One month after the gigantic bailout of Fannie and Freddie, the government is looking past that at the stumbling stock market and poor economy. According to this author, "Nationalization of an industry is easy, privatization is hard." This is in response to history where the government tried to privatize Fannie Mae in 1968, but that didn't turn out as well as planned. The provided Fannie and Freddie to have backing from the government and that enabled them to lower both their costs and capital requirements for a loan.
Now after they both are nationalized now, Bernanke wants to privatize those two giants at a slow rate until they are completely under private control. The author of the article also recommends that the United States take advice from the Russian and Chinese governments on how to privatize a previously nationalized industry, but also to take some advice about how to run a healthy system of financial socialism. Really?? Socialism, are we on the verge of a socialist system?
The author concludes the article by saying that one solution is to say goodbye to Fannie and Freddie in order to start the privatization of the secondary mortgage market.
2 comments:
It seems weird that there is talk about socialism in the same article as it's talking about privatization of companies, which seems to be the opposite of socialism. I don't think that America will ever become a socialist system, but perhaps we'll adopt a few of the components of socialism.
i couldn't agree more with the article.. fannie and freddie may should go..
these secondary markets with fannie and freddie at their helm sold re-packaged loans to millions of investors around the world, creating money out of nothing, and inflating asset prices with the government guaranteeing it.
and now average american's a paying for it..
WOW..
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