Half Changed World

15 Responses to “Wall street meltdown”

1. amy Says:
   September 16th, 2008 at 11:55 pm

   Oh, how I wish the Fed would knock it off. How I wish. I spent the morning talking to friends in NY/NJ who’re busy on the whateverth floor polishing their resumes, and others who’ve been out of work a while and now seeing the labor market flooded even more. Me, my living’s depended on discretionary school district spending around the country, so I’m making guesses as to how long it’ll take before the brakes go on good and hard, and I’m back to looking for $9/hr state-funded student jobs.
   The last time my friends and I went through this, we were just out of college, and a lot more of our parents were alive and willing, however ungraciously, to let us come home and live there. It’s a different story in your mid-40s; apart from the mortgages and kids, now we’re the ones who won’t get the desperation jobs because a) we’re expensive; b) we’ll leave as soon as things pick up.
   But, but but: All of us wish the feds would just let it all go to hell instead of screwing around with this mudslide. We want to find the bottom and get it over with. Nobody seems to resent what’s going on now — we just want to take the hit and get busy recovering. We’ve got over a decade’s stupid to unravel — all of this stuff came in the wake of Chainsaw Al. I can recall with eerie clarity watching a market report in 1995 and thinking, “wrong, wrong, wrong”. Yes, we were doing better, there were real productivity gains. Not that much, though.
   I think this AIG bailout is a mistake, and I say that even though a good chunk of my monthly income’s dependent on the continued viability of another large insurer which has been bleeding for a while; it holds my ex’s disability contract.
   My guess is that by the time the damage is totted up we’ll be looking at something on the order of a trillion dollars. A tenth of GDP, as I recall. Fine. Cut out the rot and have done with it.
   Whose fault is it? Most everyone’s. What worries me, though, is that we have an entire generation, maybe two, that has no idea how to be poor. These are people who grew up inside the delusion that credit was endless, people for whom “Maybe I should stop downloading songs I already have on CD from iTunes” didn’t follow from, “Gee, I’m $75K in debt and have no job, and nobody in my family has any money, either.” I’m nervous about what these people are going to do when hit with hard realities about being broke.

2. amy Says:
   September 17th, 2008 at 1:47 am

   You know, on second thought, it seems to me that this entire post-93 trajectory has been a long refusal to come to terms with the idea that the American postwar economic advantage is more or less dead, and that we must actually compete with the rest of the world again. Not pretend to compete, or do a lot of fancy financial handwaving; compete. Maybe this collapse will clear the air.
   It also seems to me that in moments like this, we often get a few very competent, and very wealthy or well-connected, people who really do make things go, and who do an impressive job of it. I’ve been watching T. Boone Pickens deciding that we will stop this middle-eastern oil nonsense now; I suspect we’ll have another such person in education. Maybe it’ll be Bill Gates. But it was instructive, the other day, watching Pickens talk to a Senate subcommittee; they all but got down and asked him please to lead the way. Not only don’t they know energy like he does, but their hands are clearly tied.
   So I’m watching, now, to see who else shows up, because, elect whom we please, these will be the people running the show.

3. liz Says:
   September 17th, 2008 at 9:54 am

   I really really hope that at least it helps Obama. Four more years of a deregulatory non-enforcement environment is simply too scary to contemplate.

4. amy Says:
   September 17th, 2008 at 10:12 am

   liz, just understand that a “regulatory, enforcement” environment is going to mean it’ll be very difficult for ordinary people to get credit again. Think back to, oh, 1983. You might have a Diner’s Card if you’re rich, and your AmEx card not only costs money but means you have to pay that balance off in full monthly. Without a good pile of money and a good job, you’re renting.
   Now, personally, I think that’s a dandy thing. I don’t think it’s a great idea to encourage homeownership among people who can’t afford it (although you run into serious trouble over time in expensive housing markets), and credit cards never should’ve been so freely available. But if we go back to a world like that, you’ll hear a lot of yelling on the left — it was the push for more liberal mortgage lending laws and easier credit that got this ball rolling in the first place.

