Real Estate Recovery Roadblock #3: Banks and their unlikely business partner, Uncle Sam

bank and government tug of war“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things,” Adam Smith, author of ‘Wealth of Nations’, 1776

Read these recent headlines from major metropolitan newspapers and ask yourself this question…are the banks and the federal government really capable of injecting life into the real estate market?

Now that you’ve had a chance to read these headlines I hope you answered ‘no’ to my question.  Here’s the reason why the banks and federal government are failing:  they make horrible business partners because their objectives are completely different.  The banks care about the bottom line and the government wants to keep people in their homes.  This tug-of-war has unnecessarily extended the housing crisis and delayed a recovery.

An argument can be made that the little recovery we have seen has come in spite of the banks and government partnership, not because of it.  Its like Thomas Jefferson once said, “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”

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