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Mortgage Industry Nationalized
http://www.openleft.com/ showDiary.do?diaryId=8003
I'm not versed enough in economics to know if this technically qualifies as the nationalization of a major financial sector, but it sure sounds like it: The U.S. government plans to put troubled mortgage finance companies Fannie Mae and Freddie Mac under federal control, the New York Times and Washington Post newspapers reported on Friday.(...) The firms would be placed in a legal state known as conservatorship, the Post said, citing sources familiar with the conversations. The value of the company's common stock would be diluted but not wiped out while the holdings of other securities, including company debt and preferred shares, would be protected by the government, the Post said.
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A small-government test
http://www.economist.com/blogs/democracyinamerica/2008/09/a_...IT'S a complicated issue, but the American government's nationalisation placement of Fannie Mae and Freddie Mac into a "conservatorship" raises an interesting philosophical question for a candidate like John McCain, who has espoused "small-government" conservativism in his discussions of the economy. Nearly all the experts on the left and the right agree that Heny Paulson, America's treasury secretary, made the right call in taking control of the mortgage agencies. But such agreement has left people like Chris Bowers confused by the "incredible cognitive dissonance surrounding 'big government' in our national political discourse". Even as we have reached national consensus on nationalizing industries, which is the literal definition of socialism and big government, politicians of every party keep talking about "small government" as though it were a virtue. I mean, the day after the Republican convention, which included countless attacks on big government, the Republican administration goes out and nationalizes a major industry... Voters, Democrats, Republicans, Independents, Conservatives, Moderates, Progressives, Greens--everyone is in favor of "big government" moves like nationalizing the mortgage industry now. And yet, all of those same people keep talking about how terrible big government is, and how we need to stop it. It is massive national lie. It is as though the entire country is a homophobe who is actually a closeted homosexual. It is as though the Emperor has no clothes, but now the entire nation has decided to dress to match. One need only look at George Bush's reaction to the September 11th attacks to see how easily small-government philosophy falls victim to crisis situations. We are slowly finding out that even after the crisis has passed, Republicans prefer big-government solutions to America's national-security challenges. But the housing crisis now gives us a chance to test the Republicans' small-government mettle on the economic front. Mr Paulson has described his actions as merely a "time out", leaving the big decisions to the next administration. Someone must ask Mr McCain what form he sees the mortgage agencies taking in the future. If he is truly the candidate of small government he will propose dismantling the firms. If not, Republican voters will have yet another reason to doubt their party's small-government promises.
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United Socialist States
http://www.grandinite.com/2008/09/09/united-socialist-states...Jim Rogers: “This is socialism for the rich.” Includes Sarah Palin’s idiotic quote regarding Fannie mae & Freddie Mac. Chris Bowers, from OpenLeft writes: I’m not versed enough in economics to know if this technically qualifies as the nationalization of a major financial sector, but it sure sounds like it:
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A small-government test
http://www.economist.com/blogs/democracyinamerica/2008/09/a_...IT'S a complicated issue, but the American government's nationalisation placement of Fannie Mae and Freddie Mac into a "conservatorship" raises an interesting philosophical question for a candidate like John McCain, who has espoused "small-government" conservativism in his discussions of the economy. Nearly all the experts on the left and the right agree that Heny Paulson, America's treasury secretary, made the right call in taking control of the mortgage agencies. But such agreement has left people like Chris Bowers confused by the "incredible cognitive dissonance surrounding 'big government' in our national political discourse". Even as we have reached national consensus on nationalizing industries, which is the literal definition of socialism and big government, politicians of every party keep talking about "small government" as though it were a virtue. I mean, the day after the Republican convention, which included countless attacks on big government, the Republican administration goes out and nationalizes a major industry... Voters, Democrats, Republicans, Independents, Conservatives, Moderates, Progressives, Greens--everyone is in favor of "big government" moves like nationalizing the mortgage industry now. And yet, all of those same people keep talking about how terrible big government is, and how we need to stop it. It is massive national lie. It is as though the entire country is a homophobe who is actually a closeted homosexual. It is as though the Emperor has no clothes, but now the entire nation has decided to dress to match. One need only look at George Bush's reaction to the September 11th attacks to see how easily small-government philosophy falls victim to crisis situations. We are slowly finding out that even after the crisis has passed, Republicans prefer big-government solutions to America's national-security challenges. But the housing crisis now gives us a chance to test the Republicans' small-government mettle on the economic front. Mr Paulson has described his actions as merely a "time out", leaving the big decisions to the next administration. Someone must ask Mr McCain what form he sees the mortgage agencies taking in the future. If he is truly the candidate of small government he will propose dismantling the firms. If not, Republican voters will have yet another reason to doubt their party's small-government promises.
