Reactions to story from The New York Times

• 

  Just one question on the Fannie and Freddie Bailout

  http://themessthatgreenspanmade.blogspot.com/2008/09/just-on...
  85 days ago in The Mess That Greenspan Made · Authority: 159

  The financial news media is all over today's nationalization of mortgage giants Fannie Mae and Freddie Mac by the U.S. government. Here's a list of links with enough reading material to keep anyone busy until sometime around mid-week: Action to Protect
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  Freddie, Fannie: No Exit?

  http://econlog.econlib.org/archives/2008/09/freddie_fannie_1...
  85 days ago in EconLog: Library of Economics and Liberty · Authority: 595

  (September 7, 2008 03:45 PM, by Arnold Kling) We now have the latest plan. The real legacy of the Bush Administration may turn out to be Washington's invasion...
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  Seize Them!: If you just crawled out...

  http://la.curbed.com/archives/2008/09/seize_them.php
  84 days ago in Curbed LA : The Los Angeles Neighborhoods and Real Estate Blog · Authority: 1,377

  If you just crawled out from under your rock, the big news over the weekend was the Federal take over of Fannie and Freddie Mac. Via the Wall Street Journal: "...the U.S. mortgage crisis entered a new and uncharted phase, potentially saddling
• 

  ON DIVIDED PRIORITIES

  http://mp.blogs.com/mp/2008/09/s-4.html
  85 days ago in *michael parekh on IT* · Authority: 45

  CHOOSING WISELY This New York Times piece does a better job than most in covering what just happened with Fannie and Freddie over the weekend, and the complicated history that lead to this unfortunate stage. It starts appropriately enough with the
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  Socialism Comes to the Mortgage Industry

  http://www.clubforgrowth.org/2008/09/socialism_comes_to_the_...
  85 days ago in The Club For Growth - http://www.clubforgrowth.org · Authority: 505

  The U.S. government is seizing control of Freddie Mac and Fannie Mae.
• 

  NY Times:

  http://dangerousmeta.com/site/ny_times_us_takes_over_fannie_...
  85 days ago in dangerousmeta! · Authority: 26

  U.S. Unveils Takeover of Two Mortgage Giants. Add: A History of Public Aid in Crises. Oh my god, what this is going to cost us ... calculating in all the bank failures, foreclosures.
• 

  Hurricane Fannie Freddie Hits US Taxpayers

  http://www.raincityguide.com/2008/09/07/hurricane-fannie-fre...
  85 days ago in Seattle Real Estate ~ Rain City Guide · Authority: 1,152

  CR covers the FDIC: Federal Banking Agencies React to Takeover of Fannie Mae and Freddie Mac Yves at Naked Capitalism is pondering the bank fallout: Bye Bye Banks: Freddie and Fannie Preferred Holders to Take Big Hits? CR has the Statement by Paulson on
• 

  The Line of Bail-Out Supplicants Lengthens

  http://conservablogs.com/bandow/?p=1307
  31 days ago in Doug Bandow · Authority: 9

