Socialism on Bush's watch?

Giant mortgage firms Freddie Mac and Fannie Mae to be taken over by the government to stabilise the economy?

Isn't this a damned pinko liberal exercise in socialism?

but aren't you embarrassed George? The US government should be.

Steve 41oo wrote:

but aren't you embarrassed George? The US government should be.

No, not at all. These corporations are an excellent example of "progressive" American liberal political/economic innovations. They were created to facilitate the capitalization of home mortgages and, by attracting capital through the implied, but unstated, government guarantee, promote individual home ownership -- a noble goal. Moreover it all worked very well for a while.

Eventually both corporations took on the worst features of both government and the private sector - driving out all the good ones. Senior executive positions became political plums (Franklin Raines, a political advisor to Bill Clinton, took over Fannie Mae in the late 1990s and very quickly raised executive compensation to rather astronomical levels, and built a rather lavish new headquarters building in Fairfax Virginia.) Modern financial devices, particularly the packaged securities based on portfolios of individual mortgages, very quickly diluted any sense of accountability for loan qualifications, creating the home price bubble we experienced in the past decade.

It is time now to dismember these degenerate relics of a once good idea. Government programs tend to continue long after any need for them has passed and long after the bureaucracies involved have thoroughly corrupted their intended purpose. It is always a good thing to see one of these relics actually taken apart.

Were you embarassed by the UK government's bailout of Northern Rock?

No, but then I'm not the one advocating laissez-faire capitalism. I was annoyed though to think that a perfectly good UK bank was brought down by the US sub prime lending fiasco.

It amazes me that the US Treasury has to nationalise US banks to prevent a total collapse, at enormous cost to the US taxpayer...and everyone carries on as if nothing had happened. The fact is the arch-capitalists themselves have brought the capitalist system to the brink of disaster, knowing that however much they screw up, they will be saved from themselves by the government. They walk away with their billions $ free to do it all over again, whilst the tax payer is left with the wreckage. Surely you can see there is something wrong here.