[Marxism] Why you should worry about Fannie and Freddie

S. Artesian sartesian at earthlink.net
Tue Jul 15 13:46:35 MDT 2008


Steve,

I'm not sure that the any chunk of the ruling class is fed up with the 
"antics" of the GSEs.  Certainly the creative accounting used by the GSEs 
wasn't original in its conception and application; all capital, and all 
accounting, becomes fictitious when capital cannot manage profitable 
reproduction, and the accounting tricks were the same practiced by 
corporation after corporation.  Moreover, I think we're likely to see all 
the ruling class line up in favor of doing whatever needs to be done to 
protect the GSEs debt obligations.

You are right-- the bourgeoisie could care less about stock; ownership 
afterall is a a transient think, but debt?  Why, that's forever and must be 
honored.

However,  I don't think this is a housing or a "house ownership" crisis. 
The GSE's underwrite 5.3 trillion in mortgages- with an underlying 
capitalization of 1.5% of that 5.3 trillion--with foreclosure rates over 1% 
(approaching 1.2% across the board I think), you can see the rock and the 
hardplace between which the GSEs, with a debt obligation equal to half the 
annual US GDP, and half the entire mortgage market, are being ground. This 
is a profound drag on the US with potential to push the US and the rest of 
the globe into a Japan-like decade long recession.

I do not expect the developing countries or the transition economies to be 
immunce from this recession.

Fred Mosely to the contrary not withstanding, this is not a "Minsky crisis" 
originating in the "excess exuberance" of the market; but is truly 
symptomatic of the underlying problems of overproduction, declining profits, 
and an increase in capital investment at just the wrong time, as 
overproduction makes capital investment always at the wrong time.

Always and forever the bourgeoisie want the shift the burden to taxpayers; 
this is just another version of the off-balance sheet vehicle, this one 
being sold to and bought by the government.

What you have here is essentially a class of arsonists trying to control the 
burn rate.

----- Original Message ----- 
From: "Steve Palmer" <spalmer999 at yahoo.com>
To: <sartesian at earthlink.net>
Sent: Tuesday, July 15, 2008 3:26 PM
Subject: Re: [Marxism] Why you should worry about Fannie and Freddie


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