March 2, 2009

Obamanomics = More Hair of the Dog that Bit Us

The dreams from his father are coming true.

All his father wanted was political control of businesses in Kenya -- a modest ambition compared to what the son is achieving.

From the New York Times:
U.S. Likely to Keep the Reins on Fannie and Freddie
By CHARLES DUHIGG

Despite assurances that the takeover of Fannie Mae and Freddie Mac would be temporary, the giant mortgage companies will most likely never fully return to private hands, lawmakers and company executives are beginning to quietly acknowledge.

The possibility that these companies — which together touch over half of all mortgages in the United States — could remain under tight government control is shaping the broader debate over the future of the financial industry. The worry is that if the government cannot or will not extricate itself from Fannie and Freddie, it will face similar problems should it eventually nationalize some large banks.

The lesson, many fear, is that a takeover so hobbles a company’s finances and decision making that independence may be nearly impossible.

In the last six weeks alone, the Obama administration has essentially transformed Fannie Mae and Freddie Mac into arms of the federal government. Regulators have ordered the companies to oversee a vast new mortgage modification program, to buy greater numbers of loans, to refinance millions of at-risk homeowners and to loosen internal policies so they can work with more questionable borrowers.

What could possibly go wrong with more lending to more questionable borrowers?
Lawmakers have given the companies access to as much as $400 billion in taxpayer dollars, a sum more than twice as large as the pledges to Citigroup, Bank of America, JPMorgan Chase, General Motors, Wells Fargo, Goldman Sachs and Morgan Stanley combined.

Regulators defend those actions as essential to battling the economic crisis. Indeed, Fannie and Freddie are basically the only lubricants in the housing market at this point.

Interestingly, in Southern California, homes have started to sell again in the hardest hit exurbs. The secret? Foreclosures and price cuts of fifty percent or more. Nothing is selling in Santa Monica, where homeowners continue to believe that they just plain deserve seven figures for their four room shacks. (Santa Monica has some very small houses, along with some big ones -- affluent people moving to Southern California before the invention of antibiotics preferred the dry Pasadena area to the damper beach). But out in the high desert, realism has returned and the number of sales has bounced back somewhat.
But those actions have caused collateral damage at the companies. On Monday, Freddie Mac’s chief executive, David M. Moffett, unexpectedly resigned less than six months after he was recruited by regulators, having chafed at low pay and the burdens of second-guessing by government officials, according to people with knowledge of the situation.

Fannie Mae has also experienced a wave of defections as people leave for better-paying and less scrutinized jobs.

Last week, Fannie Mae announced that it lost $58.7 billion in 2008, more than all its net profits since 1992. Freddie Mac is also expected to reveal record losses in coming days.

Most important, by taking over the companies, lawmakers have gained a lever over the housing market and national economy that many — particularly Democrats — are loath to discard, legislators say.

“Once government gets a new tool, it’s virtually impossible to take it away,” said Representative Scott Garrett, a Republican of New Jersey and member of the Financial Services banking subcommittee. “And Fannie and Freddie are now tools of the government.”

One reason that Fannie and Freddie will never return to their earlier forms is simple mathematics: to become independent, Fannie Mae and Freddie Mac must repay the taxpayer dollars invested in the companies, plus interest. Even if the firms achieve profitability, it could take them as long as 100 years — or longer — to pay back the government. And almost no one expects the companies to return to profitability anytime soon.

Moreover, the takeover has provided legislators with a long-sought ability to influence the mortgage marketplace directly and pursue social goals like low-income housing.

“There is a commitment to restructure these companies, and we are going to want to retain a hand in the things that matter, like affordable housing and making sure that the housing economy doesn’t become a threat to the entire economy again,” said Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee. “Some of what these companies did will be returned to the private sector, and some of it is going to remain with a public entity.”

The more the government demands "affordable" housing, the less affordable it gets.

Your Lying Eyes has more on the Big Picture:
The persistence of a few huge zombie banks, completely dependent on the Obama administration for their existence, will provide the streams of "capital" to fund administration-approved "private" ventures - the various health "insurers" and green "entrepreneurs" that will spring up in Obamaland. Any income that might have been dumped into savings in the past will now be redirected to "investments" in education and infrastructure. (Can I use any more scare quotes?)

