Government Guarantees Hurt the Housing Market

The New York Times reports:

Proponents of Subprime 2.0 say a government centric housing system is necessary to assure flexibility, accessibility, affordability and stability. We know from the last experiment that “flexibility” means subprime lending, “accessibility” means entitlements, “affordability” means subsidies, and “stability” means increasing leverage during boom times. For example, achieving flexibility would require the widespread use of subprime loans with low down payments, low credit-score requirements and high debt-to-income ratios. Such a system is doomed to failure. The alternative is a home finance market based on tried and true principles

Why another housing crash could happen.