Stupidity in the US - Writers Forum

Non Serviam · 09-08-2008, 11:14 AM

Fannie Mae and Freddie Mac are now the property (or actually, the liability) of the US taxpayer. And a heart-felt thank-you to all you US citizens for the trillions of dollars that'll bail out the world's housing market; I'll be better off as a result of your involuntary intervention.

Once again, the world's money markets learn that key lesson of recent times: we privatise profits and nationalise losses, so risk-takers are rewarded when they succeed and bailed out when they fail. It's a good day for fiscal irresponsibility!

In other news, the US government still refuses to intervene in the homelessness of hundreds of thousands of private citizens or to set up a national health service on the grounds that this would be expensive for the taxpayer.

But the basic problem remains: too many people owe too much money they haven't got, secured on assets worth less than the debt they owe. When the music stops, who'll be left without a chair?

Not the directors of credit companies, you can be certain of that.

StephenP2003 · 09-08-2008, 11:16 AM

Just hang tight. John McCain is going to make everything better.

JosephB · 09-08-2008, 12:08 PM

Quote:

But the basic problem remains: too many people owe too much money they haven't got, secured on assets worth less than the debt they owe. When the music stops, who'll be left without a chair?

Thanks for the news flash. Where's that Captain Obvious image of yours?

Non Serviam · 09-08-2008, 12:31 PM

Quote:

Originally Posted by JosephB

Thanks for the news flash. Where's that Captain Obvious image of yours?

This one?

SacredCircle · 09-08-2008, 12:32 PM

Did you hear Detroit city is already lining up for the next hand out?

Malone · 09-08-2008, 01:13 PM

The sad thing is that Fannie Mae used to be a killer investment opportunity. Thanks, GW.

Writ-with-Hand · 09-08-2008, 04:10 PM

Quote:

Originally Posted by Non Serviam

Fannie Mae and Freddie Mac are now the property (or actually, the liability) of the US taxpayer. And a heart-felt thank-you to all you US citizens for the trillions of dollars that'll bail out the world's housing market; I'll be better off as a result of your involuntary intervention.

Once again, the world's money markets learn that key lesson of recent times: we privatise profits and nationalise losses, so risk-takers are rewarded when they succeed and bailed out when they fail. It's a good day for fiscal irresponsibility!

In other news, the US government still refuses to intervene in the homelessness of hundreds of thousands of private citizens or to set up a national health service on the grounds that this would be expensive for the taxpayer.

But the basic problem remains: too many people owe too much money they haven't got, secured on assets worth less than the debt they owe. When the music stops, who'll be left without a chair?

Not the directors of credit companies, you can be certain of that.

Two economists with Ph.D's at my school (they are part of faculty) were beefing with each other over this kind of thing. One of them basically takes the position you have.

Snakes & Ladders · 09-08-2008, 06:32 PM

Funny, Ron Paul noticed this Fannie Mae/Freddie Mac fiasco. Here's statement in 2007 to the Joint Economic Committee. He also had a testimony before the Financial Services Committee on September 10, 2003. Which he also pointed out the Fannie Mae/Freddie Mac...yes even five years ago. Anyone want that testimony?

Quote:

Mr. Chairman, our economy finds itself in a precarious state. Oil prices are rising, gold is nearing all-time highs, and the dollar is nearing all-time lows. The root of this crisis, as with past financial and economic crises, results from federal government intervention into the economy, not to anything endemic to the market, nor to the actions of market participants.

The collapse of the housing market has served as a catalyst for the economy's latest bust. For years the federal government has made it one of its prime aims to encourage homeownership among people who otherwise would not be able to afford homes. Various federal mortgage programs through the FHA, Fannie Mae, and Freddie Mac have distorted the normal workings of the housing market.

The implicit government backing of Fannie Mae and Freddie Mac provides investors an incentive to provide funds to Fannie and Freddie that otherwise would have been put to use in other sectors of the economy. It was this flood of investor capital that helped to fuel the housing bubble.

Legislation such as the Zero Downpayment Act and the misnamed American Dream Downpayment Act made it possible for people who could not afford down payments on houses to receive assistance from the federal government, or even to pay no down payment at all, courtesy of the taxpayers. The requirement of a down payment has always helped to ascertain the ability of a buyer to pay off a mortgage. It requires the buyer to show hard work and thrift, the ability to delay present consumption in order to make a larger acquisition in the future.