Granted, this was not Obama's precise plan back when he and David Axelrod decided he should become president. Obama envisioned that as POTUS he could harness this incredible wealth-making machine that is the USofA to accomplish all the things he would have liked to have accomplished as a community organizer if being a community organizer didn't totally suck. You know, like back when he was still talking about how "white folks' greed runs a world in need". So what to do when the white-greed machine blows a serious gasket?

My published articles are archived at iSteve.com -- Steve Sailer

29 comments:

Anonymous said...

This is ludicrous yet tragic. Obama's superior intelligence, respect for competence, and science policy keep raising my hopes, and then I see things like this.

I'm really most disturbed at the number of ways to choke off political competition: killing talk radio, shoveling money to left-wing groups, card-check, etc. On the other hand, the Republican strategy to 'defund the Left' never seemed to get anywhere.

headache said...

2 things:

1. Amazing how the Slim Times is blurting out Obanomics as gospel with a straight face. They now have become the veritable Pravda of old.

2. "Nothing is selling in Santa Monica, where homeowners continue to believe that they just plain deserve seven figures for their four room shacks. "

Ha ha, is that not also the problem with the capital market. Speculators who leveraged 100x and DEMAND that the governments of the world bail them out. If I understand Denninger correctly, this attitude more than anything lese is tying up the capital markets right now.

Piper said...

Let's see, the more times you default, the worse credit you'll have. The worse your credit, the more you'll need "help" from Fannie and Freddie to buy (another) house or condo.

Therefore, since "regulators have ordered the companies to... loosen internal policies so they can work with more questionable borrowers" the key to living in pleasant "affordable" housing in the future is to never make mortgage payments. You should just "buy" a new house with a new loan from Fannie or Freddie every time you're about to be evicted from your previous house. If you take full advantage of "borrower assistance programs," the California foreclosure moratorium, all the normal legal delays, etc. you should only have to move about once per year. You can always keep your seasonal sports gear in a storage unit so you don't have to schlep it when you change houses.

Anonymous said...

"So what to do when the white-greed machine blows a serious gasket?"


Mmm, 1+1=2

During the run-up to Mandela taking over South Africa the exchange rate dropped by a factor of about 2-3. Politicians, clergy and the media were bellowing out all over the world that the saviour had arrived. Yet the markets gave the thumbs down. The country has been under the ANC thumb for about 15 years. The currency is now 1/10 its original value when the whites handed the place over.

I don't see why the USD should do much better, since Obama's economic actions so far have followed the typical mould under Mugabe and Mandela. Mass redistribution, centralisation of wealth in government hands so that the party can control the dregs, making business life outside of that system difficult. Milking whoever is not black and making money. When it became clear that Obama could win, the market crashed. Or was it deliberately crashed to let him win? Since then its perpetually downhill. Yet the Politicians, the clergy and the media tell us the saviour has arrived.

Personal enrichment can only be around the next corner.

Half Sigma said...

I've been to Santa Monica, and its a cool place with obvious SWPL appeal. SWPLs are willing to pay big money to live next to other SWPLs.

As much as they preach diversity, they don't want to live in a neighborhood with poor minorities, no matter how cheap the housing.

Anonymous said...

Well as Ben's father said, "if something can't go on forever, it won't."

Aside from that quote, which is highly relevant, is also the fact that you can't force a failed policy to work. Socialism is a failure everywhere it's tried. In America it will fail faster than it did in Europe because we already have the family and social decay of Europe plus a population about 30% black and hispanic that is already more accepting of government handouts.

Obama's rapid descent into socialism combined with open borders will make the causes of our decline more obvious.

Moreover, the world just plain damn won't buy bonds from an America in decline, so funding it with debt will eventually become impossible.

It's over. Obama will not get re-elected. Slow (or no - or negative) economic growth. Rising inflation. Increasing numbers of welfare dependent. Millions of immigrants still here doing jobs unemployed Americans "won't do." A government unable to borrow the money it needs to run itself. Protest. Riots. Who knows, maybe tarring and feathering (we can all dream).

The economy won't be better 4 years from now. It can't be better 4 years from now - Obama has guaranteed it.

He will go down in history as the worst president ever.

Anonymous said...

Western civilization is under the illusion that it can carry on the innovation and growth of an anglo and/or other euro-derived civilizations' under the weight of aggressive and/or low IQ foreign bodies.

Natiolization of some of the financial institutions is just another step in the decline process. We can talk about the symptoms all the day but the underlying causes are always going to be there until the real problems are addressed.

