Fannie Freddie Fiasco
Tuesday, September 9th, 2008
How can the world’s most right wing administration delve into the biggest act of socialism since the Great Depression? By allowing the economic fundamentals to be skewed towards speculation rather than production, the Bush administration has accelerated the push towards short term profiteering.
The last 30 years of global economic policy has encouraged this move away from manufacturing and towards speculative services. CDO’s and the like are the effect, Tax policy is the cause of such lucrative arbitrage.
Tune into the Renegade Economists tomorrow as we interview Dr. Michael Hudson on one of the biggest financial headaches of the decade. Dr Hudson was the former Chief Economic Policy Adviser for the Kucinich for President campaign.
The bailout of Fannie Mae and Freddie Mac could see up to $240 billion diverted away from crucial areas like health and education. But will this propping up of the market assist in the long run? Millions of US foreclosures on properties are occurring, with another raft of Adjustable Rate Mortgages to kick in with higher rates during the month of October.
Foreclosures occur because land and property was purchased at levels that were beyond the wages of the working class man. They paid speculative prices, expecting land and property prices to continue upwards forever – “You Never Lose on Property”. As we are seeing, you do if you buy at the wrong time, when land prices cannot be passed on to another optimistic buyer.
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