The Foundry

Earlier this week we documented how Treasury Secretary Hank Paulson’s erratic behavior has become perhaps the single most disruptive force in the global economy. But he is just one of many government actors throwing more uncertainty into an already volatile marketplace. Federal Deposit Insurance Corporation Chairwoman Sheila Bair has been pushing her own plan for propping up housing prices. Despite their integral role in creating this whole mess in the first place, Fannie Mae and Freddie Mac continue their home price inflation efforts as well.

Not wanting feel left out, the Federal Housing Administration also has their own mortgage relief program. It too has been largely unsuccessful: During the first month of the program (launched Oct. 1), FHA received applications from only 111 borrowers. Now they want to change the program. In defense of this change, an anonymous official told the Washington Post:

When you have a plan a day you create confusion in the marketplace. . . . We’ve got to determine if there are ways to enhance the efforts that we’ve already taken.

If only this official had stopped at “confusion in the market place” he’d be dead on. All these government new government programs, program changes, and yes, even program “enhancements” are not helping. They hurt. When no one knows how the rules of the game are going to change — and they seem to change from week to week — the rational way for business and consumers to respond to is to hunker down and wait for the storm to pass.