5. bj Says:
   September 17th, 2008 at 11:31 am

   “Four more years of a deregulatory non-enforcement environment is simply too scary to contemplate.”
   This is true on a more global level than just the economy — it’s happened with product safety, public lands, drug safety . . . .
   I’m freaking out because I don’t know that the machinations are stopping us from sliding to the bottom, and I am worried about what the bottom is — is it a 30’s style depression? I agree with you Amy that it is the refusal to come to terms with global competition, global marketplace, global labor market, . . . But, what will the result for America be? A depression might be halted because of the international economy, but I think there’s going to be a serious readjustment in the US.
   (And, I don’t know why anyone would think a software marketer would have the right expertise to fix education. Pickens — energy, makes sense. Gates — education? why?)

6. amy Says:
   September 17th, 2008 at 12:47 pm

   “(And, I don’t know why anyone would think a software marketer would have the right expertise to fix education. Pickens — energy, makes sense. Gates — education? why?)”
   Because he’s a hell of a smart guy who has a compelling interest in growing smart kids who can actually do something. Who can be the next Americans and make another American century. Because he understands something about learning, and because nearly anyone who goes near ed in this country from inside the system is dead from go. If you’re from inside, you cannot be anything but beholden to either the teachers’ union or the evangelicals. Minor reforms, the kind that Bloomberg put through, take crushing force. Gates is good because he can, and does, do things like build model programs that work well; he’s rich as Midas; and he can talk the language of business and nationalism to the people who’ll vote the money and keep the teachers’ union out of his way.
   I’d cheer him on every step of the way. I watch what goes on in my daughter’s blue-ribbon-school kindergarten, and I’m appalled. The school’s in an affluent area, and a lot of the kids show up for K reading and writing, or nearly reading and writing. What does the teacher do? Start hauling them through the curriculum, which involves teaching them the letters of the alphabet. Why waste time, why bore the kids? After two weeks mine was mutinous; I sent her to school with some easy-reader books and a note to the teacher saying she had my permission to read them during letters time.
   Math? The teacher, who isn’t terribly well-educated herself, thinks it’s fine to start training them to use calculators at age 5; she talks with faith about the “manipulatives” they use (pieces of wood, etc. for counting and arranging) without any apparent understanding that what she’s training them in is pre-mercantile accounting, and that she’s pounding in a single lesson from the late 80s, which is that most people suck at estimating quantities because they have no sense of scale — two problems that are a direct result of the reliance on calculators. While a sense of scale is a wonderful thing, beyond basic arithmetic you very quickly lose that “manipulatives” world of tangible items. Playing verbal logic games would serve them at least as well, and maybe better, but that’s deemed much too advanced for the kids at school.
   (Not at home, though. My kid caught on to “zero plus horse equals horse” pretty goddamn fast, though “zero plus fart equals fart” made her laugh more — and then, unprompted, she made the generalization that zero plus anything equalled that thing. She was four at the time. She’s bright, but I don’t see that she’s any genius, and I expect that many, if not most, of the kids in her class are capable of similar insight.)
   Much of the teachers’ time is taken up with social work — taking kids to eat breakfast, hauling kids to “behavior disorder” rooms around the district, working with mainstreamed kids. I received a letter the other day telling me about the sex-ed unit my daughter’s to be put through (not anymore), but what disturbed me more than the sex-ed unit was the family-life curriculum it’s part of. I started reviewing this thing — which takes up significant school time — and my overall feeling was, “Wtf? Hello? My job to teach values, respect, forms-of-family, etc.?” Then the kids have Protestant-morals psych counseling twice a month. (Boy, do I detest that Rainbow Fish, especially for girls. We did a little unpacking of the Rainbow Fish at home, and by the end my daughter was no longer talking like a tiny socialist, having discovered that no, she did not want to give all her cookies away — “maybe one.” Nor all her allowance to tzedakah. “Maybe a penny.” She decided that the RF’s crime had not been in keeping her beautiful scales, but in speaking so rudely to the little fish. Again unprompted, she started coming up with ways in which the RF could’ve politely said that no, she did not wish to share her scales, and offered to play instead.)
   I get the impression that the schools have oriented themselves to serve the children of parents who have abdicated responsibility. Which is wonderful, though of limited use, if your mission is to save this group of unfortunate children. If you’re trying to bring up bright kids and give them license to concentrate seriously on whatever they’re interested in and to use those mental rocket boosters, though, it’s a dud.
   Which is why, as we acquire rich and poor and underclass here, and the schools stratify by neighborhood, I see liberal parents move their kids from school to school, up the ladder, and finally to the private school. Not because they feel the schools are dangerous or bad, but because they see how much time and energy is devoted to the bottom and middle. They want their kids pulled; they don’t want their kids to be the smartest in the room or to sit back and pull in easy As.
   My own experience with students who are poor, recent immigrants, learning-disabled, poorly prepared, attitude-ridden, returning-after-family-tragedy, etc. is that it is imperative to have very high standards while being humane, and to push like you’d push your own kids. I argued with every department head about my expectations of the kids — they wanted me to lower them, but one of the few advantages of working for almost-free is that you can call a lot of your own shots. Invariably, the kids rose to the demands. In every set of evaluations, kids wrote these overflowing letters about how a) they felt this teacher cared, and how rare this was; b) the class was HARD but they learned so much, and wished other teachers had pushed them like this; c) I should shut up sometimes.
   This appears to be what Gates does in his schools, and I’m not surprised that it works. The real obstacle will be the teachers’ union, and it takes the money and influence of a Gates or Bloomberg to get past that.

