There has been a great deal of criticism of community organizers for encouraging low income families to take out subprime loans to buy houses in an overvalued market.
I commend the efforts to help low income families secure housing.
The problem is not with the intention of community organizers but that the community organizers used financing tools that exposed low income families to financials risks that they were not able to handle.
With shared equity financing, the community organization could work out financing where the low income family received a loan for a set portion of a house. The community organization would own a lien against the property for a set portion of its final sale price.
With shared equity financing, the low income family would end up with clear ownership of their portion of the house.
The community organization would own a lien against the house. This lien is a valuable thing that could be bundled with other liens and traded on the open market.
Unlike subprime loans, which investors treat as toxic, shares in community housing would actually be an attractive investment as they would be relatively secure (tracking the local real estate market) and they would carry a positive press of being an investment in the community.
NOTE, the reason for this post is to emphasize shared equity financing as the solution to low income housing. When a person has a big mortgage against the value of their property, they never have a clear idea what their actual equity is. Equity is the sale price of the property minus the mortgage. In shared equity financing the homeowner's equity is a set portion of the home value.
In the scheme of things, I had been thinking about this as a solution to low income housing. My previous posts talking about how it is the solution to the mortgage mess was an attempt to raise interest in the idea.
I've emailed this proposal to a number of groups. So far, interest is zero.
Showing posts with label housing. Show all posts
Showing posts with label housing. Show all posts
Thursday, October 09, 2008
Tuesday, September 30, 2008
Open Source Real Time eXchange
In recent posts, I've been ranting about abuses in the Stock Market.
Truth be told. I prefer doing to ranting.
IMHO, the problems in the current market result from gaps in the securities traded and the real items that the securities represent.
A driving force in the 2008 market collapse was the fear that bundles of mortgage backed securities were rife with bad loans. The market froze and banks collapsed as people lost confidence in the value of the securities.
Gaps in the trading system made things worse. As people lost confidence in securities, Hedge Funds hit the market with an unprecedent barrage of short selling. In the current regulatory regime, there is a multiday gap between a trade and transfer of the stock. During the market crash, there was an increase in the failures to deliver stock purchased.
It appears that these Failures to Delivered artificially accelerated the crash.
The crash was caused by investment tools that do not accurately reflect the real items behind paper securities. IMHO, the solution is to create a new exchange with fewer gaps.
Anyway, I just registered the domain name OSRTX.com. The acronym stands for Open Source Real Time eXchange.
Unfortunately, a blog is not the right format for writing a proposal. As such, I will place the proposal on the page called The Shared Equity project.
Truth be told. I prefer doing to ranting.
IMHO, the problems in the current market result from gaps in the securities traded and the real items that the securities represent.
A driving force in the 2008 market collapse was the fear that bundles of mortgage backed securities were rife with bad loans. The market froze and banks collapsed as people lost confidence in the value of the securities.
Gaps in the trading system made things worse. As people lost confidence in securities, Hedge Funds hit the market with an unprecedent barrage of short selling. In the current regulatory regime, there is a multiday gap between a trade and transfer of the stock. During the market crash, there was an increase in the failures to deliver stock purchased.
It appears that these Failures to Delivered artificially accelerated the crash.
The crash was caused by investment tools that do not accurately reflect the real items behind paper securities. IMHO, the solution is to create a new exchange with fewer gaps.
Anyway, I just registered the domain name OSRTX.com. The acronym stands for Open Source Real Time eXchange.
Unfortunately, a blog is not the right format for writing a proposal. As such, I will place the proposal on the page called The Shared Equity project.
Monday, September 29, 2008
The Rise and Fall of WaMu
On the post Shorts Say WooHoo!, I deep linked a graph from DeepCapture.com showing the role FtDs played in the final days of Washington Mutual. It was heartbreaking to see a company that played an important role in many lifes go up in a puff of questionable paper.
Truth be told, I was actually more disheartened by the rise of Washington Mutual from a wonderful little local mutual fund to a banking behemoth. I extracted the list of WaMu acquistions from Wikipedia.
Quite frankly, I was more disheartened by the slow played drama of all these wonderful little banks being vacuumed up by a corporate giant, than in watching the thunderous collapse of the corporate giant.
Mergers are not one sided. Yes, some mergers are the result of hostile take overs. My understanding in the Washington Mutual expansion is that many of the small banks were seeking protection of a larger company. Regulations like the Community Re-investment Act (established in 1977 and greatly expanded in 1995), put tremendous regulatory pressures on local lending institution. Community organizers were pressuring local banks into bad loans.
