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mithridates
Joined: 03 Mar 2003
Location: President's office, Korean Space Agency
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 Posted: Sat Aug 09, 2008 10:35 pm Post subject: Ron Paul predicts the crash of Fanny Mae 5 years in advance |
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http://blog.freeny.org/?p=3548
Ron Paul in the House Financial Services Committee, September 10, 2003
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Despite the long-term damage to the economy inflicted by the government�s interference in the housing market, the government�s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.
No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac. |
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agentX
Joined: 12 Oct 2007
Location: Jeolla province
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| Posted: Sun Aug 10, 2008 2:46 am Post subject: |
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Real peachy, folks. This mortgage meltdown was predicted well in advance but no one wanted to stop the 'gravy train'. Wall St. lost its damn mind and Washington took the money and allowed it to happen.
So now we are left with socialism. Who woulda thought it would be the Republicans who would usher it in? |
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Nowhere Man
Joined: 08 Feb 2004
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| Posted: Sun Aug 10, 2008 4:27 am Post subject: ... |
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Shouldn't the title of this thread read:
Ron Paul points out Greenspan's prediction
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Sun Aug 10, 2008 5:56 am Post subject: Re: ... |
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| Nowhere Man wrote: |
Shouldn't the title of this thread read:
Ron Paul points out Greenspan's prediction
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Indeed. Or "most economists think a government mortgage bank is a pretty stupid idea and bound to fail."
Wow. Ron Paul is such a seer. |
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mithridates
Joined: 03 Mar 2003
Location: President's office, Korean Space Agency
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| Posted: Sun Aug 10, 2008 6:51 am Post subject: Re: ... |
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| Nowhere Man wrote: |
Shouldn't the title of this thread read:
Ron Paul points out Greenspan's prediction
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Sure, let's do that.
"Member of House understood warnings from Greenspan and tried to avoid mortgage crisis five years before it happened". Unfortunately still headline-worthy. |
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Gopher
Joined: 04 Jun 2005
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| Posted: Sun Aug 10, 2008 8:16 am Post subject: |
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| Ron Paul...the Final Prophet? |
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