Bailing out Fannie Mae and Freddie Mac

Two Government "Sponsored" Enterprises, Fannie Mae and Freddie Mac, are in trouble.

Fannie Mae, created in 1938, is 70 years old. The Soviet Union was 72 when it collapsed. I suspect the lifespan of central planned economies may be about that long. Look at Social Security and Medicare. They to are doomed to failure.

The ranking government employees are calling for government help to Fannie Mae and Freddie Mac in order to save the economy. The number 3 ranking government employee, Speaker Nancy Pelosi, wants Fannie Mae to guarantee loans up to $730,000! Why so much? Could it be that Nancy Pelosi represents an expensive housing district, San Francisco? She is trying to protect those property tax revenues that empower the government. Without money the government loses power. Without money the government cannot buy loyalty. Without money the government mob cannot pay their enforcers.

Why did government employees create these GSEs in the first place? Was it the bankers and lenders who wanted a place to dump their mortgages? Was it the building industry lobby that thought home building would help their industry?

Fannie Mae was created and promoted as helping create an ownership society. The government employees want an ownership society because owners are more stable. Owners want to protect their property and therefore submit more to the God State for protection. The ownership society bid up the price of homes and the property tax revenues for the local and state gods soared. If the prices of these properties decrease, the tax blood the local and state employees drink and live on will also decrease.

Of course, liberals and central planning Utopians will always blame the collapse of Fannie Mae and Freddie Mac on capitalism. They are convinced that a committee of central planning controllers can make a dozen decisions that will be better than a billion on the spot decisions made by millions of buyers and sellers who are looking out for their own best interests.

The government says they will lend money to Fannie and Freddie. Where will they get the money? The government will "monetize" the problem. Monetize is another word for counterfeit. The counterfeiter is the one who benefits the most by their counterfeit dollars because they are the first ones to use them. By the time those newly printed dollars gets down to the consumer, through the banks, the dollars are worth less.

Charles Tolleson