As school yard wimps know, the solution to a school yard bully is a big brother.
My take is that the small banks saw the writing on the wall. They saw that the changing regulations and attitudes towards mortgages made their small business plans tenuous. So, the solution is to seek protection in a bigger, politically powerful firm.
We saw a similar merger strategy in the WorldCom fiasco. A large number of marginal companies merged creating the semblance of growth. Eventually the company collapsed.
Truth be told, I was actually more disheartened by the rise of Washington Mutual from a wonderful little local mutual fund to a banking behemoth. I extracted the list of WaMu acquistions from Wikipedia.
- Old Stone Bank of Washington, FSB, Rhode Island, 1990
- Frontier Federal Savings Association, Washington, 1990
- Williamsburg Federal Savings Association, Utah, 1990
- Vancouver Federal Savings Bank, Washington, 1991
- CrossLand Savings FSB, Utah, 1991
- Sound Savings & Loan Association, Washington, 1991
- Great Northwest Bank, Washington, 1992
- Pioneer Savings Bank, Washington, 1993
- Pacific First Bank, Ontario, 1993
- Far West Federal Savings Bank, Oregon, 1994
- Summit Savings Bank, Washington, 1994
- Olympus Bank FSB, Utah, 1995
- Enterprise Bank, Washington, 1995
- Western Bank, Oregon, 1996
- Utah Federal Savings Bank, 1996
- Keystone Holdings, Inc. (American Savings Bank), California, 1996
- United Western Financial Group, Inc., Utah, 1997
- Great Western Bank, 1997
- H. F. Ahmanson & Co. (Home Savings of America), California, 1998
- Industrial Bank, California, 1998
- Long Beach Financial Corp., California, 1999
- Alta Residential Mortgage Trust, California, 2000
- PNC Mortgage, Illinois, 2001
- Bank United Corp., Texas, 2001
- Fleet Mortgage Corp., South Carolina, 2001
- Dime Bancorp, Inc., New York, 2002
- HomeSide Lending, Inc., Florida, a unit of National Australia Bank, 2002
- Providian Financial Corporation, California, 2005
- Commercial Capital Bancorp, California, 2006
Quite frankly, I was more disheartened by the slow played drama of all these wonderful little banks being vacuumed up by a corporate giant, than in watching the thunderous collapse of the corporate giant.
Mergers are not one sided. Yes, some mergers are the result of hostile take overs. My understanding in the Washington Mutual expansion is that many of the small banks were seeking protection of a larger company. Regulations like the Community Re-investment Act (established in 1977 and greatly expanded in 1995), put tremendous regulatory pressures on local lending institution. Community organizers were pressuring local banks into bad loans.
As school yard wimps know, the solution to a school yard bully is a big brother.
My take is that the small banks saw the writing on the wall. They saw that the changing regulations and attitudes towards mortgages made their small business plans tenuous. So, the solution is to seek protection in a bigger, politically powerful firm.
We saw a similar merger strategy in the WorldCom fiasco. A large number of marginal companies merged creating the semblance of growth. Eventually the company collapsed.
Saturday, September 27, 2008
Centralization
In the first presidential debate, Barack Obama did a great job framing the mortgage crisis as one of regulation v. deregulation.
Republicans would be wise to reframe the issue as a question of centralization v. decentralization. FannieMae and FreddieMac were creations of the New Deal which effectively centralized the mortgage industry by giving a tacit understanding that the mortgages were backed by the US taxpayers.
The centralization created this strange thing that unified all of the mortgage markets across the country (and even parts of the world) into one big top heavy market.
The fault of the Republicans is that they failed to realize that centralization is a worse problem than regulation. They were happy to privative the centralized regulatory market; however that market was inherently instable. To make deregulation work, one most completely break the centralized regulatory mechanisms.
Obama's claim is that a regulator jumping up and down on the starboard side of the centralized mortgage market could keep it stable. The truth of the matter is that no markets are ever stable.
Rebuilding the centralized regulatory mechanism might give a moments sense of stability; however, we are just setting ourselves up again for a new crash.
Rather than rebuilding the economy based on tools for a rigid economy. We should realize that markets are fluid and transition our economy from rigid investment tools like mortgages and interest bearing loans to securities that share risks and equity in a fluid market.
