On the costs of governmental Social engineering

Discussion in 'Politics' started by JamesMorrison, Jun 17, 2011.

  1. JamesMorrison
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    JamesMorrison Senior Member

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    Just wanted to post this D.Brooks NYTcolumn to see if anyone had any thoughts about the wisdom and costs of allowing American politicians to have their way with our hard earned money:
    Thoughts?

    JM
     
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  2. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    If it was me in charge, Fannie and Freddie would be gone. Why the hell the federal gov't should be involvd in Housing is beyond me. Does the book go into solutions to any degree? Nice post BTW.
     
  3. Susan45
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    Susan45 Member

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    I have a question, and I ask this sincerely...

    Is this what privatization looks like?
     
  4. JamesMorrison
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    JamesMorrison Senior Member

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    Thank you for your kind words and actions. I came across this while on another errand. I don't want to come across too geeky here but I am in a months long process of formulating an answer, on an another forum, to a member of the left that insists the government had absolutely nothing to do with the latest financial crisis and that anyone that says so is, at least, uncaring about those less fortunate then themselves, if not worse. He also invokes the left's tropes of 'greedy Wall Street' types and the creation of such financial products as Mortgage Backed Securities (MBS), Credit Default Swaps, and "lack of regulation". I am always suspicious of explanations that opportunely offer moral judgments about situations that can be explained simply by objective facts and figures.

    In answer to your question: I have not read the Book in question. I might point out that Canada has a vibrant housing market that has been successful without the degree of the U.S. government's social engineering. There is little reason a free housing market cannot successfully provide more homes for lower income groups with out government intervention. As to solutions, I would look to, as a first and general step, the curtailing of those governmental progressive efforts to "help" (The last 2 1/2 years of government subsidy and creditor arm twisting should end so that housing prices can find a point where current inventories are cleared).

    As to efforts towards the prevention of the past crisis for the future economy, an elimination of government in the market is the generally prescribed elixir. For specifics, here is an article from the American Spectator The author was one of the members of Obama's progressively biased FCIC (Financial Crisis Inquiry Commission). The commission's final report is here. Wallison's dissention is just before the appendixes. For a more in depth explanation of Fannie M and Freddie M and the guilty government agencies and a timeline of their specific actions leading up to the crisis you must read Ed Pinto's (once Fannie's chief credit officer) fully sourced 70 page memorandum to the FCIC which was, essentially, ignored by the progressive majority but on which most of Wallison's dissent was based. Pinto's work is an essential source for those arguing for the conservative point of less government in markets and personal freedom--just the facts.

    Sorry for the extended post.

    JM
     
  5. Trajan
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    Trajan conscientia mille testes

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    frankly and I think Toro or William would back me up here, killing F&F right now, may be catastrophic. The private mortgage market is pretty much anemic right now and yes, that is one instance in and of itself of blow-back ala F&F having been given such a huge mandate,

    We are going to have to unwind it, and to that I say, lets get it started.
     
  6. JamesMorrison
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    JamesMorrison Senior Member

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    I am unsure as to what, exactly, your question refers to. Perhaps a clarification?

    However, let me point out something here that you may already know. Fannie and Freddie are GSEs (Government Sponsored Enterprises) created by the U.S. government. They are truly rare congressional creations. They are private in the sense of profit (Their stocks are sold on public stock exchanges and Executive's bonuses) but are implicitly backed with the full force and credit of the U.S. government. Simply put: any profit goes (or did go) to a certain finite number of individuals. Losses, however, belong to each and every American. Privatization of the two FM's at this point would not take taxpayers off the hook. It is due to the two FM's that many more Americans are, now, quite clear on the meaning of 'Moral Hazard'
     
  7. grunt11b
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    grunt11b VIP Member

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    Why do they need to be involved in housing? I will tell you why, Because before progressivism took hold in America people owned private property "Which is the biggest symbol of liberty", both land and houses. The government got involved because then they could hold your house over your head when the time comes. You will do what they tell you to do, or you will lose your house. You no longer own your house or your land, because you only own it by proxy, they actually own it if you financed it through them.
    I heard it best told on a talk radio show one time, the guy said if you where a progressive looking at a bridge, and hated the bridge and wanted to change it, you could not overhaul it all at once, because people would notice, so what you do is wait over time for it to break piece by piece, and then you replace it piece by piece with the parts that YOU want it to be, and over time, you will replace that bridge and by the time anyone notices it will be too late. This is how progressives are destroying our country and our liberties, one piece at a time, while noone is even noticing it. Fanny Mae and Freddy mac are just two pieces of their overall plan to bring this country down economically. Medicare/Medicaid,social security, welfare and Obamacare are all other pieces, they are all in the red right now "Except obamacare because it has not been implemented yet" and will cause this economy to collapse over time, and every bit of it was all by design starting with the creation of the federal reserve.
     
  8. JamesMorrison
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    JamesMorrison Senior Member

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    I totally agree. But at some point I think it might be wise to privatize the FM's especially if we must make the choice between (the taxpayers) taking an actual loss in their sale or prolonging the agony and dumping in more taxpayer money to them in the hope that, later, we might get a, somewhat, better price--time value of money and all that.

    But selling them off and taking the loss would probably allow prices to fall thus allowing the sale of these bad assets (sub-primes etc). This, of course, will only work if the government stops trying to prop up the market and keep prices up. The government, through various mortgage subsidy programs for the last two years is, now, doing explicitly what it did implicitly in the run up to the housing bust/financial crisis: encouraging, through legislation, regulation, and monetary policy, an overvalued housing market. As long as buyers and mortgage lenders feel housing prices are too high those mortgages will not be forthcomimg. High unemployment also informs this market and is also another unintended effect of this administration's Keynesian and other anti-business policies. The government must let prices fall to their natural level. Add to this the trend for more conservative lending practices that would have kept us out of this mess to begin with and we will probably see an even more depressed housing market near term.

    JM
     
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  9. JamesMorrison
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    JamesMorrison Senior Member

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    To many, your piece sounds like some crank conspiracy theory. However, at the risk of becoming labeled by those on the left as radical...Oh, too late! Seriously though, I have heard noises about the extreme left wanting complete chaos in this country so that they may take advantage and implement their ideology (think Russia-Lenin and Egypt-Muslim Brotherhood). This present administration's actions to ward off a coming bankruptcy of Social Security and Medicare (i.e. no action), its job killing policies and its profligate spending of the last two years provide more fodder for this belief that the left subscribes to this thought that from anarchy they might rise phoenix-like. But perhaps the explanation is simpler: they simply have no clue how things really work in this world and, as long as someone else is paying, they could care less.

    JM
     
  10. dblack
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    dblack Gold Member

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    Depends on who's doing the 'privatizing'. Most efforts at 'privatizing' government services simply establish government granted monopolies, or various other forms of corporate welfare. The Freddie/Fannie story is something along those lines. True privatizing (which almost never happens) simply involves getting the state out of providing a given service and letting others fill in the gaps as they will - or won't.
     
    Last edited: Jun 18, 2011

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