Jim O'Sullivan said...

Look on the bright side. That was some remarkable honesty on the part of the New York times.

josh said...

anon,

FDR has gone down in history as one of the greatest Presidents ever. There's not really much reason to expect historians to get history right.

Ronduck said...

Moreover, the takeover has provided legislators with a long-sought ability to influence the mortgage marketplace directly and pursue social goals like low-income housing.

The best way to pursue affordable housing is to do nothing. The price of houses will drop further and so will rents, which have decline around 30% in my neighborhood. The feds need to close these zombie banks, including Fannie and Freddie, and just auction off their assets.

Half Sigma said...

As much as they preach diversity, they don't want to live in a neighborhood with poor minorities, no matter how cheap the housing.

Liberals don't even want to live around poor or conservative rich Whites. Only the right kind will do...

Evil Sandmich said...

Affordable housing, pshah, reminds me of the old joke "if you think that healthcare is expensive now, wait until it's free".

Of course a large problem with healthcare today is that it's free for far too many people. Looks like our housing sector is set to follow the same path: free housing for the ghetto-ites, incredibly expensive housing for everyone else.

Anonymous said...

It may well be that we are headed for the perfect storm.

The Soviet Union failed and the gigantic capitalist deregulation party which followed has resulted in the mother of all hangovers. So Obama thinks that socialism is the way forward for America.

We are seeing the rise of nationalism in Europe; multiculturalism has led to all manner of tensions; eastern Europe has massive problems; the EMU may disintegrate. Pakistan is increasingly unstable; Taliban tribes are joining forces to fight Obama's increased US troop levels in Afghanistan; unsavoury characters are in now in charge in Israel; Iran is going nuclear ...

I take comfort from the fact that one of the first casualities of all this will surely be political correctness. It may well come to be seen as one of the luxuries of the 80s and 90s.

Anonymous said...

"Obama's economic actions so far have followed the typical mould under Mugabe and Mandela. Mass redistribution, centralisation of wealth in government hands so that the party can control the dregs, making business life outside of that system difficult. Milking whoever is not black and making money"

Perhaps Obama is merely following in the footsteps of his left-wing African father. Bringing his search for "race and inheritance" (so well described by Steve Sailer in "The Half-Blood Prince") to America.

Dave said...

OT, but the WORST IDEA ever!

http://www.samefacts.com/archives/israel_/2009/03/parole_the_palestinian_refugees.php

Got to see it to believe.

testing99 said...

Anon -- "unsavory" characters were in charge of Israel during the Kadima government, with a number of high-ranking officials charged with rape, embezzlement, and more.

What has collapsed in very suburban, affluent Israel is the idea of land for peace. Because when Sharon pulled out of the Gaza and Lebanon, all they got was rockets raining down and attacks. The idea that Israel can make some bargain, any bargain, and still exist is not supported by most of the population, because they can see the rockets raining down on them. It's interesting that the Israeli SWPL crowd that was not rocketed, in Tel Aviv, voted Livni. Who has endorsed a land-for-peace deal.

The West faces the same problem the world over: suburban wealth was the product of cheap energy, Pax Americana, and global trade that made some middlemen like Nike and Apple very rich. There is not enough energy and people among the SWPL crowd who comprise most of the population even in rocketed Israel to do anything but a rear-guard action against aggressive, more numerous third world forces that because technology is so cheap, have the same tech as the West.

You can see this in Mexico -- drug rings have the same UAVs, and night vision, and other high-tech devices as the US Military. They don't have fighter jets, but that's about all. Anything else can be bought on the open market and has been.

Obama is just the latest symptom -- a magic Shaman ala Jim Jones promising multicultural paradise if we just drink the Kool Aide.

Anonymous said...

Obama ain't no socialist. He is too intelligent for that. He knows that Socialist societies do not produce much of anything.

What he, and all Lefties, want is a successful capitalist/innovative society they can plunder again and again.

Richard

RobertHume said...

What he, and all Lefties, want is a successful capitalist/innovative society they can plunder again and again."

So maybe Obama is looking for an opening to cut back on unskilled immigration. He hasn't talked about how wonderful it is nearly as much as Bush. And Latinos are not the same as African Americans; high levels of Latino immigration hurt his homeboys. How can we leverage this leaning ... this leaning is consistent with Steve's analysis of Obama's interest in helping his own race.