7. amy Says:
   September 17th, 2008 at 1:24 pm

   oh, and bj, yes, there will have to be serious readjustment. Part of the problem is that we’ve been living in an extended fantasy for so long that we don’t even have a good feel, anymore, for what the competitive realities are. I wouldn’t be surprised if it took us a good 10-15 years to become acquainted with those realities.
   Here’s my biggest worry: we have, I’m guessing, something on the order of 100 million homeowners, with an average monthly mortgage payment somewhere around $1500. If you pick up everyone’s mortgage for just one month, that’s $150 billion. AIG notwithstanding, we can’t afford to do that once, let alone routinely.
   Obviously nobody wants to make half the homeowning population homeless. Nobody wants that much vacant housing, and nobody wants to be a slumlord on that scale. It’d be more expensive to have that many people hunting for rentals. But banks will not be in a position to be good guys on that scale, and the feds won’t have the money to back them.
   So here’s my ugly scenario: Ordinary folks can’t make the mortage and default. Banks unwillingly take the houses, because they can’t afford to be everybody’s Dutch uncle. Cash-rich foreign real estate investors buy US homes by the block, and set up as reasonably well-behaved landlords. Municipalities find themselves courting the investors, because the alternative is blocks and blocks of vacant housing, which is a crime magnet. Result: Large net outflow of capital to the foreign real-estate investors. A fine way to impoverish a country.
   Calling Mr. Buffett. Telephone for Mr. Buffett. And where’s Mr. Perot got to? Calling rich patriotic guys with vision, there’s something in it for you….
   More picturesque ugly scenario: Advisories on what Pottery Barn and Ethan Allen furniture you shouldn’t burn for heat, due to toxic substances in the wood treatment, resins, and varnishes.

