Fannie, Freddie, Uncle Sam and You

You’ve read the news, now here is how it works: The government gives money to Freddie Mac (FRE) and Fannie Mae (FNM). Then, to reimburse themselves for this generosity, the government takes money from you or your employer or both. In return, your employer leaves the U.S. while you stay and suffer. Get more details in the next two paragraphs and enjoy the video at the end.

When state governments overzealously tax corporations (entities without a pulse), those states suffer economic declines of nearly 50%.  When state governments overzealously tax individuals (entities with a pulse), then those individuals vote with their feet and move to where the corporations set up shop (usually a neighboring state).

Now, what do you suppose happens when a national government overzealously taxes corporations? Yes, those companies quietly exit the greedy nation (click this link to see how the U.S. compares).  Last question, what do you think the citizens tend to do? They might leave the country as well.  Or, in the wake of the tax mistake, as the nation is plagued by harsh unemployment rates, falling property values, lower tax revenue (individual and corporate), general capital flight, a weakened currency, all of which translate into less money for schools, welfare, infrastructure, defense, etc., the citizens may develop other strategies for survival. Without some kind of New Deal, they have been known to revolt. 

Disclosure: Regarding FRE, FNM; Not long. Not short. Not neutral. And definitely not happy.

Don’t want to be an American Idiot?  Sorry, as of today, it’s too late.

Comments

[User 201843:]

The buck..... stops at the tax payer !


The best video on the subject!
Excellent

Let Fannie, Freddie Fail: Jim Rogers
Fannie Mae and Freddie Mac should not be saved if they go bankrupt, and economic stimulus packages do more harm to economies in the long run than good in the short term, Jim Rogers, CEO of Rogers Holdings, told CNBC Friday.Last Update: Fri. Aug. 29 2008 | 08 09 00

www.cnbc.com/id/158402...

2008 Sep 07 08:25 AM

[whisperonth...:]

I'm too old to try to listen to that music on the video - and from what I did understand it's not something you could have printed the words to. This bailout is no different from other bailouts - they should just let them fail, just like the common people are. The more we give bailouts - either as financial bailouts to FNM and FRE or as stimulus packages to the people - the more dependent we get on the givers. Personally I'd like to see the govt. cut by about 80%, on the state AND federal level, and I'd like to see more people and governments taking responsibility for their own actions. If you can't pay for it, you can't have it.

2008 Sep 07 10:14 AM

[Tick Talk:]

User 201843: About bankruptcy: corporations shamelessly file 11's or 7's and reorganize or dissolve the entity respectively. The patriotic American, on the other hand, actually FEELS SHAME and personally shoulders the burden of their consumption decisions (thus modifying their behaviors over time). But here's the killer, this isn't a consumption issue, it's an equity issue. No shareholder in the world NEEDS his/her equity (like consumers need food, clothing, etc.). The comparison of one to the other is apples vs. oranges. But like Whisper On The Wind mentioned, and what I think Jim Rogers is trying to say, is that each entity needs to take their lumps ALONE and not burden others with their poor decision-making (equity risk and consumption alike).

Wisper On The Wind: Your wisdom is timeless, thank you! What is the best way (most peaceful and powerful) way to reduce the size of government by 80%? Is it democratic? Is it vigilante? Please help.

2008 Sep 07 11:42 AM

[Kunst:]

The problem with letting them fail is that our credibility with our biggest creditors would be gone. Interest rates would skyrocket and the economy would be flushed down the toilet (it's already there).

2008 Sep 07 09:16 PM

[Jake2:]

Great video! Buy green.

2008 Sep 08 01:37 AM

[TradingSmar...:]

Keep in mind people; the end game for this up-scale street match of 3 card Monty is this: Deflation of property values and returning as much real estate to direct ownership of the largest banking cartel in the history of the world, AKA the federal reserve. They learned it from the euro banks over a century ago. Once you are living under an overpass and the land has been made property of the banks again; you will be able to get a loan for a home and the whole damn thing will start over again; but on a larger scale called "ONE WORLD GOVERNMENT"

of course this is all doom and gloom... however 2 hours on the couch with my kids and a viewing of Marry Poppins brought me down out of my sniper nest Sunday morning.

I say give your toppins (lucre, money) to the bird lady and let matters of woe and want be taken care of by your guardian angels...

If you don't take that advice, go read the rise and fall of the 3rd Reich... Just consume responsibly.

DD

2008 Sep 08 03:53 AM