Greenspan Scratching the Fannie

An Economist report a few days back was quietly entitled Building the American dream…or nightmare?

There wasn’t much in this article that came as a surprise, until the near end…..

What caught me off guard were the comments about mobility. The “anchor” effect a large (or overextended) mortgage can create, can have a detrimental effect on a family’s ability to migrate to booming micro-economies. From the article, it was noted that West Virginia has one of the highest home ownership rates, as well as one of the highest employment rates.

What does happen as jobs shift to different regions, and workers cannot afford to let go of their residences (either due to transaction costs, or because they simply owe more that the home is worth)? Does the employer bear this burden? If the employee is important enough to the business, maybe so.

It is certainly may be worth thinking about a little more.

Meanwhile, Greenspan warning about financial meltdown if Fannie and Freddie are not reined in certainly IS worth thinking about.

If someone out there has any statistics on the change in the total market capitalization of residential real estate, as well as collateralized mortgage obligations outstanding, since 1995 (’round about the time CMOs hit the street hard), I’d like to see them. I bet they grew in lockstep.

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