The BBC picks up on a something that was first announced a few weeks ago:
American mortgage giants Fannie Mae and Freddie Mac are being delisted from the the New York Stock Exchange. It is the final admission that these once government-backed private firms are now entirely the responsibility of taxpayers. But despite their failure, the two firms continue to prop up America's housing market.
That's it.
That's the entire article on an event of monumental importance in the unravelling of Home-Owner-Ism - even the traditionally Home-Owner-Ist BBC admits, albeit rather obliquely, that the only thing left keeping the US house price bubble inflated is the long-suffering taxpayer - those two companies hold about a third of outstanding US residential mortgages.
Much the same applies in the UK of course - the taxpayer is currently responsible for at least a quarter of UK residential mortgages via Special Liquidity Scheme, Credit Guarantee Scheme and all the money which the government invested in RBS and Lloyds.
The new Scotland
3 hours ago
7 comments:
I'm not sure that this demonstrates the unravelling of HOI. It looks to me more like the explicit nationalisation of HOI. That's got to be a Bad Thing.
HOIsts are effectively using the USA and UK AAA credit rating to keep the bubble inflated!
That's a very bad thing for the AAA rating!
L, maybe badly worded, I could have said "A milestone in the Home-Owner-Ist death spiral". Agreed that this is socialisation or socialism, but at least that defeats the argument that HOers are somehow 'free market' and LVT is somehow 'socialist'.
S_L, indeed, HOism is always bad for everything. Except a select few bankers, landowners and politicians who want to get re-elected.
They were "private" in the same sense that for 8 years Network Rail's predecessor (Railtrack) was in private hands. Fanny Mae, Freddy Mac and Railtrack could not survive in the real world without actual or perceived government support (by cash, statute or a - correct - assumption that if something really nasty happened the taxpayer would cough up).
U, to be fair, the BBC refer to them as "government backed" when that backing was, as you say, implicit rather than legally binding.
The point is that any large mortgage lender is implicitly government backed - we can't have house prices falling now, can we?
"Propping up" is hardly the term.
JH, how would you describe it?
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