Tag Archives: Fannie

News Stories That Only Report Half Of The Truth

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Yesterday the BBC posted a story about the role of Russia and China in the financial collapse in the United States in 2008. The article notes that the Russians and the Chinese considered creating a financial crisis in the United States, but did not act on the idea.

The article reports:

Now this is where we enter the territory of a geopolitical thriller. Mr Paulson:

“Here I’m not going to name the senior person, but I was meeting with someone… This person told me that the Chinese had received a message from the Russians which was, ‘Hey let’s join together and sell Fannie and Freddie securities on the market.’ The Chinese weren’t going to do that but again, it just, it just drove home to me how vulnerable I felt until we had put Fannie and Freddie into conservatorship [the rescue plan for them, that was eventually put in place].”

For me this is pretty jaw-dropping stuff – the Chinese told Hank Paulson that the Russians were suggesting a joint pact with China to drive down the price of the debt of Fannie and Freddie, and maximize the turmoil on Wall Street – presumably with a view to maximizing the cost of the rescue for Washington and further damaging its financial health.

Paulson says this guerrilla skirmish in markets by the Russians and Chinese didn’t happen.

Now wait a minute. Even if the Russians and Chinese decided to manipulate American markets, the housing bubble was a result of the policies of the American Congress–no one else is to blame.

I have posted the YouTube video “Burning Down the House” before, but in case you missed it, here it is again. This video explains the cause of the 2008 financial meltdown. The information included in the video is a matter of public record, but has not been widely reported.

Please watch the video and draw your own conclusions.

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Hiding Tax Money Outside The Budget

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The Heritage Foundation posted an article today about government-sponsored entities (GSEs). These organizations have an off-budget status (excludes them from federal budget rules and processes) which hides their real cost to taxpayers.

The article cites the example of Freddie Mac and Fannie Mae:

The Treasury is keeping Fannie Mae and Freddie Mac, the taxpayer-backed loan guarantee giants, off the federal budget.

How is this possible?

In 2008, the government took control of Fannie and Freddie and agreed to shield the entities from bankruptcy. Now that the country has recovered from that housing crisis, and money is coming back in through these government-sponsored entities (GSEs), their true cost remains hidden.

…It’s jaw-dropping that such massive flows of taxpayer money could be kept outside the federal budget. And as you can imagine, keeping that cash off the books distorts the overall budget picture.

Just for a start, the housing entities’ “profits paid to the Treasury in 2013 alone have resulted in federal spending and deficits being underreported by more than $100 billion,” says Boccia, the Grover M. Hermann Fellow.

This affects public perception of the deficit—and even lawmakers’ perceptions as they make plans to spend more in the coming year’s budget.

The obvious solution to this is to eliminate GSEs. They have become another way that Washington can control more taxpayer money without being held accountable.

There will be an election in November. All of the House of Representatives and one-third of the Senate will be up for re-election. Unless we elect people who will actually represent us and not become part of the Beltway establishment, we will be watching America descend into bankruptcy.

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