Posts tagged freddie mac

I think I can speak the mind of most people tied into the world economy and say things are a bit on edge right now.  As I wrote about earlier, most of this debacle was heralded by the situation with Fannie Mae and Freddie Mac.  This maelstrom, however, has been brewing for years.

One of my friends forwarded me this article said to be written by Alexander Tytler, which I think illustrates some lucid points about history.  We are not the first of highly developed civilizations and we won’t be the last.  The interesting thing are the trends that tend to be cyclical, no matter the example that is examined.

About the time the original thirteen states (of the US) adopted their new constitution in 1787, Alexander Tytler, a Scottish history professor at the University of Edinburgh , had this to say about the fall of the Athenian Republic some 2,000 years earlier:

“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government.”

“A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury.”

“From that moment on, the majority always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.”

“The average age of the world’s greatest civilizations from the beginning of history, has been about 200 years”

“During those 200 years, those nations always progressed through the following sequence:

1. from bondage to spiritual faith;
2. from spiritual faith to great courage;
3. from courage to liberty;
4. from liberty to abundance;
5. from abundance to complacency;
6. from complacency to apathy;
7. from apathy to dependence;
8. from dependence back into bondage”

Our founders were keenly aware of the shortcomings of a democracy and that is why they chose a Republic for us instead. Our founders disliked democracy as a form of government and did everything they could to prevent us from falling into such a condition. Sadly, most people think we live in a democracy by design and that democracy as a governmental form is good and noble. However, in a pure democracy the majority always out rule the minority by a simple 51/49 vote. This is far from what our founders crafted but we the people have not learned we live under a Representative Republic.

What is one of the largest pinch-points of the current economy in the United States? Mortgage loans and the housing bubble, of course. This is only one corner of the multi-faceted tower that comprises the country’s stability as a whole, and its syncopation into the world system. The government acquisition of the lending giants Fannie Mae and Freddie Mac signal one of the largest bailouts in history, a new set of rules, and standards yet to be written by federal political policy.  What future does this spell for those whose loans were previously under the wing of these entities?  More importantly, does this signal a growing trend and endgame for other businesses under the same strain and state as Fannie and Freddie?  A diverse group of experts get real and extrapolate the issue on this episode of Charlie Rose below.

A discussion about the U.S. government’s takeover of mortgage giants Fannie Mae and Freddie Mac with Mohamed El-Erian, co-CEO co-CIO for PIMCO, Gretchen Morgenson, Floyd Norris both of The New York Times and Nouriel Roubini of New York University.

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