8. Amy P Says:
   September 17th, 2008 at 9:00 pm

   bj,
   I think the Depression scenario is unlikely since it’s fairly well known what caused the Great Depression: deflation (i.e. not enough money circulating). A more likely outcome is some sort of modified rerun of the 1970s with run-away inflation (if the US government yields to the temptation to inflate away homeowners’ debt), a stagnant economy and an energy crisis. On the other hand, I think the public has already expressed a lot of alarm over the inflation that we’ve been experiencing recently (my grocery store has employees wearing shirts saying something like “Beat Inflation, Shop at HEB!), so I think our political leadership has to realize that letting inflation run wild would be politically disastrous. Then (as a poster mentioned over at 11D) there’s the issue of how to pay for pension funds, Social Security and Medicare for Boomers.
   My best case scenario would be three years of housing pain and a slowly shrinking economy. One mitigating factor is that housing is going to be dirt cheap, so in a year or two it will be possible for new homebuyers to enjoy a higher standard of living on stagnant wages. That’s good news for families starting out. We plan to buy a house in about two years, and I would hesitate to pay more than $100,000. We’ll have property taxes, maintenance, private school tuition for a second child and home insurance to cover, as well as kicking up our savings for kids’ college and retirement. That’s a lot of stuff, so we’ll need to keep the house price down. If we keep the house price down, a lot of the other expenses will be smaller, too.

9. urbanartiste Says:
   September 23rd, 2008 at 11:07 pm

   This comment thread is depressing. I can’t comment on the economy since I am not very educated in that area. As for deregulation, In the 1980s, against protest from Pediatricians and others concerned with children Reagan deregulated marketing to children. Guess what we have now, new generations of consumers. Growing up in the 1980s, I saw alot of advertisements, but not like what it is today.
   With such a huge population of Boomers, the next 20-30 years, depending on medical advancements, is going to be tough to pay for with or without a Wall Street/housing crisis. I would have to agree as these people retire the economy was going to shrink simply because there are not enough of young workers to fill the voids. As long as the U.S. doesn’t flood the labor market with immigrants like Europe, I think it will eventually work itself out. But it will be a tough period to figure out how to pay for Social Security and Medicare with rising inflation.

10. urbanartiste Says:
    September 23rd, 2008 at 11:18 pm

    Just wanted to add…
    I think it is fine to have successful people from the business community try to improve education. The problem is finding the right people and prevent for-profit greed. Having taught at both “for profit” and public colleges, the entire education system needs a major overhaul from elementary through B.A. I think most teachers need to take the bulk of their studies in the subject and not split it in half.
    Amy I am hesitant to agree with your statement:
    “that the schools have oriented themselves to serve the children of parents who have abdicated responsibility”
    In the NYC area, where I am from, alot of parents have very demanding jobs or two jobs just to make ends meet. Secondly, there are major differences in cultural attitudes towards education. Now that I live in suburbia I see alot of parents complain about the little homework that is assigned because their kids are in so many extracurricular activities. I fervently agree with holding students to higher standards and most of the time they succeed.
    One thing that disgusts me is the talk about having students compete globally in science and math. One area that this would be possible is the very needed alternative energy technology. Republicans are usually the first to criticize education, but are not really pushing for it since it would probably eliminate oil dependency.