  The Line of Bail-Out Supplicants Lengthens November 1st, 2008 Posted in Tax and Spend, Budget, Bail-Outs | No Comments » Robert Higgs warns that bail-outs have only started.  The looters are lined up to make new runs at the federal treasury.  And there’s little doubt that the president–the current one, as well as the one to be elected on November 4–as well as Congress will throw open the vault to all comers.  So far the bail-outs have cost $2 trillion, so why stop now!? Writes Higgs: As the financial crisis deepens and widens, a horde of supplicants is converging on the Treasury. Each of them has a story to tell, and although the details differ from one upscale beggar to the next, each one’s tale of woe shares a common theme: help me or systemic risk will bring down the whole economy, with painful losses and injuries to one and all. Until recently, most people had never heard of systemic risk. It was a term of art for economists and financial theorists. Now every lobbyist in Washington knows how to link his special pleading to the claim that unless he extracts his own pound of flesh from the taxpayer, the entire world will have hell to pay. This not-so-thinly-veiled threat verges on extortion. Commercial bankers have long practiced this rock-bottom-low form of politics, relying on the undeniable fragility of fractional-reserve banking to justify their appeals for public succor during a financial crisis. Lately, however, various newcomers have joined the bankers in playing this con game. In March, the Fed opened its credit window for the first time to investment banks. In September, it ponied up $85 billion to rescue AIG in a de facto government takeover of the insurance giant and took control of Fannie Mae and Freddie Mac, committing up to $100 billion to each company to augment its capital. A little later it announced that it would buy massive amounts of commercial paper―thousands of firms in all sorts of industries potentially stand to benefit from that intervention. Most recently, it has undertaken to prop up money market mutual funds. The Emergency Economic Stabilization (“Bailout”) Act of 2008 makes eligible for its $700 billion of largess, not only banks, but also savings associations, credit unions, security brokers and dealers, and insurance companies. As if this scope of engagement were not sufficiently outrageous, the act stipulates that the eligible “financial institutions” include, but are “not limited to” the ones named. Will pawn shops be the next ones permitted to join the queue? Exactly why security brokers and dealers have been invited into the government’s charmed circle might seem problematic, if systemic risk must be invoked as the rationale, but their inclusion makes perfect sense in the light of public-choice analysis once you have become aware of who the primary dealers are. These institutions, a handful of companies authorized to trade directly with the Federal Reserve System, include: BNP Paribas Securities Corp Bank of America Securities LLC Barclays Capital Inc. Cantor Fitzgerald & Co. Citigroup Global Markets Inc. Credit Suisse Securities (USA) LLC Daiwa Securities America Inc. Deutsche Bank Securities Inc. Dresdner Kleinwort Securities LLC Goldman, Sachs & Co. HSBC Securities (USA) Inc. J. P. Morgan Securities Inc. Merrill Lynch Government Securities Inc. Mizuho Securities USA Inc. Morgan Stanley & Co. Incorporated UBS Securities LLC If you don’t see any likely suspects in the recent string of taxpayer robberies on this list, then it’s time you had your eyes checked. As the recession worsens, we can expect more and more firms and industries to plead for a rescue operation at taxpayer expense. The auto companies have already received a promise of $25 billion from a compassionate Congress, whose members are ever ready to injure the general public interest in the service of a well-healed campaign contributor, especially if the beneficiary can demonstrate that he has dreadfully mismanaged a big business. Now that corn and soybean prices have retreated from their recent extraordinary heights, the farmers are sure to demand that a national farm emergency be declared so that the 17-room additions and new tennis courts they have planned for their rural palaces can proceed on schedule. Other interest groups will troop toward Washington in tight formations, each with a claim that unless its demands are met, the Good Life and the American Way will go up in flames.
• 

  Every Crisis Becomes a Carnival of Opportunism

  http://righttruth.typepad.com/right_truth/2008/10/every-cris...
  34 days ago in Right Truth · Authority: 204

