According to the International Monetary Fund (IMF), if the American government had better handled the U.S. housing crisis then the world might not now be facing a global financial crisis[1]. Calling federal involvement in the U.S. housing market “pervasive” but not particularly effective, IMF called for an “overhaul” of the manner in which the federal government deals with the housing market. IMF went on to criticize “a plethora of tax breaks and subsidies…[that] may have promoted the purchase of more and bigger homes…exacerbating leverage and the severity of boom and bust dynamics.” IMF then went on to praise the Obama administration’s housing finance reform proposal as a “welcome step” toward repairing the U.S. housing finance system.
IMF bills itself as a 187-country organization “working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world”[2]. At least in terms of the U.S. housing market, the group appears to believe that the best way to handle the issue is to maintain or increase government involvement and manipulation of the market, calling for the Obama administration to “step up their efforts” and criticizing the administration for failing to address the “both expensive and regressive” issue of the mortgage interest tax deduction[3].
Do you think that it is fair for IMF to blame the global financial crisis on the U.S.? Are the demands IMF is making good solutions to the problem?
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[1] http://www.dsnews.com/articles/international-monetary-fund-voices-concerns-with-us-housing-system-2011-04-07
[2] http://www.imf.org/external/about.htm
[3] http://www.mortgageorb.com/e107_plugins/content/content.php?content.8301
