Thursday, September 25, 2008

But let's just imagine that there is a "natural" price for real estate, and that price is basically what people can afford (as a percentage of anticipated future income, or anticipated rents). Now let's imagine that the Federal Government gets stuck with a giant portfolio, that will cost nearly a trillion dollars if real estate prices return to sane levels, but will make a profit if they stay at insane levels. Now let's imagine what kinds of strange market manipulations the government will do in order to protect that portfolio.

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