  Every Crisis Becomes a Carnival of Opportunism  by Robert Higgs of The Independent Institute As the financial crisis deepens and widens, a horde of supplicants is converging on the Treasury. Each of them has a story to tell, and although the details differ from one upscale beggar to the next, each one’s tale of woe shares a common theme: help me or systemic risk will bring down the whole economy, with painful losses and injuries to one and all. Until recently, most people had never heard of systemic risk. It was a term of art for economists and financial theorists. Now every lobbyist in Washington knows how to link his special pleading to the claim that unless he extracts his own pound of flesh from the taxpayer, the entire world will have hell to pay. This not-so-thinly-veiled threat verges on extortion. Commercial bankers have long practiced this rock-bottom-low form of politics, relying on the undeniable fragility of fractional-reserve banking to justify their appeals for public succor during a financial crisis. Lately, however, various newcomers have joined the bankers in playing this con game. In March, the Fed opened its credit window for the first time to investment banks. In September, it ponied up $85 billion to rescue AIG in a de facto government takeover of the insurance giant and took control of Fannie Mae and Freddie Mac, committing up to $100 billion to each company to augment its capital. A little later it announced that it would buy massive amounts of commercial paper―thousands of firms in all sorts of industries potentially stand to benefit from that intervention. Most recently, it has undertaken to prop up money market mutual funds. The Emergency Economic Stabilization (“Bailout”) Act of 2008 makes eligible for its $700 billion of largess, not only banks, but also savings associations, credit unions, security brokers and dealers, and insurance companies. As if this scope of engagement were not sufficiently outrageous, the act stipulates that the eligible “financial institutions” include, but are “not limited to” the ones named. Will pawn shops be the next ones permitted to join the queue? Exactly why security brokers and dealers have been invited into the government’s charmed circle might seem problematic, if systemic risk must be invoked as the rationale, but their inclusion makes perfect sense in the light of public-choice analysis once you have become aware of who the primary dealers are. These institutions, a handful of companies authorized to trade directly with the Federal Reserve System, include: BNP Paribas Securities Corp Bank of America Securities LLC Barclays Capital Inc. Cantor Fitzgerald & Co. Citigroup Global Markets Inc. Credit Suisse Securities (USA) LLC Daiwa Securities America Inc. Deutsche Bank Securities Inc. Dresdner Kleinwort Securities LLC Goldman, Sachs & Co. HSBC Securities (USA) Inc. J. P. Morgan Securities Inc. Merrill Lynch Government Securities Inc. Mizuho Securities USA Inc. Morgan Stanley & Co. Incorporated UBS Securities LLC If you don’t see any likely suspects in the recent string of taxpayer robberies on this list, then it’s time you had your eyes checked. As the recession worsens, we can expect more and more firms and industries to plead for a rescue operation at taxpayer expense. The auto companies have already received a promise of $25 billion from a compassionate Congress, whose members are ever ready to injure the general public interest in the service of a well-healed campaign contributor, especially if the beneficiary can demonstrate that he has dreadfully mismanaged a big business. Now that corn and soybean prices have retreated from their recent extraordinary heights, the farmers are sure to demand that a national farm emergency be declared so that the 17-room additions and new tennis courts they have planned for their rural palaces can proceed on schedule. Other interest groups will troop toward Washington in tight formations, each with a claim that unless its demands are met, the Good Life and the American Way will go up in flames. Hundreds of billions here, hundreds of billions there―pretty soon you’re talking about real money. It will be highly depreciated money, however, because the government’s bailout commitments to date, along with its already huge budget deficit, ensure that the Fed will be flooding the world with newly created dollars, and, other things being equal, each one’s creation reduces the purchasing power of every existing one. So far we must contend with $700 billion authorized by the big bailout law enacted on October 3; $85 billion for the AIG loan; $100 billion each for Fannie and Freddie; an undetermined amount, but potentially as much as $1,300 billion for the Commercial Paper Funding Facility; $25 billion for the auto companies; and $540 billion for the money market mutual funds. Together, these giveaways, all ultimately taken out of the taxpayers’ hide, amount to an astonishing $2,850 billion―a sum almost equal to total federal government spending in the fiscal year just completed. Of course, most of these outlays nominally take the form of loans, and much of the money probably will be repaid eventually. Nevertheless, extension of the loans must be financed in any event, and in the present circumstances, such financing is inconceivable without gigantic expansions of central-bank credit, which require nothing but a snap of the Fed’s electronic finger. If you are not expecting a surge in price inflation, then you need to review your economics notes. Already we have seen an extraordinary spike in the monetary base. After increasing fairly steadily in recent years, the reported monthly average base leaped from $847 billion in August to $908 billion in September―a 7.2 percent increase in a single month! If the Fed continues to increase the monetary base at anything near this rate for more than a few months, hyperinflation is virtually certain to result. Yet, in view of the lending commitments already made in the various bailout schemes, it seems likely that the Fed will have to continue to increase the monetary base rapidly. We therefore face the prospect of stagflation the likes of which we have never seen before, with real output falling, unemployment rising, and prices increasing rapidly. All of this ruin is brought to us courtesy of the economic czars who presume to know how to manage the economy. Notwithstanding this frightening prospect, we can be certain that still more interest groups will be pressing the Treasury for their “fair share” of the plunder, even as the economic ship continues to sink. Members of Congress are already touting the desirability of another “stimulus” program like the one that sent checks for as much as $1,200 to most American families a few months ago. Somewhere in hell, John Maynard Keynes is laughing maniacally and dancing a jig. Robert Higgs is Senior Fellow in Political Economy for The Independent Institute and Editor of the Institute’s quarterly journal The Independent Review . He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation. He is the author of many books, including Depression, War, and Cold War .Full Biography and Recent Publications Uses for $700B Bailout Money Keep Changing, Fox News
• 

  September 8th Was a Bad Day for McCain’s Campaign

  http://rotophonic.com/2008/10/15/sept8baddayformccain/
  47 days ago in Rotophonic · Authority: 7

  Looks like something really bad happened to McCain’s campaign around September 8th: Fanny Mae and Freddie Mac were taken over that day and according to Pollster.com, it was all downhill from there.

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