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F&F Bust
Sarah Palin just offered a solution for Freddie Mac and Fannie Mae. Sell ’em on Ebay.
No, not really. But Fannie Mae and Freddie Mac are the big news today. Over this weekend they will, in effect, get nationalized and in the end the U.S. taxpayer will take responsibility for their losses.
The mechanism Secretary of the Treasury Paulson will use to put F&F into ‘conservatorship’ is yet unknown. The most likely way is for F&F to issue preferred stock and for the treasury to by these. Common stocks would thereby get diluted to penny levels.
China, Russia, Pimco and others who own F&F issued mortgage backed securities will not have to bear losses.
Current owners of preferred F&F stock will not have to bear losses either. Most of them are smaller U.S. banks and if these stocks would have been wiped out, many of them would have failed.
Barry asks:
- How much is this going to cost the taxpayer?
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Is this anything more than a temporary band aid?
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Does this do anything for the Housing Market? For other Financials?
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What is the political fall out from this?
My answers:
- $500 billion to $1+ trillion
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No.
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No and no.
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Nationally: Nothing. International: Further loss of U.S. influence.
This is not the endgame for F&F yet. That is about two years out when all the bad mortgages they bought in 2007 and 2008 will show their real ‘quality’ in the books. The U.S. will have to print a lot of money to inflate that debt away. There goes the triple A rating …
Hamburger,
Growth is not the answer, but rather our destruction. I vote no to Growth. We now need Anti-Growth, as the following so aptly articulates:
But the deceptive ‘obvious fact’, which rarely anybody ever acknowledges, is that constant growth in a planet of limited resources is an impossibility. Sooner or later, such growth will reach the material, physical limits of planet Earth. Only the cancer cell displays such unrelenting, single-minded, absolute growth, an unregulated growth that does not know when to stop and ends up killing its biological host by diverting all resources to its single-minded pursuit of bigger and bigger.
As that somewhat eccentric US environmental activist, Edward Abbey, had famously pointed out, “Growth for the sake of growth is the ideology of the cancer cell.”
In the first decades of the Industrial Revolution, which set this pattern of unrelenting economic growth, the limit to economic growth was not visible. The imprint of human activity was yet relatively small compared to the size of the planet and its resources. There were some people even then who spoke against economic growth and its baneful influence on the planet but these were, invariably, romantics out of touch with reality and based their critiques of industrialisation and economic growth on a desire to retain the status quo of feudal stagnation and hierarchy.
The unrelenting growth of the economy unleashed by capitalism, especially in its industrial phase, has been responsible for the flowering of the productive and creative powers of the human race. It is not merely reactionary, but futile, to talk about a return to the pre-industrial past. Yet, one cannot escape the obvious fact that limitless growth is not possible in a planet of limited resources. The point is to be able, using the very technological and intellectual tools provided by the sustained economic growth of the past two centuries, to determine how this growth has impacted its biological host and whether we have reached the limits of such growth.
I would argue, based not on some longing for a return to an innocent pastoral utopia but on hard material reality, that we may not only have reached this limit, but are mindlessly breaching it, imperilling our very existence.
Link to the rest of the article
I penned an essay in 2003 several months prior to the invasion of Iraq. I saw it coming….hard not to when you remove the blinders. Since then, I have learned, nay, we have learned much, but the general tenets of the essay still hold true.
The Last Crusade
The concept of Materialism is an extremely appropriate, and I would say urgent topic, considering the serious issues currently confronting Man and the Globe. I believe the topic lends itself to a multi-faceted analysis, however, I will limit my discussion to the facets that appear to me, to be the most crucial and pertinent.
Materialism, the word itself, in my opinion is somewhat of a misnomer in that Material refers to something concrete, physically identifiable, tangible and measurable. As such, the term precludes something less tangible such as services. Therefore, I feel it more appropriate to refer to the issue as Consumerism; the purchase or acquisition of wants versus needs.
It has been my observation that the discussion of this topic centers around the assumption that Consumerism has been adopted wholesale by the inhabitants of the Globe, or in the least, will be, and as such the analysis of the issue proceeds according to this precept. I do not agree with this assumption/precept as a given, however, for the sake of the point I am about to make I will allow the assumption in the hypothetical. My second point will address the validity of this assumption, so hang in there.
Assuming that Consumerism is fully accepted and adopted as the way of life under the New Global Order, then I fear, the implications of such will be destructively far-reaching and ultimately catastrophic. I will attempt to illustrate my point through the use of an analogy, given the disclaimer that analogies are not foolproof; nonetheless, I will do my best to come close.
Try, if you will, to envision mankind collectively as a fetus in its Mother’s womb. Ideally, the Mother and Fetus coexist in a state of equilibrium for the entirety of the gestation period; the Fetus requires exactly what the Mother can provide. Suppose the Fetus has a genetic defect though, a defect that alters the nourishment equilibrium and leaves the Fetus yearning for more than the Mother can provide; an unquenchable yearning that must be satisfied regardless of the implications.
The Mother, in an attempt to quench the fetus’s “unreasonable” nourishment requirements, diverts life- sustaining nutrients from herself to her Fetus, thus depriving herself of vitality. The Fetus’s requirements increase exponentially to the point where it is defecating in the womb. Alas, the Mother can no longer provide any additional nourishment, in fact, her yield to the Fetus declines precipitously, and she is on the verge of death, while the Fetus wallows in a cesspool of its own excrement with an unquenchable and veracious hunger.
