Technocrat

The masters of the universe, coders one and all.

GuyFawkes
Sat Oct 11 16:24:00 -0700 2008
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No, not the action figures, but the financial big wheels.

There seems to be a general consensus of opinion out there that these guys and their underlings "the bankers" and "the city" basically fumbled the play, dropped the ball, spilt the milk, whatever euphemism you want to use.

There used to be a saying in prison, "If you're so smart, what are you doing in here?"

The flipside of this is, as reassuring as it may be for everyone who just watched their pensions go up in smoke to congregate and agree that these guys made a monumental mistake, this simply is not a logical perspective.

These MOTU didn't get where they were by being assholes, well, not the stupid kind at least, and it completely violtates all logic to claim that several thousand very intelligent people, worldwide, have spent the past decade building this edifice of re-packaged debt-as-an-asset rinse-and-repeat until every single "asset" is its own father, uncle and grandson, and nobody knows where to send the paternity suit to.

This is like claiming that a bunch of coders sat down to write winamp, and everything was going really well, and then wow, one day they woke up to find that they had unleashed Smitfraud on the world.

Or like claiming that a bunch of guys sat down to write the US Constitution, and ended up writing the Jolly roger cookbook.

There is ABSOLUTELY NO WAY that we can have gotten to where we are with the CDO's, CDS's, and everything esle, unless all these people know exactly what they were doing, and achieved everything they set out to do.

Now it may well be the case that they can claim to be Oppenheimer, and intone "now we are destroyers of worlds" when all they were doing was interesting science, eg Oppy didn't pursue the career path he did because his sole long term goal was to vapourise tens of thousands of Japanese civilians.

However, you cannot on the one hand claim that Oppenheimer was a genius, and then also claim that at no point did it ever occur to him that his work would first be put to military use.

Gee, I'd like to pursue a career in developing man portable multi-kilowatt lasers, oh cool, uncle sam is funding my research, they did WHAT? They fired my laser at PEOPLE! Oh my GOD, how could I possibly have foreseen this.

hmmm

I wonder why we try to teach our kids not become thieves or habitual drug users, maybe because we have this idea that the choices we make today influence the outcome of our lives, our future options, our future (available) choices.

Which is great, unless we are talking about a GREAT thinker, or a GREAT engineer, or a GREAT scientist, or a GREAT politician, or a GREAT financier.

As soon as that happens, all of a sudden it is a whole different ball-game, Ozzy Osborne's kids take drugs, wow, I mean, who could possibly have seen that coming?

And in this week's episode of the Osborne's, we see Sharon stage managing the DEA bust and selecting a new outfit for the court hearing where the dogs and Jack are removed from the home and placed in the care of Social Services.

No.

The current financial crisis is an edifice as complex and as carefully crafted as the Windows 7 code base, it is simply too artificial to be anything but the works of man, the works on man working to a common goal.

Similarly, all the political posturing, from Gordon "moron" Brown to Geogre "draft dodger" Bush all claiming that they are leading their country, and their country is leading the world, in dealing with the current financial crisis, is equally an artifice, a work of man.

Now the IMF is in on the game too, warning that, and I quote "the world is facing financial meltdown"

Which is all very fortunate really, because the terrorist threat thing was starting to wear a bit thin and fraying around the edges and the middle and everywhere else.

But luckily we all now have a global financial crisis to worry about, and of course the biggest problem by far is "fixing" it without drawing attention to the fact that it is totally, completely and utterly impossible for this financial crisis to have arisen any way other than by the deliberate hand on man.

Let's take a look at the Bush dynasty, in the past century this family has been advisor to President Hoover, US Senator, married into the Walker banking family, chairman of US - China chamber of commerce, US president, congressman and CIA director, US President, governor of texas, governor of florida, numerous first and second ladys, often the same person, numerous bankers, the list goes on and on. Oh yeah, distant cousins to Washington, Roosevelt and Coolidge too.

But, like the current financial crisis, this all happened accidentally, stands to reason, because statistically in a democratic country of 300 millions what are the chances otherwise???

This shit makes the Greek / Danish / Austrian / Russian / English royal families interbreeding look positively random and mongrel-ish.

