Time to sound the Tocsin??

So far, the goal of these rants has been to reveal that the socalled subprime mortgage crisis is not so much of a crisis as a regular part of the business cycle. (feast then famine then back to feast again in 25 words or less) This "crisis" is actually a correction. Mortgage lenders went overboard in the subprime lending area and eventually got burned. Bear Stearns, Fannie Mae & Freddie Mac the most prominent examples. Each required bailout by the Feds because they were too big to fail. Same old, same old.
On Sunday, 9/7/2008, the director of the Office of Federal Housing Enterprise Oversight, soon to become the Federal housing finance agency, James B. Lockhart, issued a statement on the takeover of Fannie Mae and Freddie Mac. I will quote paragraph 5 here:

"Key events over the past six months have demonstrated the increasing challenge faced by the companies in striving to balance mission and safety and soundness, and the ultimate disruption of that balance that led to today's announcements. In the first few months of this year, the secondary market showed significant deterioration, with buyers demanding much higher prices for mortgage backed securities."

Please read the last sentence, this is disturbing to me. Remember, the goal of Federal Agencies such as the FRB, FHFA, OFHEO.. etc is to help maintain orderly, efficient and effective markets. Director Lockhart seems to be saying that buyers are demanding higher prices for mortgage backed securities. Since when did the buyers demand higher prices?? Most markets, orderly, efficient, effective or otherwise have the sellers demanding higher prices and the buyers demanding lower prices. Has anyone ever gone into a grocery store and said" This chicken is worth lots more than $2.00 a pound, charge me $4.00 or I'm taking my business elsewhere, and asking everyone I know to do the same!! " If that person continued to demand higher prices one of 2 things would happen. A store employee would charge the extra money and pocket the excess for her/himself or the police would be summoned and commitment proceeding would start. (in most cases, the latter. I have an optimistic opinion for my fellow human beings.)
If the buyers are demanding higher prices, maybe I am wrong and this is a true crisis. Hopefully, there is another more reasonable explanation for buyers wanting to pay more for their purchases.
You can read the Director's statement about Fannie Mae & Freddie Mac's takeover at visit FHFA newsroom. Choose Statement of FHFA Director James B Lockhart dated 09/07/2008 when you get to the newsroom.