Fannie and Freddie Symptoms of Larger Problem

"Socialism for the rich and capitalism for the poor" -- The Real News Network's Matt Palevsky spoke with Chief economist at the AFL-CIO, Ron Blackwell

Watch the story below:

July 15 -- The Federal Reserve and the Treasury announced steps on Sunday to shore up mortgage giants Fannie Mae and Freddie Mac, whose shares have plunged as losses from their mortgage holdings threaten their financial survival. Congress has been asked to approve a sweeping rescue package that would inject billions of federal dollars into the faltering companies. The Federal Reserve has also said that it would promote up to $300 billion in short-term, low-interest loans for Fannie and Freddie, expedited authority from Congress to expand its current line of credit to the two companies and to make an equity investment in the companies if necessary. Adding to the financial turmoil over the weekend, the FDIC took over operations of IndyMac, a failing bank with over 265,000 customers.

Chief economist at the AFL-CIO Ron Blackwell believes that while bailing out Fannie and Freddie is important, politicians shouldn't lose sight of the broader economic crisis: "The question is: what are they going to do beyond that to put a floor underneath the housing crisis to do something about the two million people that are going to lose their homes over the next 18 months if we don't do something, to do something about the millions of workers that are losing their jobs every year."

Blackwell believes that the falling economy is hitting working families much harder than many politicians are willing to acknowledge. It is hitting families hard especially because the recovery since the 2001 recession has been very slow, and that while it's "a very acute crisis", it is "against the backdrop of a generation-long stagnation of wages, and it has its roots in the fundamental economic policies of this country over the past 30 years."

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Comments

[truthynesslover]

The unions are either coward or in the pockets of the corporations.They should have stuck together when reagan fired the air traffic controllers and shut the country down the way they do it in france.Since then theyve just gotten weaker and act like its each man for himself.They deserve to go under!

[StephenBarry]

Marx was correct, the supersession of Capitalism by Socialism is inevitable. We can not endure these so called "free market" crises continually. The system is on the verge of a massive generalized implosion. Keynesian and fiscal stimulus is useless now. A political hammer is needed to smash Wall Street and its political running dogs. We are already half way there - privatization of gains and socialization of losses. The very WORST of both - the maximization of exploitation of the public. The capitalists are frantically clinging to a sheer cliff face by their bloodied fingernails and could care less about anyone else. The dialectic of this is that after the Soviet Union collapsed they moved closer to Capitalism. When we crash, and we will crash, we will move closer to Communism, as we did under FDR. We will end up meeting in the middle - Socialism. And after all, as Marx pointed out, Socialism is merely the prolonged historical epoch preceding Communism.

[leftLibertarian]

NO bailouts.

NONE!!

Let them fail. Screw 'em.

The guy down the street made great pizza but he went bankrupt.

Did he cry like a baby and ask big mommy government to bail him out?

No!!!!!!!!!!!!!!!!!!!