Category Archives: Political Economy

Paying Freddie & Fannie To Hoard Homes

Business, Debt, Government, Political Economy, Socialism

If there’s one thing you need to know about President Barack Obama so-called financial-regulatory overhaul it is that, predictably, it didn’t touch the Freddie Mac and Fannie Mae money pits. Freddie, a government owned mortgage-finance company, has cost taxpayers (or China) $63.1 billion, and it has “asked the U.S. Treasury to provide [it with an additional] $1.8 billion infusion.” “Fannie last week asked the government for $1.5 billion, bringing the total tab for the companies’ rescue to $148 billion.”

You will recalled that in May of this year, the thieves in charge of the Treasury handed over another $8.4 billion to “Fannie Mae and sister company Freddie Mac.” And that “The Obama administration had pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.”

WSJ:

The U.S. took over Freddie and Fannie two years ago through a legal process known as conservatorship and has pledged to inject unlimited sums of aid over the next three years to keep the companies afloat.

Freddie is being propped up by taxpayers (read China) until eternity or until the US collapses, whichever comes first. This, despite the fact that these mortgage sinkholes should have long since been liquidated.

As a bankrupt and bankrupting state-run entity, Freddie and Fannie are responsive to political masters, not to markets. This would explain why these entities are hoarding houses when they should be getting rid of them at fire-sale prices.

As political players, they are expected to avoid “putting further pressure on home values.” “The inventory of homes owned by the companies has doubled over the past year, to a combined 191,000, up from 97,000 a year ago.”

Freddie and Fannie forever.

UPDATED: Obama And Bush: Partners In Government Giganticism

Barack Obama, Bush, Economy, Fascism, Foreign Policy, Government, IMMIGRATION, Justice, Law, Political Economy, Regulation, Republicans, States' Rights

The following is from “Obama And Bush: Partners In Government Giganticism,” now on WND.Com:

“Sean Hannity wants to know how Arlen Specter could go from ‘supporting George Bush, in some years 80-90 percent of the time, to supporting Barack Obama 96 percent of the time, considering the two men’s principles – their core values, their belief system – are in diametrical opposition.’

They are? How so? …

Bush pursued wars that have contributed to the bankrupting of this country and the death of thousands of innocents. Obama has sustained the same momentum in those far-flung occupied lands. The gabbers on television who coo and kvetch nostalgic about Bush’s virtues should console themselves thus: Yes, The Decider was the originator; Obama nothing but a second-hander. But give Barack a break. The 44th president may not be as blessed with killer core values as the 43rd. But he’s doing his best. Has he not expanded the one theatre (Afghanistan) to compensate for drawing down in the other (Iraq)? …

Moocher Obama has pulled ahead of Looter Bush with respect to deficits and debt. The Bush budget for 2009 was a trivial $3 trillion, while Obama’s 2010 budget was a respectable $3.5 trillion. According to “Bankrupting America,” “Bush doubled the debt to almost $6 trillion and Obama’s plans would leave us with an IOU of an additional $8.5 trillion by 2020.”

C’mon. Six trillion; 8 trillion: the act of racking up such financial liabilities exists on a continuum of criminality ? it does not constitute a difference in kind (or in “core values”).” …

Barack’s tidal wave of regulation is hard to beat … But a second-best to BHO The Regulator is not to be sneezed at. The Decider is still in the running for America’s Best Enforcer (a very bad thing indeed). …”

The complete column is “Obama And Bush: Partners In Government Giganticism.

Read my libertarian manifesto, Broad Sides: One Woman’s Clash With A Corrupt Society.

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UPDATE (Aug. 6): DICK’S DOCTOR. I mentioned Dick Cheney in the column:

“Barack’s tidal wave of regulation is hard to beat – in particular the financial-reform bill, which goes beyond Dick Cheney’s wildest dreams in increasing the overweening powers of the executive branch. (Barack will be able to seize a firm he designates as systemically risky.)”

Even Dick’s doctor is a mini-dictator. My ears perked up. I heard someone talk about federal law preempting state law. No, this was not a discussion of Arizona’s SB 1070. There was more muttering about compelling drug stores, at the pains of punishment (for that is what a new law means) to carry defibrillators. I was, in fact, listening to a snippet from an interview cardiac surgeon to Mr. Cheney was giving to Liz, daughter to the dictator. In case Dick dropped while shopping in their aisles, the good doctor wanted the feds to compel certain outlets (not sure which) to carry the life-saving defibrillator.