11. amy Says:
    September 24th, 2008 at 6:20 pm

    urbanartiste, because this is a democracy, it behooves all of us who can read and who vote to educate ourselves in economics at least to the point where we can follow what’s going on. The basic story here is not complicated. The details are complicated and jargon-ridden. But one need not be a genius to follow.
    So, if you’re not educated, read up. Any standard freshman econ text will give you a good start, and WSJ has a free investor’s book they’ll send you to explain market & investment basics.
    As for the rest of your first post, (1) we are lying about medicare and soc sec, because we can’t afford them, but haven’t yet broken the news (so give thought now to who’s going to take care of your folks); (2) yes, we will be importing large numbers of guest workers. Why? Florida can already tell you. You can’t stop working just because Mom needs in-home care; you’ll pay $8/hr for the Haitian “nurse”, who is at least a warm body and has some minimal training and a phone. You cannot pay $60-150/hr for a well-trained American nurse who gets a reasonable salary and benefits; Uncle Sam will tell you “sorry,” too.
    Re parents who’ve abdicated: I don’t mean parents who are working. I work. I mean parents who don’t look after the kids’ health, don’t do the work of sitting with the children, reading, teaching them to behave, making them responsible, teaching manners and social matters, having conversations with them about civic matters, science, history (their own, the country’s, other people’s), math, music, health & nutrition, all those things we note as the mark of a civilized society.
    Routinely, I get papers — oh, those papers — from the school written by people who must assume that I don’t do a goddamned thing with or for my kid. The latest delight has them telling me they’re going to teach my five-year-old how to protect herself from sexual abuse and AIDS. Now, apart from the fact that their advice isn’t just impractical but dangerous, whose job is this? Hello? Mine? Perhaps at an appropriate time? And perhaps I can afford to wait, in part because I don’t normally let her wander off with pedophiles (no, just the public drunk teaching another kindergarten class, the one who had to plead guilty to assault a few years back — and yes, there will be a quiet visit to the principal to ensure that she isn’t left alone with him, or put in any car he’s driving), and have spent considerable time and effort making it easier for her to talk to me when she’s upset or scared, or when something’s gone wrong; also to speak up when the truth is unpopular.
    Last night I also sat and read a perfectly subliterate book to my child, because the teacher told her it was important, and the educators assume that parents are maroons who don’t Appreciate the Value of Reading With Children, and must be led by the hand. I think I have tolerance for about two more of those, which come from miserable guided-reading series, and then I’ll replace them with something worth reading and our usual word games. This will make my daughter anxious and lead to trouble at school. Why? Because I’m telling the teacher I know better, and in this case, I do. For the anxiety, I’ll let my kid believe I’m just contrary, for the moment. She can wait a few years before finding out she knows more about poetry than her teacher does.
    Twice a month her class goes to an in-house shrink for some Protestant-flavored coercion on feelings. As it happens, my daughter has a psychologist she sees periodically; she’s got a rough go of it with family, she’ll have plenty more to deal with, and I’d like for her to have someone sensible to talk to who isn’t me. But yes, we talk about feelings and how to behave civilly and all the rest, except that ethics is also involved and so is a sense of art. Why? Because it’s _my job_.
    I also give her breakfast, although the district’s helpfully offered to feed her sugared-up crap in the morning. Why? You got it. My job.
    Soon we’ll have the fall conference, and I’m guessing we’re going to be offered testing for the IEP wagon. I know that the kindergarten teacher is accustomed to being beaten with IEPs. However, I’m not going to take up the IEP rod myself, because the teacher’s job is not to scurry around playing tutor and special-ed aide to 20 children. She doesn’t have time to do that and teach, and my guess is it leads to half-assed, box-checking tutoring, too. Nor am I interested in having the district run batteries of tests on the child, or putting her in “gifted” boxes, or anything like this. Public ed is a mass product; the kid falls outside the norms in some ways; I’ll handle it, thanks. My job. Just please leave some room for me to do it, and stand out of her way.
    We’re not going nowhere on math and science because we don’t have enough math/sci teachers who understand what they’re supposedly teaching. It doesn’t matter what the big project is. Until the majority of teachers understand and love their subjects to the point where they’ll look at current textbooks, say, “What in hell is this crap?” and start writing angry letters about everything that’s deeply wrong in these English-major-written-and-edited chapters, it’s a nonstarter. Don’t get me started on “manipulatives”, formerly known as “beans”.

12. urbanartiste Says:
    September 24th, 2008 at 8:01 pm

    Amy, I don’t understand why you put most of the blame on consumers and less on mortgage companies. If I owned a business I would sure as hell not sell my product or service to people that could not afford it. That would make commonsense in terms of what is best for my business. I think the big problem is a lack of business ethics, which befits an oxymoron now.
    I am against this bailout because it is continuing to promote a spend on credit mentality that you discussed above. Why should all these loans be available if the market is not demanding them? Every week I read about more businesses closing stores, filing for bankruptcy and laying off workers. This seems like another Bush shock doctrine and similar to his instruction to spend money after 9/11.
    During my college days I temped a summer at an international bank across the street from the World Trade Center and I had the wake-up call of my life. I don’t want to lump all of Wall Street in this category, but there a many in that industry that have no ethics. People say doctors have a god complex. Listen in on some traders’ conversations from business to personal and you will find these traders have a major god complex.
    As for economics, I took it in college and have no desire to prusue it as a personal interest. I do read newspaper business sections, but forgo magazines like the Economist. From what I gather listening to the radio and journalists is that Bush basically appoints people based on connections rather than past performance. I think Paulson, “Brownie” and a lot of others are fine examples of such poor management appointments.

