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View Full Version : conservative Gregg Easterbrook on the Fannie/Freddie bailout...


Mosca
09-09-2008, 03:33 PM
Hint: he doesn't like it... neither do I. Imagine if Social Security had been privatized, and then invested in Fannie/Freddie!


Next Government Press Release: "Deficit Spending Good for Your Children": Perhaps Washington had no choice but to take over Fannie Mae and Freddie Mac, considering what we now know about years of self-serving lying by the management of both institutions. But taxpayers have been put on the hook for at least $200 billion in loan guarantees. Buried in the conservatorship declaration is word Congress may add extra subsidies to Fannie and Freddie to keep mortgage interest rates low. Washington has been involved in many loan guarantees, but never in mortgage rates. This all-new subsidy will make mortgage markets political on a permanent basis -- any time rates rise, borrowers seeking mortgages will demand taxpayers subsidize them. By shifting to taxpayers (and to our children, via still more deficit spending) some of the cost of borrowing, this may only further distort the mortgage market, encouraging buyers and brokers to generate imprudent loans and then passing costs along to taxpayers.

Note another aspect of the Fannie-Freddie takeover that politicians don't want to talk about. On paper, the takeover looks like a bankruptcy. In a bankruptcy, creditors receive preference (because they hold a promise of payment) while shareholders are wiped out (because equity positions are speculative and known to buyers to guarantee nothing). The Fannie-Freddie takeover preserves the companies' bondholders, while making shareholders appear to get clobbered -- the government receives a warrant to claim up to 80 percent of shares, which would slash a share in Fannie or Freddie to 20 percent of current value. But the government must exercise that warrant. If not, shareholders are bailed out too. As soon as attention shifts to the next screw-up, lobbyists for the rich quietly will twist White House and Congressional arms for assurances the warrants are never exercised. If this happens, average people will be taxed to protect the wealth of Fannie and Freddie shareholders. "We only wish [Treasury Secretary Henry] Paulson had gone further and erased all private equity holders the way the feds do in a typical bank failure … [share]holders deserve to lose everything." Who said this, some left-wing fanatic? The editorial page of the Wall Street Journal.

Anyway, get a load of the headline on the Treasury Department announcement of the takeover: TREASURY AND FEDERAL HOUSING FINANCE AGENCY ACT TO PROTECT FINANCIAL MARKETS AND TAXPAYERS. We're reaching into your pockets for hundreds of billions of dollars -- to protect you!

Hammer67
09-09-2008, 05:12 PM
Well, I don't like the bailout. The government shouldn't be saving people too stupid to spend within their means or to save sharks in the mortgage industry.

But, I don't see why I can't have the option to invest Social Security. I will bet that I can do a better job then the government managing MY money.

Mosca
09-09-2008, 06:50 PM
Well, I don't like the bailout. The government shouldn't be saving people too stupid to spend within their means or to save sharks in the mortgage industry.

But, I don't see why I can't have the option to invest Social Security. I will bet that I can do a better job then the government managing MY money.


Hammer, if it was JUST you, yes. Same with me. But if 20,000,000 of us all hit the market at the same time, it would be a disaster. We would buy insanely high (a seller's market), and then not be able to cash out at anywhere near what we paid in. The boost would be artificial. There would be nothing wrong with investing the money in theory, but in reality it wouldn't work. But it sure would enrich those who already have money; the ones we would have to buy the stocks from.

Fannie/Freddie was actually tossed around as a good investment for your SS dollars.

revefsreleets
09-09-2008, 07:45 PM
It's good in that we will stabilize something that was out of control. It's HORRIBLE in that it basically tells banks to continue to run amok because Uncle Sam is always there to catch you if your high risk/high reward SCAMS (that's what they are...let's call an ace an ace and a spade a spade) go awry.

We need sweeping reform in the way out banking and financial markets are run, and I DON'T mean more government control.

Mosca
09-09-2008, 08:14 PM
If there was sweeping reform, too many friends of friends of folks in high places would have their special oxes gored. No one has the balls to get that one through. Not Obama, and not McCain.

The only ones with balls that size are the ones who are profiting from it right now; the ones with the balls big enough to engineer the scam, and then hold out their hands for the bailout!

revefsreleets
09-09-2008, 08:17 PM
I hope you're wrong. I'm hoping McCain is so old, and Palin so ballsy (is that proper nomenclature for a woman) to just go for it and secure their place in history...