But hey, it is all just circumstance, and anyone who says anything different is clearly a paranoid schizo with a tinfoil hat innit.

The PROBLEM here, we are told by these dynastic MOTU, is all these dead-beat hispanic types taking out 125% mortgages on McMansions.

Of course it is, history is replete with examples of ill-educated peons sitting down at the table with bankers and then walking away and the bankers go to count their fingers on to find both arms and legs are missing.

Sure, ole Pedro spent all day working construction to buy a Dodge Ram, but he spent all night in a spiderman suit hacking the banks computer systems and creating 125% interest only mortgage instruments that nobody in the staff or boardroom questioned.

Just like Jimmy the heroin addict, he also has a spiderman suit, but he hacks the White House and the Pentagon and starts a war in Afghanistan in order to ensure his supply of smack.

It was obviously another spider-suit hacker responsible for my new bank account that I created two weeks ago on nothing more than a photocard driving licence for ID, being awarded an automagic 1,500 UK pound overdraft facility, that the bank clerk could not disable on the computer, even when I specifically asked him to.

What?

Elite ninja spider suit robed hacker by night, semi-literate sewerage plant worker by day, agent provocateurs too fanciful for you?

You think maybe tens of thousands of degree qualified professionals from all over the world and all cultures somehow accidentally creating these financial djinns is a more credible idea? seriously? Because I promise I won't come in your mouth.

Or maybe we can emply occam's razor.

Everyone knew EXACTLY what they were doing, and they still do. In fact, the mere success of their efforts is testimony to the fact that far from being incompetent and unfit to be in charge of a piggy bank, these people are actually extremely bloody good at what they do... literally world class.

Merely competent people would have fucked it up totally the first time they tried to repackage Pedro's 125% interest only mortage for half a million as an asset and sell it back to Pedro as his pension plan.

The Great Heist of 2008

zogger
Sat Oct 11 19:07:13 -0700 2008
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I do not think this is all some sort of accident.

The masters of the universe, coders one and all.
Timothy Brownawell
Sat Oct 11 20:02:33 -0700 2008
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This is like claiming that a bunch of coders sat down to write winamp, and everything was going really well, and then wow, one day they woke up to find that they had unleashed Smitfraud on the world.

Or like claiming that a bunch of guys sat down to write the US Constitution, and ended up writing the Jolly roger cookbook.

Or like claiming that a bunch of people went to write a new version of Linux, but instead wrote something that would destroy your computer?

The masters of the universe, coders one and all.
phred14
Sun Oct 12 03:36:08 -0700 2008
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Oh - you mean 2.6.27 on a machine with an e1000e?

The masters of the universe, coders one and all.
Timothy Brownawell
Sun Oct 12 08:42:02 -0700 2008
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Yes. Well, the -rc versions, since they did manage to fix it just before the final 2.6.27.

The masters of the universe, coders one and all.
mcrbids
Sun Oct 12 14:28:45 -0700 2008
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If we're going to talk about money, we should all have a clear understanding of where our money comes from! Seriously, this is perhaps the clearest, most insightful explanation of how fractional reserve banking got started and works today.

Seeing this will probably change your perspective forever...

The masters of the universe, coders one and all.
Timothy Brownawell
Sun Oct 12 16:45:48 -0700 2008
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It doesn't entirely make sense (the little bit about the money multiplier is OK, but the rest...), and ends up in definite conspiracy/crackpot territory. Is there a proper text version, preferably with references? Video sucks for reasoned consideration and critique.

The masters of the universe, coders one and all.
President4242
Tue Oct 14 08:53:41 -0700 2008
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I'd like to see a proper text version as well, if only to catch all of those quotes that were scrolling into tunnel vision space while wierd music played.

Having said that, the bit about the money multiplier (basically, the first 30 minutes of the video) is what I'm going to give the nephews for Christmas, along with "golden dollars".  I wonder if I can burn that video to DVD after downloading?

nope

Thomas Lord
Sat Oct 11 20:13:40 -0700 2008
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This is fucking boring but probably useful to say out loud:

Any impression that I at least am calling this an accident is mistaken. Well, kinda.

