The federal government made the subprime mortgage mess inevitable when it imposed social engineering rules on private mortgage contracts. The long process began with the 1975 Home Mortgage Disclosure Act (HMDA), the 1977 Community Reinvestment Act (CRA) and the regulatory bureaucracy that these two legislative acts required.

The probability of a recession this year is now more than 50%. The last straw was the latest weak jobs and construction spending reports. Both were the weakest since 2003 and both were accompanied by downward revisions for recent months.

The construction industry will get a boost at midyear from the $150 billion economic stimulus package that Congress is now debating, if the stimulus package is enacted. It will include accelerated depreciation for capital investment, possibly tax loss carry backs for unprofitable firms to recoup earlier income tax payments from the boom years and personal “tax rebate” checks in the late spring and summer that could be as high as several thousand dollars for working families with several children.