13. amy Says:
    October 4th, 2008 at 8:54 pm

    In answer, urbanartiste, from the NYT today:
    “Capitol Hill bore down on Mr. Mudd as well. The same year he took the top position, regulators sharply increased Fannie’s affordable-housing goals. Democratic lawmakers demanded that the company buy more loans that had been made to low-income and minority homebuyers.
    “When homes are doubling in price in every six years and incomes are increasing by a mere one percent per year, Fannie’s mission is of paramount importance,” Senator Jack Reed, a Rhode Island Democrat, lectured Mr. Mudd at a Congressional hearing in 2006. “In fact, Fannie and Freddie can do more, a lot more.”
    But Fannie’s computer systems could not fully analyze many of the risky loans that customers, investors and lawmakers wanted Mr. Mudd to buy. Many of them — like balloon-rate mortgages or mortgages that did not require paperwork — were so new that dangerous bets could not be identified, according to company executives.
    Even so, Fannie began buying huge numbers of riskier loans. ”
    (Thank you, pinko sexist rag.)
    From the wiki:
    “In 1995, Fannie Mae began receiving affordable housing credit for buying subprime securities. In 1999, the Clinton administration and Fannie Mae shareholders encouraged the lender to increase the number of mortgage loans offered to those of low and moderate income, both to improve rates of home ownership among those groups and to increase profits.[7]
    In 2000, due to a re-assessment of the housing market by HUD, anti-predatory lending rules were put into place that disallowed risky, high-cost loans from being credited toward affordable housing goals. In 2004, these rules were dropped and high-risk loans were again counted toward affordable housing goals.[8]”
    Incidentally, I can think of no publicky-privatey large corporation that functions without having a legislative hand on its side of the seesaw, and the legislature is a non-market-bound lunatic. Think of the big ones: Amtrak, CPB, USPS. Either they’re given monopolies (like USPS) or they’re permanently on a tax-funded lifeline. In some instances, I think that’s fine. You want a national rail service that works all the time, and if we actually bothered much, we could have a nice one, at least in densely-populated areas. I think we’re going to regret having done away with NSFnet down the line. But in the case of mortgage-buying…you’re spreading out a picnic lunch on an anthill. But it was necessary if you wanted banks to lend to people _who were essentially unmortgageworthy_. And once you established a market for bad loans, what was to stop mortgage-writers from making lots more? And new markets growing up to take any overflow and exploit those bad loans? Businesses exist to make money, not to protect the citizenry from Congress’s lousy judgment. The citizenry are supposed to be doing that part themselves, through the use of that ballot box thingy and the ability to run for office.
    I regret that our easily cowed legislature has handed over our wallet in this mugging. (The muggers will be back, by the way, with buddies.) No, I do not believe that the financial world would have come to an end had we told the banks where to get off. And if it had? Then you can bet that we’d have come out of it after a few years with lasting and prudent regulatory policy. From the Depression we got Glass-Steagall; from the 20+% inflation of the late 70s we got Paul Volcker and Alan Greenspan.
    20 years ago, if I’d heard someone talk like I’m talking, I’d have been furious at the callousness. I’d have said, “Who the hell are you to compare people’s suffering with _policy_?” But now I say it as one with little cushion beyond a place to live, and with a kid to support. Why? Because I see how we delude ourselves and hide from the fact of competition, and I see that the bill will come due before my daughter and I are dead. Also because I think this is still, in general, the best place on earth for people who can really make something of themselves, and I’d like for it to survive.
    What’s struck me throughout is how terrified of pain we seem to be, as a nation. This can’t be a good thing. Nearly every adult I know has been through something terrible — serious illness, deaths of spouses or parents or children, poverty, abandonment, ongoing physical abuse, you name it. And yet somehow we got by. I look in the mirror and wonder what invisible account I’m drawing on, because frankly I look better than I figure I have any right to look, given what I’ve been through and how I live. I find this is true of other people, too. And yet, when faced with a few dark years — with advance notice! — we, as a nation, fall down and shake like a bowl of Jello.
    The only way to clear “troubled assets” is to wait and see which blow up in investors’ faces over the next 15-20 years or so. We’ve just agreed to hold a big box of grenades, but there are more out there. Plenty more.
    Worse, if you want to see what’s wrong with nationalizing investment banks, which is what we’ve been doing, just look at Jack Reed’s quote above. I happen to like Jack Reed, and think that he’s a fairly moderate guy, especially given his constituency. But that’s exactly what’s wrong with having Congress run an investment bank. We’ll see plenty more of it, and you can bet we’ll pay the banks to rid themselves of Congress, too, a decade or two down the line.
    I had a curious conversation at shul today with a very liberal, and very smart, comp-sci professor who made the point that the movie of Charlotte’s Web was a disaster, because it took out death. Which was, of course, much of the point of the book, that there’s this fact, death. And he went on a while about the energy put into saving children from the very idea of death in the 50s and 60s. I cannot imagine anyone from EB White’s world except the drunkest, most deludable fool falling for the borrowing nonsense that’s gone on the last few years. They knew just as well as anyone else that the runt who wins a prize at the fair is one hell of an exception, and that lending money to people who can’t pay back is bound to end badly. Had his people borrowed the money and then found themselves in this mess, I bet I know who they’d have blamed, wildly and at home: themselves.

