Wednesday, May 12, 2010

The Un-Free Market at Work

I bought a home in 1981 with a Fannie Mae mortgage. I'd been out of the country for more than nine years and had missed the great inflation of the Carter era which had blown housing prices up from the affordable $35k I'd spent in 1970 in San Antonio to an average $120,000.00 for a small new home in Alamogordo NM.

Mortgage interest rates, even for a VA loan were still near 18% and the Fannie Mae option got me into a house at a measly 13.5% rate. That was a great deal at the time. But much has changed since then.

Fannie Mae and Freddie Mac became more than mortgage guarantors. They became tools of a social agenda with the lofty goal of "making home ownership affordable for all Americans"...even those who can't really afford a home and have never reliably met their financial obligations or held a meaningful job.

In a real world, that concept might be noble, but it is also unworkable. Now read this:

We Lost Money, But Making Money Isn't Our Job

The whole concept of property with value and finance with obligation has been abandoned apparently.

CEO Mike Williams didn't even pretend that he's running a profit-making business. "In the first quarter we continued to serve as a leading source of liquidity to the mortgage market, and we made solid progress in our ongoing efforts to keep people in their homes," he said.

A "leading source of liquidity" means we continue to pour money into the losing situation. "Keep people in their homes" means that the government now buys certain people a house. Are those deserving people? Of course not. If you were deserving of a house you wouldn't need the government's help would you?

And, how about this example of Alice-in-Wonderland-speak:

the company also clarified yesterday that its directors "are not obligated to consider the interests of the company"

No obligation whatsoever.


Me said...

I got the tar? Anyone got feathers?

immagikman said...

I have feathers. Sure they have no obligation because they are unelected spenders of tax payers money. They dont have to worry about getting fired, job performance or effectiveness, they are completely unaccountable.