Anonymous said...

Obama gets more kudos for his supposedly superior intelligence than Einstein. I'm not sure why.
Yes, he did well in Law School. Big friggin deal. Doing well in school in more subjectively graded subjects like law is a matter of gaming the system more than pure brain power. If you know the right classes to take you will do well. (As an aside his public personality - flamboyant thoughtfulness followed by an elegant statement of the establishment opinion - is exactly the way successful students write law school exams)
Since his election the only thing coming from his administration that seems like he had some hand in it (as opposed to someone putting something in front of him and saying this is what you want) is that subprime-buyer bailout. It just seems like the sort of thing a former racial activist would like: it is impractical, expensive, rewards malfeasance and will make our present problems worse.
But everyone thinks he's clever because he writes a couple books about his favorite subject and did well in school.

anony-mouse said...

I'm puzzled by why the government won't at least combine the two mortgage Macs. Would make for a tiny bit of savings and typing efficiency.

(Call it Fardy)

RKU said...

Obama gets more kudos for his supposedly superior intelligence than Einstein. I'm not sure why.

Ha, ha!

It really will be pretty funny if Obama's test scores do eventually come out, and it turns out they're *below* those of "Bush-the-Moron". Personally, I'd guess there's a pretty fair chance of this being the case...

On the other hand, I can't believe that Obama snorted as much coke as "W" or drank as much whiskey, so I'm sure that these days, he's well ahead in the brain-power department...

Anonymous said...

"Socialism is a failure everywhere it's tried. In America it will fail faster than it did in Europe because we already have the family and social decay of Europe plus a population about 30% black and hispanic that is already more accepting of government handouts."

I disagree. The way down is limitless. Think Angola or Zimbabwe. More NAM's, less family, more corruption. The more of that, the more powerful the governing elites become. Angola and Zimbabwe are run by cleptocratic elites who bag everything. They have about 4000 loyals who get paid to keep the system in place. The rest live in abject poverty with a little welfare and free medical care. The oil wealth in Angola keeps the place ticking for ever. Unfortunately the mineral wealth in Zimbabwe did not turn out as lucrative for uncle Bob.

The outrageous part is that the elites in Angola re not even black but mulatto. And they make sure to keep the darker brothers out. But don't expect the Slim Times to notice.

Anonymous said...

"He will go down in history as the worst president ever."


You wish. The national radio broadcast in Germany last week filled the entire news program with the Obama budget. The ENTIRE news program. I don't think any Germany event ever got this amount of attention. And they were swooning over all the justice, humanity and kindness of Big Brother. Europeans are so mindlessly infatuation with this imposter.

I'm sure the Slim Times and its minions will manage to portray Obama as the greatest prez. ever, no matter how much he f. up. They’ve done it with other African leaders before.

dc watcher said...

.
"Yes, he did well in Law School. Big friggin deal. "
How do we know that? What was his GPA? Doing well in school at the University level does indeed predict future capability, generally speaking. Douglas McArthur's average at West Point was never beaten to my knowledge, but I dont' know if that's still true.
Obama's academic records, like so much else in his life, were sealed. The fact this was never questioned in MSM shows how trustable that entity is. He was editor of the Harvard Law Journal, undoubtedly an Affirmative Action position since there is no evidence of any innovative or incisive writings on legal matters, nor any impressive academic record he has allowed the public to see. If there were any impressive academic records to see, we'd have seen them, AA or no.

So. Obama is good at quasi-religous speeches written by young white guys who used to work for the Clintons. Even this speech-delivery talent came out of nowhere. There's no evidence of it before his presidential candidacy. He exhibited no special charisma or public speaking skills in school. At least not that anybody recalls. That's it. That's what his "intelligence" is based on. That and the whiter-people-liberals who think the 8th wonder of the world is a black-ish man who can sound intelligent and is skinny.

dc watcher said...

On the other hand, I can't believe that Obama snorted as much coke as "W" or drank as much whiskey, so I'm sure that these days, he's well ahead in the brain-power department..."


why would you not believe that? and there's no evidence he's ahead in brain power. As in the case of Bush, the people around him are doing most of whatever "work" is done. He just attaches his name to it. This doesn't mean presidents don't have "power" it just means they are "powerful" for as long as their name means anything to people who really hold the poewr.

Ronduck said...

