Holy Sh!t
September 8th, 2008 by jack
How else can one respond to the government’s takeover of Fannie Mae and Freddie Mac? I’m sure our resident socialists will be happy (or at least they would be if anyone but Bush had done it), but this is unbelievable. Where the hell is Bush’s constitutional authority to take over these companies and assume such massive debt? And even better, according to the LA Times:
Domestic reports indicate that China holds about $376 billion of Fannie and Freddie debt, Cao said, “so if those two companies went bankrupt, with all the securities that China’s central bank and the foreign exchange bureau hold, they could also go bankrupt.”
He said China’s central bank’s capital amounts to just $3 billion to $4 billion, after huge losses from the falling U.S. dollar and housing market. “I believe the central bank will definitely decrease the proportion of dollars” that it holds in the future, Cao said, echoing sentiments across Asia.
Tim Condon, chief Asia economist for ING Financial Markets in Singapore, thinks stock and bond markets in Asia, excluding China, will likely be big beneficiaries of the Fannie-Freddie rescue plan.
All the more reason to let them fail. China’s purchase of these bonds fueled the bubble, so China should lose when the bubble bursts, not be bailed out by people (U.S. Taxpayers) who have been paying ludicrous prices for housing brought on by cheap debt, never-mind the increased property taxes. That’s called Capitalism — you places your bets and you takes your chances.
But no, we have to bail out not only the idiots that took out adjustable rate mortgages when interest rates were at all-time lows (where did they think the interest rates were going to go, anyway?), but we also have to bail out the idiots who lent money to people who were taking such loans because they could not afford the higher interest rate of a fixed-rate mortgage. When failure has no consequences, behavior gets riskier and riskier. Actually, that’s wrong, because there is no risk anymore! The risk is taken on by the government (taxpayers)!
I have to say it again: Holy sh!t.
This entry was posted on Monday, September 8th, 2008 at 7:09 am and is filed under Economics, Politics, Socialism. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
September 8th, 2008 at 7:42 am
I say we send several former Fannie and Freddie executives (aka former Clinton Administration officials) to China to experience the tender mercies of the justice system there.
September 8th, 2008 at 8:01 am
Ron
Don’t any in the Bush Administration have responsibility for this - at least a tiny, tiny bit? Did Clinton really start the decline?
jack - I believe you’d have trouble finding “resident socialists” in this area.
The Reps want government of peoples’ backs - except when it suits them.
September 8th, 2008 at 8:18 am
Not really, just look behind the title “Democrat” and you’ll probably find a socialist hiding there.
September 8th, 2008 at 8:25 am
Not sure what you’re on about, Ron. Syron became chairman of Freddie Mac in 2003: http://www.freddiemac.com/bios/exec/syron.html
September 8th, 2008 at 9:22 am
Jack, Perhaps it’s the same Constitutional authority that allows the Feds to bail out the airlines, the auto industry, and the lenders ?
The load upon our children’s backs has just grown exponentially . For this, I curse Bush and his administration.
September 8th, 2008 at 9:39 am
” find a socialist hiding there.”
jack, I suspect you are on to something here. Some time back, I took the family down to the Verizon Center to see the Globetrotters. This happened to coincide with an anti-war rally on the Mall.
On the subway, and in the stations we saw many carrying signs. And on those signs, the word “socialist” appeared much more often that the words “war” or “Iraq”.
I suppose calling it what is was, a socialism rally, would be too much negative publicity.
September 8th, 2008 at 9:43 am
Yeah, must be that dans. Can’t find it in my copy though.
September 8th, 2008 at 9:58 am
Jack, guess you and I must have the abridged version..
September 8th, 2008 at 11:32 am
Happy now, Jacob?
September 8th, 2008 at 11:39 am
Jack, I lumped Freddie Mac in with Fannie Mae. I believe that Howell Raines and Jamie Gorelick (both former Clintonistas) were running Fannie Mae.
Once again, a well-intentioned big government program (probably started by Democrats) manages to corrupt both parties, and it takes a major meltdown before half-measures of reform are taken. Let’s see if it is enough.
September 8th, 2008 at 1:31 pm
Update: The Wall Street Journal gives good roundups:
http://online.wsj.com/article/SB122083012951708369.html?mod=opinion_main_review_and_outlooks
http://online.wsj.com/article/SB121677050160675397.html
http://online.wsj.com/article/SB121599777668249845.html?mod=opinion_main_review_and_outlooks
September 9th, 2008 at 4:28 pm
We need to have failure of a major financial business for a couple of reasons. One, it would allow us to rebuild the economy on more sustainable and solid ground. Two, it would give notice to businesses that there is no one covering their butts; times for golden gratis awards are over; stockholders may become lynchmobs when executives start “finessing” company funds.
I, for one, don’t want ANY nation to have a firm interest in the U.S. You call that the selling of America and it has been going on far too long!
September 10th, 2008 at 2:25 pm
what great buying opportunity all thanks to Mr. Hillary Clinton.
If anyone really paid attention to Clinton’s inactivity then the current administration OVER activity to stimulate the economy post 9/11 - is it really that much of a surprise?
You cannot go on financing your future - you have to pay your bills sometime.