INCREDIBLE LOSSES - AT 7:09 P.M. ET:  Not to spoil anyone's New Year's Eve, but I wanted you to be aware of the extent of the losses to the U.S. Treasury that Freddie and Fannie have cost us.  This is what happens when normal, common sense rules of finance and lending are not followed, and are replaced by political and social objectives:

Dec. 31 (Bloomberg) -- Taxpayer losses from supporting Fannie Mae and Freddie Mac will top $400 billion, according to Peter Wallison, a former general counsel at the Treasury who is now a fellow at the American Enterprise Institute.

“The situation is they are losing gobs of money, up to $400 billion in mortgages,” Wallison said in a Bloomberg Television interview. The Treasury Department recognized last week that losses will be more than $400 billion when it raised its limit on federal support for the two government-sponsored enterprises, he said.

And...

The U.S. seized the two mortgage financiers in 2008 as the government struggled to prevent a meltdown of the financial system. The debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks grew an average of $184 billion annually from 1998 to 2008, helping fuel a bubble that drove home prices up by 107 percent between 2000 and mid-2006, according to the S&P/Case- Shiller home-price index.

COMMENT:  High home prices may be temporarily exhilarating for some people for a time, but ultimately, if prices get too high, communities are destroyed, the most creative people are driven out, and the future is severely compromised.  It's happened in New York City and in communities around New York, and it's one of the reasons why New York State is losing its most productive population. 

I gently point out that Fannie and Freddie are Democratic Party pets.  Haven't heard any apologies yet.

December 31, 2009