Momma “Saves” Fannie/Freddie?

As I have written before I have been concerned that Mother Government would come to the rescue of Fannie and Freddie.  Well, it looks like she did this weekend.  I believe that sets such a bad precedent for the future.  They both were creatures of the Government from day one.  Fannie goes all the way back to FDR.  The Government should never have been in the mortgage business in any fashion.  But the situation endured due to politics over the decades and the intense lobbying of the Fannie folks themselves.   Here the bad news is laid at the feet of the Democrats.  They created it and nutured it for decades and made sure that Democratic-friendly management was in place.   Fannie and Freddie have poured millions into the coffers of the Democratic party over the decades with their lobbying efforts.   It is always a bad idea for any Government to get involved in the business affairs of the people.  Trust the people and let them make their own decisions and bear the consequences of those decisions.  The Republicans could have fought harder over the years but were too shy about appearing not politicially correct and somehow against the interest of the common man.  The common man would have been much better off over the years by having access to a healthy economy and mortgages that made sense from a business standpoint.  Anytime you have an industry that is “propped up” by the Government, you have a distortion in the marketplace that will cause harm sooner or later.  Later has arrived.

Fannie and Freddie do have assets.  They hold mortgages.  The vast majority of those mortgages are current and will remain current on their payments and represent a solid cash stream of money for an investor.  It is a long term investment and would be ideal for pension plans for example.   Those assets still have substantial value.  The folks who invested in a Government company took their chance and made their own assessment of risk.  They should not be rewarded with any Governement help.  Maybe they won’t be.   But that doesn’t offset the millions of dollars that went out in  profits to the shareholders over the years.  When I make an investement in any company, I take the risk.  I reap the reward if there is one and I bear the burden of loss when that happens too.  I bet you have made a couple of  bad investments over the years and no one came to offer you any help.    Bear in mind that the people who owe on their mortgages are in no danger as long as they pay their mortgage payments.  You and I have paid our mortgages on time like a slot machine for years.  We never received or expected any special breaks from anyone.    I have no sympathy for example for investors who bought numerous houses on easy financing and hoped to make a proft on the expeceted rise in home values.    They made an choice and why should we make sure now they don’t suffer a loss on an unwise investment? 

Now that they have been put into Conservatorship the Government should break them down into several much smaller units and sell them off to investors.  Investors will bid.  There is value and a profit to be made.  The Government should get out of the mortgage business entirely.   The Government already regulates the Banks and Savings and Loans, that is sufficient protection for the average Joe.   Do you really want all that Government regulation in your purchase of your next home?   Just read the fine print for once on a FHA backed loan.   Really read it.  It is your property why are you having to conform to all these regulations of the Government?   You won’t have to if you get a private loan.  Those private loans will be readily available if only the Government would get its finger out of the pot.

Also, the precedent is terrible.  You recall we have already mentioned that the Big Three Automakers were approaching Congress with a request for help, to the tune of Billions.   Read your paper and you will see that they are making their move now.  If the Feds are helping out Fannie and Freddie why not the Big Three?  There are lots of votes there with all those auto workers so sadly I think there is a good chance that the Government will offer “loans” or whatever to them.   After just stepping in for Fannie/Freddie it will be harder to say no.    God gave us free will so we could succeed and fail.  A life that “guarantees” only success is no life at all.  Go back and re read Fahrenheit 451 for example.  The Government can’t guarantee success and in fact it shouldn’t try.   Government help comes with a price–they want you to be in thrall to the powers that be in Washington–and you will be.  

Electromagnetism is an amazing property or force.  If you have magnets and a conductor and a little motion you get electriciy to power your home or shaver.  With electricity you can make magnets.  What a circle of power.  That force gives us life itself.  Our magnetic field in Earth literally saves our lives each day.  We would be killed within minutes by the other elements of the electromagnetic force produced by our Sun without its protection.  Gamma ray, x-rays, radio waves, light itself are all part of the electromagnetic force.   Those are only a few of its magical and life sustaining attributes.  I find it spiritual in application.  Not all bodies in the Universe have a magnetic field.  Mother Nature sure doesn’t care if there is one on Earth.  There isn’t one on the Moon for example.   Just one more marker that something special happened when this place we call home was created.


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Filed under Economics, government, history, Politics

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