Daniel Gross at Newsweek has now published a mainstream article that tells much of the unspoken the truth about the mortgage mess. He points out that the continued announcements over the last nine months that the latest gimmick to save the mortgage industry had solved the problem, only to be followed by new and larger problems, has made it very difficult to get investors to step in and refinance Freddy Mac and Sallie Mae.
The result is that the only remaining solution is for the government to take over those two agencies. Since Freddy Mac and Sallie Mae have been responsible for 70 of all mortgages sold in 2008, that means that the mortgage industry has already been nationalized. It belongs to the government. The only question is how explicit the ownership documentation actually is.
That means that the conservatives in government are directly responsible for subsidizing the losses while giving away all the profits in the mortgage industry since Alan Greenspan created the housing bubble by lowering interest rates to avoid a recession that would defeat Bush in 2004. [See Economics and politics of the Fed fund rate.]
The unregulated free market dreamed of by conservatives and pushed for by the Reagan Revolution has failed disastrously. The result is going to be more government subsidy, handing out taxpayer funds. The only question is whether the conservatives will obstruct efforts by the government to recover gains to pay the taxpayers back instead of just handing future profits to the bankers who created this mess.
Oh, wait. I forgot. Phil Gramm has told us all the Truth (as viewed by conservatives and Libertarians.) This is "this is a mental recession. .... We have sort of become a nation of whiners." Right. Phil Gramm and John McCain have theirs already in hand and to Hell with the rest of us.
Go read the Newsweek article. Then prepare for the lengthy period of stagflation that has already started.
No comments:
Post a Comment