Wednesday, September 24, 2008

Dems Dissemble Today, Yesterday They Fought For Fannie

transitive verb
1 : to hide under a false appearance
2 : to put on the appearance of : simulate

As discussed here, we know that Fannie Mae and Freddie Mac were the key enablers of this credit meltdown - the fuel that stoked the flames. They enabled nearly half a trillion dollars in the bad kind of loans. We know that democrats in lock-step blocked the chance for the Senate to even vote on overhauling Fannie and Freddie right before they went on a subprime buying spree 3 years ago when it could have helped. We know that Republicans and Democrats are to blame, but Democrats have been by far the fiercest supporters of these GSE's.

Now, Thomas Sowell adds his points to the topic, here and here.

Sowell has some great quotes from the same Democrats who are now blaming "Wall Street greed" and George Bush. Chuck Schumer is trying to convince us that the "lowly mortgage" has brought us to this, as if no people were invovled. It turns out, Senator Schumer was involved, and he even tried to make things worse by expanding Fannie's and Freddie's abilities to make loans.

Article Quotes:
Saints are no more common on Capitol Hill than they are on Wall Street. We can only hope that the political "solution" does not turn out to be worse than the problem.

Probably most members of Congress don't know the details yet-- and many may still not know the details when the time comes for them to vote on this bailout.

Ninety percent of the people on this planet would exchange their economic situation for ours in a minute. The media love hype, and have been dying to use the word "recession" all year but nothing has happened that meets the definition of a recession.

The American economy is growing, not declining. Our unemployment rate is up to 6 percent but there are countries that would be delighted to get their unemployment rate down to 6 percent. Our inflation rate is up a little but many countries would love to get their inflation rate down to where ours is.

For years the Wall Street Journal has been warning that Fannie Mae and Freddie Mac were taking reckless chances but liberal Democrats especially have pooh-poohed the dangers.

Back in 2002, the Wall Street Journal said: "The time for the political system to focus on Fannie and Fred isn't when we have a housing crisis; by then it will be too late." The hybrid public-and-private nature of these financial giants amounts to "privatizing profit and socializing risk,"

But liberal Democratic Congressman Barney Frank criticized Professor Mankiw, citing "concern for housing" as his reason for supporting Fannie Mae. Barney Frank said that fears about the riskiness of Fannie Mae were "overblown."

Just last year, Senator Charles Schumer advocated legislation to allow Fannie Mae and Freddie Mac to increase their already huge role in the mortgage market.

Many people have trouble even forming some notion of what such numbers as billion and trillion mean. One way to get some idea of the magnitude of a trillion is to ask: How long ago was a trillion seconds?

A trillion seconds ago, no one on this planet could read and write.

Whenever there is a lot of the taxpayers' money around, politicians are going to find ways to spend it that will increase their chances of getting re-elected by giving goodies to voters.
The real point is to avoid a major contraction of credit that could cause major downturns in output and employment, ruining millions of people, far beyond the financial institutions involved. If it was just a question of the financial institutions themselves, they could be left to sink or swim. But it is not.
As recently as July of this year, Senator Dodd declared Fannie Mae and Freddie "fundamentally strong" and said there is no need for "panicking" about them. But now that the chickens have come home to roost, Senator Dodd wants to be sure to get some goodies from the rescue legislation to pass out to people likely to vote for him.

More Dems Dissembling, here at The Pantheon Journal.

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