End Of The Road  (624 posts)     | Tue Jul-15-08 12:43 PM Response to Original message |
| 43. Question about Fannie for you smart people |
 | Edited on Tue Jul-15-08 01:05 PM by End Of The Road I used to keep up with Fannie, back in the days of the Franklin Raines scandal. I suspected that she was insolvent then, and that was, what, seven years ago? So I've wondered since then if the whole sub-prime lending thing was a strategy to keep the cash coming in -- more mortgage-backed securities to sell to meet obligations -- with the hope that she could 1) turn things around before the bubble burst, or 2) steal more money before the bubble burst. Could this strategy have worked if the economy, otherwise, remained strong? Or am I totally off my rocker? (Please be gentle -- there's a whole lot of economics (most of it, frankly) that I don't understand. |
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Tansy_Gold (1000+ posts)  | Tue Jul-15-08 01:58 PM Response to Reply #43 |
| 77. Not that I'm one of the smart ones, but I tend to agree with you |
 | I think most of us would agree that there have been many conspiracies to make macro changes in the American way of life. We may call them "the civil rights movement" or "the gay rights movement," and we may totally support them and not consider them "conspiracies" at all, but those who are opposed to them have a different perspective. We hear all the time about the "gay agenda" as if it is some kind of conscious plan to do something horrendously evil. Just looking at some of the google ads that appear with this thread suggests that there is a culture in this country that celebrates "making" a lot of money without working for it. "I made a billion dollars last year and you can too!" or something like that. And certainly people like hedge fund managers and multi-millions-a-year CEOs didn't just accidentally get those paychecks: they had to have some kind of plan. Long-term that "plan" included such things as cutting taxes on capital gains, allowing banks and insurance companies and investment firms to merge, avoiding scrutiny of unregulating trading, etc. etc. etc. I mean, it's not like Phil Gramm just woke up one morning and said, "Hey, Wendy, I think it would be fun to overturn Glass-Steagal and see what happens!" So I think the big question is whether they just intended to suck all the wealth out of these institutions out of just plain avarice or if there was an underlying intention to bring the institutions to collapse. Rather like the goose that laid the golden eggs: did they kill it because they thought they could get more golden eggs that way, or did they kill it so no one else could? I'm not big on  theories. On 9/11/01I was roundly denounced in a Theory of Social Movements class for dismissing Henry Kissinger's comments that 9/11 was commited by a huge and wealthy organization. We were sitting in the class, watching CNN coverage of the attack, and I insisted, "They didn't need a big organization. You could do this with maybe twelve, fifteen people. Four or five to a plane, one to fly it the others to hold the crew and passengers hostage." And when my classmates and even professor said it couldn't be done without a trained pilot able to take off and land, I just shrugged and said, "He doesn't need to take off if he's going hijack a plane already in flight and he doesn't need to know how to land it if he's just going to crash it into a building. All he needs to know is how to steer." But of course Henry Kissinger and all the CNN bots know far more than Tansy Gold!!I relate that because I think it's important to look at what the objective is and what it will take to accomplish the objective. A simple hijacking and suicide crash doesn't take a whole lot of preparation and it doesn't take the cooperation of a lot of people. Someone posted just this morning an item about the $43 million boooosh gave to the Taliban in the months before 9/11/01, and I suppose that in the almost seven years since the event, there are at least some who will read that headline today and gasp at the "discovery" of this evidence of a conspiracy. But there were many of us, especially those who had been following even tangentially the rise of the Taliban and its policies toward women, who knew about the $43 million a long time ago. We know the act occurred, but we don't know the motives behind it or what the ultimate objective was. Was it to control the growing of opium poppies, or was it to arm the Taliban against another enemy or was it to help finance bin Laden to bring down the WTC as part of a plan to wage war on Iraq and grab all the oil? The problem with big conspiracies is that they require lots and lots of co-conspirators. A single one who breaks ranks can destroy the whole plot. The bigger the conspiracy, the more chances for leaks. A conspiracy depends on secrecy, and it's really hard to keep EVERYONE from talking. And yes, I drop the whole Ayn Rand thing in from time to time, and I do like the term "shruggers" applied to the people whose actions are destroying both the U.S. economy and the world's. I think people like Greenspan and Paulson and Bernanke do believe in a kind of Randian ethic of greed is good and greedy people are good because they're greedy. I think they've adopted Objectivism, as Rand called her philosophy, in much the same way as the faithful of any religion adopt its tenets. Not only do they trust in "the markets" but they believe that propping them up with supports that are in fact "anti-market" will enable to markets to recover to a point where the supports aren't necessary. I think they honestly believe this, even though those of us on the outside can see that it isn't working, won't work, and indeed can't work -- at least not in the sense of keeping "the markets" healthy and viable in the way Greenspan and Bernanke and their ilk tell us. I think