Wednesday, 10 September 2008

Some background on Fannie Mae

In summary;
Here is the cycle: The government invents something virtuous; the private market takes it over and loses hundreds of billions; the government then bails it out. This is best understood as socialized risk, privatized gain. Yes, the shareholders of Fannie Mae will deservedly lose a bundle -- it's always the shareholders who take a hit -- but the insiders who thought up subprime and the executives of Fannie Mae during the roaring '90s already made their pile.