The Great Depression prompted a bit of finger-pointing and current events on Wall Street will do the same. Reading the WSJ editorial pages for some years, I got the plot long ago. GSEs are a very bad idea.
But the many friends of Fan and Fred always pointed to early successes in getting more people into their own homes. This included showing the way so that secondary mortgage market securitization could take off -- on Wall Street and around the world.
The WSJ editorialists had been suggesting for some years that, in light of the growth of private secondary market securitization, Fan and Fred could go -- before they ever got "too big to fail".
The Economist's graphic on loan origination shares over the years (above) shows that the growth of private securitization did follow the growth of Fan and Fred securitization.
Policy wonks, however, should get used to the fact that politicized enterprises, no matter how shaky, are never subject to rational retirement.
I would not be surprised if among the many Fan Fred fans, there are those who think that Social Security is not a Ponzi scheme and others who claim that Ponzi schemes are really OK if guaranteed by the U.S. government
Posts
