Is economic literacy directly correlated to direct experience with the free market?

[Indeependent]

Not germane to the fact that it caused a market distortion and the subsequent bad information.

Good intents don't overtake bad results.

Of course it is germane as proving cost doesn't prove that the cost is greater than the benefit. Also there is no reason why the risks can't be known. There is nothing inherent in a program that is meant to increase loans to "low" income individuals that would result in bad information and the total disconnect the market had with regards to risk.

Risk isn't known when government deliberately deceives the purchasers of mortgages. Borrowers only know the interest rate they are asked to pay. They don't have any idea about their ability to pay the mortgage or sell the house in a market downturn.

Investors also don't know if the entity they are "supposedly" investing in is providing true information concerning their financial status.

Oh, I forgot...All business are HONEST...

 

[bripat9643]

Of course it is germane as proving cost doesn't prove that the cost is greater than the benefit. Also there is no reason why the risks can't be known. There is nothing inherent in a program that is meant to increase loans to "low" income individuals that would result in bad information and the total disconnect the market had with regards to risk.

Risk isn't known when government deliberately deceives the purchasers of mortgages. Borrowers only know the interest rate they are asked to pay. They don't have any idea about their ability to pay the mortgage or sell the house in a market downturn.

Investors also don't know if the entity they are "supposedly" investing in is providing true information concerning their financial status.

Oh, I forgot...All business are HONEST...

Lying about such information is called "fraud." It's illegal. Businessmen can go to jail for it. Government officials, on the other hand, can lie all they want and suffer no penalty whatsoever. As the Obama Administration has recently demonstrated so abundantly, they often do.

 

[Indeependent]

Risk isn't known when government deliberately deceives the purchasers of mortgages. Borrowers only know the interest rate they are asked to pay. They don't have any idea about their ability to pay the mortgage or sell the house in a market downturn.

Investors also don't know if the entity they are "supposedly" investing in is providing true information concerning their financial status.

Oh, I forgot...All business are HONEST...

Lying about such information is called "fraud." It's illegal. Businessmen can go to jail for it. Government officials, on the other hand, can lie all they want and suffer no penalty whatsoever. As the Obama Administration has recently demonstrated so abundantly, they often do.

Can you supply me with that long list of Wall Street fraudsters who were even brought to trial?
Didn't think so.

 

[emilynghiem]

It's fairly obvious that someone like Paul "Wrong in the trillions column" Krugman never worked a day in the private sector and has only lyrical knowledge of how capital markets and economies function.

When people say things like "profits are stolen wages" it's glaringly obvious they never worked at a real business. Maybe they're in a Union, or maybe they're still in high school, but you can't possibly have worked anywhere in the marketplace where adults put their money into their businesses and come up with anything as removed from reality as that.

Is economic literacy directly correlated to direct experience with the free market?

Not just free market but what TYPE of system or structure used in free enterprise, whether this is sustainable or not.

there is difference in teaching people by
fair trade cooperatives and shared management by the actual laborers as co owners
local currency based on labor or barter as opposed to depending on federal currency
microlending and business training for longterm development
property ownership and management
including teaching people how to retire using rental income

if people do not have equal access or experience in these areas
they will not have the same capacity or understanding to represent
what it takes for sustainable and equitable economic growth and development

all their informaiton will be skewed if they only know one system and leave out others

 

[Bombur]

Not germane to the fact that it caused a market distortion and the subsequent bad information.

Good intents don't overtake bad results.

Of course it is germane as proving cost doesn't prove that the cost is greater than the benefit. Also there is no reason why the risks can't be known. There is nothing inherent in a program that is meant to increase loans to "low" income individuals that would result in bad information and the total disconnect the market had with regards to risk.

Risk isn't known when government deliberately deceives the purchasers of mortgages. Borrowers only know the interest rate they are asked to pay. They don't have any idea about their ability to pay the mortgage or sell the house in a market downturn.

Government didn't deliberately deceive anyone.

The individual borrowing money won't know but that is not the same issue as a financial institution being able to calculate the risk of many borrowers at once. The bad information was in how these institutions managed their risk.

 

[HelenaHandbag]

Of course it is germane as proving cost doesn't prove that the cost is greater than the benefit. Also there is no reason why the risks can't be known. There is nothing inherent in a program that is meant to increase loans to "low" income individuals that would result in bad information and the total disconnect the market had with regards to risk.

Risk isn't known when government deliberately deceives the purchasers of mortgages. Borrowers only know the interest rate they are asked to pay. They don't have any idea about their ability to pay the mortgage or sell the house in a market downturn.

Government didn't deliberately deceive anyone.

The individual borrowing money won't know but that is not the same issue as a financial institution being able to calculate the risk of many borrowers at once. The bad information was in how these institutions managed their risk.

Horse feathers.

Raines, Gorelick, Johnson, et.al. took immense bonuses from Fannie and Freddie, by deliberately deceiving people with false information.

You don't really believe such blatant corruption ended there, do you?