The rich get richer, the western-world middle class sink lower, polarization of riches gets sharper.... all on purpose. Creation of instruments known to some to be bogus but sold with hype that encouraged ignorance and false beliefs about them? On purpose.

The current consequences? The current crisis? Accident. They didn't mean to hit this stage so quickly. It wasn't supposed to unfold this quickly.

The nice thing about playing the technocratic angle ("it's all the fault of hackers like us") is that we can apply forensics to the discourse around IT that shaped power and obtain objective authority to use to interfere with the next round. Call a spade a spade -- that's the weak link in their chain. Those programs don't do what they are advertised, never could, no fixing it, was objectively apparent from the start just papered over with hype.

-t

smitfraud

Thomas Lord
Sat Oct 11 20:23:08 -0700 2008
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This is like claiming that a bunch of coders sat down to write winamp, and everything was going really well, and then wow, one day they woke up to find that they had unleashed Smitfraud on the world.

You do realize, I hope, that as far as most of the line-coders behind web 2.0 are concerned, that is what happened. Now, they shouldn't act so surprised because the main skill they used to get ahead was to compete among one another to see who could be the biggest tool. And they set world records in that regard -- some of the biggest tools anyone has ever seen. But they didn't start out with malice in their hearts, by in large.

-t

The masters of the universe, coders one and all.
Alcibiades
Sun Oct 12 07:13:34 -0700 2008
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What is so utterly weird about these discussions is the collective inability to even consider the obvious candidate for the source of the problem.  You are all invoking crazed bankers and financiers conspiracies now.  But just look at the chain of evidence.

We have at present a huge amount of bad debt.  There is no doubt of this.  This debt has also risen dramatically in the last 10 years.  You doubt this, have a look at the table on

http://ftalphaville.ft.com/blog/2008/10/08/16815/tremble-taxpayers/

which shows how much certain banks debt is as a percentage of their country's GDP, and ask yourself if you are really prepared to argue that this is the same now in aggregate as 5-10 years ago.  Of course it was not.

Now, lets ask how it got so big.  I know, you all think it was computers, despite the fact that credit bubbles have arisen without computers, and despite the fact that computing has accompanied every other feature of society over the last 10-20 years and so can be invoked with the same rationality to explain everything.  You might as well blame any other universal feature of our environment, like central heating.

No, it got so big because of identifiable government actions.  In the US, for instance, the Clinton Administration instructed Fannie and Freddie to change the criteria for mortgage purchase, in pursuit of extending home ownership to those who had previously been considered bad risks.  In Europe, many regulators accepted as bank reserves insurance written by AIG, and so permitted expansion of lending beyond previously known limits.  In the UK the government engaged in deficit spending, and concealed off balance sheet financing via something called the PFI.  The government also kept trying to urge everyone to find creative ways of extending the benefits of home ownership to everyone, which ministers commonly referred to as 'getting on the housing ladder'.  A ladder which only went one way, of course.  Mortgage approvals were relaxed to help with this.

In the US, the rating agencies were consitituted by the government as a duopoly without competition.  The monolines were encouraged by the rating agencies to insure municipals and later other bonds by their granting of the higher ratings pension funds required.  The rating agencies were also paid, under this government sponsored scheme, by the companies they rated.  In the US, under Greenspan, in fear of the wholly imaginary Year 2000 bug, interest rates were dropped below the rate of inflation.  It wasn't bankers that did this, it was the Fed, giving the banks the means effectively to pay people to take out loans at the taxpayer's expense!

All of this is fact, not subject to dispute.  Now, you are going to have to argue that we are in the middle of enormous amounts of defaulting bad debt, which was incurred with the support encouragement and cause of these activities, but somehow, the only thing that went wrong was the wickedness and greed of bankers, and the fact that they were using computers.  It was, presumably, a complete coincidence that all this government credit creation was going on at the same time.  That had nothing to do with any of it?  This is totally nuts.  If the problem is debt, look for who was behind the creation of the debt.  What did they do differently?