Republicans would be wise to reframe the issue as a question of centralization v. decentralization. FannieMae and FreddieMac were creations of the New Deal which effectively centralized the mortgage industry by giving a tacit understanding that the mortgages were backed by the US taxpayers.
The centralization created this strange thing that unified all of the mortgage markets across the country (and even parts of the world) into one big top heavy market.
The fault of the Republicans is that they failed to realize that centralization is a worse problem than regulation. They were happy to privative the centralized regulatory market; however that market was inherently instable. To make deregulation work, one most completely break the centralized regulatory mechanisms.
Obama's claim is that a regulator jumping up and down on the starboard side of the centralized mortgage market could keep it stable. The truth of the matter is that no markets are ever stable.
Rebuilding the centralized regulatory mechanism might give a moments sense of stability; however, we are just setting ourselves up again for a new crash.
Rather than rebuilding the economy based on tools for a rigid economy. We should realize that markets are fluid and transition our economy from rigid investment tools like mortgages and interest bearing loans to securities that share risks and equity in a fluid market.
Monday, September 15, 2008
Mortgages and Ownership
The American Mortgage industry began with the assumption that a mortgage would be a stop gap measure on the path to full ownership of a piece of property.
Today, housing prices are so high that full ownership of property is not a feasible option for the majority of Americans. The few people who are in a position to buy a home outright would be wise to have their investments diversified.
The fact that people are no longer seeking full ownership of the home when they buy a piece of property makes mortgages problematic. A person does not really own something when their is a lien against it.
When you pay your monthly mortgage payment, you can never smuggly say "I own x percent of a house." What you have is a piece of property with a free floating risk associated with it. This type of situation is better described as illusionship than ownership.
The idea that people have mortgages that they will never fully repay looks ugly from both the individual and societal level.
From a societal level, we have millions of people clinging to the hope that the fixed interest they are paying on their loan will never get too far out of whack with their property value. The whole paradigm is something that pushes a population toward a precipice.
The mortgage problem is not simply the fault of a few bad actors that engaged in predatory lending. The idea of mass marketed mortgages is systemically flawed.
Our two presidential candidates seem to believe that the fix to the problem is a new regulatory regime that will renew faith in our mortgages.
I am back to thinking that we need to rethink the financing of housing from scratch, and that thinking should start with the idea that a person should not take out a loan until their is a very clear path to full ownership for the property in question.
See Shared Risk Financing Post. This post is also related to the strange math post. The mortgage model is based on a mathematical model that says we can finance real estate at money market rates because real estate will always appreciate at a rate faster than inflation, which is a dubious assumption.
Today, housing prices are so high that full ownership of property is not a feasible option for the majority of Americans. The few people who are in a position to buy a home outright would be wise to have their investments diversified.
The fact that people are no longer seeking full ownership of the home when they buy a piece of property makes mortgages problematic. A person does not really own something when their is a lien against it.
When you pay your monthly mortgage payment, you can never smuggly say "I own x percent of a house." What you have is a piece of property with a free floating risk associated with it. This type of situation is better described as illusionship than ownership.
The idea that people have mortgages that they will never fully repay looks ugly from both the individual and societal level.
From a societal level, we have millions of people clinging to the hope that the fixed interest they are paying on their loan will never get too far out of whack with their property value. The whole paradigm is something that pushes a population toward a precipice.
The mortgage problem is not simply the fault of a few bad actors that engaged in predatory lending. The idea of mass marketed mortgages is systemically flawed.
Our two presidential candidates seem to believe that the fix to the problem is a new regulatory regime that will renew faith in our mortgages.
I am back to thinking that we need to rethink the financing of housing from scratch, and that thinking should start with the idea that a person should not take out a loan until their is a very clear path to full ownership for the property in question.
See Shared Risk Financing Post. This post is also related to the strange math post. The mortgage model is based on a mathematical model that says we can finance real estate at money market rates because real estate will always appreciate at a rate faster than inflation, which is a dubious assumption.
Thursday, September 11, 2008
SRF and the Mortgage Mess
In the last post I noted that Shared Risk Financing eliminates the need for re-insurance. Therefore, this reduces the need for re-insurance schemes like Freddie Mac and Fannie Mae.
The Mortgage Mess happened because housing prices did not increase at the rate anticipated by borrowers. A large number of people owe more than their home is worth and are walking away from mortgages. There is a liquidity crises because banks have no way to know what their mortgage portfolio is worth.
Switching troubled loans from the mortgage to a shared risk contract would give the parties involved a clear idea of what they owned, and would restore liquidity.
