http://www.wvwnews.net/story.php?id=5607
Whether we realize it or not, we the people (or “the public” or “society” or whatever we are) now effectively http://www.wvwnews.net/story.php?id=5665 and friends are now even considering buying up bad loans, which we means that we the people would own tons of actual houses, and not just the capital used to finance them.
I don’t think anyone is particularly excited about our latest collective purchase; publicly owning real estate doesn’t exactly fill you with the same sense of pride you felt upon buying your first home. Indeed, the vibe I’m picking up here in the so-called “financial capital of the world” is something close to widespread panic.
Well, before we get caught up in the hysteria, three important points should be made.1) Though tons of left-leaning journalists are speaking of a general financial meltdown, of the shattering of the foundations of American capitalism, in reality most of the problems are centered on one sector — housing. (Though “spillover” is of course taking effect.)
Fannie and Freddie both did nothing but mortgages and Lehman Brothers and AIG got into dire straights due to their forays into subprime lending and those pesky mortgage-baked securities.
2) The kind of direct state intervention into the housing market like we’ve seen over the past few weeks is nothing new — the federal government has been doing it for the past 75 years (and making a general mess of things along the way.)
Fannie and Freddie are a great example of this. Both we’re New Deal organizations established to subsidized homeownership. They were “privatized” by LBJ (with the government still there to back their loans and regulate them) and now have been, in effect, re-nationalized by Bush and Paulson.
(Back in the ’60s, Fannie and Freddie were replaced with yet another government lending entity, “Ginnie Mae,” indicating that there must be some federal law that all government mortgage houses must have cutesy names that make them sound like genteel Southern realtors.)
3) Though conservatives like to rail against welfare and food stamps as wicked socialism, most Republicans have treated federalized lending as pure Americana — even as “pro-market.” Too few have pointed out that there might be an unintended consequence or two when the federal government compels banks to make loans to low-income Americans who, under normal market conditions, wouldn’t be considered ready for the responsibility of debt and homeownership — this is what “sub-prime” lending is all about. Just before Fannie and Freddie collapsed, Bush & Co. were ordering them to buy up all the bad paper on the market — indeed, this might have been what send the two lending giants over the edge.
The supposedly “conservative” and “free-market” Bush admin has been one of the most assiduous in trying to inflate minority and low-income home-buying through government action. And it’s thus been the poor and non-white who’ve suffered the most once the bubble inevitably burst.
http://awearnessblog.com/2008/09/you-are-now-the-proud-owner-of.php