High hopes and wishful thinking, I know, but....dare to dream.

tony hipchest
09-09-2008, 09:46 PM
this is a serious problem and shows what happens when the rich and greedy get too much power and influence. just another example of the "rich getting richer, and the poor getting poorer". unfortunately our govt has been an enabler.

mccain is too inexperienced and unqualified to deal with such matters and anyone he may choose to put in his cabinet, to deal with them, is most likely a key culprit in the problem.

he knows virtually nothing about economics and has admitted as much.. heck, he cant even remember how many houses he owns. :noidea:

when it comes to solving such matters, id rather put my trust in the party that doesnt live by the mantra "capitalism comes 1st, and everything else is last".

revefsreleets
09-09-2008, 10:33 PM
Holy Jesus, the break with reality has spread even to this?

Dude, McCain is putting Dems and GOP in his cabinet. You HAVE to stop with this incessant nonsense. It's just....silly now.

I don't care if you call me a dick and try and make false claims about ME, but let's deal with reality when it comes to the candidates. There is a ZERO percent chance that Obama has a bi-partisan cabinet. ZERO.

GBMelBlount
09-09-2008, 11:59 PM
when it comes to solving such matters, id rather put my trust in the party that doesnt live by the mantra "capitalism comes 1st, and everything else is last".

Great post Jeremy....errrrr, ummm, sorry, I meant Tony....

tony hipchest
09-10-2008, 12:07 AM
Holy Jesus, the break with reality has spread even to this?

Dude, McCain is putting Dems and GOP in his cabinet. You HAVE to stop with this incessant nonsense. It's just....silly now.

I don't care if you call me a dick and try and make false claims about ME, but let's deal with reality when it comes to the candidates. There is a ZERO percent chance that Obama has a bi-partisan cabinet. ZERO.
:laughing: reading comprehension is your friend esay.

http://forums.steelersfever.com/showthread.php?p=433720#post433720

you are falling apart right infront of our eyes (again).

listen "dude".... we dont have to agree on every single matter, but DONT talk down to me or belittle me just because i dont fall in "rank and file" with your viewpoints. :thumbsup:

Mosca
09-10-2008, 08:43 AM
IMO this has everything to do with the business and financial world being immune to politics. It took both sides to push this buyout/handout through. It is a classic case of opportunism; using something that has to be done for the good of the country to make it extra special good for a small group of special interests.

And that ain't changing, no matter what. To me, this election is more about keeping it balanced than it is about fixing it, because I don't believe it is fixable.

revefsreleets
09-10-2008, 09:52 AM
:laughing: reading comprehension is your friend esay.

http://forums.steelersfever.com/showthread.php?p=433720#post433720

you are falling apart right infront of our eyes (again).

listen "dude".... we dont have to agree on every single matter, but DONT talk down to me or belittle me just because i dont fall in "rank and file" with your viewpoints. :thumbsup:

Don't talk down to YOU? Are you KIDDING me? You don't make any sense, you're desperately chunking spagheti at the wall hoping something will stick, following right behind my posts trying to post pretty much the opposite of what I post (whether it's based in any kind of fact or realism at all), all while pedanticaly dismissing my posts in a completely patronizing fashion. It's out of control, and a LOT of people have noticed this.

You've got a GIGANTIC blind spot when it comes to yourself...

Look, it's none of my business, but we've been buddies on here for a long time, so I'm hoping you'll step back and take a more objective look at all this. If not, that's fine and all, but I just want to go on the record saying I at least tried.

tony hipchest
09-10-2008, 11:10 AM
Don't talk down to YOU? Are you KIDDING me? You don't make any sense, you're desperately chunking spagheti at the wall hoping something will stick, following right behind my posts trying to post pretty much the opposite of what I post (whether it's based in any kind of fact or realism at all), all while pedanticaly dismissing my posts in a completely patronizing fashion. It's out of control, and a LOT of people have noticed this.

You've got a GIGANTIC blind spot when it comes to yourself...

Look, it's none of my business, but we've been buddies on here for a long time, so I'm hoping you'll step back and take a more objective look at all this. If not, that's fine and all, but I just want to go on the record saying I at least tried."following right behind your posts"? its called trying to have a conversation and exchanging ideas. please dont play the "victim" here and try to convince people i am trolling you. you know better than that. we have a ton in common (maybe much more than you would like to admit- even politically) and i have reponded to hundereds of your posts either agreeing or giving kudos. :thumbsup:


you say you want your election covered by "McNeil/Lehrer, not Entertainment Tonight " thats fine, but i have my finger on the pulse of this board and the majority read these forums for entertainment. i post for entertainment, not to direct people which way to vote.

ive read alot of people saying to talk about the issues. and obama doesnt know the issues (as if mccain does). yet when it comes down to discussing the actual issues that affect the majority, they simply bow out. more people post in "mccains $300,000 dress" type threads. those are the threads that get the most hits. if people are atleast reading it, it is good for the boards.

lets take the topic of this thread for example.

does sarah palin even know that fannie mae and freddie mac are PUBLICLY traded companies on the NYSE?