A borrower would move from the situation where they owe a fixed amount on a house, for which they don't know the value. The lender would move from a situation where they have a fixed loan but don't know if the borrow will ever pay them back to actually owning a share of property which can be valued and traded.
The initial act of valuing and trading the SRF's would created a mini financial boon as the market re-aligns. The Feds would probably have to pour some cash into the pot to help home owners seriously underwater. The SRFs put the primary parties into a situation where they have better knowledge of their assets.
The Mortgage Mess happened because housing prices did not increase at the rate anticipated by borrowers. A large number of people owe more than their home is worth and are walking away from mortgages. There is a liquidity crises because banks have no way to know what their mortgage portfolio is worth.
Switching troubled loans from the mortgage to a shared risk contract would give the parties involved a clear idea of what they owned, and would restore liquidity.
A borrower would move from the situation where they owe a fixed amount on a house, for which they don't know the value. The lender would move from a situation where they have a fixed loan but don't know if the borrow will ever pay them back to actually owning a share of property which can be valued and traded.
The initial act of valuing and trading the SRF's would created a mini financial boon as the market re-aligns. The Feds would probably have to pour some cash into the pot to help home owners seriously underwater. The SRFs put the primary parties into a situation where they have better knowledge of their assets.
Shared Risk and Reinsurance
I did some more thinking on the shared ownership concept I spat out a few days ago.
First, I decided to rename the ideaShared-Risk-Financing Shared-Equity-Financing.
Shared equity financing dramatically eliminates the need for massive re-insurance programs like Fannie Mae and Freddie Mac.
The mortgage industry was created by bankers who wanted a guaranteed income from the paper money created by the Feds. In this scheme, bankers borrow money at a fixed rate from the government then loans it to a home owner at a fixed rate. The bank's income is the difference between the two rates.
This scheme requires a re-insurance mechanism because the fixed rate scheme is untenable in times of economic duress. When prices dip, people are uable (or are unwilling) to pay back the high interest loans. Banks suddenly lose liquidity and are unable to make new loans, and the market freezes.
This mortgage structure is inherently unstable.
The inherent instability of mortgages created the need for big federal re-insurance programs. The idea behind these programs is that real-estate cycles tend to be local. The hope of re-insurance is that, if there is a liquidity crisis in one real estate market, the re-insurance scheme could rush money from other markets into the squeezed market and stave off local economic failure.
The great fault of the re-insurance programs is that such programs eventually turn the whole country into a single market with a deeper systemic fault. The big reinsurance schemes create the conditions where our whole nation (if not the whole world economy) will periodically suffer sudden and severe economic crisis.
Shared Equity Financing does not use an artificial fixed interest rate. The home owner and creditor share the ups and downs of housing prices. With such a scheme you never lose total liquidity as you do with mortgage financing.
First, I decided to rename the idea
Edited 9/6/2010: I changed the name to Shared Equity Financing to emphasize the investment aspects of the scheme.
Shared equity financing dramatically eliminates the need for massive re-insurance programs like Fannie Mae and Freddie Mac.
The mortgage industry was created by bankers who wanted a guaranteed income from the paper money created by the Feds. In this scheme, bankers borrow money at a fixed rate from the government then loans it to a home owner at a fixed rate. The bank's income is the difference between the two rates.
This scheme requires a re-insurance mechanism because the fixed rate scheme is untenable in times of economic duress. When prices dip, people are uable (or are unwilling) to pay back the high interest loans. Banks suddenly lose liquidity and are unable to make new loans, and the market freezes.
This mortgage structure is inherently unstable.
The inherent instability of mortgages created the need for big federal re-insurance programs. The idea behind these programs is that real-estate cycles tend to be local. The hope of re-insurance is that, if there is a liquidity crisis in one real estate market, the re-insurance scheme could rush money from other markets into the squeezed market and stave off local economic failure.
The great fault of the re-insurance programs is that such programs eventually turn the whole country into a single market with a deeper systemic fault. The big reinsurance schemes create the conditions where our whole nation (if not the whole world economy) will periodically suffer sudden and severe economic crisis.
Shared Equity Financing does not use an artificial fixed interest rate. The home owner and creditor share the ups and downs of housing prices. With such a scheme you never lose total liquidity as you do with mortgage financing.
Monday, September 08, 2008
Shared Ownership
In my last post I ranted about the mortgage mess. Ranting is easy. Coming up with a solution to the mess is harder. People want solutions. Here goes a post on a possible long term solution.
