Nationalize Your Socialism
When I heard that Freddie Mac and Fannie Mae would be “nationalized,” my first impression was huh? Is the government next to announce that it’s going to take over public education and the forest service?
Fannie and Freddie were, of course, New Deal projects, both designed as a way to subsidize home ownership. They were then “privatized” by LBJ, meaning they could use private capital, and were in effect replaced by yet another government program with yet another cutsy, Southern name—Ginnie Mae.
As Lew Rockwell alludes to, there’s a certain contradiction in the political consciousness of many of our countrymen--whereas welfare payments are considered wicked socialism, government’s guaranteeing that every citizen has the “right” to own a home is thought to be pure Americana. When McCain talked about the nationalization of Freddie and Fannie, it was as if a Democratic senator had suggested abandoning American troops in the battle of Faluja—[Freddie and Fannie] will not fail, we will not allow them to fail … we will do what’s necessary…
Best of all, when a “private” organization has all its loans backed by Washington—Bush is actually willing to take on the organizations’ $5 trillion in debt—this leads to some rather generous lending. The boys upstairs are willing to take some pretty wild risks when they feel safe in the knowledge that they’ll never really have to take responsibility if defaults ensue. Uncle Sam will make it right.
Best of all, “ownership socialism” is lucrative!
As the Times reported this weekend,
In Washington, Fannie and Freddie’s sprawling lobbying machine hired family and friends of politicians in their efforts to quickly sideline any regulations that might slow their growth or invite greater oversight of their business practices. Indeed, their rapid expansion was, at least in part, the result of such artful lobbying over the years.
And as Fannie and Freddie grew, so did the fortunes of Wall Street, which reaped rich fees from issuing debt for the two companies, as well as the mortgage and housing industries, which banked billions of dollars as the housing market boomed.
Government agencies are usually miraculous in always landing on their feet—Freddie and Fannie transformed themselves from New Deal projects, to “private” organizations, and finally ended up in the Diversity Industry. As Steve Sailer recently discussed, socialized lending found a new raison d’être in the national initiative to “increase minority homeownership.”
It’s been an interesting run for Freddie and Fannie. But with Washington’s clumsy, self-evidently unsustainable re-nationalization efforts, it looks like the game might be up.
Comments
By nationalisation they mean the taxpayer is going to pay…
Wait, its a fiat currency, worth nothing, its a human beings labor that creates real wealth [assets]
The taxpayer will end up ‘working’ this off.
The Ponzi schemes, and fiat currency, have reached the tipping point. Already the banks are basically insolvent as is the government, the only thing keeping our economy afloat is because they keep buying our T-bills and making loans.
We dont own the world, we owe it.
All the Kings horses and all the Kings men...you know the rhyme.
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Wasn’t it Jefferson who dreamed of a nation of sturdily independent, enlightened, and informed yeoman farmers? With the nineteenth century came industrialization and urban concentration. Then the automobile revived the fantasy of independent estates. Huey Long probably meant it when he pushed the idea of every man a king.
And here we are now. The spoilsport ecologists have been warning about unsustainable development for decades, but who wants to take those Marxist spoilsports seriously. Now the chickens are coming home to roost, and their droppings are beginning to fall. Don’t blame FDR et al. Telling the great American public that there really is no Santa Claus is a guaranteed recipe for defeat.
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Well, I dont think the problem is because it was subsidised, we subsidize corn and oil as well.
The real problem is that these structired investment schemes are highly leveraged. Freddie and Fannie were leveraged 20 to 1. Bear Stearns was leveraged at 32 to 1.
They simply dont have the capital on hand to cover their losses. Some 264 mortgage lending institutions have gone under since 2006. All because they were leveraged and didnt have the necessary capital and couldnt raise it.
This equity stake [a form of nationalism] is an attempt to raise capital for Freddie and Fannies overleveraging.
Its Wall Street with its alphabet soup schemes and fake ratings that, I think, are the biggest cause of this mess.
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Wall Street is just one of many willing and enthusiastic victims of the ongoing Debt Socialization pursued by the lapsed-Republic. The Oracular Somnambulator Greenspan and his friends in the Clinton Administration decided the dawning inflation of the 90’s was best left un-said. And so, like magic, we saw rising gas and food costs detached from measuring inflation so that we could use the artificially suppressed inflation rate to encourage low interest rates. With another snap of the fingers, abra cadabra and shem sholly shaboom, these low interest rates could then be the magic Fountainhead to exploit the last remaining deep-well asset in the land: The Sacred American Home and its Happily Charging Owner. After all, when Hershey’s Chocolate is more highly capitalized than GM, manufacturing might be a tender memory might it not?
So, The Fed, The White House, our useful idiots in Congress and their bag-men on K Street happily farmed the fields of home ownership with their donors in the Financial industry until the soil could give no more . After all, with the no verification loans of this avidly idiotic sub-prime fiasco, we saw people getting money who should not....serially...and even folks without the importunate complication of mere citizenship papers were granted home mortgages to the tune of several hundred thousand dollars. Never ask questions you do not want the answer to.....unless of course, you have a fiduciary responsibility but who wants that? This is what debt is for......and debt, as we all know since Reagan is nothing to worry our cute little head over.
Who also could possibly know that allowing the welfare of a country with a smaller population than Los Angeles County, said country that is the mortal enemy of the chief global energy supplier....who knew that this frustrating little detail might be a bad idea...particularly when one’s sacred love of driving is akin to a State Religion.
The books have been cooked all around in this vaunted “Growth Economy” of Big Box imports, SUV’s and 3,000 s.f. starter homes. Wall Street is but one of many bad actors and the fact remains that without the wishful thinking of an idiotic FED and an ever gluttonous public enthusiastically supporting that house of horrors called Congress and It’s Imperious Executive , this entire thing would have been impossible to pull off. Wall Street is just a bit player.
Still, the public cannot get enough of the ongoing slide and are busy loading more chambers in the gun before hoisting it aloft and next to their thumping temple. Let us now pray stridently for Change. Funny , but it is all just an elaborate comedy in that kind of tragic way that always accompanies a declining empire that refuses to admit it did anything wrong.
What’s next? Why of course, the standard plot line is always there: Bombs Away.
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“...The government’s guaranteeing hat every citizen has the “right” to own a home is considered pure Americana.”
Well… actually the government never guaranteed anything - or even attempted to. These federal agencies did facilitate working-class home ownership, and did so, successfully, for decades. It wasn’t until boomers and post-boomers, with that ultra-modern disposable morality, came along and started looting the systems did they fail so spectacularly.
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