If you want to look for conspiracies, though I find that completely unecessary when stupidity and political opportunism and fading memories of previous crashes can explain far better, then at least look for your conspirators among those who actually had the opportunity to produce the effect, and for whom there is a large trail of evidence showing that they did actually do it.

However, all you seem able to see is the wicked bankers, and the need for more government regulation.  Yes, we may need government regulation.  But its not like we have not had it.  We have just had government regulation and initiatives desiged to produce a credit bubble.  What we need is government regulation designed to produce sound banking and finance practices.  No amount of yelling at computers and bankers will prevent a government hell bent on creating a credit bubble.  And they'll usually create one this big about every 70-100 years.  We are right on track.  The last one was 1929.

The masters of the universe, coders one and all.
rubycodez
Sun Oct 12 10:28:51 -0700 2008
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frequency of major market bubble much fast than that, had a few since 1929 but when markets are intimately coupled then we have current situation.  Such coupling was mostly forbidden until a decade ago.

 

bankers and most other megacorporations still wicked in their machinations, they pushed the politicians in this recent case into decoupling starting a decade ago.   Their scams continue through the cycles of boom and bust, all variation on pyramid scheme (not "Ponzi scheme", that's different)

The masters of the universe, coders one and all.
Thomas Lord
Sun Oct 12 12:50:14 -0700 2008
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Speaking of conspiracies....

No, it got so big because of identifiable government actions. In the US, for instance, the Clinton Administration instructed Fannie and Freddie to change the criteria for mortgage purchase, in pursuit of extending home ownership to those who had previously been considered bad risks.

Gee, that story is going around a lot these days. It doesn't appear to have a lot to do with the truth but it's going around...

The Agonist has been having some go-arounds on the topic:

Fannie and Freddie were effectively shut down by their regulator, OFHEO, in 2004 because their accounting was flawed and their hedges didn't work. Until that point, they had guaranteed and securitized "conforming" mortgages, which had strict limits on downpayments, size, verification of applicant income and assets, and restrictions on structure.

This is all a matter of record. Anyone can see this by looking at the GSE annual reports from 2004 to 2007. Around 2006 the two GSEs were allowed back in the market with somewhat looser limits, and their management took the fateful step of investing in subprime mortgages that went well beyond their conforming mortgage standards for what they guaranteed and securitized. If was these subprime mortgages, originated by Wall Street, that killed these two GSE - that and their perpetual lack of capital.

It is also easy to see that in 2004 a cottage industry sprung up orchestrated by Wall Street investment banks, who teemed up with mortgage brokers around the country to begin originating subprime mortgages, plus jumbos and other mortgages that had strange new features like option ARMs, pick-and-pay loans, and NINJAs, many of which required zero downpayment (the borrower could borrow the down payment from a second party). This is where 84% of the mortgages since 2004 came from. If you look at the securities that are in trouble now, with nearly 50% defaulting mortgages, they have features like these. Frannie and Freddie mortgages dated before 2004 are not having serious delinquency issues.

Since this is all a matter of fact and record, we have to conclude that Ben Stein, Limbaugh, McCain, Hannity, the WSJ, and the Republican noise machine are knowingly presenting a false picture of reality. [....]

As for conspiracies, perhaps a simpler one to see and understand is the GOP starve the beast strategy. Not having a political viable means to disable entitlement programs directly, the GOP elites have embarked on a strategy of deliberately engineering their financial collapse. Similar GOP work here in California has saddled us with the highest per capita public debt of any state and periodic crises where the state teeters on default, withholds pay, etc.

The things you should notice about starve the beast strategies are who gets the tax cuts and what the end-game is. The wealthiest typically get the tax cuts. The end-game is not a realignment of legislative priorities but a crash. They are aiming for governments in default, abruptly denuded of staff, and incapable of anything but military action.

In other words, arranging large institutional crashes isn't just an accident of these groups: it's an aim.

Looking at the financial sector, we are now starting to see massive consolidation and the installation of new executives in some cases with liquidity injections into the banks on the taxpayer dime. Conditions leading to this were created by (primarily republican) de-regulation and have now yielded the inevitable crash, destroying a lot of personal savings, and making Paulson roughly the new Czar of the finance industry. You attribute that to stupidity and political opportunism? It looks like a sought after policy goal!

