Fannie & Freddie....Remember

iVillage Member
Registered: 03-25-2007
Fannie & Freddie....Remember
48
Sun, 10-19-2008 - 9:08pm

In the last couple of months, there have been a number of threads where posters have contended that if only those durned Democrats hadn't blocked legislation introduced by Chuck Hagel (and later signed onto by McCain), that Fannie & Freddie wouldn't have suffered such incredible losses.

Sopal

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iVillage Member
Registered: 10-18-2008
Mon, 10-20-2008 - 1:44pm

This program starting at 21:50 also addresses Fannie & Freddie talking points the GOP is pushing:


http://www.thislife.org/Radio_Episode.aspx?sched=1265


This program at 57:53 details the absolutely awful

iVillage Member
Registered: 07-25-2006
Mon, 10-20-2008 - 1:48pm

Regulation or not, Dem or Rep. the unbiased Mcclatchey economists told us to suspend belief and think Fannie and Freddie had nothing to do with this crisis...IOW who cares who regulated or deregulated and when...



iVillage Member
Registered: 03-25-2007
Mon, 10-20-2008 - 1:53pm
I guess I'm missing the point.

Sopal

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iVillage Member
Registered: 07-25-2006
Mon, 10-20-2008 - 1:59pm

What??!?! What spending. The phenomenal,


iVillage Member
Registered: 07-25-2006
Mon, 10-20-2008 - 2:02pm

Okay, fannie and freddie badbadbad ;-)


iVillage Member
Registered: 03-25-2007
Mon, 10-20-2008 - 2:05pm
I am concerned as to how we're to pay the interest on the national debt (surely requiring an increase in taxes).

Sopal

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iVillage Member
Registered: 10-14-2008
Mon, 10-20-2008 - 2:07pm
I'm tempted to ask you how you pulled off such a remarkable feat, but I think that might actually be the sort of TOS violation I actually care about - because I wouldn't want you to feel pressured to reveal more about yourself and your own circumstances than you're comfortable with. And even beyond that, it's not necessarily all that germane to the overall situation. However, it does lead me to one line of thinking:

Even not knowing anything about how you accomplished your financial reversal-of-fortune, I can say this: you are unusual. I don't for a moment believe that what you've accomplished CAN'T be done....you are living proof that of course it CAN. But as Everlast said a while ago in the the amazing song "What It's Like" (complete lyrics here):
You know where it ends

Yo, it usually depends on where you start

There's a reason that the "rags to riches" story remains a compelling cultural icon/story (I won't say "myth," since that implies that I think it doesn't exist): because although it most certainly does exist, it's far less common than the much-more-ordinary story of people staying more-or-less where their parents did, with maybe some minor movement here or there along the economic ladder. We keep hearing in various tax-related threads that 40% of the country pays no taxes at all, and that you have to break the top-2% barrier before you earn over $250,000 a year. I bring that up not to re-debate it, but to point out the difference between 1.5% and 40%. Most people stay more or less where they are, even if it's possible to move.

And though there are undoubtedly many reasons for that, surely one of those reasons is that some people don't WANT to move (or they can't truly envision a realistic way that someone like themselves would do so; it usually involves lottery fantasies, or marrying someone rich, or becoming a sports or movie star: instant money). That's not to say that they wouldn't ENJOY or don't maybe FANTASIZE about being much more financially secure than they are....just that on some level, they're comfortable enough with where they are (or perhaps not motivated enough to change) that the end result is that they never really pursue it. A second reason might be that even among those who DO have the genuine desire to take concrete steps to move up the financial ladder, some fairly significant portion of them simply lack the talent to do so. It doesn't take any particular talent to fantasize about being wealthy. Succeeding in business or for that matter, any endeavor which isn't mostly chance, takes some talent and skill, along with the willingness to work hard.

I'll put it this way, in the hope that it's the easiest to understand what I'm driving at: while I believe it's possible for anyone to be able to do what you did, I also believe not everyone is capable of it. Does that make it clear? And I think that percentage of folks who might not be able to accomplish it, even if they had the desire, is larger than the number who could.