In a campaign stop in Colorado Springs over the weekend, Ms. Palin, the Republican vice-presidential nominee, addressed the biggest issue of the day — the government takeover of Fannie Mae and Freddie Mac, the giant mortgage finance companies.

“They’ve gotten too big and too expensive to taxpayers,” she said. “The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.”


Ms. Palin’s statement went largely unnoticed by political reporters, who are often more schooled in political rhetoric than economic theory. But left-leaning blogs and others have picked it up and are portraying it as a gaffe, noting that Fannie and Freddie are not government entities but instead are private-sector companies.

http://thecaucus.blogs.nytimes.com/2008/09/08/bloggers-pan-palins-first-major-statement-on-economy/

how am i to trust her to bail us out of this mess when she doesnt even "make any sense".

and her boss will fix it? he admittedly doesnt know about economics but he has alan greenspans book (which we both know he hasnt read yet- too many big words).

fact of the matter is alot of the people dont know the actual issues as there are TONS of them. even the candidates themselves dont even know all the issues ( none ever really do) it is forgivable because expecting those in politics to know everything about everything isnt realistic.

that is why it is so important for me to choose a candidate who can learn quickly and and who is capable of surrounding him/herself with the best people.

surrounding oneself with a housewife from alaska, a spouse who steals from her own charity, and the dude who helped cause this housing crisis mess in the first place is a MAJOR ISSUE for me.

i have no problem discussing the issues (especially those that directly affect me). i dont know about all of them in great detail and have no problem admitting as much.

but if the common response is gonna be it doesnt " make any sense" i have no problem discussing lapel pins, decals on airplane tails, and $300,000 outfits.

in the meantime, i will keep on keeping on whether people like or "get" my posts. if mike or the mods think i am bad for the board i am certain they will let me know.

incase you forget, LITP always said none of my posts made any sense and he tried to prevent me from starting threads he simply did not like.

revefsreleets
09-10-2008, 05:22 PM
this is a serious problem and shows what happens when the rich and greedy get too much power and influence. just another example of the "rich getting richer, and the poor getting poorer". unfortunately our govt has been an enabler.

mccain is too inexperienced and unqualified to deal with such matters and anyone he may choose to put in his cabinet, to deal with them, is most likely a key culprit in the problem.

he knows virtually nothing about economics and has admitted as much.. heck, he cant even remember how many houses he owns. :noidea:

when it comes to solving such matters, id rather put my trust in the party that doesnt live by the mantra "capitalism comes 1st, and everything else is last".

Too inexperienced? He's one of the most experienced politicians in the government! He was a member of the Keating 5, if you recall, and has rued those decisions for a couple decades now. Once elected, especially as a 72 year old, I hardly think he's going to be thinking about pleasing constituents as much as making his mark and creating a legacy.

Unqualified? There are about 5 people who actually grasp the full complexities of a global economy and the US role in it on the whole planet, and all 5 would probably completely disagree how to best manage it. If you're looking to elect the most qualified economist, elect Greenspan.

Finally, Obama ain't goin' to be appointing any Republican to HIS cabinet, and you can BANK that. If you want some balance on policy making in the White House, McCain has the clear afdvantage. The fact that he's willing to put the opposition in the room with him to advise on these kind of issues tosses all the rest of your arguments out the window.

So there's my answer to the post. Issues only.

Dino 6 Rings
09-10-2008, 05:52 PM
I have a question. I have a loan from a Bank for my Morgage, but its backed by Fannie Mae. So what happens if Fannie Mae goes under?

I mean, I pay my loan on time, actually pay over every month a little in order to try and pay off a 20 year in 15 years, which I am on pace to do, but what happens if everything goes under? Are they going to take my house even though I paid the full mortgage on time each month? Are they going to increase my rates even though they are offically "locked in"?

Are they going to send someone to kick me out of my house? Good thing I still have my guns to cling too huh?

This all started in California with Horrible Loans being given out to Flippers and Bad Clients that had no intention of paying off the full amount of their loan to begin with. When the market adjusted, and the rates locked in and there wasn't enough people to buy the 500,000 houses they had over built, the prices dropped, dropping the market. How does that effect little ole me?

Can someone answer that question for me. My guy at the bank, told me everything was cool so far. "At this time there is still nothing to worry about. FannieMae is or was until yesterday an independent company. As of now they were taken over by the Federal Government to ensure that they do not go under. So for now you are fine and it is business as usual."

Yeah...um...should I, a person who does pay his mortgage on time, really worry about this?

revefsreleets
09-10-2008, 06:12 PM
The government just guaranteed that that will never ever happen.