None of it would have been possible had not a lot the operators of these schemes now unwinding believed they were doing something else. That is, had not many of the people on the front lines of the financial system and reporting on it fundamentally misunderstood new and very large classes of "innovative instruments". So, yes, of course the software side has a lot of 'splainin to do about just why exactly we ought not see this as a complete abandonment of the social responsibility component of engineering.

in fear of the wholly imaginary Year 2000 bug

Few people seriously argue that the bug was wholly imaginary. Many who did the work point to specific problems they encountered and/or fixed. A great deal of infrastructure was replaced and/or significantly improved in ways that have had secondary benefits since that time.

It is true that expectations of "the end of the world" were exaggerated and probably caused a tiny bubble in "survivalist gear" however pumping liquidity into the banks as 2000 approached didn't create any significant problems that are convincingly demonstrated anyplace I've seen.

Rather, the dot com bubble was most directly precipitated by bad information, failures of diligence, and shady IPO practices.

-t

The masters of the universe, coders one and all.
Uncle Entity
Sun Oct 12 13:19:57 -0700 2008
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The things you should notice about starve the beast strategies are who gets the tax cuts and what the end-game is. The wealthiest typically get the tax cuts. The end-game is not a realignment of legislative priorities but a crash. They are aiming for governments in default, abruptly denuded of staff, and incapable of anything but military action.

That may be their stated policy but to claim the GOP is a minarchist organization is just plain wrong.

Looking at their overall actions it is quite clear that they are just as much the party of Big Central Government as the Dems, they just have different priorties on who gets to suck on the taxpayer's teet.

Corporatist-socialism as opposed to the Dem's socialist-corporatism is the only real difference between the two if you discount all the emotional wedge issues that get played up around election time to 'mobilize the base'.

The masters of the universe, coders one and all.
Thomas Lord
Sun Oct 12 14:44:43 -0700 2008
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Looking at their overall actions it is quite clear that they are just as much the party of Big Central Government as the Dems, they just have different priorties on who gets to suck on the taxpayer's teet.

Right. That's why I described them as protecting the military function and attacking entitlements. Of course, now we can also say they'd like to vest more power, money, and complexity in the Treasury.

Even in the military space I do have to wonder about their end-game here. We learned a whole lot over the past 5 years or so about the sudden USian boom in paramilitary industry.

That privatization of a lot of military functions is alarming in its implications for continuity of government scenarios. Where, ultimately, do the loyalties of those organizations lie?

Corporatist-socialism as opposed to the Dem's socialist-corporatism is the only real difference between the two if you discount all the emotional wedge issues that get played up around election time to 'mobilize the base'.

Heh. That's a funny way to put it.

Perhaps it's just something about my "life experience" or what have you. There are really four parties, maybe 5 or 6 that matter. Two of these would be core D and R registered voters -- folks on your average street. There is some "dominionist" kookiness in the R part of that but I'm skeptical it runs all that deep. Then there the other two: D and R power insiders. You can split up the insiders and get 5 or 6 groups. On the D side you might want to split between the children of Kennedy and Tip O'Neil, etc. and the more Dean-ish / Obama-ish upstarts. I don't know that that particular split matters much but that's how I would get to 6. But the split on the inside of the R side I think is much more important and it is not, as so commonly described, a split between fiscal and social conservatives (that's more in the base). Rather, the R insiders are split between the ideological loyalist conservatives and the non-loyal fascist conspirators. The latter group seems to hold most of the cards, to be firm enmeshed in the intel community, and to have no particular loyalty to the Union except insofar as they find it convenient at various times. The fascists plotted to overthrow the government and lent support to Hitler (hi, Prescott Bush). They exploit IC ties to obtain and hold executive power over long periods of time (e.g., Cheney, Rumsfeld, etc.). They have zero respect for human rights, no qualms about taking political prisoners or engaging in torture, little concern for the fate of the "average American," inflated senses of personal entitlement, etc. They appear out to destroy the union and then consolidate their power in the aftermath.

