Monday, September 15, 2008

Free Market vs. Freddie's Fannie

Webster defines
"free market"
as follows...

free market
: an economic market operating by free competition

Now, if the fishmonger is selling bad fish, at some point the fish buyers will stop buying his fish and shop at the Dairy Queen instead. I think that would be an example of what the fancy-pants economists would call a "market correction." So, why does Uncle Sam have to spend my hard earned money on Freddie Mac and Fannie Mae?

The obvious answer is that bad federal policy and corporate greed for decades has led the U.S. economy to a point that not bailing out the two mortgage giants would have made that bitter pill too big and too bitter for most of the politicians to get re-elected! Oh, I mean too hard to swallow for the American people. Yeah.

Frankly, this is all beyond the ken of my wee brain. I do know this though, the cartoon below is an apt summary of the end result of this temporary and costly shoring up of Freddie's Fannie.

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