Even worse, they specifically benefit from making as many bad faith loans (or in the case of airlines…creating new “essential routes” as possible. They greater they can spread their influence, and the more people that can be lured into a co-dependent relationship with them, the better. In the case of the housing market the strategy was to offer as many loans to people as possible, whether they were financially secure or not. This increases the likelihood of a bailout.

And yet rather than taking over a clearly mismanaged (or dis-managed) industry or firm…the Federal giovernments actually not only pick up the bad debts of those that did this, but allow them to continue running Freddie Mac and Fannie Mae!

I swear the people who run the US are more worthless than used toilet paper. Just abysmal. they aren’t even really making themselves rich, because when everything crashes down including the ecology, if hey haven’t won the death bet, they’re going to get screwed with everyone else.

But then, with current ideological regime in place, it is hard to think of what kind of economic organizational regime in financial system would not produce a crisis: private company, central bank, government agency, GSE -anything would blow up sooner or later.

“They were more than uncapitalized, …. Fannie can’t even produce audited copies of their books. Management’s actions were essentially criminal and were designed to produce bonusses. “

—

That kind of thing is why I do not like them as GSEs… so, no excuses for me for forgetting about that. I remember reading about that now, and fulminating over it.

thanks for the links.

rise and fall of the alternate banking system

Housing Market Foundation

http://economistsview.typepad&…..he-en.html

BTW: I wonder why it was published in the Daily News of Egypt, rather than the NYT or Washington Post?

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” The world has not been kind to neo-liberalism, that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics, and the so-called “Washington Consensus” in favor of privatization, liberalization, and independent central banks focusing single-mindedly on inflation. “

[My ed note: I think Stiglitz should have said “unregulated markets, especially those where there is an unequal distribution of information, or contracts are complex and incomplete” instead of just “markets.” Markets are good, usually best form of economic decision making, but you have to watch and regulate them, especiall in situations I mentioned above.]

” Though neo-liberals do not want to admit it, their ideology also failed another test. No one can claim that financial markets did a stellar job in allocating resources in the late 1990’s, with 97% of investments in fiber optics taking years to see any light. But at least that mistake had an unintended benefit: as costs of communication were driven down, India and China became more integrated into the global economy.

~~~ModNote: Edited for length.
Shorter excerpts will be easier to read here, and will allow FDL to remain within Fair-Use guidelines – 250 words. The link is important. Thanks.~~~