3 thoughts on ““These assets are so riskless…” -Frank Raines, Economic Advisor to Barack Obama”

  1. It’s coming out that Barney Frank, and possibly other Democrats, are more than just metaphorically in bed with Fannie Mae and Freddie Mac. One wonders if a censure at least ought to be forthcoming for those, um, “involved.”

    I liked the bit from Raines about how a 2% reserve ratio is adequate for housing. Yeah, nobody has EVER lost 2% or more on selling a home by, say, paying the realtor.

    (which suggests that, ahem, minimum reserve ratios for banks, Freddie, and Fannie ought to be not 2.5% or 4%, but rather 6-10%)

  2. (Potentially crazy formating depending on whether this commenting system works like I hope. I just wish there was a preview button.)

    Debt-to-equity ratios were changing dramatically as people were borrowing much larger amounts relative to the total purchase prices and to their incomes and savings. However, much of this financing consisted of a crazy quilt of land contracts, second and third mortgages, high interest rates and loan fees, short terms, balloon payments, and various other high risk practices that crashed like a house of cards when the commercial banks suffered a liquidity crisis after 1929 and real estate plummeted in value as market demand began to disappear. By 1933 nearly half of all home mortgages were in default and there were a thousand foreclosures a day. In the wake of this panic of defaults and foreclosures, the federal government intervened to structurally transform the rules of the financial game.

    The chief lobbyists for the massive government intervention in housing
    finance were the leaders of the “Own Your Own Home” coalition.

    — Marc Weiss, Business History Conference, 1989

    “The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.”

    — Ecclesiastes 1:9 250 BC

    “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.”

    — Albert Einstein

  3. So what kind of commercial is McCain running? Something that gets this meeage out? No. Instead it’s one that says “we should all just get along”. Meanwhile Barry is pulling away.

    It’s like Boschwitz not taking Wellstone serously.
    Or LaFollette thinking Joe McCarthy is a crackpot who could never win.

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