Crisis of a lifetime

Economy: Fannie Mae and Freddie Mac rescue promises more instability to come and more government sponsorship of consumption | Alex Tokarev

Year-long meltdowns of the real estate market have unsurprisingly reached Fannie Mae and Freddie Mac, two companies associated with half (a mind-boggling $10 trillion) of America's mortgages. Multi-billionaire George Soros warns the world that we could be witnessing "the most serious financial crisis of our lifetime," which in his case includes the Great Depression.

The Depression led to the birth of Fannie Mae: New Dealers created it with the goal of artificially lowering the cost of buying a home, and it became the second-largest corporation in America and a pioneer in a nationwide secondary market for mortgages. The problem is that government interventions in markets often result in gargantuan bureaucracies and monopolies that help certain sectors of the economy to expand temporarily, but at the expense of other activities that are more productive and valued by individual consumers.