-t

The masters of the universe, coders one and all.
Charles E Hill
Sun Oct 12 17:42:51 -0700 2008
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Not to nitpick, but this is a subject with which I am intimately familiar and have done a lot of field research on.

The correct spelling is "teat".

:-)

The masters of the universe, coders one and all.
Alcibiades
Mon Oct 13 02:10:50 -0700 2008
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Thomas, do you think that Fannie and Freddie and the Fed are somehow not part of the government?  That what we are now seeing is a start of government regulation to save us from some non-governmental agencies?  Do you think that when Fannie and Freddie changed tack it was anything other than the government changing tack?

The Fed is the government.  So are Fannie and Freddie.  Whatever they did was government policy.  They cannot save us from the government,  all this is, is the government changing tack again.

The same thing has happened in the UK.  All that has happened is that the FSA has changed tack and raised capital requirements.  The banks then have to raise money, some of which comes from equity participation by taxpayers.  However, what do you think the FSA policies were during the bubble?  Did they maybe have anything to do with the bubble?  Of course they did, they caused it by their policies.  Now they are reversing it.

This is not the government stepping in to rescuue is.  This is the government having wrecked the economy with one set of policies, turning on a dime and implementing a different set.  And looking around while doing it, saying 'Who, Me?'.  This is basically credit cycles produced by the government.  I don't think its any sort of conspiracy.  But it is extreme stupidity and wishful thinking.

The masters of the universe, coders one and all.
Thomas Lord
Mon Oct 13 08:11:45 -0700 2008
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Do you think that when Fannie and Freddie changed tack it was anything other than the government changing tack?

You reported a rumor going around right wing news sources and GOP political discourse. The rumor says "Clinton made it easier for poor people to get mortgages with changes to Fannie and Freddie and that's why we have the sub-prime crisis."

That rumor is false, not born out by the facts. The mortgages written under the changes from the Clinton administration aren't doing too badly.

This is basically credit cycles produced by the government.

You keep saying that and your evidence is basically the arguments-by-analogy of the Austrian school plus a few numbers that show that during bubbles, indeed, credit inflates and this is indeed often reflected in government regulatory or fiscal policy.

That doesn't establish cause and effect, however. Nobody held a gun to Wall Street's head, for example, and ordered over-investment in (and consequent over-leveraging of) CDOs and off-market CDSs. No conceivable regulation could ultimately have prevented trade in such instruments, only caused it to be better hidden. For a long time, the poorly understood nature of those instruments (plus adjustments in how inflation and unemployment were measured) gave the government plausible evidence of real economic growth and low inflation thus justifying the monetary and regulatory policies they adopted. The story only started to fall apart within the past few years with a rising chorus of criticism and concern.

Common sense should have told people that something was wrong much sooner. For a period of time one could scarcely escape hour-long TV "infomercials" variously for auctions of really sketchy, undeveloped land; seminars in how to be a zero-down real-estate flipper; and "get in early" deals on units in middle-of-nowhere "planned communities". The net trolling for unqualified borrowers was broad, deep, and visibly burning through lots of marketing money with a curiously high amount of on-the-margin profit taking from things like seminar givers. Nevertheless, in both the public and private parts of the finance sector, many people critical to the key decisions driving the sale of the resulting securities were content to puzzle over balance sheets and official macro-economic stats and conclude "No, everything is mostly fine."

So yes, there was "wishful thinking" in that sense but that wishful thinking was brought to you by mis-labeled software products.

-t

The masters of the universe, coders one and all.
Alcibiades
Tue Oct 14 00:47:21 -0700 2008
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"You keep saying that and your evidence is basically the arguments-by-analogy of the Austrian school plus a few numbers that show that during bubbles, indeed, credit inflates and this is indeed often reflected in government regulatory or fiscal policy."

No, argument by analogy it ain't.  You have not read Rothbard's history of the depression.  Were you to do that, you'd find a precisely quantified account of exactly how much the events surrounding the creation of the Fed added to bank reserves, where, and why.  This is not argument by analogy.  This is argument by pointing to the facts.  As for Fannie and Freddie, were you to go back and read the NYTimes for 1999 or so, you'd find an account of the changes in policy, along with some reservations about them back then.  Those policy changes happened, and were known at the time to be happening, its not either analogy or retrospect. 

