Instead of facing the foreclosure crisis head-on, President Barack Obama has chosen a terrible time to finally discover the virtue of federal restraint and mostly deferred to state attorneys general.

The Senate approved legislation to restore modest reductions to the loan limits applicable to Fannie Mae, Freddie Mac, and FHA. Except for the housing lobby, there is widespread agreement that reducing these limits is a key first step towards ending the government's chokehold on the now nationalized housing finance market.

A banking crisis in Europe, coupled with a renewed European economic downturn, will have serious implications for the global economic recovery.

The U.S. economic recovery is facing a number of strong headwinds that make a relapse into recession all too likely, including the appalling state of the U.S. labor market, the ongoing foreclosure crisis, prospective cuts in government spending, and more.

While President Obama's economic strategy may have succeeded in pulling the economy back from the abyss, its poor design has not laid the basis for sustainable recovery in output and employment, and recovery to date as been weak by the standards of other post-war economic recoveries.

The U.S. economic recovery currently faces an increased risk of a double-dip recession and a call for Federal Reserve tightening could hardly be more ill-timed.

Most of the ideas for supplanting Fannie Mae and Freddie Mac are just imaginative ways of keeping government in the business of housing finance, but when the new Congress begins weighing alternatives to government-sponsored enterprises, it should start with a fully private system.

The Federal Reserve's tentativeness about a new round of quantitative easing is regrettable since monetary policy is now the only game in town.