Okay this is throw back economics pure and simple. According to Hugh Stretton's "New Introduction to Economics" [which was institutional economics description of the lessons of 20th century and the Long Boom] the hidden cost of running a free floating international exchange system in currency and equities and bonds is 3%. This means that the first to "get it in the neck" are local builders since what was once 6% and their price point for reasonable profits is now effectively 9% and out of reach of the middle classes - HENCE FANNIE MAE AND FREDDIE MAC.
Thats one side of the argument. The other is the desegmentation of international stockmarkets in the early 1990's combined with the general de-segmenting of equity, real estate and bond markets of earlier times (1980's) was _supposed to_ increase the effective demand for housing and so boost housing supply - a key plank of Republican social policy.
Now this would've been okay if the increased volume of money into the mortgage market from equities (when they went south) and bonds (when they went south) and money markets (when they went south) had not been sunk into Houses as "Store of Value" rather than a "use value" - affordable shelter.
Now that we've desegmented everything why not go back to the less potentially inflationary (in a market bubble sense) days of DEDICATED MORTGAGE BANKS for owner occupiers- and partially Resegment the Market and admit that de-segmented markets aren't all that "free" and carry hidden risks and costs.
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