Videos about how to invest, investing in gold and silver, and economics 101
Zerohedge contributor Bob English and Inside Scoop’s Mark Levine debate whether mortgage giants Fannie Mae and Freddie Mac are paying off for U.S. taxpayers and the roots of the wealth gap in this 2013 RT.com video clip. Of course, we know the U.S. housing market is “structurally more unsound” today than before the financial crisis because it depends more on government-backed mortgage companies such as Fannie Mae and Freddie Mac, according to BlackRock's Chief Executive Officer Laurence D. Fink.
Thanks in part to rising home prices, Fannie Mae, rescued at the height of the financial crisis at taxpayer expense, has turned around, reporting not only the ability to pay back its taxpayer-financed bailout but a profit. But it was Fannie and Freddie, English contends, that bore a share of responsibility in crashing the economy to begin with.
With the bailout, American taxpayers would up with some 80% ownership of the two government-backed mortgage lenders. “Guess how that happened,” English responds.
Although Fannie and Freddie were ostensibly private corporations, English points out, “the FR was buying agency bonds that would be Fannie and Freddie agency bonds since 1999.”
The bottom line, Levine argues, is that “at the end of the day we’re getting all our money back, and we’re making a profit, which shows that it was a good idea to bail them out.”
But how did we get here in the first place? English asks.
“We got here because the Republican Congress got rid of regulations; they got rid of Glass-Steagall; they got rid of the ‘bucket shop’ laws that had been around since the early 1900s that prevented you from gambling on other people’s things,” Levine answers.
In fact, Fannie and Freddie, while they also entered the CDO market, entered late and at far lower levels than other private companies did, Levine argues.
But the root of the evil lies with the Federal Reserve, rather than a need for more regulation English counters.
But Levine holds the derivative contracts sprang up as a way for Wall Street to avoid regulation.
If non-banks were regulated similarly to how the Federal Deposit Insurance Corporation has regulated banks, Levine concludes, the problem with toxic securities could be avoided in future. For bankers, ensuring the taxpayer bears any moral hazard associated...
The conversation turns to the wealth gap as reflected in the reported disparity in savings rates among the wealthiest Americans and everyone else: The top 1% of Americans now save 37 cents for every dollar earned, English reports. “This is triple the savings rate of the top 1% in 2007.”
The cause of the savings disparity, Levine says, is income disparity:
English argues that the cause of income disparity is crony capitalism, in which corporations are disproportionately rewarded, often, as in the case of defense contractors, with taxpayer funding.
The problem is an institutionalized disparity in the way economic rewards and punishments are dealt, Levine says.
And that, English concludes, is the moral hazard argument against government bailouts for private businesses: “When the government picks winners and losers, it does hurt the small businesses.”
Zerohedge contributor Bob English and Inside Scoop’s Mark Levine discuss the roots of the wealth gap in this 2013 RT.com video clip.
"And inasmuch as that has yet to be seen in the U.S., or even in Japan after 20 years, we can’t necessarily say that it will never happen."
Leonard Read’s 1958 essay, ‘I, Pencil,’ reminds us of the timeless truth that freedom is impossible without faith in free men.
What the people really want is recognition for their diverse heritage and the opportunity for self-governance.
CBC report fingers worsening pollution, largely resulting from ever-increasing use of carbon-based energy, as the culprit in the shellfish die-offs.
Imagine what would be possible with a limitless, environmentally benign and safe energy source, that could somehow be harnessed as warp drive-fueling “negative energy.”
“At one time U.S. Treasuries were considered the safest investment you could make. Now you’ve got every reason in the world to be concerned.”
Europe must someday realize that government needs to shrink: Once Italians Were Outsiders, Now Its Turks and Yugos...
"High taxes and over-regulation threaten to strangle innovation in its crib."
Were U.S. States to adopt gold and silver bullion as legal tender on a broad scale, the alternate currency would compete with the dollar.
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