14. Amy P Says:
    October 4th, 2008 at 11:18 pm

    “When homes are doubling in price in every six years and incomes are increasing by a mere one percent per year, Fannie’s mission is of paramount importance,” Senator Jack Reed, a Rhode Island Democrat, lectured Mr. Mudd at a Congressional hearing in 2006. “In fact, Fannie and Freddie can do more, a lot more.”
    2006 was when I started reading thehousingbubbleblog.com. The information was out there, if you were looking. How on earth did Reed think that home prices could go on doubling every six years with wages being flat and new subdivisions and condos going up like mushrooms? Madness.
    I know barely anything about how Fannie Mae and Freddie Mac work, but it seems like it was a terrible idea to create a public/private hybrid that pays multimillion-dollar salaries, pours money into lobbyists and campaign funds, but that we the taxpayers are financially responsible for if it fails. I was a kid at the time, but that was very similar to the problem with the Savings and Loans–they were out there making crazy loans (in real estate!), but we the taxpayers had to pay for it.

15. urbanartiste Says:
    October 5th, 2008 at 11:26 pm

    I just thought of this after reading the latest comments on this topic. How many people knew someone setting the price of their home way above what it is was worth? The greed spread beyond Wall Street and to homeowners wanting to make as much money as they could on their home. I don’t fault them for wanting to make money since homes are usually the only investment people have, but is that not a part of the housing bubble? I may be in the minority, but I feel guilty taking advantage of others. I grew up in NYC and now live out in the suburbs and the way people are outpriced of the city, the boroughs and suburbs is staggering. I know alot of people that sold homes for far more than they were worth. Old shacks were being sold for ridiculous amounts due to location, school district, etc. Some of the worst greed comes from some of the upscale areas where a person purchased a home for $400,000 five years ago and now wants 7 million for it.
    Personally, I am aggravated over the bailout and am against it because it is not going to make things better in terms of loans for homes, businesses and schools. What really ticked me off was when I heard on a news program that Fannie Mae was privatized by Johnson to pay for the Vietnam War. I just wish history would stop returning to kick us in the butt.

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