My solution is a radical thing that starts by re-assessing mortgages altogether.
A mortgage is a thing where you borrow money to buy a home and pay interest on the loan. The interest rate is set by the global money market. This rate is manipulated by centralized banks such as the Federal Reserve, Fannie Mae and Freddie Mac.
The loans are made by banks seeking a guaranteed income from their investment. From a macro view, this system is untenable. You have groups trying to get an assured income on trillions of dollars in investments.
Libertarians often rant against this structure calling it "rent-seeking."
The paradigm has borrowers bearing the entire risk of homeownership. This type of system seems to work when prices are rising. Unfortunately, there is no such thing as a perfect market where prices run up forever. When the market slows down or dips, the last people in the market get hurt big time.
Imagine a person borrowed $100k in 2006 to buy a $100k house. They worked hard and paid $20k of their loan. In the mean time, the house dropped in value to $80k. Their bank statement would show they had $20k equity on a loan, while in reality they have zero real equity in their home. If they are forced to sell, the homeowner can kiss their money goodbye.
A more equitable way to go about housing is to develop a system of shared ownership. In a system of shared ownership, multiple groups would have a stake in a house. Imagine the same house where the home buyers had an arrangement of shared ownership. Imagine that, at the purchase of the house, the homeowners had a shared ownership arrangement where the value of the house was split into 100 shares. During the years, they bought back 20 of the shares for $20. When the home buyers were force to sell in a down market, they would have a real 20% equity in the home and would get $16k when the house sells at $80k.
I should note that homeowners and the bank would share in both the risks and rewards of homes. The shared ownership notes would trade on a market and would rise and fall with investor's expectations of the market.
It would take a long dissertation to explain how contracts and the mathematics around shared ownership would work. People are very good at writing contracts.
The public debate should focus on the distinction between sharing ownership and mortgaging ownership.
I contend that sharing ownership builds community, while the mortgage process encourages a gambler's approach to housing and ultimately forces people into subservience to the banking community.
My solution is a radical thing that starts by re-assessing mortgages altogether.
A mortgage is a thing where you borrow money to buy a home and pay interest on the loan. The interest rate is set by the global money market. This rate is manipulated by centralized banks such as the Federal Reserve, Fannie Mae and Freddie Mac.
The loans are made by banks seeking a guaranteed income from their investment. From a macro view, this system is untenable. You have groups trying to get an assured income on trillions of dollars in investments.
Libertarians often rant against this structure calling it "rent-seeking."
The paradigm has borrowers bearing the entire risk of homeownership. This type of system seems to work when prices are rising. Unfortunately, there is no such thing as a perfect market where prices run up forever. When the market slows down or dips, the last people in the market get hurt big time.
Imagine a person borrowed $100k in 2006 to buy a $100k house. They worked hard and paid $20k of their loan. In the mean time, the house dropped in value to $80k. Their bank statement would show they had $20k equity on a loan, while in reality they have zero real equity in their home. If they are forced to sell, the homeowner can kiss their money goodbye.
A more equitable way to go about housing is to develop a system of shared ownership. In a system of shared ownership, multiple groups would have a stake in a house. Imagine the same house where the home buyers had an arrangement of shared ownership. Imagine that, at the purchase of the house, the homeowners had a shared ownership arrangement where the value of the house was split into 100 shares. During the years, they bought back 20 of the shares for $20. When the home buyers were force to sell in a down market, they would have a real 20% equity in the home and would get $16k when the house sells at $80k.
I should note that homeowners and the bank would share in both the risks and rewards of homes. The shared ownership notes would trade on a market and would rise and fall with investor's expectations of the market.
It would take a long dissertation to explain how contracts and the mathematics around shared ownership would work. People are very good at writing contracts.
The public debate should focus on the distinction between sharing ownership and mortgaging ownership.
I contend that sharing ownership builds community, while the mortgage process encourages a gambler's approach to housing and ultimately forces people into subservience to the banking community.
NOTE (9/11/2008): I decided that Shared Risk Financing is a better name for what I described in this post, than shared ownership.
Saturday, September 06, 2008
Doing Unto Healthcare
I admit, a year ago, the mortgage mess had me baffled. I couldn't figure out how mortgage portfolios got so toxic so quickly.
The excuse I heard from the left made absolutely no sense. They said that there were horrible people called predatory lenders who loaned money to people who couldn't pay the money back. These horrible people caused the mess.
