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Google Reduces Evil Quotient

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ausador3/22/2010 11:24:23 pm PDT

re: #794 WindUpBird

I don’t believe this is true. At all.

Here is what I believe (backed up by economists)

Housing bubble, bad home loans, bad home equity loans, bad paper all around. Deregulation of lending istitutions. Consolidation of lending institutions. Credit default swap market traing around mortgage loans as if they’re playing cars so nobody has any idea what was worth what.

Bubble bursts, everyone realizes that they’re in too deep on their homes, using them as ATMS, getting loans that they’re underwater on, economy is predicated on a good housing market, that crashes, it all crashes. crash crash crash.

Putting it on F&F is ridiculous and ignorant.

A very sloppy synopsis but not too far from the mark, Fannie and Freddy were late to the housing bubble table because early on their regulations prohibited them from joining in on the feeding frenzy. Congress obligingly removed those restrictions when both they themselves and the real estate lobbyists campaigned for the removal of the loan limitations.

What started out as mainly a completely privately financed bubble ended up at the end being almost 40% financed by fanny/freddie guaranteed loans. Now it is convenient just to blame the entire thing on them since they did after all start guaranteeing the riskier loans once Congress allowed them to do so.

Still the loss that fanny and freddie incurred is so pathetically small when compared to say the default swap market at AIG that it is simply ludicrous to attempt the economic downturn on them.