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Fannie and Freddie more important than the disposal of flags
http://www.whyweworry.com/blog/2008/09/08/fannie-and-freddie...(Updated Below) One of the big stories to come out the campaigns this weekend was McCain’s false claim that Democrats desecrated thousands of American flags used at the DNC in Denver. I’m glad to see the McCain camp and our venerable news media are focused on the vital issue of how to properly dispose of campaign props. Meanwhile, back in the real world, two of our biggest financial institutions are so f***ed that our corporate welfare state is going to take them over: The U.S. government plans to put government sponsored mortgage finance companies Fannie Mae and Freddie Mac under federal control, the New York Times and Washington Post newspapers reported late Friday, in what could be the largest financial bailout in the nation’s history. The two government sponsored enterprises (GSEs) own or guarantee almost half of the country’s $12 trillion in outstanding home mortgage debt. Weeee! I guess that housing bubble was real eh guys? Thanks to the fine folks at Freddie and Fannie I can announce the first winner of the prestigious quote of the weekend award: “After having debated the economists at Fannie and Freddie more than a dozen times over the past six years, I am going to take the opportunity to say that I was right and they are bankrupt.” - Dean Baker If you want to read more, Chris Bowers has an interesting take on how we’re now nationalizing the mortgage industry. Update Tyler Cowen explains what might have happened had we not re-privatized Fannie and Freddie: But let’s say that the Treasury did not support the debt of the mortgage agencies. The Chinese bought over $300 billion of that stuff and they were told that it is essentially riskless. The flow of capital from them and from other central banks, sovereign wealth funds, and plain old ordinary investors would shut down very quickly. The dollar would fall say 30-40 percent in a week, there would be payments system gridlock, margin calls at the clearinghouses would go unmet, and only a trading shutdown would stop the Dow from shedding half its value. Most of the U.S. banking system would be insolvent. Emergency Fed/Treasury action would recapitalize the FDIC but we would lose an independent central bank and setting the money supply would be a crapshoot. The rate of unemployment would climb into double digits and stay there. Many Americans would not have access to their savings. The future supply of foreign investment would be noticeably lower. The Federal government would lose its AAA rating and we would pay much more in borrowing costs. The deficit would skyrocket. And I haven’t even mentioned the credit default swaps market. Well, I have now.
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Venezuela? No, the USA: Government Seizes Mortgage Finance Giants. Costs to Taxpayers in Tens of Billions
http://whigblog.blogspot.com/2008/09/venezuela-no-usa-govern...N.Y. Times: The Treasury Department on Sunday seized control of the quasi-public mortgage finance giants, Fannie Mae and Freddie Mac, and announced a four-part rescue plan that included an open-ended guarantee to provide as much capital as they need to stave off insolvency. Mr. Paulson refused to say how much capital the government might eventually have to provide, or what the ultimate cost to taxpayers might be. The companies are likely to need tens of billions of dollars over the next year, but the ultimate cost to taxpayers will largely depend on how fast the housing and mortgage markets recover. More here from Open Left: Mortgage Industry Nationalized I mean, the day after the Republican convention, which included countless attacks on big government, the Republican administration goes out an nationalizes a major industry. It will probably be done in the corporate welfare style typical of American government--privatize the profits, socialize the risk--but it is still nationalization. Voters, Democrats, Republicans, Independents, Conservatives, Moderates, Progressives, Greens--everyone is in favor of "big government" moves like nationalizing the mortgage industry now. And yet, all of those same people keep talking about how terrible big government is, and how we need to stop it. Well, here's one Whig who's not in favor of nationalizing the mortgage industry. More here from Next Right: (I have posted nearly the entire post, he responded to the Open Left post above) This is not a left-wing criticism - it's a genuine problem, both for the country (as illustrated by Freddie Mac and Fannie Mae going "under government control") and for the Right (which sets itself up to lose a fight about the size of government with every intervention in industry). This is how government grows... 1. Socialize Risk: Government intervenes in an industry to "solve" some apparent and visible problem. This is done "for the people." 2. Unintended Consequences: This intervention merely shifts the costs to new areas and sweeps problems under the carpet, where they accumulate. 3. Blame The Market: Government intervention is not blamed, because the people who support it assume their good intentions could not be responsible for bad things. 4. Socialize Profit: The Left demands Something Be Done by people with Good Intentions. Politicians comply. This is done "for the people." Unfortunately, our political structure comes at this from four different places. Democratic politicians, organizations and activists are happy to go along with Steps 1-4, because, hey, #4 was their goal in the first place. Republican politicians and organizations go along with Steps 1-3, only objecting at Step #4. By which time it is too late. Business goes along with Step #1, and attempts to use Step #2 to get more of Step #1. Libertarians believe the problem occurs at Step #1. Once Step #1 is conceded, we've already lost on steps 2-4. But libertarians and limited government conservatives have relatively little power. Now, we are at Step #4 - essentially nationalizing Freddie Mac and Fannie Mae.