I have no doubt that there are horrible people in this world. However, companies that make loans that never get paid back tend to go under. The free market would weed out such clowns.
A year into the crisis, when it is time to put taxpayers' dollars where the pundits' mouths are, we get to see the real cause of the mortgage mess.
The real cause of the mortgage mess are two comic book characters from the New Deal called Fannie Mae and Freddie Mac.
These two government spawned entities that handle half of the mortgage re-insurance. The two behemoths masquerade as private companies so that their actions would not be reflected in the government books. The companies would buy and repackage mortgage portfolios, with the tacit understanding that they would get a government bailout if ever things went south.)
So, just like the Savings and Loan Crisis of the 1980s, we find our financial markets mucked up by incompetent political drones. The S&L Crisis as enabled by another creation of FDR called the FSLIC that re-insured Savings and Loans.
So, the mortgage mess of 2008 is the second major financial crisis caused by Saint Roosevelt
The reason I filed this post under health care is that this re-insurance model is exactly the type of program that intellectual giants like Mitt Romney and Hillary Clinton want to define the health care industry.
BTW, I suspect that the neocons are partially to blame. A neocon is a Democrat who became a Republicans when it was politically expedient. The mantra of the neocons was to encourage ownership. Their ideology would be to use the power of the Fannie Mae and Feddie Mac to encourage risky loans, failing to realize that they were undermining their cause.
Statists can make the claim that it was the horrible neocons that enabled the horrible predatory lenders that caused their precious comic book companies Fannie Mae and Freddie Mac to behave comically.
Hidden behind statist excusism is the absurd notion that the comical government schemes to control markets for social justice are premised on having a perfect person with clairvoyant powers to oversee the agencies.
The reality is that these big government agencies work by thrashing from crisis to crisis. You have one big crisis and thrash to the next big crisis.
As fortunes dwindle in this mortgage mess, I hope people realize the inherent absurdity of the big government programs that are supposed to let us live below financial sea level without drowning in our own stupidity.
Sadly, in the same year that we suffer the mortgage mess, we are likely to vote in a president who wants to do unto health care what Fannie Mae and Freddie Mac did unto the housing market.
The excuse I heard from the left made absolutely no sense. They said that there were horrible people called predatory lenders who loaned money to people who couldn't pay the money back. These horrible people caused the mess.
I have no doubt that there are horrible people in this world. However, companies that make loans that never get paid back tend to go under. The free market would weed out such clowns.
A year into the crisis, when it is time to put taxpayers' dollars where the pundits' mouths are, we get to see the real cause of the mortgage mess.
The real cause of the mortgage mess are two comic book characters from the New Deal called Fannie Mae and Freddie Mac.
These two government spawned entities that handle half of the mortgage re-insurance. The two behemoths masquerade as private companies so that their actions would not be reflected in the government books. The companies would buy and repackage mortgage portfolios, with the tacit understanding that they would get a government bailout if ever things went south.)
So, just like the Savings and Loan Crisis of the 1980s, we find our financial markets mucked up by incompetent political drones. The S&L Crisis as enabled by another creation of FDR called the FSLIC that re-insured Savings and Loans.
So, the mortgage mess of 2008 is the second major financial crisis caused by Saint Roosevelt
The reason I filed this post under health care is that this re-insurance model is exactly the type of program that intellectual giants like Mitt Romney and Hillary Clinton want to define the health care industry.
BTW, I suspect that the neocons are partially to blame. A neocon is a Democrat who became a Republicans when it was politically expedient. The mantra of the neocons was to encourage ownership. Their ideology would be to use the power of the Fannie Mae and Feddie Mac to encourage risky loans, failing to realize that they were undermining their cause.
Statists can make the claim that it was the horrible neocons that enabled the horrible predatory lenders that caused their precious comic book companies Fannie Mae and Freddie Mac to behave comically.
Hidden behind statist excusism is the absurd notion that the comical government schemes to control markets for social justice are premised on having a perfect person with clairvoyant powers to oversee the agencies.
The reality is that these big government agencies work by thrashing from crisis to crisis. You have one big crisis and thrash to the next big crisis.
As fortunes dwindle in this mortgage mess, I hope people realize the inherent absurdity of the big government programs that are supposed to let us live below financial sea level without drowning in our own stupidity.
Sadly, in the same year that we suffer the mortgage mess, we are likely to vote in a president who wants to do unto health care what Fannie Mae and Freddie Mac did unto the housing market.
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