they've reached a point where they have believed their own message for so long that they just can't get their little heads around the fact of their error. And I further think they are so terrified of what would/will happen when they can no longer deny the error that they willingly continue the denial because not to do so is to embrace the catastrophe. The other option, of course, is that they did it all deliberately like their "heroes" Dagny Taggart and Hank Rearden, with the conscious intention of destroying the economy and the peripheral institutions (including government) as a means to an end: re-establishing a wealth-based feudal aristocracy. It's a tempting philosophy. It promises unlimited rewards not for hard work but for the mental maneuverings to acquire unearned wealth. It also utilizes language to disguise ulterior motives. "Greed is good" becomes a fundamental truth, and once it's accepted, all manner of nefarious behaviors become sanctioned. Rand resolutely insisted "A is A" with ferocious Aristotelian logic, but in fact her A was only sometimes A. Her version of Robin Hood was that he stole from the productive rich and gave to the undeserving poor and such a cultural memory had to be erased and replaced with a NEW Robin Hood who returned wealth to its rightful owners. The legend, of course, was that Robin Hood stole from the UNproductive rich and returned oppressive taxes to the working, productive poor from whom they had been extorted. But in a culture like ours that puts so much emphasis on the sanctity of unearned wealth, it's easy for those who buy into that Randian picture to promote an economy in which the wealthy "earn" their right to be wealthy on the basis of how little they earn. I mean, wouldn't we all like to take home a billion dollars every year without having to work for it? Unfortunately, it means someone ELSE has to work for it and we just take it away from them. What happens when the feudal peasants just refuse to work? What happens when they no longer CAN work because of the machinations of the aristocrats? The ultimate goal, of course, is the destruction of the economy, but whether this is an intended goal or "collateral damage" is the question I can't answer. I do indeed like to think they're all just evil shruggers, but maybe they aren't. Tansy Gold, who has never trusted anyone named Hank |
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| llmart (1000+ posts) | Tue Jul-15-08 02:14 PM Response to Reply #77 |
| 97. Terrific post and analysis...... |
 | I'm not a regular poster on this thread but I read it every day and when you claim you're not one of the "smart ones" - well, don't do that again! Give yourself some credit. Your post contains a lot of analytical thinking and we all know that's in short supply in America today. We are a nation being run by old, white men stuck in the '50's mentality that they were brought up with. The Democratic Party was always considered the progressive party - thinking towards the future and advancement - not stuck in the past. As a good friend once said to me, "People think they can go back and relive the times which are really only nostalgia, but things ALWAYS move on and change." I would love to see Democrats use the term "progressive" over and over again so we can get away from the word liberal which has been hijacked by the Republicans to be a bad word instead of what it used to mean. |
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| Dr.Phool (1000+ posts) | Tue Jul-15-08 02:57 PM Response to Reply #97 |
| 112. I don't think it's the '50s mentality. |
 | I call it the "Chickenhawk Government". My high school class was 1970. And about that time, a few years before, and a few years after, everyone I knew who could afford it, was running away to Kent State to avoid the draft. Most of them majored in some shit called "Business". Although most of them came from union households in Cleveland, they went away and came back with all the tools to break unions, screw workers, maximize short term profits, and basically run businesses into the ground. They eventually took over my company, and decided that new employees had to have at least 2 years of college to work there. Even though some employees with no education could work circles around them. I managed to get 31 years in, and a good Railroad pension, before they ran the place out of business. The decisions they made, didn't make any sense unless you looked at it in the context that they were trying to run the place into the ground. |
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| llmart (1000+ posts) | Tue Jul-15-08 06:44 PM Response to Reply #112 |
| 181. Well, there's that too.... |
| I'm from NE Ohio also. Graduated high school 1967. I think Kent State and Cleveland State were both pretty liberal. Dennis Kucinich was at Cleveland State with my husband. It was and still is a very pro-union area. It was the Reaganites that started the anti-worker sentiment. |
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| End Of The Road (624 posts) | Tue Jul-15-08 03:30 PM Response to Reply #77 |
| 131. I loved your reply, thanks, but |
| I wasn't really trying to suggest conspiracy here, though making tin-foil hats is my favorite hobby. I was just wondering if the sub-prime lending program was a studied attempt to shore up an already insolvent Fannie Mae. |
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| Tansy_Gold (1000+ posts) | Tue Jul-15-08 04:11 PM Response to Reply #131 |
| 142. The logical answer is "no." |
