& bahahaha

Jul. 18th, 2008 11:40 am
[personal profile] bobemm
ty [livejournal.com profile] salacious_pop

George W. Bush Sewage Plant plan is on ballot

A White House spokeswoman, when asked about the measure several weeks ago, refused to comment.

and ty [livejournal.com profile] brewergnome

Fannie, Freddie host GOP convention party

This really grinds my gears! Wow, like really.

I heard a good description of the setup of these companies being bailed out - "private profit, socialized risk". I think that's apt. As long as everything's going well, they're rolling in cash and using it to wipe their asses etc. When their irresponsible practices get them in trouble, they get bailed out with public money. It seems the opposite of right. But I know that the consequences would be horrible if they weren't bailed out. I feel like a hostage!

Date: 2008-07-18 04:24 pm (UTC)
From: [identity profile] ludomancer.livejournal.com
Borosage calls for socialization. If it's too important to fail, then add some accountability and all that jazz.

Edwards was right about the two Americas. If you want to be treated fairly, you're welcome to lobby Congress with millions of dollars like everyone else.

Date: 2008-07-18 04:26 pm (UTC)
From: [identity profile] chucknoblet.livejournal.com
If it's too important to fail, then add some accountability


Date: 2008-07-18 04:30 pm (UTC)
From: [identity profile] sourdick.livejournal.com
perhaps citizens should make their government accountable before worrying about private companies

Date: 2008-07-18 04:31 pm (UTC)

Date: 2008-07-19 01:41 pm (UTC)
From: [identity profile] brewergnome.livejournal.com
Difficult to do one without the other.

Date: 2008-07-18 04:30 pm (UTC)
From: [identity profile] chucknoblet.livejournal.com
Also, this reminds me of a Mad TV Oprah skit. In the immediate post-9/11 hysteria, she was talking about her home's new $30 million 3D laser security perimeter, and she was like "...everybody should get one." lol.

Date: 2008-07-18 04:32 pm (UTC)
From: [identity profile] sourdick.livejournal.com
my dog barks if there are any squirrels nearby

Date: 2008-07-18 04:44 pm (UTC)
From: [identity profile] chucknoblet.livejournal.com
well what about a-rabs? Also, did u pay less than $30 million for him.

Date: 2008-07-18 07:47 pm (UTC)
From: [identity profile] sourdick.livejournal.com
we have some really nice muslims who live three doors down. Banjo was a thousand bucks.

Date: 2008-07-18 07:49 pm (UTC)
From: [identity profile] chucknoblet.livejournal.com
well, is he smart enough to bark at them

Date: 2008-07-18 04:25 pm (UTC)
From: [identity profile] sourdick.livejournal.com
Well if you dont like their business model, perhaps you should consider just not paying your mortgage!

Date: 2008-07-18 04:27 pm (UTC)
From: [identity profile] chucknoblet.livejournal.com
don't tempt me

Date: 2008-07-18 04:35 pm (UTC)
From: [identity profile] lingostarr.livejournal.com
Yeah, you are totally correct here it is "... the opposite of right." Hell if we bail out companies, why don't we just socialized the industry? ARGH! Also, if they fail I wonder what would happen too. Countrywide is no better. Those fuckers tried to screw us over big time! When we heard they were having trouble we hoped they would burn!

Date: 2008-07-18 04:43 pm (UTC)
From: [identity profile] chucknoblet.livejournal.com
I'm actually not really clear on what the consequences would be if they didn't get bailed out. I wonder if anybody has written up any scenarios.

Date: 2008-07-18 04:55 pm (UTC)
From: [identity profile] lingostarr.livejournal.com
Well I think it would cause more layoffs, then people who I am sure paid into pensions would lose that too. It would be a disaster!

Date: 2008-07-19 12:46 am (UTC)
From: [identity profile] brendand.livejournal.com
I wouldn't even know where to begin.

Date: 2008-07-18 04:36 pm (UTC)
From: [identity profile] gonesurfin.livejournal.com

like you said, bahahaha.


Date: 2008-07-19 12:57 am (UTC)
From: [identity profile] brendand.livejournal.com
"private profit, socialized risk" -- Let's all pool our money and start a mortgage company.

Date: 2008-07-19 06:20 pm (UTC)
From: [identity profile] viannin.livejournal.com
my bf told me about this sewage plant. perfect name. i hope it happens.

Date: 2008-07-20 12:38 am (UTC)
From: [identity profile] the-macnab.livejournal.com
I heard a good description of the setup of these companies being bailed out - "private profit, socialized risk". I think that's apt.

Yes and no. Let me be clear at the start that I favor nationalization. And I've made it clear in my own lj that I'm not psyched about the proposed bailout. That said, there are some genuine quibbles with calling Fannie and Freddie private profit, socialized risk, at least in the polemic sense.

(Bear with me. I've been working on this stuff on and off for ten years now.)

Socialized risk usually, and should, prompt one of two responses. Either you can nationalize the asset (i.e., socialize rewards as well as risks) or you can regulate the asset (i.e., ensure that the potential downside doesn't get too large). Fannie and Freddie were nationalized through the late 1960s. Then they were allowed to sell shares to investors, which bequeathed the current odd, quasi-public agencies with an implicit government guarantee of their mortgages.

During this period, Fannie and Freddie have been regulated, though. They were for example now allowed to make sub-prime loans. Indeed the very definition of a sub-prime loan is one that they wouldn't touch, because the feds were unwilling even to offer an implicit guarantee of such borrowing. That's one of the reasons that their share of all mortgages fell in the years right before the bubble burst, as Paul Krugman has pointed out.

Another point he makes in that post is worth remembering: much of the expansion of Fannie & Freddie had to do with the collapse of the savings & loan thrifts at the end of the 1980s. The S&Ls themselves had an explicit government guarantee of their assets and were thus heavily regulated, before Reagan came into office. The S&L debacle came about because an asset whose risk had been socialized was suddenly neither nationalized nor regulated. When the S&Ls collapsed, the taxpayer was left on the hook for billions. Into the lending vacuum stepped Freddie and Fannie; and thus, as Krugman notes, it's questionable whether there's been any net socialization of risk.

Furthermore, as mentioned, Fannie and Freddie (Christ I hate typing those names over and over) were not the drivers of the current crisis. It's more accurate to say that the crisis created by others has now grown so very large that it's threatening other institutions that weren't involved in birthing it. Their instability is big news, but let's not confound subjects with objects.

Now, it IS true that Fannie and Freddie have carefully lobbied against any policies that would restrict their lending activities in other areas, and that they have grown quite large, larger than we probably would like a guaranteed agency to be. So I do support nationalization--i.e., returning the agencies to their pre-1968 status, without investors and such--and thus removing a major incentive (maximizing shareholder value) for them to seek out increasingly large lending opportunities.

This bailout, in other words, shouldn't make you feel like a hostage. That bailout of, say, Bear Stearns, though? That was some bullshit.


Robert I Murillo

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