A reader chanced upon a passage in Henry Hazlitt’s Economics in One Lesson where that celebrated economist predicted today’s mortgage crisis:
Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to “buy” houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion.
This book first appeared in 1946. Wow how prescient was this man. Too bad we don’t have more such individuals in government. And too bad more elected officials aren’t familiar with his work.