Elizabeth Warren's Misguided Mission

TARP oversight panel head and perennial scold Elizabeth Warren was granted more time than she's worth, again, on CNBC this morning.

Becky Quick fawned over Warren to a point that became sickening. I won't go into the Supreme Court nominee episode, but it nearly made me physically sick.

What Warren ranted about this time was how only 1 in 10 foreclosed mortgages have been rescued by the Treasury's various programs. She breathlessly intoned that too many families with foreclosure looming were not being saved by the government.

This, she solemnly warned, would lead to further housing price declines, and, thus, even more foreclosures. These must be avoided! Housing prices must be propped up articificially!

It's clear that Ms. Warren, a lawyer by profession, has absolutely no notion of how markets actually work.

That is, by allowing foreclosures to occur, inflated housing prices are brought down to, well, market-clearing levels.

Why we discriminate and confer special privileges on those who bought unaffordable housing, rather than, say, those with money who are waiting for those houses to fall in price to a level they can afford, went unexplained by Ms. Warren.

It's simply enough for you to believe that Warren feels that existing owners are special.

If you wonder why moral hazard has vanished from our financial lexicon, and nobody seems to seriously expect consequences from their bad financial decisions anymore, you don't need to look any further than Warren's views on mortgage foreclosures.

Yet another chilling example of naive, misguided government at work interfering with markets and scaring off or simply forbidding private investment to play it's normal, market-correcting role in the economy.