Recently returned from a nearly month long tour of the northern Med from Barcelona around the boot to Venice and back again. Met a lot of fine folks, and a few jerks, and polled many on their health care systems, paying for and quality of upper education, how their mortgage systems worked - and how well.
From what I saw and heard I think if we want to remain the dynamic and most envied of real estate machines on this planet or any other we need easy and cheap financing. We need to 'turn over' in a timely manner, or our economy will resemble Europe's, with fourteen trillion tourists clogging the streets, sidewalks, restaurants, and all the rest.. Property must run it's life-cycle as do we all; cars, boats, and buildings too are created, do their thing for awhile, and die. Europe, not so much -- Imagine driving or walking to the grocery store and the streets are overflowing with peeps from anywhere and everywhere, all the time. It's sad, but gotta chase they gotta chase the buck too, right?
I believe with every fiber of my being that this whole economic eruption was planned for, as the price that would have to be paid should we not realize the billions in permanent revenues from the iraqi oil fields, when war drums were beating on our air waves and in print, beginning in earnest in August, 2003.
When it became clear our adventure in the middle east was going to cost more than three trillion us escudos and nothing - NOTHING would be realized in return, it was necessary to execute Plan B - a good old fashioned stock market crash, and the normal accouterments, such as housing collapse, and that old favorite - unemployment. And finally, of course, budget cuts, deflation, and then the doldrums for a decade or so until commodities double and double again, raising prices of virtually everything and we're off to the races again. Like Monopoly, it's just a game..
Short, fat Fannie Mae, and her studmuffin brother, Freddie Mac are unique in the world, a sort of extra part in the machine that no country has except America.
Why is that, I wondered. Is that a good thing? I sought out people who could think and talk on this subject. At a table in an ancient stone cottage in outer county, Dubrovnik, we were seated with couples from Norway, Scotland, Australia, England, and 'locals' from Narlens and Joisy, including me, your humble orator and my blushing bride, from the 'turn over' capital of the world, Las Vegas, where every structure is a potential tear-down. After several hours of fine food and wine with talkative thoughtful 'foreigners' a consensus developed, regarding American real estate, which was we should not try to fix that which is not broken, especially when it would give complete control to venomous vipers and snakes whose interests are the opposite of living, working human beings who have families and the right to a decent god-damned life, for Christ's sake!
So what if there is an implied, IMPLIED government back up? The Banks kept the faucets on full blast for too long - it's that simple. And the Vipers and Snakes thought they would end up with Fannie and Freddie's ten trillion dollar revenue stream, did they not? Thanks to George! Bimbo college cheerleader, they did. His dad was a fighter pilot at the same age the son was shaking pom-poms in front of thousands of people wearing a big "P" on the front of his preppie white sweater and white pants and white shoes. Our president! Ha!
The remaining big banks have become gargantuan banks, and have not been sent to the woodshed in any meaningful way, and won't, now that five years have gone by and the Obama administration has not only managed to stop the bleeding, but launch a now believable if not robust, recovery from the chaos they inherited. Fannie and Freddie played a key - THE KEY role in turning back the tide of losses.
The Banks will extract the language out that charges Fannie and Freddie with maintaining an accessible, affordable and fair system for transacting real estate transactions. The Banks will not have fairness and ethics to worry about anymore when Fannie and Freddie are gone because they won't be there to provide the competition that prevents those fun-loving Banks from screwing consumers to death. You can bet your keester the benefits derived from our current system, which allows us to own our home outright in twenty-five or thirty years. When people had to save up 50% of the total price things moved a lot slower. Now Wall Street sees that real estate is the ultimate money machine, and they have a plan to get their grubby paws on it - all of it.
If Fannie Mae and my personal favorite, Fast Freddie go away we will live in Potterville within a few years, because all the incentive to buy, maintain, and improve homes in America will have been taken away by Bank executives, whose spawn will be able to attend the best schools while your kids will not. The rich get richer faster and the middle class disappears and the poor - well you can imagine. With Fannie and Freddie providing formidable competion, approaching 50% in normal times, the smelly, unpleasant, arrogant and greedy, stinking filthy banks will be repelled like garlic repels vampires.
I think if we want to remain the dynamic and most envied of real estate machines on this planet or any other we need easy and cheap financing. The one and only chance of that is if Fannie and Freddie stay right where they are and continue to do what it is they do - and regulate them well..
AI