Liz nodded.

David (Brooks) Discovers The Managerial State

Economy, Fascism, Old Right, Political Economy, Pseudoscience, Regulation, Socialism, The State

David Brooks, via Vox Day, makes a welcome discovery: The technocratic or Managerial State, a foundational concept among Old Right thinkers, Paul Gottfried, most recently. In my review of Gottfried’s superb After Liberalism, I explained:

The present managerial state certainly is not an instantiation of the liberalism of the American Founding Fathers. The post-revolution federal government was not to levy any taxes, and an expansion of its power required the consent of every sovereign state. “The American Revolution,” writes economist Murray Rothbard, “was against empire, taxation, trade monopoly, regulations, militarism and executive power,” all now implicitly embraced by the US and its Western allies.
Undergirding our public administration is an unyielding ideology bolstered by a monolith of toadying journalists and intellectuals. The dubious precepts of social psychology and the enforced “public philosophy” of pluralism have become means through which bureaucrats, educators and state-anointed experts embark on crusades against “prejudice”. Together with official multiculturalism they form an instrument of control, designed to privilege a certain position and to stigmatize those who think differently. By extension, speech codes, human rights legislation, employment quotas and other infringements, contradict the classical liberal espousal of rights to property and freedom of association.
“Unlike the communist garrison state or the Italian fascist “total state,” the managerial state succeeds by denying that it exercises power. It conceals its operation in the language of caring. But “behind the mission to sensitize and teach “human rights” lies the largely unacknowledged right to shape and reshape people’s lives. Any serious appraisal of the managerial regime,” cautions Gottfried, “must consider first and foremost the extent of its control—and the relative powerless of its critics.”

AFTER summarizing the Republican and Democratic expansion of “a vast national security bureaucracy,” and the latter’s bureaucracy accreting health care and financial reform laws, BROOKS concludes:

When historians look back on this period, they will see it as another progressive era. It is not a liberal era — when government intervenes to seize wealth and power and distribute it to the have-nots. It’s not a conservative era, when the governing class concedes that the world is too complicated to be managed from the center. It’s a progressive era, based on the faith in government experts and their ability to use social science analysis to manage complex systems.
This progressive era is being promulgated without much popular support. It’s being led by a large class of educated professionals, who have been trained to do technocratic analysis, who believe that more analysis and rule-writing is the solution to social breakdowns, and who have constructed ever-expanding networks of offices, schools and contracts.

Vox adds by alluding to the impossibility of economic calculation in a socialist system:

“The Misean [sic] concept of central information deprivation – not to be confused with F.A. von Hayek’s later refinement – first foresaw and explained this certain failure not long after the Progressive era began, in a monograph entitled Economic Calculation In The Socialist Commonwealth, published in 1920.”

‘Law Remakes U.S. Financial Landscape’

Business, Economy, Fascism, Political Economy, Regulation, Republicans

Among the 500 odd new regulations it imposes, the financial bill, all 2,300 pristine, unread pages of it, has just been passed by the Senate. As we surmised in April, and Bloomberg now confirms, the thing will,

” … create a mechanism for liquidating failing financial firms whose collapse could roil markets, a council of regulators to police firms for threats to the economic system and a consumer bureau at the Federal Reserve to monitor banks for credit-card and mortgage lending abuses. It also expands oversight of executive compensation and derivatives, contracts whose value is derived from stocks, bonds, loans, currencies and commodities.”

“Nowhere in the final bill will you see even a pretense of rolling back the endless federal incentives and mandates to extend credit, particularly mortgages, to those who cannot afford to pay their loans back,” notes Mark A. Calabria of the Cato Institute. “After all, the popular narrative insists that Wall Street fat cats must be to blame for the credit crisis. Despite the recognition that mortgages were offered to unqualified individuals and families, banks will still be required under the Dodd-Frank bill to meet government-imposed lending quotas.”

The title of this post is borrowed from the aptly titled article in the WSJ, which warns that “the legislation hands off to 10 regulatory agencies the discretion to write hundreds of new rules governing finance. Rather than the bill itself, it will be this process—accompanied by a lobbying blitz from banks—that will determine the precise contours of this new landscape … ”

The Managerial State in full force.

There were 60 YEAs and 39 NAYs.

The Republicans that must be thrown into the brier patch are Susan Collins, slow Olympia Snowe, and beefcake Scott Brown.