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.

[...]

Myth 2: Fannie and Freddie’s role in the housing market increased
homeownership, especially for first-time buyers and lower income
earners.

Fact 2: The small increase in homeownership rates were temporary and
artificial, driven by unsustainable incentives. In the best case
scenario, Fannie and Freddie may have increased the homeownership rate
from 63 percent to 69 percent, but the rate has now fallen back to 66
percent. Moreover, Fannie and Freddie did not make housing more
affordable and even priced many first-time buyers out of the market.

[...]

Myth 3: Fannie and Freddie are essential for maintaining a working
mortgage market. Without them, interest rates will increase and
homeownership will plummet as more people are priced out of the
housing market.

Fact 3: Interest rates are likely to go up. Yet it is not clear what
impact this will have on homeownership rates. In the 1980s, interest
rates on the average 30-year mortgage were significantly higher, yet
homeownership rates were almost the same as they are today. Besides,
the alternative to homeownership is not living on the street.

[...]

http://reason.com/archives/2011/03/0...fre/singlepage

http://reason.com/archives/2011/03/0...fannie-and-fre

?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.

Fannie Mae is a loan guarantor. She doesn't make loans. Investment banks
crashed the economy. Blame it on Phil Gramm and Bill Clinton, and "W"
for looking the other way.

Fannie Mae is a loan guarantor. She doesn't make loans.


Man, you are the biggest moron that graduated from a California public
school.

The Trillion-Dollar Bank Shakedown
http://www.city-journal.org/html/10_...on_dollar.html

http://www.youtube.com/watch?v=_MGT_cSi7Rs

The Real Culprits In This Meltdown - Clinton Democrats
http://www.investors.com/NewsAndAnal...-Meltdown.aspx

Andrew Cuomo and Fannie and Freddie
How the youngest Housing and Urban Development secretary in history
gave birth to the mortgage crisis
http://www.villagevoice.com/content/printVersion/541234
http://en.wikipedia.org/wiki/Andrew_Cuomo

Bankrupt "Exploiters"
http://www.townhall.com/columnists/T...upt_exploiters
http://www.townhall.com/columnists/T...oiters_part_ii

How "Smart Growth" Exacerbated the International Financial Crisis
http://www.heritage.org/Research/Economy/wm1906.cfm

How U. S. Land Use Restrictions Exacerbated the International Finance
Crisis
http://www.demographia.com/db-overhang.pdf

Who is to blame?
http://cafehayek.typepad.com/hayek/2...-to-blame.html

On Mar 4, 5:21Â*pm, dave wrote:
?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.

Fannie Mae is a loan guarantor. She doesn't make loans. Investment banks
crashed the economy. Blame it on Phil Gramm and Bill Clinton, and "W"
for looking the other way.

On 03/04/2011 05:55 PM, Chas. Chan wrote:

Fannie Mae is a loan guarantor. She doesn't make loans.


Man, you are the biggest moron that graduated from a California public
school.

I never graduated.

"[...]So if a politician voiced an opposition point of view, and some
did, there was a real risk of them being beat down by an opponent
financed by the financial industry. Doesn’t that kind of weaken the
ability to have a real discussion?

Absolutely. There’s a chilling effect. One of our commissioners,
Brooksley Born, she’s the classic case. Brooksley Born was appointed by
[President Bill] Clinton in 1996 to head the Commodity Futures Trading
Commission. She was one of our 10 commissioners. From 1994 to 1996 or
1997, there were a series of scandals involving the highly risky use of
the over-the-counter derivatives; these are the ones not traded on the
Chicago Board of Trade and the commodity exchanges. There was a big
scandal at Procter & Gamble with Sumitomo Bank. So Brooksley Born, as
chair of that commission, stepped forth and said, “I think we ought to
discuss whether these over-the-counter derivatives”—which ultimately
grew to this multitrillion-dollar industry by the time of the
crisis—“should be regulated.” She put out a concept paper to discuss it.

Well, she was immediately shut down by the powers that be. It was
[former Chairman of the Federal Reserve] Alan Greenspan, it was [former
Secretary of Treasury] Robert Rubin, it was [former Securities and
Exchange Commission Chairman] Arthur Levitt, it was [former Secretary of
Treasury] Larry Summers and it was the financial industry. And they
essentially put a stop, they went to Congress and said that Congress
ought to adopt a moratorium on any regulation—and then two years later,
they got a complete ban on regulation. So this is an example where
someone stood up, said the right thing and was put down for it. But this
should be a constant source of concern, because also more and more power
is concentrated in fewer and fewer banks. Between 1990 and 2005, I
believe the top 10 banks in the country, their share of assets grew from
25 percent to 55 percent. After the crisis now, we have fewer big banks,
because Lehman [Brothers] went under, Bear Sterns went under, Merrill
Lynch merged with Bank of America. The concentration of power by fewer
banks is even greater today.[...]"
http://www.newsreview.com/sacramento...nt?oid=1923599

dave wrote:

On 03/04/2011 05:55 PM, Chas. Chan wrote:

Fannie Mae is a loan guarantor. She doesn't make loans.


