![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
& bahahaha
ty ![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
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 tybrewergnome
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!
salacious_popGeorge 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
brewergnomeFannie, 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!
no subject
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.
no subject
YES.
no subject
no subject
no subject
no subject
no subject
no subject
no subject
no subject
no subject
no subject
no subject
no subject
no subject
no subject
no subject
like you said, bahahaha.
:-P
no subject
no subject
no subject
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.