Delaying the Bottom

"Any propping up of shaky propositions postpones liquidation and aggravates unsound conditions." -Murray Rothbard

• "President Bush on Wednesday signed into law a sweeping housing bill that aims to boost the struggling housing market and bolster mortgage finance giants Fannie Mae and Freddie Mac." -CNN Money


• "[Treasury Secretary] Paulson is pushing Congress to authorize the Treasury to purchase equity stakes in Fannie Mae and Freddie Mac, which account for about half of the $12 trillion mortgage market, and expand government-backed credit lines to them." -Bloomberg

"The ultimate result of shielding man from the effects of folly is to people the world with fools." -Herbert Spencer

• "The Federal Reserve extended its emergency lending programs to Wall Street firms through January after policy makers judged that markets are still `fragile.' "-Bloomberg


• "The Federal Reserve extended its emergency lending programs to Wall Street firms through January after policy makers judged that markets are still `fragile.' Emphasizing the dangers to the economy, the Fed said in its statement that a substantial easing of interest rates in recent months, 'combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.' " -New York Times

"[It is] the most michievous doctrine ever broached in the monetary or banking world in this country; viz. that is the proper function of the Bank of England to keep money available at all times to supply the demands of bankers who have rendered their own [illiquid] assets unavailable." former 19th Century governer, Bank of England

• The British monetary authorities plan to inject liquidity into the country's banks as they seek to restore health to financial institutions battered by the credit crisis...the Bank of England will exchange [liquid] government bonds for [illiquid] mortgage-backed securities...The central bank will hold the illiquid mortgage assets as collateral. -International Herald Tribune
• The actions by the Fed and other central banks are expected to help banks and brokerages temporarily swap their [illiquid] mortgage-backed securities for [liquid] Treasury debt and possibly unclog credit markets, say analysts. -AFP

I wonder what history has to say about our current mortgage crisis?