Man, you are the biggest moron that graduated from a California public
school.

I never graduated.

"[...]So if a politician voiced an opposition point of view, and some
did, there was a real risk of them being beat down by an opponent
financed by the financial industry. Doesn’t that kind of weaken the
ability to have a real discussion?

Absolutely. There’s a chilling effect. One of our commissioners,
Brooksley Born, she’s the classic case. Brooksley Born was appointed by
[President Bill] Clinton in 1996 to head the Commodity Futures Trading
Commission. She was one of our 10 commissioners. From 1994 to 1996 or
1997, there were a series of scandals involving the highly risky use of
the over-the-counter derivatives; these are the ones not traded on the
Chicago Board of Trade and the commodity exchanges. There was a big
scandal at Procter & Gamble with Sumitomo Bank. So Brooksley Born, as
chair of that commission, stepped forth and said, “I think we ought to
discuss whether these over-the-counter derivatives”—which ultimately
grew to this multitrillion-dollar industry by the time of the
crisis—“should be regulated.” She put out a concept paper to discuss it.

Well, she was immediately shut down by the powers that be. It was
[former Chairman of the Federal Reserve] Alan Greenspan, it was [former
Secretary of Treasury] Robert Rubin, it was [former Securities and
Exchange Commission Chairman] Arthur Levitt, it was [former Secretary of
Treasury] Larry Summers and it was the financial industry. And they
essentially put a stop, they went to Congress and said that Congress
ought to adopt a moratorium on any regulation—and then two years later,
they got a complete ban on regulation. So this is an example where
someone stood up, said the right thing and was put down for it. But this
should be a constant source of concern, because also more and more power
is concentrated in fewer and fewer banks. Between 1990 and 2005, I
believe the top 10 banks in the country, their share of assets grew from
25 percent to 55 percent. After the crisis now, we have fewer big banks,
because Lehman [Brothers] went under, Bear Sterns went under, Merrill
Lynch merged with Bank of America. The concentration of power by fewer
banks is even greater today.[...]"
http://www.newsreview.com/sacramento...nt?oid=1923599

Bottom line: never trust any content out of Sacramento, as it is a hotbed of
Liberal/Democrat/Marxist/Socialists who have brought California to the brink
of bankruptcy.

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.

On 03/05/2011 06:50 AM, dxAce wrote:



Bottom line: never trust any content out of Sacramento, as it is a hotbed of
Liberal/Democrat/Marxist/Socialists who have brought California to the brink
of bankruptcy.



We're always on the brink of something. At least we have nice weather.

dave wrote:

On 03/05/2011 06:50 AM, dxAce wrote:



Bottom line: never trust any content out of Sacramento, as it is a hotbed of
Liberal/Democrat/Marxist/Socialists who have brought California to the brink
of bankruptcy.



We're always on the brink of something. At least we have nice weather.

We have nice weather here as well. Unfortunately it's cold nice weather!

But, the hummingbirds will return in the next 6 to 7 weeks, as will the summertime
static :-(

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

[...]

http://reason.com/archives/2011/03/0...fre/singlepage

http://reason.com/archives/2011/03/0...fannie-and-fre

Fannie and Freddie, created to increase the availability of mortgage
loans, misused the government's support to enrich Fannie and Freddie
shareholders and Fannie and Freddie executives by backing millions of
shoddy loans. Taxpayers so far have spent more than $135 billion on
the cleanup.

Fannie and Freddie allow people to borrow at lower rates because
investors are so eager to pump money into the two companies that they
accept relatively modest returns. The key to that success is the
guarantee that investors will be repaid even if borrowers default -- a
promise ultimately backed by taxpayers - Socialized risk, i.e.
Socialism.

"Socialism is great!" - Until it runs out of other peoples money.

Fannie, Freddie and other federal programs now support roughly 90
percent of new mortgage loans because lenders cannot raise money
(investors are not stupid) for mortgages that do not carry government
guarantees. Socialized risk, i.e. Socilism.

"Socialism is great!" Until it runs out of your money, i.e. Serfs.

The Road to Serfdom

[...] "every step away from the free market and toward government
planning represented a compromise of human freedom generally and a
step toward a form of dictatorship--and this is true in all times and
places." [...] "government planning would make society less liveable,
more brutal, more despotic. Socialism in all its forms is contrary to
freedom."

http://mises.org/resources/2402/The-...-Serfdom-Video

How does it feel, Serfs?