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Thu

24

Jul

2008

Attention Barack – The Writing is on Fannie Mae’s XXX
Thursday, 24 July 2008 11:44
by Stephen Bindman, ph.d

The secret is out: Randall W. Forsyth, Barron's Online Editor at Barron’s.com, subheadline of the day reads, Socialism takes hold in U.S. finance. Get over it.
“Ideologues of the right and the left can argue whether this is a good thing. Investors should just deal with it.”
But Forsyth is incorrect: The right has been rejoicing for years about what is actually socialism for the rich.

Contrary to the rumor, spread as gospel, by the majority of economists as well as the majority of elected officials and their darling media commentators this hasn’t been a free market economy for several generations, since FDR in fact.  The question however has become, who do the regulations and the laws benefit.  Since Reagan they have increasingly benefited the rich, and under Bush much more dramatically the super rich.  Meanwhile the country’s public institutions and infrastructure deteriorate.  Now much of its industry is also lost along with decent paying jobs and their accompanying health care.

So saving Fannie Mae and its cousins should not be a continuation of such policies for the rich.  We don’t need taxpayer money to subsidize upper middle-class housing and jumbo second loans.  There are people who ought to be able to own their own home, and some of them are losing theirs.  But affordability remains low in many parts of the country.  Supporting jumbo loan authority and second loan purchases is a waste of taxpayers money.  We have more important priorities.

Some kind of central planning direction is necessary, but it shouldn’t belong to Henry Paulson, and the Fed, recent tools of the new elite class of managers.  We need the establishment of economic direction more democratically or else or else the resurrection of Fannie Mae will not lead to America’s salvation, but further decline for the majority of us.

Clearly Paulson was on the job keeping the stock market from crashing on Monday, July 13, 2008. That was good.  However one of the helpful ideas of the old capitalist system was the idea of bankruptcy.  One of the disadvantages of the centrally planned economies of Eastern Europe and postwar Western Europe was that they spent too much money on politically inspired investments that didn’t work.

One needs to understand that the housing bubble was that kind of investment. Hardly anyone credits Alan Greenspan, the supposed disciple of Ayn Rand the glorified worshipper of individualism, to have been the inheritor of Russian state socialism, but in a way he was with fewer tools.  After the market’s enthusiasm for the computer and the Internet - which was pretty genuine  - led to the .com bubble, Greenspan encouraged the housing bubble.  He lowered interest rates to avoid an economic crash following the stock market crash and he didn’t raise them timely.  He didn’t do his duty to moderate the .com boom, probably because he was too infatuated with the crazy idea that the Internet and the computer would solve everybody’s problems tomorrow.  Like those people who bid up Amazon and Microsoft to the moon and other long forgotten names to dizzying heights.

But before the Japanese markets collapsed in the end of the 1980s Tokyo real estate was valued higher than the entire United States including its productive industry and all its land.  Market enthusiasm runs to excess, periodically. So with few tools at his hand he ignored the warnings that he must have seen as he poured over data which history records he likes to do.  But unlike the propaganda of Wall Street and DC it wasn’t only subprime loans.  It was undocumented loans. It was collateralized debt obligations that pretended to guarantee the value of the poorest loans that were sold to central banks throughout the world.  This is the result of such types like Bernanke or Paulson running our statist economy.

Dr. Stephen Bindman’s book: Pseudo-Capitalism: Socialism for the Rich and the Coming Crisis, is due for publication in August.
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john said:

