The Revolt Against Obama's Massive Mortgage Plan Begins

And not with a whimper, but with the financial gurus on Wall Street.

Buying real estate has always been a risky endeavor. There's no guarantee that you'll make money on the purchase, but it was seen as more stable than other investments, primarily because you couldn't quickly buy and sell the properties and that some property was more coveted than other real property.

Along comes President Obama and his plan to remove the risk of moral hazard from decisions made by lenders and borrowers. In fact, he's attempting to take the risk out of the transactions entirely - limiting the downside risk from foreclosures (and the benefit of foreclosures resulting in more affordable housing in those areas), while screwing those who managed their housing risks by not buying more than they could afford.

It's a theme I've hit upon before when it comes to the prior bailouts, whether they're for the automakers - corporate welfare in an earlier era when Democrats hated federal money going to businesses they didn't like or for the last homeowner bailout plan, which didn't solve anything since many of those who had mortgages renegotiated found themselves right back in the same mess just months later.

Economics is about supply and demand and managing risks. Eliminating risks or inflating demand distorts the markets and causes bubbles. That's what got us into the current real estate mess, and expanding the bubble further will only result in additional problems down the road. It is not a solution.

It's a band aid that allows the problems to fester for years to come.