Saturday, September 6, 2008
Bush Socializes the Mortgage Industry...Oh, the Freakin' Irony
The federal government--translation: you and me--steps into the breach and seizes the private mortgage corporations Fannie Mae and Freddie Mac from the precipice of bankruptcy. Cost to taxpayers? Unknown and unknowable.
Thus the Republican Bush-McCain team adds to its legacy the single largest government encroachment into the Private Sector since the Great Depression years of the 1930s. It's done as stealthily as something of this magnitude can be done, beginning on Friday evening, all over by Sunday.
The action is justified as necessary to halt and prevent the continued unraveling of the financial-housing-mortgage-banking system; that is, the 20% of that system that has not already unraveled.
Who benefits? Holders of Fannie and Freddie debt securities, primarily. The Bank of China, for example, holds $360 billion of those puppies, which have been steadily declining in relative terms, to US Treasury debt securities.