Obamanomics should make Uncle Bob proud, its a nice second step toward the wet dream of every Black radical.

Its' amazing that so many states went for Obama, what were they thinking? Were they even thinking at all?

Gene Berman said...

There's one aspect to the current shaking out that I haven't seen discussed here (somewhat to my surprise) but it may prove to be a very important factor.

In the economy in which the country operated for years, an average white male's income was burdened to a certain extent for the benefit (and wage enhancement) of females, blacks, and Hispanic workers. I don't remember the figures but believe they appeared either here or at LaGriffe's. To the best of my memory, it cost the average white male about $6K to kick up the black workers' average
pay envelope by $9K and the average Hispanic's by $4K; women weren't included in the stats (but are also, on average, getting a partial "ride."

Whatever resentment has been engendered by the arrangement has not been readily apparent (and it would not surprise me at all to learn that any news or available information on the subject has been discouraged or actively suppressed). What I'm suggesting that current conditions may change that situation drastically. When firms downsize, their financial survival chances will vastly increase the importance of retaining as many of the "least-cost" employees as possible (which invariably means the sharpest and most productive in any given capacity); the pressure will become enormous to lay off as many as possible of the AA hires and, concomitantly, every white male laid off will mean fewer backs on whom to lay the AA burden.

This thing is going to bring some surprises, few of which will be pleasant. In Rand's "Atlas," it was rich industrialists and financiers who "shrugged." This time around, it may be a lot more "reg'lar folks" a-jining in.

Anonymous said...

Barack is going to be a victim of circumstances, that is for sure. A victimization complex at the core of his personality may be the reason for his nonchalance in these most perilous of times.

I think a valid third party effort is needed to break the deadlock of the duopoly which invites domination by oligarchs and suffocates political dissent. I am concerned since by midcentury the consequences for our country of this latest binge of deficit spending will become clear. The debt service is going to be paid to sovereign wealth funds, not to “us” as it is usually described. A revolutionary situation will develop because all solutions proposed by the then-establishment will clearly be counterproductive, and make that extremely so. When we pay our taxes in the future, much of the wealth we consign over to the federal government will be shipped to overseas accounts of countries such as China who likely will be in fierce economic competition with us for remaining global markets and resources, and will not be militarily impotent.

So the reason people will pay taxes then is …to hasten our demise? I don’t think so; and to prepare for that eventuality a powerful third party must be started now so there will be a legitimate channel for the ultimate dissent: secession. Our backs will absolutely be against the wall by then.

Reasons? Well,the federal government will have to resort to an army of Treasury Police to enforce acceptance and usage of the dollar in economic transactions, all of which will be subject to onerous value-added taxes. Additionally, in order to regularize the economy further there will be extensive wage and price controls once the inflation generated by this “stimulus” takes hold. This will of course result in a huge black market, in turn a further reason for policing of the economy in a soviet-style manner. Dissent will become linked to economic crime and will be outlawed.

But as I have said above the revolutionary situation may develop because the USA is a debtor nation; essentially a financial colony of the sovereign wealth funds of China and other holders of our TBills. Taxation, already onerous, will become unbearable in light of the fact that the collection of taxes itself will hasten our economic demise. The “original 13 colony” mentality will reassert itself. Prosperity will frankly be seen never to be realizable unless a re-ordering of the borders takes place to enable the productive to separate themselves and rid themselves of dollar debt.

Ergo, secession

testing99 said...

Berman --

You forget the deciding role politics plays. Obama's model, with the Big Man deciding all economic activity, and the government a "partner" or as Jonah Goldberg wrote, a fascist corporatist director, means ...

White men are first fired and last hired.

Remember, Obama does not care about economic results, merely "social justice" aka punishing White people, particularly middle/working class white men, and rewarding Blacks and Hispanics, and Women.

Therefore, given that corporations are now dependent on the government for financing as well as regulations, expect a lot of jobless white men. A ready made Bonus Army, with the largest demographic segment (White Working class men are 25% of the population).

ANY third party populist who cares to can take advantage of this.

Gene Berman said...

testing:

I didn't "forget."

You've just described more or less what I suggested.

But it would be a mistake to assign inevitability to any particular scenario. Granted that the preference in hiring is for the minority and presumably the favor extends when condidering whom to lay off. But viability--survival--is also a powerful force, one that may be equal to the task. We'll just have to see what happens.

When the shit really hits the fan, my money's on survival.