Monday, September 08, 2008

The Pull Yourself Up by the Bootstraps Businessman is a Welfare Case at Best.

Over two years ago, in July, 2006, Nouriel Roubini predicted and explained why the U.S. would experience its worst housing recession in the last 50 years, why home prices would fall approximately 20%, and why it would all start with the “subprime” market. Mr. Roubini also predicted that this housing and mortgage collapse would lead to the collapse Fannie Mae and Freddie Mac.

Fast forward to September of 2008 and our government is taking control of Fannie Mae and Freddie Mac in what can only be called the "nationalization" (not fully nationalized as "companies’ common and preferred shares will remain outstanding, but will be junior to new preferred shares that the government will receive.") of the mortgage industry as these two giants guarantee three-quarters of all new US mortgages.

On July 11, 2008 Nouriel Roubini's article "Insolvency of the Fannie and Freddie Predicted Here Two Years Ago. What Happens Next? Or How to Avoid the “Mother of All Bailouts” said,

"So let’s call a spade a bloody shovel: nationalise Freddie Mac and Fannie May. They should never have been privatised in the first place. Cost the exercise. Increase taxes or cut other public spending to finance the exercise. But stop pretending. Stop lying about the financial viability of institutions designed to hand out subsidies to favoured constituencies. These GSEs were designed to make losses. They are expected to make losses. If they don’t make losses they are not serving their political purpose." -- Nouriel Roubini
Once again, we, the taxpayers will pay the price for the lack of regulation in our financial markets, a.k.a., legalized corruption, that we were brainwashed to believe is/was absolutely essential for our economy to thrive. Of course, the ones who defined and declared their version of laissez-faire capitalism or "free market" economics sacred, are the same ones who profited so egregiously. They will not pay the price...we, the taxpayers will pay, potentially, up to $200 billion.

As Nouriel Roubini said regarding Fannie Mae and Freddie Mac,
"...socialism for the rich, the well connected and Wall Street; it is the continuation of a corrupt system where profits are privatized and losses are socialized."
Affordable housing and health care are crucial to the existence of a civilized society. Privatizing profits and socializing losses does not work in the "human rights" realm. How can an industry maximize investment return to shareholders, which only serves to increase housing and healthcare costs for everyone, and at the same time see to it that everyone has access to those necessities?

The risk-taker...the pull-yourself-up-by-your-bootstraps (PYUBYB) businessman doesn't exist. At the same time the PYUBYB rants and raves about universal health care, welfare, and/or any social program designed to level the playing field a tad, PYUBYB relies on hard working Americans who can just about afford to put food on their table, can't afford to go to the doctor, can't afford medicine, as his safety net.


try to be american,  17:26  

Fannie Mae and Freddie Mac are large companies in the history world! How can you not know failing long time before?

No one try to house only make money because know rescue will come.

I like blog. American ego perspective.

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