"cavelamb himself" wrote in message
m...
azotic wrote:
It appears the american taxpayer will subsidize the risks taken by
sophisticated investors.

http://www.reuters.com/article/press...008+BW20080711

Since we have a free market Freddie Mac and Fannie Mae should be allowed
to go broke.
New entities will arrise to fill the vacume left by Freddie Mac and
Fannie Mae in the mortgage
market.


Best Regards
Tom.




That's because _you_ have no money invested there...

Everybody has money invested there, directly or not. They hold half of the
country's 12 trillion dollars in mortgage debt. They truly are too big to
fail. If they did, we wouldn't be talking about recession. We'd be in a
hell-bending depression that would knock down the world's economies like
dominoes.

The idea that we could let them fail and that some other "entity" would pop
up to take their place is a blissful pipe dream. Institutions like those two
depend absolutely on intelligent management; in this case, on anticipatory
regulations and requirements of capital to back the loans. It could have
been done, but that kind of regulation is antagonistic to the current
economic ideology -- which is to be happy, don't worry, let them run
themselves. Hah.

It's time to stop kidding ourselves and to face the fact that we've let
these enormous financial institutions -- including the big investment banks,
as well as these mortgage backers -- run rampant at the expense of our
entire economy. It is nuts; economists and smart financial people knew it
was nuts; but there was so much money being made that their voices were shut
up or shouted down. The party's over.

--
Ed Huntress