Wednesday, September 18, 2019

LET'S REVIEW THE MYTH OF THE FREE MARKET FANTASIES, AGAIN


The lesson here is very real. Greed and free markets don't always get things right. You can access the larger story by clicking here and here.

- Mark

Monday, September 16, 2019

TRUMP'S PRISON CAMPS ... IT'S THE CRUELTY THAT'S THE POINT

An interesting interpretation of what's happening in Trump's immigration prison camps for Mexicans and Central Americans ...

________________________

For those of you unfamiliar with the Stanford Prison Experiment, you can order it from Netflix (it's worth the watch), or you can watch the clip below.


- Mark


AMERICAN HEGEMONY, AT ITS END?

Via Reuters ... It looks like the world's largest western economies, and our allies, are done putting up with Donald Trump's antics.
____________________

- Mark

THE 22 CITIES AND TOWNS WITH MORE SPANISH SPEAKERS THAN ENGLISH SPEAKERS

It's Hispanic Heritage month. The map below from Business Insider lists the 22 cities and towns in the U.S. where Spanish is primarily spoken ...
_________________________________
_________________________________

And for those who may be inclined to grumble about the number of Spanish speaking cities and towns in the United States, you might want to read this and my write up on the piece here.


- Mark

Hat tip to Robert for the link.

Monday, September 9, 2019

TRUMP WANTS TO PRIVATIZE PROFITS, AFTER 2008 BAILOUT SOCIALIZED THE LOSSES ... THE STUPID, IT BURNS

What a surprise. Now that Fannie Mae is making money - after the federal government came in and bailed them out in 2008 - the Trump administration is now proposing to "privatize" the housing market agency. 

Specifically, with a net income of $16 billion in 2018 the Trump administration wants to turn Fannie Mae over to private investors, again. 
______________________________

For those of you who may not be familiar with Fannie Mae, know that it's a federal agency that was formed after the Great Depression. The thinking then was "there's only so much money in the housing market, so let's create a government agency - Fannie Mae - to purchase privately originated loans, which will put more money back into the housing market."

If your a little confused think of "It's a Wonderful Life", which starred Jimmy Stewart. Imagine how many more loans the Bailey Brothers' Building & Loan would have been able to move if they had a Fannie Mae to purchase the home loans they originated. In simpler terms, Fannie Mae purchases, holds and manages housing loans made by private lending institutions. Lending institutions end up with more money to lend because of the purchases, and we all have a wonderful life because home ownership goes up (and it did) which is instrumental to a strong middle-class.

Image result for it's a wonderful life

It's a little more complex than that, but concept remains. Not only did housing markets stabilize after the depression, but home loans soared in America, as did the nation's middle-class.

Fannie Mae and other Government Secured Entities (GSEs) ran into problems when they were privatized (1968) and then deregulated in the 1980s. Fannie Mae and other GSEs (like Freddie Mac) started purchasing not just home loans, but toxic collateralized debt obligations (CDOs) tied to the housing market. These privately sourced bad bets, which were originated largely by shadow banking institutions and Wall Street, helped collapse Fannie Mae's income and helped bring down the housing market in 2008.

Once the market collapsed in 2008 the federal government stepped in and bailed out "private" financial institutions - like Fannie Mae - who were drowning in their own free market greed and stupidity.

So, here we are, more than 10 years after the 2008 market collapse, and Fannie Mae, Freddie Mac and other GSEs are doing so well they're actually making money for the federal government. With billions of dollars now rolling in they are now considered "cash cows" for the federal government. With a nation facing a wave of red ink because of the Trump administration's reckless budget management, Fannie and Freddie are a breath of fresh air.

So what does the Trump administration want to do? They are proposing to turn over two stable and profitable agencies - which were designed to be government managed institutions all along - to the same free market fools who ran these agencies (and other GSEs) into the ground, which helped precipitate the 2008 market collapse.

This is yet another lesson in American Capitalism, where we socialize the losses when things go bad, and then privatize the profits when things are going well.

The stupid, it burns.


- Mark