I do not think you can simply show that during bubbles 'credit inflates'.  You have to ask one more thing:  where did it come from.  This is trackable.  In all cases it turns out to be government.  For instance, do some research, find out where all the money came from in the South Sea Bubble.  Concretely, where did it come from?

Yes, you are right about the infomercials.  This is what happens when there is a huge supply of some product (credit) and people are being paid vast amounts to sell it.  But what you're always refusing to even ask is:  where did all this credit come from?  Or do you think (a) it was there all along - no, it wasn't.  Or perhaps (b) it was created by Wall St completely independently of Fannie and Freddie and the Fed? 

This last is nuts.  Do you really think that the Fed lowering interest rate to 1% nominal had nothing to do with the credit bubble of the last ten years???

The masters of the universe, coders one and all.
T Fluckiger
Mon Oct 13 08:37:48 -0700 2008
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From Freddie's 2005 annual report First part:

"Freddie Mac’s portfolio of issued mortgage securities grew by 10.5 percent and our retained portfolio grew by 8.7 percent."

"Turning to our balance sheet, Freddie Mac’s regulatory core capital grew to over $35 billion — well above the capital requirements set by our safety and soundness regulator.

As a result of our strong capital position and confidence in our profitability, we increased our quarterly common stock dividend twice last year. In fact, since December 2003, we have raised this dividend by 81 percent."

"In May we reported 2005 earnings in excess of $2 billion in GAAP net income."

"In 2005, Freddie Mac financed homes for more than 4 million borrowers. Our affordable performance was among our strongest on record — with more than 54 percent of the units financed through our mortgage purchases being affordable to low- and moderate-income families."

Shut down in 2004? Not allowed back until 2006? Granted much of this report is corporate propaganda, and I am aware that there was some to-do about accounting in 2004, but.... gee....Those are some pretty hefty numbers for 'shut down'.

The masters of the universe, coders one and all.
Thomas Lord
Mon Oct 13 10:29:37 -0700 2008
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The 10.5 percent growth in securities issued in 2005 is up from a dismal 3.7M mortgages in 2004 (read the overview of the 2004 report, not just the 2005 report).

The regulatory core capital growth reports on a rebuilding to achieve the regulatory requirements started in 2004.

Look at the 2004 report with the summary containing bits about putting their house back in order, rebuilding shareholder confidence, etc.

Note, btw, that the HUD goals for affordable housing which the 2005 report says were met are percentage of business goals, not absolute numbers.

Yeah, shut down in 2004 and not fully back until 2006. Sounds about right.

-t

The masters of the universe, coders one and all.
Uncle Entity
Sun Oct 12 13:07:08 -0700 2008
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It's funny that.

Most people reconize that there is a problem but don't accept the cause because it directly contradicts the propaganda they were taught to believe during their public education indoctrination.

The fact that the people who have the most to lose if the system were changed are also the very same people who determine what 'truths' are taught doesn't seem to register as a conflict of interest for some reason.

The government monopoly on education isn't some altrustic plan to ensure that every poor kid's 'right' to an education isn't violated by the evil capitalists but a means to ensure only a pro-State message is taught. I think it would be very, very hard to find a single instance where the neo-Keynesian doctrine of 'government deficit spending is the only way to solve a recession' and 'taxation to reduce spending is the only way to cure [price] inflation' isn't touted as the 'proper' way to manage a complex industrial economy and cure the 'natural' cycles that are an inherent part of capitalism.

It is also little wonder that the people who directly gain from such a system, government bureaucrats (who quite rationally try to increase both their income and budgets), are full supporters while trying their best (by proxy through their court economists) to disprove any competing theories which may show that they are the root of the problem their policies are attempting to solve.

It is quite refreshing to see Mises and Hayek getting some mainstream media time recently...It'll be a cold day in hell before they give a nod to Rothbard and his 'radical anarchism' I'm afraid, though.

 

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