That's why things like social security are overall a good thing (not to mention the best-loved social program ever, period): because not everyone is capable of understanding and using the financial markets to their advantage reliably. Many just don't want the hassle. Others would simply screw up. I've heard over and over on this board - and elsewhere, over the years - from people with libertarian or other fiscally-conservative points of view that they don't like Social Security, for example, because they feel it's taking their money without their consent, which bugs them because they're quite convinced they could do better with investing it than the government could. While we probably could have a robust debate about how frequently this certainty is deserved or accurate, let's say it's always true, just for the sake of argument: that anyone who says "I hate SS because I could invest my money better" is probably smart enough to be right in that assertion. How large a percentage of the population do you think makes such a claim?

Why isn't it more of a universal lament? My answer would be: because there are a lot of people out there who simply don't think in these terms, or - to the extent they do - realize that they probably WOULDN'T be able to beat the payoffs of SS through private investing. Smart people - people who care enough to figure it out and stick with it - likely CAN beat SS's payout. Others? Not so much, I think. For them, it's comforting that - even though they might understand that someone else could get a better return on their money - their SS check will be waiting for them, to keep them from the worst sorts of poverty in their old age(s), without them having to risk it in the stock market. Especially when they see things like major banks and other financial institutions failing around them: more than ever, it makes them thankful that those SS checks arrive without having to depend upon what's in reality - if we're being honest about it - gambling. No matter how many nice suits and ties people wear, or how many big colorful prospectuses they produce, the bottom-line reality that in fact one is gambling one's money (and COULD lose it all, even if this isn't too likely) remains true.

I didn't bring SS up to have a debate about its merits, per se - just to point out that some people (and a fairly large chunk, I'd argue) don't think they have what it takes to do the sort of "I can beat the system" type of success that you've accomplished for yourself....and/or, they don't WANT to mess with it, for whatever reason: maybe they're a teacher, and their fulfillment is in teaching kids....so the old idea of "go out and better yourself" really doesn't apply: they're already doing what they love; it just isn't ever going to make them rich under even the most optimistic of circumstances. The point is not to create a "nanny state" in which everything is controlled by the government, or to inject government into every aspect of people's lives, or even to prevent people like you with both the desire and the savvy to accomplish a goal that's possible, but not commonly accomplished, from achieving or pursuing your goals. Instead, it's simply to step back and say "what about everyone else, who's either not interested or not able to pursue such financial ladder-climbing? Will we - and HOW will we - structure our safety-nets so that they don't have to live in fear when they're young and working of living in penury if they become infirm or ill, like many of us do, or old, like hopefully all of us will sooner or later?" My biggest problem with hands-off libertarianism is that in theory, it works great for everyone....but in practice, it only seems to work well for the types of people who already KNOW they'd do well under it: those with the either environmental gifts (such as wealthy parents or a good education) or natural gifts (high intelligence or the like) which give them a leg up on being able to do better than the average. And while I certainly think that our governmental and social systems should be set up to allow people with such gifts to take full advantage of them to their own benefit with as few restrictions as possible, I don't think that the much-larger group of people who lack these gifts or advantages should be forced to live in the kind of fear and want which the more "pure" conceptions of libertarian societies would make them endure.

Somewhere, at bottom, I just don't subscribe to "screw 'em if they can't make it on their own" as a philosophy of how human relations ought to be. I liken it somewhat to one of my favorite old political quotes, from Thomas Noon Talfourd: "Fill the seats of justice with good men, but not so absolute in goodness as to forget what human frailty is.">

iVillage Member
Registered: 10-14-2008
Mon, 10-20-2008 - 2:08pm
Good gracious, that was awesome.

iVillage Member
Registered: 10-18-2008
Mon, 10-20-2008 - 2:11pm
I don't admit it. At what point in time (1938-2008) are you claiming Fannie Mae was bad? Or were they always bad?


Edited 10/20/2008 2:12 pm ET by friendwithbenefits
iVillage Member
Registered: 10-18-2008
Mon, 10-20-2008 - 2:16pm
Once again, amazing post. I appreciate your research. It's top-notch.