And people thought that the last real estate boom caused by the low interest rate (i.e. cheap money) was bad. This is like throwing gas gas truck into a wildfire in hopes of extinguishing it:
NEW YORK (CNNMoney.com) -- Lobbyists are pushing the Treasury Department to consider a plan to purchase mortgage-backed securities in the hopes of driving mortgage rates to as low as 4.5%, an industry source said.
Last week's Fed move drove mortgage rates down to 5.5%, from 6.06% a week earlier. The Fed said on Nov. 26 that it would purchase up to $500 billion in mortgage-backed securities from Fannie, Freddie and Ginnie Mae, and that it would buy another $100 billion in direct debt issued by those firms.
What's next? Maybe the Feds will decide to sell human eggs that they farm from homeless women to rich couples whose wives are infertile.
I do not know what the long term repercussion of such large government intervention in the economy. Just like the multi-billion dollar bailout of the Big 3 auto makers is doomed to fail, this might be another one of those "oops" moments in economic history.
Politicians fail to realize correction almost ALWAYS follows any type of economic boom. The only way that the economy will heal itself is to let it! That's the key. Let it heal on its own.
No goverment intervention will do any good in the long run. Let nature take its course. If people need to burn for their financial mistakes, then let it be.
