It is important that the government bail out Fannie and Freddie.The free enterprise system, with its private property rights, profit and loss system of incentives, and market prices that allow individuals to rationally plan, works just fine for all other goods and services: food, clothing, health care, etc.The one exception is housing. Here, greed and rampant capitalism reign supreme, causing vast harm to the populace. The only hope for the average person is government.They are there to help us.
No, wait, that’s all wrong. That is nonsense on stilts. Yet, this sort of mischievous thinking is argued on behalf of government involvement in the housing market. But, there is no difference between housing and any other good or service. The free enterprise system is the last best hope that society has for keeping the wolf from the door. ALL government interference with the housing market has been an utter and total disaster. And this includes, in addition to Fannie and Freddie, rent control, housing subsidies, zoning legislation, urban renewal, housing codes.
Have we learned nothing from the fall of the USSR? Socialism doesn’t work. It doesn’t work in ANY country, and it doesn’t work in ANY sector of any nation’s economy. Housing is no exception.
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Nonsense on stilts? Stop borrowing terms from utilitarian philosophers!
XD
Good point none-the-less.
More wolves, I say!
When I mention to people that the utility companies should be completely privatized, I get something like this: “That is how we got Enron.” In other words, we really can’t trust the free market, and we need to look to government to keep things in control.
Then I see the Fannie/Freddie mess. Maybe my answer to the Enron response will be: “The government did a great job with Fannie/Freddie.”
You have to understand that all this market interference and bailing out is done for political reasons only. Deep down, they know what they’re doing is wrong. It’s election year and they’re more interested in getting their buddies reelected. I wish the commentaries would write more about this aspect.
As for Fannie and Freddie, it is more of the same politics from Republicans and Democrats. What is the difference between banks getting money from the Fed at 2.25% or regular Americans getting a 5% mortgage ? In each case, a subset of Americans are subsidized by the taxpayer and the purchasing power of the dollar is further eroded. With the power to reduce interest rates all the way to zero, the Fed can keep the party going for decades. Printing paper money and encouraging banks to lend inflates employment and produces the appearance of true prosperity.
The American people choose their representatives and have frequent opportunities to fire them and elect new ones. That is our form of government and it works well for the most part. The simple truth is that Americans now want the benefits of socialism and the majority have not had to pay the cost. It is true that there is no such thing as a free lunch, but what if you get to eat your lunch and put it on a stranger’s tab every day? That is a deal too good to pass up.
Until the underlying flaws of socialism cause economic collapse, voters will not make the necessary hard choices. The illusion of something for nothing is just too strong. The idea of having someone else pay for your house, healthcare, education, food etc. is too tempting to pass up. There is also a fair amount of envy; why does John McCain have seven houses and I cannot afford to own one? Apparently, more than 40% of the population does not pay federal income tax. Why would they vote to get less and pay more?
Those who are paying much more than their fair share should stop, think and quit working so hard. If the productive people purposefully reduce their income, shrink their businesses, minimize their taxes, retire early and collect social security, it would cause change. What if we experience 15% unemployment, 12% inflation and the federal government needs to borrow $2 trillion each year to maintain its foreign and domestic programs? What if GDP fell 5% for 3-5 years? Working people would choose small government and hard money like their grandparents did. You would see change you can believe in then!
Thoughtful Americans should prepare; pay off their debts, live in houses they can afford, drive older cars if necessary and arrange their personal affairs to lessen the effects of a economic collapse. Some gold and silver might help too if the dollar becomes completely worthless.
We do not have a free market in health care. The government is the largest single purchaser, health insurance is too closely tied to employment because of the tax code, and state governments mandate benefits as part of health plans.
I wouldn’t be suprised if someone took Walter’s first paragraph and used it out of context somewhere else. We can only hope that the absurdity of what it says will come through to these as yet, unknown readers.
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