 

[Bombur]

Risk isn't known when government deliberately deceives the purchasers of mortgages. Borrowers only know the interest rate they are asked to pay. They don't have any idea about their ability to pay the mortgage or sell the house in a market downturn.

Government didn't deliberately deceive anyone.

The individual borrowing money won't know but that is not the same issue as a financial institution being able to calculate the risk of many borrowers at once. The bad information was in how these institutions managed their risk.

Horse feathers.

Raines, Gorelick, Johnson, et.al. took immense bonuses from Fannie and Freddie, by deliberately deceiving people with false information.

You don't really believe such blatant corruption ended there, do you?

You know you just repeated the same claim. I am willing to look at any evidence you have. Considering F&F were clearly deceived themselves I think it will be pretty hard to show they were intentionally deceiving others.

 

[Toro]

Economics doesn't make assumptions. It ignores nothing.

Economics makes a lot of assumptions, many that are wrong in the real world. It ignores many things. You start learning that first day of Econ 101 class.

 

[bendog]

Government didn't deliberately deceive anyone.

The individual borrowing money won't know but that is not the same issue as a financial institution being able to calculate the risk of many borrowers at once. The bad information was in how these institutions managed their risk.

Horse feathers.

Raines, Gorelick, Johnson, et.al. took immense bonuses from Fannie and Freddie, by deliberately deceiving people with false information.

You don't really believe such blatant corruption ended there, do you?

You know you just repeated the same claim. I am willing to look at any evidence you have. Considering F&F were clearly deceived themselves I think it will be pretty hard to show they were intentionally deceiving others.

are they still peddling the potion that FF started the credit implosion? And see the previous post. LOL

 

[Bombur]

are they still peddling the potion that FF started the credit implosion? And see the previous post. LOL

F&F is all powerful and responsible for the decisions of everyone. Even those being paid millions of dollars to make decisions.

 

[HelenaHandbag]

Government didn't deliberately deceive anyone.

The individual borrowing money won't know but that is not the same issue as a financial institution being able to calculate the risk of many borrowers at once. The bad information was in how these institutions managed their risk.

Horse feathers.

Raines, Gorelick, Johnson, et.al. took immense bonuses from Fannie and Freddie, by deliberately deceiving people with false information.

You don't really believe such blatant corruption ended there, do you?

You know you just repeated the same claim. I am willing to look at any evidence you have. Considering F&F were clearly deceived themselves I think it will be pretty hard to show they were intentionally deceiving others.

That Raines cooked the books to get himself and others huge bonuses is a matter of the record. He pulled the same accounting stunt that Kenneth Lay and Jeffrey Skilling did, but he had political cover.

Your lack of a grasp of current events is your problem.

 

[william the wie]

Horse feathers.

Raines, Gorelick, Johnson, et.al. took immense bonuses from Fannie and Freddie, by deliberately deceiving people with false information.

You don't really believe such blatant corruption ended there, do you?

You know you just repeated the same claim. I am willing to look at any evidence you have. Considering F&F were clearly deceived themselves I think it will be pretty hard to show they were intentionally deceiving others.

are they still peddling the potion that FF started the credit implosion? And see the previous post. LOL

I would suggest looking at the literature. Countrywide and Merrill Lynch most certainly did use F&F to market crap loans with Dodd and Frank flying cover for the fraud.

 

[Bombur]

Horse feathers.

Raines, Gorelick, Johnson, et.al. took immense bonuses from Fannie and Freddie, by deliberately deceiving people with false information.

You don't really believe such blatant corruption ended there, do you?

You know you just repeated the same claim. I am willing to look at any evidence you have. Considering F&F were clearly deceived themselves I think it will be pretty hard to show they were intentionally deceiving others.

That Raines cooked the books to get himself and others huge bonuses is a matter of the record. He pulled the same accounting stunt that Kenneth Lay and Jeffrey Skilling did, but he had political cover.

Your lack of a grasp of current events is your problem.

LOL

I don't think guys like Raines are above reproach and I think there was rampant incompetence. Provide evidence or not. I don't really care.

 

[HelenaHandbag]

You know you just repeated the same claim. I am willing to look at any evidence you have. Considering F&F were clearly deceived themselves I think it will be pretty hard to show they were intentionally deceiving others.

That Raines cooked the books to get himself and others huge bonuses is a matter of the record. He pulled the same accounting stunt that Kenneth Lay and Jeffrey Skilling did, but he had political cover.

Your lack of a grasp of current events is your problem.

LOL

I don't think guys like Raines are above reproach and I think there was rampant incompetence. Provide evidence or not. I don't really care.

Updated Oct. 4, 2004 12:01 a.m. ET

For years, mortgage giant Fannie Mae has produced smoothly growing earnings. And for years, observers have wondered how Fannie could manage its inherently risky portfolio without a whiff of volatility. Now, thanks to Fannie's regulator, we know the answer. The company was cooking the books. Big time.

