Fannie and Freddie and Bears, Oh My

I saw this linked at Lambert’s place this morning, and I was thinking how consistently racist wingnuts are. Of course, they insist otherwise — even though they manage to blame all our economic problems on brown people who tried to buy houses Above Their Station! (They had those perfectly good shacks back behind the big house, why’d they need to go getting ideas like that?) Even though before they were angry at them for buying Cadillacs instead of houses, but whatever.

It’s one of those curious things that disappeared down the memory hole, George Bush’s campaign to “help poor people buy houses” aka pump up the mortgage market. It was one of the few things he could brag about, and he flogged it frequently: “Under mah administration, I’m proud to say we have record numbers of American home owners!” Well, sure. They gave mortgages to anyone with a pulse, and sometimes without.

The latest scapegoat is Fannie Mae and Freddie Mac (and anything else that actually benefits poor people — I’m looking at you, Social Security!):

The thing that the wingnuts cannot explain is why Fannie and Freddie—which had a history that goes back to the mid 1960s, did not encounter significant problems until they were directed by Congress to replicate a market-oriented strategy. And they cannot explain why defaults on home mortgages were so rare until the “free markets” took over the mortgage sector. Heck, Fannie and Freddie even survived the savings and loan fiasco of the 1980s, when thrifts were “freed” to pursue free market maximization that resulted in suicide for the whole industry. It was only after 2004 when they were directed to cater to control frauds like Countrywide that they got into trouble.

Make no mistake. The wingnuts are likely to win these battles. President Obama will not put up a fight. Social Security is a done deal. It is going to be “reformed”. That is, it will be handed over to Pete Peterson, who will manage it right down the rat hole where all the private pensions are going. Wall Street will gamble away all the funds, whilst enriching itself with management fees. And Fannie and Freddie will be shut down so that Wall Street will have free reign in the housing market. Homeownership rates will plummet. Predatory mortgages will be the rule. Wealth will trickle up. Democratic Party coffers will be replenished.

The only possible hope is that financial markets completely collapse in the next three to four months. That would discredit Pete Peterson and the wingnuts at his think tanks. It would make it possible to stop the right wing stampede and the collective amnesia about the last three years—that is, about the global financial crisis caused by free market wingnuts. Resumption of the crisis could discredit the crazy troglodyte thinking promoted at Chicago and Washington think tanks.

I think there’s a pretty good chance that’ll happen — another collapse, I mean. So no worries, capitalism is just fine!