On Mar 4, 6:39Â*pm, ∅baMa∅ Tse Dung wrote:
Separating economic myth from economic fact

Myth 1: The government-sponsored housing finance companies Fannie Mae
and Freddie Mac had nothing to do with the housing crisis. They were
simply innocent bystanders caught in the crossfire. Economist and New
York Times columnist Paul Krugman, for instance, has argued that
Fannie and Freddie’s role in the housing market was insignificant
between 2004 and 2006 because “they pulled back sharply after 2003,
just when housing really got crazy.� According to Krugman, Fannie and
Freddie “largely faded from the scene during the height of the housing
bubble.�

Fact 1: Fannie and Freddie contributed to the housing crisis by making
it easier for more people to take out loans for houses they could not
afford. Beginning in 2000, Fannie and Freddie took on loans with low
FICO scores, loans with low down payments, and loans with little or no
documentation.


So Fannie and Freddie started loaning huge amounts of money to people
who couldn't afford houses in 2000. But it took until late 2007 and
2008 for all these people who "couldn't afford houses" to get into
financial trouble with those houses that they couldn't afford. That's
a long, long time for dirt poor bums to be successfully making
mortgage payments. And all these people who "couldn't afford houses"
got into trouble at exactly the same time which, by an incredible
coincidence, just happened to be the exact same historical moment when
the rest of the economy was melting down. But there's no connection
between the two events. Really? Banks and investment firms taking on
insane, high stakes risks that they couldn't afford to lose had
nothing to do with it? People losing their jobs en masse in 2007 and
2008 had nothing to do with a wave of people no longer being able to
meet their financial obligations from late 2007 to today? No
connection at all?

Spread that story in your garden and you can grow yourself some
tomatoes.