| At least IMHO. **IF** they wanted to keep Fannie and Freddie solvent only for a short term, then the answer might be a hesitant "yes," but as a long-term fix, there was no way it could work. As I've posted here before, in summer and early fall of 2002 I worked for a dept of one of the cities in the far west Phoenix suburbs, an area undergrowing horrendous development. The city was small and primarily lower-income. As developers came in and suckered these people into buying, my dept tried to put pressure on the city council to halt predatory lending. They refused, and ordered us NOT to counsel residents who feared being suckered. The city wanted the tax revenue. The long-term effects of foreclosures, delinquent taxes, vandalism, etc., were recognized but ignored, dismissed, denied, in preference for the short-term benefits. For investors, there was likewise far more money to be made in the short term by making the mortgages, taking the money, and running and doing that via investment in the mortgage brokers and banks. Investment in the GSEs wouldn't have had the quick return the other vehicles did. I think it's far more likely that the intent, if there was any, was to get the cash out of the subprimes and alt-a's, push them into the GSEs, then get the feds/taxpayers to bail out the GSEs and make a double killing, especially if FOREIGN investors could be brought in to shore up the GSEs with big bucks. I think that would be Kevin Phillips' analysis. The fact, however, that one bubble follows another -- S&Ls, dot.com, housing, commodities, etc., etc., etc. -- suggests that there is an element of the citizenry that has full knowledge of how bubbles are formed and how to profit from them AND has the financial ability to do so. The faster the bubble is blown and then burst, the faster they are able to pull out their profit; there is more risk and less return in dragging out the bubble. I probably still didn't answer your question, but my response is solely speculative anyway!  Tansy Gold |
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| End Of The Road (624 posts) | Tue Jul-15-08 05:19 PM Response to Reply #142 |
| 158. Wow. Yes, this answers it for me |
| and you ARE one of the smart ones! |
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| Demeter (1000+ posts) | Tue Jul-15-08 04:47 PM Response to Reply #77 |
| 151. I Share Your Viewpoints |
 | It is hard for me to wrap my mind about any native son WANTING to destroy his motherland. Historically, I can't think of any. The closest we come are the crazy Caesars: Nero, Caligula, etc. They were either mentally deformed puppets of the Praetorian Guard or the Senate, or outright tyrants. Nothing existed in the world outside of themselves, and they acted accordingly. Shrub fits this to a T: he has the emotional development of a 2 year old, the mental stability of quicksand, and lots of people pulling strings behind him. It's a conspiracy of pirates. Our only recourse as a nation is some form of the French Revolution: to remove the "Aristos" and redistribute their loot. Nothing else will fix the problem. Demeter is going to have to learn how to knit. But she refuses to go gray for the occasion. |
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| Tansy_Gold (1000+ posts) | Tue Jul-15-08 08:20 PM Response to Reply #151 |
| 202. But I don't consider him a "native son" |
| I think that's one of the phenomena to come out of the post-WW2 economy -- a destruction of nationalism in favor of corporate loyalty. Hitler (and Mussolini)tried to weld nationalism and corporatism into a seamless whole, but it didn't work. In order for the corporation to triumph, it must be made superior to the state, so that the corporations control the states rather than the other way around. Again, stepping into territory, remember that Prescott Bush was forced by the government to divest himself of lucrative investments in Nazi Germany. The state impeded his ability to make money, which is the only "morality" of the monied right wing. So why not go in AFTER the war, rebuild the German (and the Japanese) economy, establish corporations that can operate regardless what political regime is in power. Eventually, the regimes become subservient to the corporations. The whole Iran-Contra episode was a similar scenario, with bunches of the same actors as we see in the current farce, and it may in fact have been a trial run to see if they could get away with it. They did. As a result, by 2008 the corporations -- InBev's takeover of Anheuser-Busch being a PERFECT example -- are immortal and supra-national to the point where nations, national identities, etc., no longer matter. ONLY the bottom line. ONLY.I consider boooooosh to have reached the point where the nation comes a distant second to the corporation. He and his board of directors have been able to utilize rhetoric that appeals to the nation and nationalism, but the motives are solely corporate. Iraq and WMDs, Iraq and democracy, even Iraq and cheap oil for the masses -- it's ALL empty rhetoric. The whole thing is about grabbing the wealth and profits, establishing a new world order based on the morality of the dollar (or any monetary unit they choose, since eventually they will all be interchangeable/identical). Remember, too, that there are those who would eagerly establish a government based on the principles defined in religious texts: Look at the Taliban in Afghanistan, the ayatollahs in Iran, al-Sadr in Iraq, even Israel. We've seen many many examples here in the U.S. of the right wing christians who want public education, public morality, etc., based on biblical principles. Is it, then, such a stretch to think there are people who have taken the philosophical, quasi-religious writings of Ayn Rand as their blueprint for world domination? She was an avowed atheist, yet her proposal for a new world order requires an apocalypse, an end times to sweep away the evil so the savior(s) can return and reign supreme. And yes, it's very possible that unless/until there is a French- or Russian-style revolution, they will not be stopped. Tansy Gold, who is beginning to think she is going off the deep end. . . . . . |
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