Saturday, February 23, 2013

Left collapsed the world economy

The recession is now real but it was induced by the barrage of pronouncements that the economy was in a recession and that it was going to to a long one. Why was there such insistance that the economy was in a recession long before there was any recession in production. One element was a media hatred for George W. Bush and an obsession with regime-change. Anything that what would destroy the record of the the Bush Administration and help replace it with a Democratic Party regime was looked upon as good, even if it was bad for the country. Crying Recession would not necessarily change the expectations of businesses and their investment plan. It took the dramatic event of the bankruptcy of Fannie Mae and Freddie Mac and the chaos in the financial markets which followed to lend credibility of the pronouncements of recession.
The Timing of the Financial Crisis
Given the crucial role that the collapse of Fannie Mae played in the current recession its placement in September when it would have maximum electoral impact is suspicious. Is it possible that Fannie Mae went bankrupt months before and the announcement was postponed until September? This would have been a terrible thing, but the truth is far worse. Fannie Mae was not bankrupt in early September. Its assets were not less than its liability. Its stock was trading on the stock market. However Fannie Mae's management chose to declare it bankrupt and asked to be taken over by the Federal Government.
This event, precisely because it was unexpected, produced panic in the stock market. Just as there can be irrational exuberance in a bubble there can be irrational panic in the market. In both cases the irrationality creates a self-fulfilling prophecy. The collapse in stock prices then produced consternation among consumers when they saw the loss in value of their stock holdings.
It is clear that Barrack Obama had foreknowledge of the impending financial collapse. When John McCain asserted that the economy was basically in good shape Obama announced that McCain was not up to date. The official statistics confirmed McCain's assertion. It is not surprising that Obama knew about the impending collapse before hand. The political candidate receiving the second largest amount of campaign contributions from Fannie Mae was Barrack Obama. (The first was Christopher Dodd of Connecticut, who has long been the most important supporter of the insurance industry in the Senate.)
Fannie Mae would have eventually collapsed but some savings and loan associations operated for years in a state of bankruptcy. Usually it is the creditors that have a financial institution declared bankrupt. What a suspicious situation in which the management declares that their institution is bankrupt before it is bankrupt!
Would the management of Fannie Mae do such an immoral thing as to provoke a recession by scuttling their institution before in was bankrupt and giving up months of time to bring about some softening of the blow to financial markets?
The Contrived Nature of the Current Recession (2009)

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