Wednesday, 10 September 2008

USSRA : United Socialist State Republic of America?

"Senator Jim Bunning said Treasury Secretary Henry Paulson, by rescuing Fannie Mae and Freddie Mac, is acting like China's finance minister and both Paulson and Federal Reserve Chairman Ben S. Bernanke should step down.

'I sincerely believe that Henry Paulson and Ben Bernanke should resign,' said Bunning, a Republican from Kentucky on the Senate Banking Committee. 'They have taken the free market out of the free market.'

Paulson and the federal regulator for Fannie and Freddie placed the two largest U.S. mortgage-finance companies in a government-operated conservatorship on Sept. 7, ousting their chief executives and eliminating their dividends. Treasury also may purchase up to $200 billion of stock in the firms to keep them solvent."

..Couldn't resist. I suppose everybody knows that the U.S. treasury has kind of rescued the two biggest mortgage buyers amid a catastrophic decline of their housing market.

As some say "privatize the profits but socialize the losses", this has never been so true... If I'm correct, Finland during the beginning of the 90's did the same thing, rescued the banking system, (I wonder what happened to the CEO's and the one who filled their pockets full of Markka...)

Anyway, They (the U.S.) didn't have any choice, it was that or the collapse of the whole financial system- systemic risks- , that would have certainly ravaged the global economy. Indeed, you heard the decoupling theory from most competent economists and politicians (..the "sound" thing...)...well that was/is bloeuf, nothing else. Everything is ongoing and nobody knows yet the outcome. people are delevering (getting out of debt) as fast as they can (stocks on free fall all around the world)...
I don't say that the global economy will collapse next year, far from that, I'm just highlighting that there are very big risks or threat around. Should they materialize, then indeed 1990 will be replayed...otherwise you will have anemic growth for few years to come...well at least no inflation ahead - that is guaranted.

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