The financial debacle can be fully accounted for by the government’s decades-long campaign to enable people to buy more housing than they can afford and then to underwrite the mortgages through its creations Fannie Mae and Freddie Mac, i.e., the taxpayers.
To put it in the simplest terms: Republican and Democratic governments deliberately shifted the risk of dubious mortgage-writing from lenders and borrowers to the public. This has been portrayed as a noble effort to make the American Dream accessible to all, regardless of income or credit-worthiness. In fact, it was a massive subsidy to special economic interests: bankers, homebuilders, and the real-estate profession.
It was the corporate state in action, and a dismal failure.
So now the taxpayers are to be forced to make good on the guarantees that economically ignorant politicians issued in their name. President Bush and Congress are conspiring to spend at least $700 billion they don’t have to buy bad loans and securities from struggling lending institutions. The bill could go far higher...
Do you really think Rep. Barney Frank and Sen. Chris Dodd, enablers of Fannie and Freddie, know what they are doing?
This is incoherent. The problem lies not in ignoring problems but in the government privileges and guarantees extended to Fannie and Freddie and by extension to the whole lending industry.
MWC News - A Site Without Borders - - The Corporate State Fails
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