We've looked closely at the 211-page report issued by the Office of Federal Housing Enterprise Oversight (Ofheo), and the details are more troubling than even the recent headlines. The magnitude of Fannie's machinations is stunning, and in two key areas in particular they deserve to be better understood. By improperly delaying the recognition of income, it created a cookie jar of reserves. And by improperly classifying certain derivatives, it was able to spread out losses over many years instead of recognizing them immediately.

In the cookie-jar ploy, Fannie set aside an artificially large cash reserve. And -- presto -- in any quarter its managers could reach into that jar to compensate for poor results or add to it to dampen good ones. This ploy, according to Ofheo, gave Fannie "inordinate flexibility" in reporting the amount of income or expenses over reporting periods.

This flexibility also gave Fannie the ability to manipulate earnings to hit -- within pennies -- target numbers for executive bonuses. Ofheo details an example from 1998, the year the Russian financial crisis sent interest rates tumbling. Lower rates caused a lot of mortgage holders to prepay their existing home mortgages. And Fannie was suddenly facing an estimated expense of $400 million.

Well, in its wisdom, Fannie decided to recognize only $200 million, deferring the other half. That allowed Fannie's executives -- whose bonus plan is linked to earnings-per-share -- to meet the target for maximum bonus payouts. The target EPS for maximum payout was $3.23 and Fannie reported exactly . . . $3.2309. This bull's-eye was worth $1.932 million to then-CEO James Johnson, $1.19 million to then-CEO-designate Franklin Raines, and $779,625 to then-Vice Chairman Jamie Gorelick.

That same year Fannie installed software that allowed management to produce multiple scenarios under different assumptions that, according to a Fannie executive, "strengthens the earnings management that is necessary when dealing with a volatile book of business." Over the years, Fannie designed and added software that allowed it to assess the impact of recognizing income or expense on securities and loans. This practice fits with a Fannie corporate culture that the report says considered volatility "artificial" and measures of precision "spurious."

Fannie Mae Enron? - WSJ.com

They willfully, deliberately supplied bad information, so they could loot millions F&F.

If you believe that the corruption and polluting of the marketplace with bad information ended there, you have to be one naive mammjamma.

 

[Bombur]

That Raines cooked the books to get himself and others huge bonuses is a matter of the record. He pulled the same accounting stunt that Kenneth Lay and Jeffrey Skilling did, but he had political cover.

Your lack of a grasp of current events is your problem.

LOL

I don't think guys like Raines are above reproach and I think there was rampant incompetence. Provide evidence or not. I don't really care.

Updated Oct. 4, 2004 12:01 a.m. ET

For years, mortgage giant Fannie Mae has produced smoothly growing earnings. And for years, observers have wondered how Fannie could manage its inherently risky portfolio without a whiff of volatility. Now, thanks to Fannie's regulator, we know the answer. The company was cooking the books. Big time.

We've looked closely at the 211-page report issued by the Office of Federal Housing Enterprise Oversight (Ofheo), and the details are more troubling than even the recent headlines. The magnitude of Fannie's machinations is stunning, and in two key areas in particular they deserve to be better understood. By improperly delaying the recognition of income, it created a cookie jar of reserves. And by improperly classifying certain derivatives, it was able to spread out losses over many years instead of recognizing them immediately.

In the cookie-jar ploy, Fannie set aside an artificially large cash reserve. And -- presto -- in any quarter its managers could reach into that jar to compensate for poor results or add to it to dampen good ones. This ploy, according to Ofheo, gave Fannie "inordinate flexibility" in reporting the amount of income or expenses over reporting periods.

This flexibility also gave Fannie the ability to manipulate earnings to hit -- within pennies -- target numbers for executive bonuses. Ofheo details an example from 1998, the year the Russian financial crisis sent interest rates tumbling. Lower rates caused a lot of mortgage holders to prepay their existing home mortgages. And Fannie was suddenly facing an estimated expense of $400 million.

Well, in its wisdom, Fannie decided to recognize only $200 million, deferring the other half. That allowed Fannie's executives -- whose bonus plan is linked to earnings-per-share -- to meet the target for maximum bonus payouts. The target EPS for maximum payout was $3.23 and Fannie reported exactly . . . $3.2309. This bull's-eye was worth $1.932 million to then-CEO James Johnson, $1.19 million to then-CEO-designate Franklin Raines, and $779,625 to then-Vice Chairman Jamie Gorelick.

That same year Fannie installed software that allowed management to produce multiple scenarios under different assumptions that, according to a Fannie executive, "strengthens the earnings management that is necessary when dealing with a volatile book of business." Over the years, Fannie designed and added software that allowed it to assess the impact of recognizing income or expense on securities and loans. This practice fits with a Fannie corporate culture that the report says considered volatility "artificial" and measures of precision "spurious."

Fannie Mae Enron? - WSJ.com

They willfully, deliberately supplied bad information, so they could loot millions F&F.

If you believe that the corruption and polluting of the marketplace with bad information ended there, you have to be one naive mammjamma.

You are comparing apples to oranges. No you are comparing an apple orchard to orange juice.

The bad information I am talking about almost collapsed the world economy.