2 Videos of 2 demagogues trying to rewrite history of their past statements

Here's two videos to think about on election day, Tuesday 2 November, 2010. The first one is from For America reminding us of what a nightmare Obamacare is. The second one is from CNBC Power Lunch.  It features the master of the disasters known as Fannie Mae and Freddie Mac, rep Barney Frank, the first openly gay congressman and currently the chairman of the house financial services committee.  In it he states after the FM/FM collapse that he was always opposed to sub prime mortgages and advocated more rental housing??!!  Does he not know most of his statements in congress are on C-Span and in many cases YouTube as well?  The Power Lunch reporters conjured up one statement from 2005 that contradicts his first statement.

video 1

video 2

Barney Frank attempts to be Big Brother

Have you read George Orwell's novel 1984? The movie's male protagonist, Winston Smith, was a civil servant who rewrote history to suit the government, embodied by Big Brother. The government maintained all records and newspapers. Whenever something happened that was contradicted by past records or policies, the contrary items were purged and replaced with records that supported the new policy.

As you will see in this youtube video of Barney Frank interviewed by Bill O'Reilly on the O'Reilly factor, Mr. Frank seems to think that all the things he said and did in the past would not come back to haunt him.



Lots more to come on this later.

abra cadabra.. poof!!!! WM becomes JPM!

Wow!! The FDIC did not even wait until the weekend to seize Washington Mutual(WM), the nation's largest savings bank and sell it to JP Morgan Chase (JPM). This will spare the taxpayers another bailout at the cost of shareholders and bond holders of WM. Hey!!! the people who took on more risk for more reward are left holding the bag, not the taxpayers and responsible mortgage holders!!! This is an event that should become a trend.
Just remember one thing. The root cause of this sub-prime lending crisis is the government's extension of credit (via Fannie Mae and Freddie Mac) to mortgage borrowers who could not handle the mortgage they were receiving. When Bill Clinton told Fannie Mae and Freddie Mac to lend money to people who could not handle the debt, that started the current sub-prime lending crisis. This occurred in 1995. In 1996 Bill Clinton became the first Democrat to be re-elected as President of the USA since FDR.
HHHMMMMMM!!!!
More to come.

Time to sound the Tocsin??

So far, the goal of these rants has been to reveal that the socalled subprime mortgage crisis is not so much of a crisis as a regular part of the business cycle. (feast then famine then back to feast again in 25 words or less) This "crisis" is actually a correction. Mortgage lenders went overboard in the subprime lending area and eventually got burned. Bear Stearns, Fannie Mae & Freddie Mac the most prominent examples. Each required bailout by the Feds because they were too big to fail. Same old, same old.
On Sunday, 9/7/2008, the director of the Office of Federal Housing Enterprise Oversight, soon to become the Federal housing finance agency, James B. Lockhart, issued a statement on the takeover of Fannie Mae and Freddie Mac. I will quote paragraph 5 here:

"Key events over the past six months have demonstrated the increasing challenge faced by the companies in striving to balance mission and safety and soundness, and the ultimate disruption of that balance that led to today's announcements. In the first few months of this year, the secondary market showed significant deterioration, with buyers demanding much higher prices for mortgage backed securities."

Please read the last sentence, this is disturbing to me. Remember, the goal of Federal Agencies such as the FRB, FHFA, OFHEO.. etc is to help maintain orderly, efficient and effective markets. Director Lockhart seems to be saying that buyers are demanding higher prices for mortgage backed securities. Since when did the buyers demand higher prices?? Most markets, orderly, efficient, effective or otherwise have the sellers demanding higher prices and the buyers demanding lower prices. Has anyone ever gone into a grocery store and said" This chicken is worth lots more than $2.00 a pound, charge me $4.00 or I'm taking my business elsewhere, and asking everyone I know to do the same!! " If that person continued to demand higher prices one of 2 things would happen. A store employee would charge the extra money and pocket the excess for her/himself or the police would be summoned and commitment proceeding would start. (in most cases, the latter. I have an optimistic opinion for my fellow human beings.)
If the buyers are demanding higher prices, maybe I am wrong and this is a true crisis. Hopefully, there is another more reasonable explanation for buyers wanting to pay more for their purchases.
You can read the Director's statement about Fannie Mae & Freddie Mac's takeover at visit FHFA newsroom. Choose Statement of FHFA Director James B Lockhart dated 09/07/2008 when you get to the newsroom.

Feds seize Fannie Mae & Freddie Mac

WooooHoooo!!! The Federal Government put Fannie Mae and Freddie Mac in Conservatorship to prevent further economic losses from the deteriorating home mortgage market. These 2 quasi-government agencies hold nearly 50% of the USA's home mortgage debt. Who created this gross violation of the investor's risk management rule of not putting too many eggs in one basket?? The Federal Government of course. This reminds me of the farmer jokes about the fox guarding the chicken coop from the weasels. Fortunately, The Feds are bringing in retired banking executives to guide the "Enterprises" through the conversatorship. David Moffett, former vice chairman and CFO of US Bancorp, will head Freddie Mac. Herb Allison, former vice chairman of Merrill Lynch, will head Fannie Mae. This gives me hope that this conversatorship will eventually work to the benefit of the American taxpayers, not the shareholders who are supposed to deal with both the risks and rewards.
What exactly is a conversatorship?? When a company is in dire straits and facing failure, it can be put in a conversatorship. The goal of conversatorship is to turn a company around, stabilize it and let it go back to business as usual. Oftten when a company is bailed out by the government, the phrase too big to fail becomes all too commonplace. Liquidation of the company is not a goal, in fact, it is considered an option of last resort.
Another ray of hope for the success of the conversatorship are the presidential candidates responses to the takeover. Republican John McCain supports the conversatorship but wants the "enterprises" to be privatized once they are out of the conversatorship and taken off the backs of the American taxpayers. Barack Obama wants "clarification of the private and public nature of our housing policies." He also does not want shareholders to be protected from the risk inherent in mortgage investing by the American taxpayers. For once they both agree on the right way to handle one of our nation's problems. Wow! Sept. 7, 2008 should be a red letter day in history.

Speaking of history, let's add a historical perspective to this event. So far in 2008 11 banks have failed and required bailout by the Feds. In 1988, over 200 banks failed. During the 1980s over 800 banks and 500 savings and loan associations failed. That is 1300 financial institutions in a 10 year period. Do the math and you will discover that is 130 failures a year or over 10 failures a month for 120 months. Yikes!! History does repeat itself from time to time and those who do not learn from past mistakes are bound to commit them again and again.