It is no longer receiving satisfaction from the Mother so it proceeds to devour its host. It begins with the umbilical cord and proceeds to the uterine lining, consuming layer upon layer.
The Mother is in physical arrest at this point, she is writhing in pain; the internal bleeding is massive and irreversible. She succumbs and the Fetus is violently vomited from the now deceased Mother’s womb.
Such is Man’s destiny if we continue to globalize the concept of Consumerism; the production and/or the delivery of wants.
As I mentioned earlier, I do not believe that Consumerism will be adopted under the New Global Order, in fact, the resistance to such will ultimately lead to a Global clash and human self-annihilation. An analogy of such could be likened to two diabolically opposed fraternal twins in the Mother’s womb fighting for position in the birth canal and ultimately destroying each other in the process.
I believe the current clash between many of the Arab nations and the West (exemplified by the U.S.) is a clash over ideology; that ideology being Materialism or more appropriately, Consumerism.
There is no doubt in my mind that Western Civilization is marked by among other things, Consumerism. It is “our” way of life. There is no need for me to elaborate on what is obvious, one need only turn their head about and observe to prove this point.
However, since I do not have the luxury of observation related to the Arab world, I have to rely on the observations of others; for example, T. E Lawrence.
Lawrence gives a profound (given that he was speaking to the issue in the early part of the 20th century) insight into the Arab, Semitic, Bedouin disposition, specifically as it relates to Western Materialism/Consumerism.
In his book, Seven Pillars OF Wisdom-A Triumph, Lawrence expounds,
“The common base of all the Semitic creeds, winners or losers, was the ever present idea of world-worthlessness. Their profound reaction from matter led them to preach bareness, renunciation, poverty; and the atmosphere of this invention stifled the minds of the desert pitilessly. A first knowledge of their sense of the purity of rarefaction was given me in early years, when we had ridden far out over the rolling plains of North Syria to a ruin of the Roman period which the Arabs believed was made by a prince of the border as a desert-palace for his queen. The clay of its building was said to have been kneaded for greater richness, not with water, but with the precious essential oils of flowers. My guides, sniffing the air like dogs, led me from crumbling room to room, saying, ‘This is jessamine, this violet, this rose.’”
“But at last Dahoum drew me: ‘Come and smell the very sweetest scent of all’, and we went into the main lodging, to the gaping window sockets of its eastern face, and there drank with open mouths of the effortless, empty, eddyless wind of the desert, throbbing past. That slow breath had been born somewhere beyond the distant Euphrates and had dragged its way across many days and nights of dead grass, to its first obstacle, the man-made walls of our broken palace. About them it appeared to fret and linger, murmuring in baby-speech. ‘This,’ they told me, ’is the best; it has no taste.’ My Arabs were turning their backs on perfumes and luxuries to choose the things in which mankind had had no share or part.”
Western civilization cannot buy the Arab world. We may think we can, witnessed by the various puppet governments placed in power and kept in power by the Western Multinational Corporations, however, that device is only temporary, and we are beginning to see the dismantling of it before our very eyes. The Royal families and the Puppet dictatorships of the Arab world are not a true representation of the Arab people. The renunciation of Materialism/Consumerism is woven into the life-breathing fabric of Arabs. Conversion, considering this pretext, is impossible.
One might well say, nonsense, look at the Royal families of Saudi Arabia and Jordan. I would say, yes, let us look at them. They appear to me to be irresponsible and contradictory individuals according to Western logic. Their life of opulence is a conflict for them and their erratic behavior exemplifies this.
T.E Lawrence writes,
“To live, the villager or townsman must fill himself each day with the pleasures of acquisition and accumulation, and by rebound off circumstances become the grossest and most material of men. The shining contempt of life, which led others into the barest asceticism, drove him to despair. He squandered himself heedlessly, as a spendthrift: ran through his inheritance of flesh in a hasty longing for the end.
……The Semite hovered between lust and self-denial.”
So you see, the Arabs are not at peace, at home, amongst Materialism/Consumerism, and as such, will ultimately squander their fortune due to a un-conscience longing to return to worthlessness.
What we are seeing now, in the resurgence of fundamentalist Islam, is not so much a religious revival, as much as a Cultural revival. According to Lawrence, these revivals have come in waves as follows,
“Since the dawn of life, in successive waves they had been dashing themselves against the coasts of flesh. Each wave was broken, but, like the sea wore away ever so little of the granite on which it failed, and some day, ages yet, might roll unchecked over the place where the material world had been, and god would move upon the face of those waters. On such wave (and not the least) I raised and rolled before the breath of an idea, till it reached its crest, and toppled over and fell in Damascus. The wash of that wave, thrown back by the resistance of vested things, will provide the matter of the following wave, when in fullness time the sea shall be raised once more.”
Lawrence experienced a wave that predicated his novel. There have been waves since, and, I believe, we are in the midst of a wave right now; a tidal wave of astronomical proportions. One that may perhaps strip the granite clean in one fell swoop and clear the Earth of Materialism/Consumerism once and for all. Of course, Mankind would be a casualty, leaving only Purity (God).
T. E. Lawrence, when he mentioned, “ages yet”, obviously, had no knowledge of Nuclear Weaponry. With the advent of such, and his knowledge thereof, I’m certain he would have asserted “years yet.”
Posted by: Pro Anti-Growth | Sep 6 2008 23:48 utc | 10
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