Chalk up another of those "unintended consequences". It took a long time for Fannie and Freddy to destroy the U.S. economy, but they got the job done.
How, you ask? Absent Fannie and Freddy, the U.S. economy would have had to do something PRODUCTIVE, like manufacture something, improve something, or transport something... instead, the U.S. decided to build houses. Instead of shipyards in New York and the other major seaports, we've got waterfront condos. We built a system, the suburbs and the single family home sub-division, whereby 4.5% of the world's population consumed 25% of the world's oil.
Ah, but it SEEMED like a good idea at the time.
Next up: Sallie Mae. Another unintended consequence, in a long history of unintended consequences... we now have LEGIONS of young folks in debt up to their EYEBALLS to fund an education in, get this, LIBERAL ARTS!! Just what we needed, another Shakespearean scholar or Art Appreciator with $200,000 in student loans to repay. All they really needed was a bloody well free library card, but the system convinced them otherwise... not that it matters, these indentured servants will not be able to pay the system back in any event.
The hyper-inflation of advanced education tuition is a direct result of the customer's (the student) ability to BORROW. Fannie & Freddy did this to the homeowner.
Getting back to Freddie and Fannie...
Nationalization means that the housing price collapse is just getting going, and that the American tax payer is on the hook for a goodly portion of Fannie and Freddy's $5+ TRILLION mortgage portfolio. Working class single mom's are going to be paying for multi million dollar homes in locals these ladies would never, ever have seen in their lifetimes! Way to go Goldman Sachs, Lehman Brothers, and Bear Stearns senior managements of the past 2o years! You guys single handedly (actually that is not entirely fair, as there was an enabling legion of borrowers that wanted to be Rich and Famous without actually having to succeed at anything, by borrowing their way to the top) did what Nazi Germany, Imperial Japan, and the Soviet Union, among others could not accomplish - you have brought the U.S. to ruin.
Any wonder that Gold & Silver were going up today while the rest of the financial world was coming to an end? On the other hand, who in their right mind was bidding up the Long Bond? Go figure.
But what comes around, goes around. The collapse in New York City real estate is going to knock the front teeth out of the last one standing in the portfolio of Wall Street's "best and brightest".
There is plenty of blame to go around. But don't worry; some politically ambitious, scum bag prosecutor (Elliot Spitzer?) will publicly filet a couple of sacrificial lambs to satisfy the Great Unwashed.
And the beat goes on.
Mentatt (at) yahoo (d0t) com
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