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• • Climate Heretic (Visitor)
  • http://www.theclimateheretic.com
  • 13.09.2008 @ 19:14:32

  I wish somebody could explain to me why the Freddie and Fannie developments of late are ot the central story on every newspaper and News Service in the world?
  
  The implications are so amazingly vast and the impact on the Global Financial Markets is so potentially huge that this should be more important than Barack Obama's SNL appearance and Sarah Palin's glasses.
  
  Even here in Canada the Liberal Green Shift could destroy our economy and we care about "Pooping Puffins" and if the Green Party (which has just made a deal with the Liberals that the Green Party leader will get the Environment Minister's position if the Liberals form the Government) can be in our National Debates.
  
  http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080907/election2008_dion_080909/20080909?s_name=election2008

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  • • metyu
    • 13.09.2008 @ 19:28:03

    I think it's because people are, in general, more interested in Palin's glasses and pigeon sh!t!
    
    Can you tell me what "There is no solution until the ownership structure is changed." means, perchance?

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    • • Climate Heretic (Visitor)
      • http://www.theclimateheretic.com
      • 13.09.2008 @ 21:08:22

      Sure.
      
      Freddie and Fannie were publicly traded corporations started by the US Government (similar to the Public Private Parnership we hear about so much these days, or here in Canada we call Crown Corporations)that freely traded on the Equity Market. Yet direct operational control, financial security,guarantees and primary ownership remained in the hands of the US Government.
      
      The reason for the sucess of the Entities in the capital markets was based solely on the ownership and backing of the Government, Mortgage products were assumed to be "guaranteed" by the USA.
      
      This implied ownship was the reason they failed recently for the following reasons...
      1) There was no incentive to protect investors or markets because the Government would move in. So no steps were taken at the executive level to restructure the company and would have taken congress to agree as to policies regarding mortgage backing.
      2) Investors realized if the Government did move in Investors would not be looked after so looked to liquidate their positions.
      
      So the same guarantee of direct action that propped them up in high times caused their demise. If the entities are to survive a clear ownership structure must emerge, all private or all Government.
      

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      • • metyu
        • 14.09.2008 @ 15:49:34

        Wikipedia notes the action is "one of the most sweeping government interventions in private financial markets in decades". http://en.wikipedia.org/wiki/Fannie_Mae
        
        How much influence/power does this give the US government wrt housing?
        The US usually cites privatisation and property ownership as fundamentals. Does this move secure property rights, or make them more vulnerable?
        
        Interesting, http://en.wikipedia.org/wiki/Federal_Housing_Finance_Agency
        
        There seems to be a lot of protectionism and nationalism emerging at the moment, arguably reaction against globalisation?

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• • Climate Heretic (Visitor)
  • http://www.theclimateheretic.com
  • 15.09.2008 @ 03:15:25

  The Financial systems of the world are a victim of their own success, with sustained growth came a sense of security. The huge growth in individual personal wealth globally and an era of low risk equity markets emerged after the early 1990s. This period saw huge growth in the demand for credit and a abandonment of risk adversion investing. There was so much capital on the markets that investment firms were buying any mortgage backed securities just for investment bulk. Being US Backed made people trust the investments.
  
  The US typically turtles when the economy softens, at least the rhetoric rises, but this is beyond that because the problem is not the equity markets or trade markets. The Democrats are protectionist by nature, with notable exceptions like Bill Clinton (who won the election because George Bush Sr. broke the faith on taxes during a recession), and tend to always do better with this type of sentiment in America when the economy is in trouble.
  
  If elected the Democrats will attempt to not only re-negotiate standing trade agreements they will attempt to make advantageous trade deals that have really been abandoned in the Global Economic sense.
  
  

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