Financial Times: Bush Nationalizes Fannie & Freddie

Somebody once joked in our office that many of the org charts and pitches we see from self-described Capitalist Tools would give Joe "5-year plan" Stalin a boner. That's comedy. But, when there's no plan and only an underlying idea that money is it's own purpose, well, that's tragedy and it invariably takes you to places you never believed you'd go, or could go...

Clive Crook - Guarantees for America’s guarantors

US taxpayers are about to find out what their long-standing and (strictly speaking) non-existent guarantee of Fannie Mae and Freddie Mac will cost them. One way to think of it is this: take the US national debt of roughly $9,000bn and add $5,000bn. Not bad for an obligation still officially denied.

In the end, that astounding prospect might be the outcome. Partial or outright nationalisation of the housing lenders – colossal pseudo-private entities that own and underwrite US housing loans – would add some or all of their $5,000bn (€3,144bn, £2,513bn) in liabilities to the government’s balance sheet. While it is true that the agencies (unlike the government) own housing-related assets that roughly match those liabilities, the still-collapsing housing market makes this a lot less reassuring than one could wish....

There's one never-changing reason why I think deregulation is, on the whole, bollocks. It stems from the same rationale that deregulation's defenders always claim: Creativity; specifically the creativity supposedly fostered by unfettered markets. Short but simple reasons why:

1. Creativity stems from friction, not it's absence. Useful creativity, the kind accessible to more than just Jackson Pollock fans, stems from obstacles in the way, from mountains, diseases, threats or other realities that must be overcome. I hate the term, but thinking outside the box requires a freekin box. Otherwise, you're not being creative, you're being self-indulgent and myopic. You're jerking off.

2. Dereg fans are trying to dip their toes in the same river twice. Can't be done. The claim of unfettered markets can only be made in honesty when Ogg the spearmaker was finding Thag, excellent finder of non-poisonous berries, and they did a deal. And even then, the tribe Shaman, Droog, introduced regulation in the form of tithe or sacrifice to the gods of whatever to assure further berry abundance or mighty and fearsome spears.

What dereg tries and fails to do is replicate pioneering conditions when many rules were being made on the fly or when the existing rules of the time mostly took note of those who had the most power/capital/muscle. A tad immature for a mature, complex nation of 400 years. This quixotic thread passes not just through conservative business thought, but in actual jurisprudence--in the way some lawmakers (regulators) view the lawmaking process itself:

LA Times

WASHINGTON -- In 1985, President Reagan's attorney general, Edwin Meese III, criticized the Supreme Court's decisions and called on the justices to decide cases based on the "original intent" of the Constitution. The justices were wrong to rely on contemporary views of liberty and equality, Meese said; instead, they should rely on the understanding of those concepts in the late 18th century, when the Constitution and the Bill of Rights were written...

The article goes on to discuss with actual historians what awful judges of history our justices and politicians actually are. But let's recall the idealized American river as it was: Liberty and Equality defined as voting and financial rights for property owning males mostly, and with a big hairy white thumb on the scales of Justice. Fall out of that narrow original interpretation (or "intent" or, ahem, "concept") and you're not at liberty to complain. You can imagine the whole mess of American achievement and legacy that's suddenly inoperative when viewed through that ridiculous prism. LAT again...

"Neither of the two main opinions in Heller [link]would pass muster as serious historical writing," Stanford University historian Jack Rakove wrote on a blog called Balkinization.

Neither Scalia nor Stevens is a "competent historian," University of Texas at Austin professor Sanford Levinson wrote in another Balkinization posting. Their work is "what is sometimes called 'law-office history,' in which each side engages in shamelessly (and shamefully) selective readings of the historical record in order to support what one suspects are predetermined positions."

Harvard law professor Mark Tushnet, like Levinson, has studied the 2nd Amendment. Tushnet wrote that both opinions "demonstrate why judges shouldn't play historian."

In other words, they spin, they fluff. And, as things unspool futher*, perhaps we'll get a new term that accomodates our preferred reality and the real reality. Henceforth, orgs and industries wont be "nationalized," they'll be burden-shared. In 5-year increments, naturally. Da, that's it.

* click for larger doom and gloom...