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Principal Rate Forebearance
This plan is ridiculous. The main problem is that these homes are upside down. People don't want to pay for homes for thirty years just to owe what they started off paying. Might as well rent. Fannie Mae you are losing your homes to foreclosure now or in the future. The banks are wasting our time stalling with these loan mod payments and principal forbearance. You will only save the housing market with true principal reduction. Or people have no economic sense but to walk. You will only delay the problem until five years from now as home values are never going to increase at the rates they were. Actually it could be tens of years before homes even start seeing real value increases. No one wants to risk being trapped by this investment scam again. You have no choice INVESTORS but to write down the principal if yo don't you will be stuck with nothing promise you that as I too have just received the payment of my dreams only to still have to walk away to short sale because I will still owe more than my home is worth and the mod is good for five years. I just did five years trying to sell my home and could not. So what is another five years nothing a blink than im five years older and still owe the same and probably still upside down. Time for a reality check you are still causing foreclosures and decline in property values. The minute you write down these loans than the housing market can recover and we can all get back to normal life. You investors have already made plenty money your greed in holding the principal value is only costing you more money as you will end up in foreclosure or writing down the loans later adding more money to close the paper work. It is pointless and ridiculous. Peoples primary homes should have received a principal reduction immediately to save there homes. You think saving us money for five years just so we have to give it back after five years makes any real sense???? It doesn't and we know it and as I sit and struggle with going to pay more in rent now than my mod payment and for way less house the bottom line is that I will not owe on an upside down mortgage. This will only lead to a long deep recession and will end up looking like a bunch of w's instead of a U as predicted. Do what is right we shouldn't have got ripped on these homes in the first place. Banks are the ones that tell us what the home is worth and we trust them and buy it and they aren't even worth half of the value. Spending almost what we paid in only 5 years in p&i taxes and insurance homeowners are seeing that home ownership is just a big nightmare. Trapping us into a debt that we can't move from and end up paying three to four times what a home really cost. This is what is really going through our minds so stop worrying about making the rich keep there money. They want to have any money they better reduce the principal values or expect more homeowners like me to walk. Keep your house. I would rather move to another country than owe you money on a home that will never have positive equity. Which from 400k to the 230k offer i received it is not worth for me to pay your mod payment just to have to go through the same process in five years as you hope we will just be making more money to pay you more we want to have make money too. That's the real problem. Homeowners want to make money on there investment. Not pay you until we die while you retire rich off our backs. I first thought we got a principal reduction and my heart just leaped I thought my marriage was saved, my life, my home I was so happy. Then it was explained that it was forbearance I was right back to have to get out sell it my marriage was back to fighting. Homeowners with upside down mortgages are going through more than just the monthly payment we are thinking about our future. Does it make sense to see if these values ever come back. NOOOOOOOOOOOOOOOOOOOOOOOO it doesn't we can walk and make more return on walking than doing your monkey tricks. Pay for five years at 2% and then back to where we started hey. Sounds great for you but sucks for us. Our homes have lost value directly to the fault of the banks and house flippers. Anyone who owns multiple houses is directly at fault and morons that took five years teaser loans which were wanna be investors. They should get nothing people who have put there heart and sole into there only home should get a principal rate reduction automatic with no bs paperwork and hoops to jump through. As its your fault there homes aren't worth anything that U the banks the gov the investors. YOU CAUSED THIS MESS. And we always end up paying for it. You think!!
After five years I am giving up the fight to keep my home which you will give to some joe blow for half but not to me after I have spent near 300k on it some other guy gets to buy it and an fha loan just doesn't seem fair. While I poured thousands a month almost 4k for many years some guys going to have a payment of about 1,200.00 seem fair? NO
You think I will ever take out another loan? NO. I would rather live in a tent than pay you every dime I make so you can steal my home and give it to some other guy for half the price. You should be working out principal balance with homeowners I would rather have had a higher monthly payment and less principal than the other way around. Make sense?
But you think hey give a low payment and will make it up later you think that's going to work again? That's what got you in this mess. I predict another housing crash five years from 09 as the payment on all modified loans jump back up to 5 percent and people realize that there homes have not gained value there will be massive foreclosures and short sales all over again. The obama plan though appealing at first glance is nothing more than a stall tactic hoping that the economy will get better. But the problem with the economy in the first place is that the housing market is the original problem and is not being fixed if it was cancer it was just given some antibiotics when it needed chemo. You are just setting the problems aside for later. Wall street is so happy about the future and talking so positive but the problem still remains housing values are overinflated. Home shoppers are getting smarter and will not go run out and buy a house that is not in range leaving millions of home owners upside down. All because they bought homes in the wrong time frame??? Fannie mae and Freddie need to be more responsible to homeowners and not investors as homeowners are really the ones in control of there future. If it makes economic sense to walk that's what they have to do. To stay and pay on something that is upside down by a quarter million dollars and think that at an average rate of five percent increase a year over the next ten years you will still not break even what choice do you think we have?? It does not effect you one bit to give the principal reduction what are you really losing? It is a number in a computer for homeowners it is hope for a secure future. Not giving this reduction is criminal and for all you morons that talk crap about people upside down you are lucky you didn't have money to buy a home and sure that you didn't no this crash was coming and you will effected to as you will not qualify for homes that you want credit will be tighter than ever approvals will be harder and will only lead to even more declines in value. Rich investors will buy up most of these homes and rent them out for and get richer.
Transfer of wealth from the middle class to the rich and the poor.
America Land Of The Greedy.
 
August 31, 2009
Votes: +1

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