Pensions, Treasuries, Fannie and Freddie: Ponzi's one and all

[stockholmer]

http://theautomaticearth.blogspot.com/2011/02/february-12-2011-pensions-treasuries.html

"Stephen Hawking's "A Brief History of Time" begins like this:

A well-known scientist (some say it was Bertrand Russell) once gave a public lecture on astronomy. He described how the earth orbits around the sun and how the sun, in turn, orbits around the center of a vast collection of stars called our galaxy.

At the end of the lecture, a little old lady at the back of the room got up and said: "What you have told us is rubbish. The world is really a flat plate supported on the back of a giant tortoise." The scientist gave a superior smile before replying, "What is the tortoise standing on?" "You're very clever, young man, very clever", said the old lady. "But it's turtles all the way down!"

Ilargi: If there is a better way to illustrate our financial systems, and our economies, I haven't seen it. Substitute "Ponzi's" for "turtles", and you've got yourself the perfect way to describe what's going on in our world today, if anyone should ever ask for such a description. .........."

[Vinnie From Indy]

1. Bullshit!

Fannie and Freddie funcioned as designed for decades. The programs should not be killed simply because of the idiocy and greed of some executives.

I hope all fair-minded DU'ers understand that there is a concerted effort to dismantle FDR's legacy. The OP's proposition is simply one facet of an all out attack on progressive legislation that has served Americans well for decades.

[ingac70]

2. +1

[DJ13]

3. +2

[napoleon_in_rags]

4. You know, you may just be plugging your ears here.

I'm saying maybe you're right, but maybe this article is describing what's going on. I've talked to plenty of Europeans, an they don't have Fox news, they didn't have FDR, but people are taking to the streets as it comes out that pensions are being cut. I saw a pretty thoughtful rant movie called "Collapse" by this guy Michael Ruppert, and it basically made the point that once oil production peaks, the whole way of life of the previous century becomes impossible, and he believes that peak is happening right around now. This slowly sucks life from the economy and all these old things become impossible. Notice the article quotes the UK, not America on this:

Britain's ... retirement promises have become a "Madoff-style pyramid, now collapsing under the weight of insufficient contributions, rising longevity and an ageing workforce", Michael Johnson said in his report for the Centre for Policy Studies, "Self-sufficiency is the key".

The article goes on to talk about numerous other countries. If you read between the lines here, the crunch is on the whole economy. The government debt is about governments producing money not translated into real products and services, you can argue that its because its being shoved into the pockets of the rich, or because the slow unstoppable rise in oil prices leading to less production of products and services, but there it is, and its global.

[Vinnie From Indy]

6. I think you are missing the bigger point

The OP specifically offers that Freddie and Fannie and pensions etc. are PONZI schemes. This is fundamentally not true. The OP attacks the PROGRAMS as being the problem when, in fact, the failures we see around the world and here at home are the direct result of unrestrained capitalism and the greed of recent and current executives. The problem is not the programs but those who chose to distort the programs to fill their pockets.

[napoleon_in_rags]

13. What I'm saying is I just don't know.

I honestly don't know enough about how FMA FMC work to know if there is anything ponzi like about them. But what I do know i that what's happening is happening globally, so this looks like something bigger than the "Greed of recent and current execs" as you put it.

[DCKit]

7. "...simply because of the idiocy and greed of some executives."

Not to mention outright sabotage by Congress and the financial industry.

They was set up.

[stockholmer]

9. current practice matters,the political & financial leaders are utterly corrupt, thus the Ponzi label

At some point, you have to realize that you were/are the victim of a crime, it matters not what the sui generis of intent was, but what the state of the system is now. Even the original Pozi scheme, if the assets were first invested for profit, could be argued to be a "legitimate investment" in the beginning.

the point is that now the system is collapsing


There needs to be a major, massive restructuring of the monetary system, but the corporatists in the public/private sphere, combined with the bankers will use every means they have (which are legion) to ensure the class war and their death grip on wealth consolidation continues



central banks here in the EU are already startng the shredding of the social safety net, it's a terrible thing to see

Hungary, Poland, and three other nations take over citizens' pension money to make up government budget shortfalls.
http://www.csmonitor.com/Business/The-Adam-Smith-Institute-Blog/2011/0102/European-nations-begin-seizing-private-pensions



Dutch Central Bank Orders Pension Fund To Sell Its Gold
http://www.zerohedge.com/article/here-comes-executive-order-6102-qe-generation-dutch-central-bank-orders-pension-fund-sell-it




finally here are 2 quotes from the OP


"In other words, here's why government bonds (Treasuries, Gilts etc.) are Ponzi schemes: when you're deep enough into debt, you will need to both bring down government borrowing AND see your debt payments go up as interest rates rise. The first reaction politicians will have is to borrow even more just to pay off the interest -and maybe principal, if they can at all-, but that will at some point down the line only raise your interest payments even more. And there are pretty clear limits set here, though many choose to ignore them."


"What makes Fannie Mae and Freddie Mac a Ponzi scheme is this: you need an endless and large influx of new homebuyers, as well as available credit, to keep home prices sufficiently high for the scheme to continue. And those buyers are not there anymore. From 2002-2008, or thereabouts, every American who could write his or her initials was given a mortgage loan. So was every Brit, Irishman, Spaniard and Dutchman. And now the conditions that allowed for this to take place are gone, and they will never return in our lifetime. Our housing finance schemes have run out of -potential- clients, just like Charles Ponzi did in his day."

[Vinnie From Indy]

10. And thus, your initial premise is false

These programs are not Ponzi schemes as originally designed. They should not be sacrificed nor abandoned. In fact, what you have posted is propaganda in the service of Big Banking.

Cheers!

[stockholmer]

12. I never suggested they be scrapped, control of the system needs to be taken away from the banksters

[WinkyDink]

5. You don;t know enough about how employees PAY INTO their own pensions here.

[mmonk]

8. Uh, those were the stable things at one time.

Financial deregulation and 401K's were the undoing. I presume that is the point?

[stockholmer]

11. yes, the entire system was hijacked, and it was done by both major parties,...

in a highly complex system, both sides play roles in the multi-decade destruction of a viable scheme, and the ultimate outcome is that, through fits and spurts, bit by bit, the bottom foundation is hollowed out, but the continuity of agenda is maintained (in this case vertical wealth consolidation, and destruction of the middle class)


all one has to do to see the law of seemingly unintended consequences (the spew that the masses are fed. when the outcome was absolutely known by the system controllers), cloaked in social egalitarian overtones is too look at the following on the housing collapse


both sides played their role


White House Philosophy Stoked Mortgage Bonfire
http://www.nytimes.com/2008/12/21/business/21admin.html?_r=1

Bush's ownership society scam exposed by the NY Times
http://crooksandliars.com/john-amato/bushs-ownership-society-scam


Democrats in their own words Covering up the Fannie Mae, Freddie Mac
http://www.youtube.com/watch?v=_MGT_cSi7Rs&feature=player_embedded

Mortgage Giants Leave Legal Bills to the Taxpayers
http://www.nytimes.com/2011/01/24/business/24fees.html