Because there is nothing resembling a free market in home ownership.

The GSEs guarantee nearly of 50% EVERY SINGLE MORTGAGE OUT THERE and at some points in time the GSEs have guaranteed as much as 75% of the throughput in new mortgages in any given period.

That's not a 500 gorilla in the homeownership living room - that IS the living room.

Add the negative real rates provided by the Fed, the cost of lax regulation in terms of predatory lending, and the cost of mortage interest and capital gains tax exclusions -- all create artificial preferences and malinvestment -- there is clearly no such thing as a free market.

It is impossible to say what home prices and interest rates would look like in a true free market environment. It is like wondering what sort of life would have involved on earth if we had had a nitrogen environment instead of oxygen. Unknowable.

From this morass you pluck the studies that say mortgage rates are a wee bit lower due to the GSEs subsidy, and so conclude that we have inarguably benefitted from that.

Nonsense. That is cherry picking a single facet of an insanely complex system of dependencies.

What about the cost to taxpayers of the house price bubble? My rates may be a little lower, but the damned house price is quite a bit higher.

In additon of course those negative real Fed rates are DESTROYING the dollar, and my wages and savings along with it.

In fact, thanks to the Fed, there is no free market in banking either. The entire beast exists to borrow money from the taxpayers at a very low rate, then lend it back to them at a higher rate. Good work if you can get it. What is the cost to the taxpayers of that scam?

who has propped up the "American Dream" of home ownership with your tax dollars. And they don't necessarily get their financing from borrowing at low rates from the US taxpayers--sometimes its foreigners and sometimes Uncle Sam just takes what he wants (aka, taxes). We seem to go through a banking crisis maybe every 20 to 30 years--remember the Savings and Loan crisis? I am sure McCain is trying to forget it, as are the Clintons.

Just a nitpick, but we do live in a nitrogen environment. Earth's atmosphere is ~70% nitrogen compared to ~21% oxygen.

Actually, I originally wrote "helium"environment, but figured that someone would say we already lived in that: everyone acts gooofy and talks in silly voices.