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Source link: http://archive.mises.org/8474/the-spin-on-the-mortgage-disaster/

The Spin on the Mortgage Disaster

September 6, 2008 by

The NYT is reporting that the bailout and nationalization, I mean conservatorship, of Freddie and Fannie is going to be far worse than expected by anyone not reading Mises.org. In any case, somehow I think we know the spin already: this is a failure of the market, since the mortgage giants were, after all, privatized some years ago. When I read such things, and we will all read plenty, one has to wonder whether this is just ignorance/misunderstanding at work, or outright manipulation of obvious facts to serve ideological ends. It’s probably some of both. Anyway, free marketeers had better get ready to make the point that this is an example of the failure of half measures, for had it been clear to these institutions that they would bear the liability for the lending–which of course they will not–the mortgage problem would never have gotten this out of hand. It was precisely the legal ambiguity about Freddie and Fannie’s status as market players–are these full market institutions or government-protected and subsidized rackets?–that is the source of the problem here.

{ 7 comments }

Bruce Koerber September 7, 2008 at 8:37 am

It would be great if all the chanters of “End The FED” got out their pens and wrote letters to the editors, and wrote blogs, and sent their ‘representatives’ at every level of government a clear message that this disaster and failure is directly attributable to the ego-driven interventionists who are trying to enrich themselves through the corrupting of the economy.

Yancey Ward September 7, 2008 at 11:10 am

I make this point at every single opportunity, and it is almost always denied by the statists.

Robert September 7, 2008 at 1:14 pm

Just what “idealogical ends” are served by this blatant usurpation of public trust? The “legal ambiguity” of Freddie and Fannie governance are no less heinous than that of the Federal Reserve Bank. Moreover, legislation coming from the respective banking committees of the Senate and House of Representatives serve but one constituency.

Members of the Congress in both the House and the Senate are simply, as Mencken wrote, “…swathed in the trappings of Service, but at the heart of it there is nothing but bald self-seeking.” The imperial executive is powerless against the money changers; the corrupt, self-seeking legislators know only the unquinchable thirst for power.

The mob is asleep but, happily, beginning to stir.

John September 7, 2008 at 7:45 pm

Re: “The mob is … beginning to stir.”

I think you are hearing the start of the football season.

Ken September 7, 2008 at 10:48 pm

Please help us new to the movement (“the revolution”) pen these letters to our elected leaders. As we (I) are on a steep learning curve of sound money, we need some help getting the correct content to these letters to our officials. I truly believe we need to mobilize from the bottom up in order to get the message out and gain momentum. Education is critical to our success.

Peter Bjørn Perlsø September 8, 2008 at 10:14 am

It is highly disingenous to blame the ‘free market’ for failures caused by the market merely following the rules that was laid out to play along, that is, the legislation that government passes unto us, with or withour or consent.

Bruce Koerber September 8, 2008 at 1:03 pm

Dear Elected Representative,

What is your definition of nationalization? When an industry is taken over by the government, that is called nationalization and it is a red flag. It is the red flag of an advancing socialism.

Are you a representative of the people or are you a representative of the Party (regardless of whether it is called the Democratic Party, the Republican Party, or the Communist Party)? Unless you confess otherwise I have to assume that you are a representative of the people.

Do not be silent about this. Do not tow the Party line and drag us deeper into socialism.

I want to hear a clear response from you and I want to see evidence that you are taking action to undo this socialistic intervention into the economy.

A watchful citizen,
XYZ

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