Did We Just Become Commies?
on 09/16/2008 at 09:35 PM
Personally, I think we’re heading for a really messed up form of socialism, but I don’t think the name matters that much.
In the meantime, be afraid, be very afraid.
Drew, I gotta agree with your take. Sadly, IF the Obamessiah AKA the “Great One” were elected we would become Socialist/Communist in toto.
I think I hear a high speed whir from the founders of our nation spinning in their graves.
No, it is pragmatic IF the dems dont get control, if the gov had done nothing what would have happened? mind you the weapon of choice of the left is to financially ruin the middle classes, it is all a bit worrying. Why has the really dodgy financial house not gone down? (the EU/euro)
Posted by Chris Edwards
09/17/2008 at 10:30 AM
Drew I have chopped out part of an article in the Telegraph by Jeff Randall. He has been pointing out the stupidity of the housing bubble for years. I think his analysis is correct and that Fannie and Freddie were special cases. Not sure about AIG though. I think it is an interim measure and long term they will be sold off again when the market recovers sufficiently.
Nobody said that capitalism was devised to provide soft landings for hopeless losers. Sending a message that all sinners will be saved only encourages reckless behaviour.
Meddling politicians often find this impossible to accept. They would rather pay a stricken company’s ransom than face the wrath of voters whose interests are linked to a business about to go bust.
Which explains Gordon Brown’s willingness to jet-hose a relative tiddler like Northern Rock with Treasury largesse, instead of allowing the bank to take its chances in administration. The Rock’s nationalisation was not about saving the banking system from oblivion. It was a cynical and unduly expensive exercise in electoral engineering failed to instill confidence in other UK mortgage lenders (shares in wobbly Halifax Bank of Scotland fell by more than 15 per cent yesterday).
By contrast, in America, Fannie Mae and Freddie Mac were special cases. Not because they are inextricably linked to the US housing market - although that is true ($5.4 trillion of liabilities) - but because from the outset they were “government-sponsored” private companies.
As quasi state bodies, their implicit guarantee was that Washington stood behind them. Had they gone under, it would have told the world that Uncle Sam was happy to renege on his promises.
While unbothered by the wiping out of shareholders in Fannie and Freddie, the US Treasury was determined to preserve value for their bondholders. The reason was that these bonds are held in vast quantities by foreign governments, notably China’s, whose confidence Washington is desperate not to lose.
The full article here. If China pulls the plug they would be committing economic suicide, but they could turn the screw slowly and subject the US to a world of hurt.
09/17/2008 at 11:03 AM