When this requirement is minimized or eliminated, you introduce a new class of homebuyers, people who are unable to budget and save for the purchase of a home, or who should wait for a few years until they have saved enough to purchase a home. Federal policies have encouraged investors, lenders, and brokers to cater to these people, so it is no surprise that market actors came up with ever more sophisticated means of bringing these people into the real estate market.

Finally, the Federal Reserve's loose monetary policy and lowering of interest rates were a major spur to the housing boom. Low interest rates influence marginal buyers, those who are sitting on the fence, and encourage them to take on a mortgage that they otherwise would not. Even when interest rates are raised, no one expects them to stay high for long, as there is always pressure from politicians and investors to keep rates low, as no one wants the cheap credit to end.

Thinking that interest rates will cycle from low to higher, back to low, lenders begin to offer adjustable rate mortgages, 2/28's, 3/27's, and other sophisticated mortgages that may trap many unsavvy buyers. Buyers go short, lenders go long, and many people have been burned as a result.

It is time that the federal government get out of the housing business. Through our interventionist legislation we have caused the boom and bust, and any attempts at reform that fail to address the causes of our current problem will only sow the seeds for the next bubble

What a kook he is!

PSFoster · 09-08-2008, 09:13 PM

I knew we were going to end up paying for this. I worked hard to get my land paid for, like anyone should. I had enough sense to not buy more than I could pay for in a reasonable amount of time.
Now, the mobile home sitting on this paid-for property isn't paid for yet. But it would have never crossed my mind to go cry to the government to bail me out of this debt.

KangTheMad · 09-09-2008, 07:59 AM

Quote:

Originally Posted by StephenP2003

Just hang tight. John McCain is going to make everything better.

By joining Kim Jong Il and Fidel Castro in the ranks of the worlds Zombie Hordes when he dies of old age two years in? And Sarah P becomes president and forces Creationism classes on public schools?

No thanks, I'm running away to....Great Britian! I'll take the Nanny State over Sarah anyday.

PSFoster · 09-09-2008, 06:02 PM

Quote:

Originally Posted by KangTheMad

By joining Kim Jong Il and Fidel Castro in the ranks of the worlds Zombie Hordes when he dies of old age two years in? And Sarah P becomes president and forces Creationism classes on public schools?

No thanks, I'm running away to....Great Britian! I'll take the Nanny State over Sarah anyday.

Chicken!!!

Writ-with-Hand · 09-18-2008, 11:07 PM

In hard times, tent cities rise across the country - Yahoo! News

Quote:

Out of a dozen people interviewed in the tent city, six had come to Reno from California or elsewhere over the last year, hoping for casino jobs.

"I figured this would be a great place for a job," said Max Perez, a 19-year-old from Iowa. He couldn't find one and ended up taking showers at the men's shelter and sleeping in a pup tent barely big enough to cover his body.

The casinos are actually starting to lay off employees.

"Sometimes I think we need to put out an ad: 'No, we don't have any more jobs than you do,'" Royal-Goodwin said.

Non Serviam · 09-19-2008, 07:18 AM

BBC NEWS | The Reporters | Robert Peston

Mermaid on the breakwater · 09-20-2008, 05:56 PM

Bit off topic but, I don't know why action wasn't taken sooner against short-sellers. Only recently with the latest run on financials has action been taken in both the US and the UK. You only have to look at HBOS to see that the whole practice is plain wrong. Knocking value off a company that has it's sheets in order isn't right, and I defy anybody who claims that short-sellers only target those in a weak position.

We have our own problems in the UK. Nobody is calling Gordon Brown the great iron Chancellor anymore, it's very much a case of him being a one-trick pony; the national bank of England, kudos there, Gordon. As for the rest of his term, we all know it's easy to spend money and waste an awful lot of it too. It's easy to allow banks to continue to borrow irresponsibly because you don't want to ruffle the feathers but the truth's come home to roost, as it has been for years, we're hard-up for cash and the only way out now is to cut expenditure. That means the greedy public sector - whom labour have played to for years - will have to like it or lump it; I am sure the private sector will continue to pay for your inflation proof pensions.