User 260928

Where's the Bottom? Still Anybody's Guess

Errata: The Income Tax only assists in paying the interest on the debt, not the debt itself.

Where's the Bottom? Still Anybody's Guess

I agree. Most of this problem stems from having a Central Bank (aka Federal Reserve), which produces the money for the entire country. The Central Bank controls the interest rates and the inflation (since they control the money supply). They also regulate the value of the dollar by increasing and decreasing the money supply.

They loan each dollar to the government with an attached interest. Every dollar produced is actually: a dollar + a percent of this dollar in immediate debt. Since the central bank has the monopoly on the production of the money supply, the only way to pay the debt is to borrow more money from it. This creates even more debt. This system is a self-generating debt machine.

The central bank has to continually produce money to cover the debt that is created from borrowing. This method creates even more debt. It is impossible for the government to get out of this self-induced debt.

This was why the US broke away from England. King George III outlawed the interest free and independent currency that was being used by the American Colonies. This forced the colonies to borrow money from the Central Bank of England with interest, putting the colonies into debt.

"The refusal of King George III to allow the colonies to operate an honest money system, which freed the ordinary man from the clutches of the money manipulators was probably the prime cause of the revolution."
Benjamin Franklin

"I believe that banking institutions are more dangerous than standing armies... If the American people ever allow private banks to control the issue of currency, the banks and corporation that will grow up around them will deprive the people of their property until their children wake up homeless on the continent their fathers conquered"
Thomas Jefferson

We didn't implement a Central Bank until Woodrow Wilson was in his presidency. The Federal Reserve act was created during this time, along with the Federal Income Tax. The Income Tax only assists in paying the debt, not the governments budget, as some people like to think. Prior to that, the government (and the economy) operated just fine.

Nationalization of the U.S. Mortgage Problem

Also, Silverleaf:
Here is a link to the entire company history of FNM (including the info I think you are looking for in your post). There is another one for FRE, as well, you just have to search it at the top. Very detailed history.

www.fundinguniverse.co...

Fannie and Freddie: Mission Drift on Parade

Because when Fannie was created, the country was recovering from the depression. People couldn't buy homes, because the mortgage market was dead. It brought life back to it.
After the S&L crisis, saving and loans were required to hold higher reserves to curtail loan losses on ordinary mortgages. This provided another incentive to deal with the 2 GSE's. The economy struggled in the wake of the S&L crisis, but these FRE and FNM kept mortage money wheels turning. In the early part of this century, they both helped in lowering the interest rates to the lowest it had been in the 30 years prior, making affordable housing for countless numbers of Americans.

Imagine what would've happened post-depression without FNM or FRE, or after the S&L crisis. I would be willing to say that the Mortgage rates would be out of the roof if it wasn't for these 2 and that some Americans in certain parts of the country would still be homeless. And no government subsidies? Tell that to all the people living in HUD homes and other 'less' fortunate families that have to eat ketchup packets for dinner. The government needs to take care of it's people, but ordinary American's don't see the things that it's government is actually doing (like HUD homes, for example). The best way to do that is through subsidies, giving breaks to the companies and organizations that are helping out these less fortunate Americans.

Nationalization of the U.S. Mortgage Problem

First time posting here @ SA. I like your article. I wanted to point out that some people saw this coming 6 years ago. Here is an extract of an article entitled "In the Dream Business: U.S. Home Ownership" which was featured in the November 29, 2002 edition of Financial Times.

[quote]While critics abounded, the GSEs were credited with helping to boost home ownership levels from 64 percent to 68 percent over the last decade, while other segments of the economy faltered in 2002, the U.S. housing market continued to flourish. The lowest interest rates in three decades and the attractiveness of real estate for investment purposes also helped to keep the market strong.

Freddie Mac and Fannie Mae themselves benefited from the charged market, ranking among the most profitable companies in the United States. Their stunning success led to yet another wave of concern by some over their influence on the housing market. "They warn that a failure could drag down a U.S. Banking system highly dependent on Fannie- and Freddie-issued bonds and that taxpayers would be on the hook for a bail-out that would dwarf the savings and loans scandal of the 1980s," wrote Paul Taylor.[/quote]

I'm a bit of a conspiracy theorist and wonder if the Administration orchestrated this to dismantle Freddie and Fannie. The Republicans were the GSE's biggest critics -and- the Republicans also gained foothold of Congress in the '02 elections. After all, this is the Administration that blatantly lied to the American public about Weapons of Mass Destruction in Iraq, among other things. So Congress "failed" to come up with a solution for the 2 GSE's. The Treasury did the best that it could do, although I'm sure there is more that they could've done. I just hope that when the smoke clears and the dust settles, that the 2 GSE's return back to the hands of the Investors/Market and that they return in 1 piece.

I would also like to add that I vote for neither Democrat nor Republican. I vote for the person whom I think can do the best job. And I own shares of Freddie Mac, of which I am 'long' on.