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Fannie and Freddie bailout
http://strandedinreality.typepad.com/stranded_in_reality/200...It looks like Fannie Mae and Freddie Mac are set to become the largest government-owned entities in American history, and, once again, taxpayers will foot the bill. The Left have it all over the Right regarding nationalising industries. This is an argument advocates for capitalism cannot seem to win. This left wing blogs says: Even as we have reached national consensus on nationalizing industries, which is the literal definition of socialism and big government, politicians of every party keep talking about "small government" as though it were a virtue. I mean, the day after the Republican convention, which included countless attacks on big government, the Republican administration goes out and nationalizes a major industry. It will probably be done in the corporate welfare style typical of American government--privatize the profits, socialize the risk--but it is still nationalization. Voters, Democrats, Republicans, Independents, Conservatives, Moderates, Progressives, Greens--everyone is in favor of "big government" moves like nationalizing the mortgage industry now. And yet, all of those same people keep talking about how terrible big government is, and how we need to stop it. It is massive national lie. It is as though the entire country is a homophobe who is actually a closeted homosexual. It is as though the Emperor has no clothes, but now the entire nation has decided to dress to match. That is difficult to disagree with. No wonder privatisation cannot get traction. Link: Mortgage Industry Nationalized ~ Open Left
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Republican Nationalizers
http://www.ruthgroup.org/2008/09/06/republican-nationalizers...Republican Nationalizers So Fannie May and Freddie Mac with their massive debt load are now being put into “conservatorship.” Or, in other words, nationalizing a huge part of the financial sector. Big Government, anyone? the day after the Republican convention, which included countless attacks on big government, the Republican administration goes out an nationalizes a major industry. It will probably be done in the corporate welfare style typical of American government–privatize the profits, socialize the risk–but it is still nationalization. Voters, Democrats, Republicans, Independents, Conservatives, Moderates, Progressives, Greens–everyone is in favor of “big government” moves like nationalizing the mortgage industry now. And yet, all of those same people keep talking about how terrible big government is, and how we need to stop it. It is massive national lie. It is as though the entire country is a homophobe who is actually a closeted homosexual. It is as though the Emperor has no clothes, but now the entire nation has decided to dress to match. Nationalization of the Mortgage Industry This is an enormous mess and McCain/Palin and the entire Bush gang should be pounded relentlessly about it. Not that it was done, which most economists say must be done, but that the mortgage mess happened on the GOP watch, and as Bowers says above, they continue to scream about big government and then grow it to suit their purposes, thinking we won’t see. They are talking as usual through their hats (euph) and think we won’t notice the smell. Posted by Will Kirkland on 09/6/2008 @ 11:45:49 AM in Economy | Republicans Tags: Fannie May, Freddie Mac, GOP
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How the Right loses
http://www.thenextright.com/jon-henke/how-the-right-losesHow the Right loses by Jon Henke | September 6, 2008 at 2:27 PM in Chris Bowers Fannie mae Freddie Mac socialism Chris Bowers complains about "the corporate welfare style typical of American government--privatize the profits, socialize the risk". This is not a left-wing criticism - it's a genuine problem, both for the country (as illustrated by Freddie Mac and Fannie Mae going "under government control") and for the Right (which sets itself up to lose a fight about the size of government with every intervention in industry). This is how government grows... Socialize Risk: Government intervenes in an industry to "solve" some apparent and visible problem. This is done "for the people." Unintended Consequences: This intervention merely shifts the costs to new areas and sweeps problems under the carpet, where they accumulate. Blame The Market: Government intervention is not blamed, because the people who support it assume their good intentions could not be responsible for bad things. Socialize Profit: The Left demands Something Be Done by people with Good Intentions. Politicians comply. This is done "for the people." Unfortunately, our political structure comes at this from four different places. Democratic politicians, organizations and activists are happy to go along with Steps 1-4, because, hey, #4 was their goal in the first place. Republican politicians and organizations go along with Steps 1-3, only objecting at Step #4. By which time it is too late. Business goes along with Step #1, and attempts to use Step #2 to get more of Step #1. Libertarians believe the problem occurs at Step #1. Once Step #1 is conceded, we've already lost on steps 2-4. But libertarians and limited government conservatives have relatively little power. Now, we are at Step #4 - essentially nationalizing Freddie Mac and Fannie Mae. As Chris Bowers writes, "nationalizing industries ... is the literal definition of socialism and big government". Of course, he thinks that is a good thing, also writing that "nationaliz[ing] the mortgage industry ... actually seems like a good idea to me."
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