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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Tuesday, June 07, 2011

True cost of Fannie/Freddie bailout more than twice Obama administration claim « Hot Air

The US government is on a mission to completely bury the taxpayer in obligations. Its truly shameless.....
The calculation is then rather simple. The GSEs have a fair-value deficit between assets and liabilities that total to $187 billion. Combined with the $130 billion in cash infusions given by the federal government to Fannie and Freddie, the taxpayer is on the hook now for $317 billion. The CBO predicts that the liability will increase each year by slightly more than $4 billion over the next ten years as well.
So, this supposed government sponsored enterprise, that was designed and promoted as an institution to assist and promote private home ownership is costing hundreds of billions just to keep afloat. Eventually, a true market economic response will have be developed in order to replace the ability that these institutions had to issue long-term fixed rate mortgages. This free market response could take decades to adjust since

As I written before, the US government have created these Potemkin enterprises that somehow both serve the market and public policy. At the end, they served no one except the politicians that gain short-term benefit from the largesse that these Potemkin enterprises generate. However, the cost of these follies is now been shifted onto others, people paying taxes today, diverting important resources from other productive uses to these dead enterprises, too homeowners whose home values are destined to be lower and to our children that will have to foot the bulk of the bill.

This is what socialism brings you. Despite good intentions, government intervention in markets can sometimes destroy markets and severely injure the very people that they are trying to benefit. I hope that this is a lesson learned but I am not that hopeful.

True cost of Fannie/Freddie bailout more than twice Obama administration claim « Hot Air


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