ron paul a prophet? Options

[Seeker]

he predicted 5 years ago where freddie and fannie were headed and tried to stop it

transcript of Ron Paul in the House Financial Services Committee, September 10, 2003:

http://www.lewrockwell.com/paul/paul128.html

Fannie and Freddie

by Rep. Ron Paul, MD

Ron Paul in the House Financial Services Committee, September 10, 2003

Mr. Chairman, thank you for holding this hearing on the Treasury Department's views regarding government sponsored enterprises (GSEs). I would also like to thank Secretaries Snow and Martinez for taking time out of their busy schedules to appear before the committee.

I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase GSE debt. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.

Mr. Chairman, I would like to once again thank the Financial Services Committee for holding this hearing. I would also like to thank Secretaries Snow and Martinez for their presence here today. I hope today's hearing sheds light on how special privileges granted to GSEs distort the housing market and endanger American taxpayers. Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

Dr. Ron Paul is a Republican member of Congress from Texas.

[impala454]

too bad he's still a wacko

[Seeker]

nope, he's a true conservative

republicans are no longer conservatives, they're liberals

if ron paul is whacko then you're a bleeding heart lib

[impala454]

Wacko, as in nuts, crazy, lunatic, etc. Not wacko as in left.

[Seeker]

what i'm getting at is you yourself claim to be a conservative, if you're calling ron paul a whacko then you're a whacko too... because all ron paul supports is conservative stuff

[chook]

He says things that the rest of Americans are afraid of saying, becuase it is real change. Not Obama Change or that Mavrick McCain.

[woody]

word.

not a whack, but a true politician

maybe wacko to some cause he doesn't sugar coat shit

[Dogmeat]

Shhhhhhhhhh! Obama is going to save the world!

[impala454]

Says stuff others are afraid to say? No. IMHO the man is a wacko because he thinks ignoring the rest of the world means they'll ignore us (bullshit). He would stand idly by while Russia becomes a new world superpower and then be crushed by them. The man is a wacko because he thinks dissolving the CIA and NSA and any other clandestine security organization is a good idea. There's plenty of other examples that maybe I'll dig up as to really stupid ass ideas Ron Paul has. The man is practically an anarchist IMHO, which is why people like Lance praise him as their Lord & savior.

[woody]

Says stuff others are afraid to say? No. IMHO the man is a wacko because he thinks ignoring the rest of the world means they'll ignore us (bullshit). He would stand idly by while Russia becomes a new world superpower and then be crushed by them. The man is a wacko because he thinks dissolving the CIA and NSA and any other clandestine security organization is a good idea. There's plenty of other examples that maybe I'll dig up as to really stupid ass ideas Ron Paul has. The man is practically an anarchist IMHO, which is why people like Lance praise him as their Lord & savior.

there's a difference between non-intervention and ignoring.
he doesn't believe that just wiping CIA, NSA, etc. altogether & leaving no intel is a good idea, he thinks there's too much bureaucracy between all the different orgs that involve in intel/security. there'd be intel groups, just narrowed down & less bureacracy

This post has been edited by woody: Sep 17 2008, 05:35 PM

[pysex]

there's a difference between non-intervention and ignoring.
he doesn't believe that just wiping CIA, NSA, etc. altogether & leaving no intel is a good idea, he thinks there's too much bureaucracy between all the different orgs that involve in intel/security. there'd be intel groups, just narrowed down & less bureacracy

there's a reason why we have so much intel orgs....because we have to keep tabs on all of our threats...and that would be way too much for one agency to handle

[impala454]

I will admit I like some of his ideas, but I think he takes them to an extreme that's simply not possible or practical. I also think he's extremely naive when it comes to our relationships with the rest of the world.

[woody]

there's a reason why we have so much intel orgs....because we have to keep tabs on all of our threats...and that would be way too much for one agency to handle

which is why he would shrink the number of them & not eliminate them or combine them all into one.

[chook]

That is the problem with America, everyone lives in fear. Fear of the evil terrorist that are lurking everywhere. Fuck, you are more likely to get mugged and killed than getting anthrax in your mail.

And on the other side is fear of ruining the environment, and hyping up that shit.

[Inferia]

reddit much? =P