Occasionally some world and local events require us to circle back and look at perceptions, facts and events that we have contemplated before. Today. two such items require revisiting.
Trump’s Addressing Root Cause of 2008 Crash-Freddie and Fannie
Link to Original Post (2/24/2019): https://wp.me/pY51c-1g4
In February, contrary to “conventional wisdom”, (meaning Fake News aided and abetted by RINOs), was that President Trump would NOT seek to privatize Fannie Mae and Freddie Mac and eliminate government control over these two quasi governmental agencies and by and large eliminate the potential liability for these agencies by we, the taxpayers. Both entities were originally chartered as private entities in 1938 when they were created.
The “wisdom pundits” postulated that Secretary Mnuchin and others in the administration would convince the President that privatizing these agencies would be a bad idea. The big government control freaks love the idea of being able to control each of us and generally, our largest personal asset, our homes, by controlling the liquidity of mortgages. In 2008, the fallacy of keeping these two Government Sponsored Enterprises (GSEs) was highlighted as we, taxpayers, had to bail out both of these entities after they knowingly, and with the aid of Republicans and Democrats, bought up junk mortgages and loans from banks who made sub-prime loans.
Today, President Trump is pushing the privatizing of both of these entities in order to restore accountability and responsibility for their operations. Their sole purpose is to provide a secondary market for mortgages and loans so banks “sell” these loans and restore the cash they need to give more new loans. If you have refinanced or bought a home, you probably received a note that your loan was bought out by Freddie or Fannie and you probably were given the name of a new processing company to send you payments to. Your original bank was then off of the hook for your loan and the responsibility was shifted to Fannie and Freddie, and you the taxpayer.
The fallacy of this quasi-government arrangement was that there were already private companies doing the same thing as Freddie and Fannie. But, they could not compete with the purchase rates nor the lack of liability that Fannie and Freddie enjoyed. So, the private market pretty much is insignificant.
President Trump want to recreate the private secondary market by removing the GSE status of these agencies and force them to compete on the open market. Private investors would have never made the decision to buy worthless paper as these two agencies did in early 2000’s until the crash in 2008. Congress will find it much harder to create a bubble like they did in the 2000’s that led to the housing crisis. There will be no willing partners in the secondary market. Also, it reduces Congress’s ability to fiddle with the mortgage market and create politically popular short-term bubbles.
Congratulations President Trump…
Chinese Communist Party and President Xi Jinping Stuck on World Domination Goals
Link to Original Post (9/1/2019): https://wp.me/pY51c-1iG
This week we saw that the Hong Kong leaders pulled back the Chinese Government Law that would have allowed Hong Kong Citizens to be sent to mainland China for interrogation and prosecution. (Ask Muslims how this has worked out for them!) But, the Hong Kong protestors are also demanding:
- Unconditional release of all protestors that have been arrested.
- Elimination of the characterization of the protests as Riots
- Independent inquiry into the actions of the police.
- Universal suffrage and control over Hong Kong by their citizens.
While President Xi was not publicly involved in this action, I believe that he convinced the hardliners in the Communist Party that a Tiananmen Square type of crackdown would only exacerbate the Hong Kong problem but also endanger any hope of a US trade deal and invite international condemnation. I do not believe that, as of this writing, the Chinese are willing to go much further in terms of turning over more autonomy to the people in Hong Kong. This would have ramifications within the Chinese mainland as well as Taiwan.
While this may signal some softening inside of China, it may not. But, if Xi did overcome objections by the hardliners, there is some hope that Xi may also be able to push forward trade talks with the US. I still am less than hopeful that President Trump and Xi will arrive at a point acceptable to the Chinese hardliners or President Trump. But, I still do not believe that President Trump cares if he gets a deal or not. He can achieve his goals by the end of his second term by revamping the Chinese goods supply chain and move US companies out of China. This will severely hurt the Chinese economy, prop up the US economy, and cripple the Chinese ability to fund its military expansion.
Don’t forget that President Trump has also ramped up our military sales to Taiwan to the dismay and consternation of the Chinese. He is also protrolling the south Chinese Sea in the face of Chinese protestation. Trump is poking a lot of different sticks in the Communist Chinese Eyes and they are quite dumbfounded as how to respond…