Friday, June 05, 2009

The Democratic Socialist Republic of the United States

Whatever happened to the free market? What happened to unfettered capitalism? What happened to the trickle down effect? What happened to big business being deregulated to create employment for the masses?

Let me see, a quick list.

Fannie Mae and Freddie Mac banks, the largest home load lenders in the US, now government owned.

One of the largest motor car manufacturers in the world, General Motors, now government owned.

Chrysler, now partly government owned.

The largest insurance company in the US, American International Group, now government owned.

These are off the top of my head. I bit of research would reveal many more I am sure.

While I know my readers are intelligent and informed, I just want to make sure that you are aware of a rather curious thing. No promises about the accuracy. Check the details yourself.

In Australia, when you take on a mortgage to buy a house, it is a debt you become responsible for, no matter what. If you can't repay your mortgage, the bank may sell your house from under you and if the selling price does not repay the debt, then you will be responsible for the remainder. This catches many people, especially in times when property prices are falling or people have borrowed near one hundred per cent of the value of the house, but it does give people a strong incentive to fight on and try to repay the debt.

The US allows mortgage defaulters to walk away from their house with no penalty apart from losing what they have paid and any improvements. Ok, perhaps they end up with a bad credit rating, but many of them had no money to repay the loans and were only lent the money by avaricious banks and their agents anyway. With any objective observations, they should not have been lent the money in the first place. So that is it, hand the key to the bank and that is the end of trouble people found themselves in. Very odd practice for a country that espouses personal responsibility.

And mate, you there in Detroit who has been just sacked from GM and may lose your house, I do really feel for you. You were a victim of things none of us really understand. But what is clear, is that it all happened under Bush and his government. You are fortunate to have someone like Obama to pick up the pieces. You would have never voted for Bush anyway...would you?


  1. I just learned a thing or two from you today Andrew, never did know that people can walk away seemingly unscathed from all of that in the US.
    I think, like with many things in life, we do need to be accountable and responsible with our own expenses/ borrowings, the vulnerable seem to suffer greatly..caught up in all those scams like the 300 days free ...take home the furniture crap la di da da...yep, buggers everything up eh!
    Enought waffle, I'm having a nanna nap coz Nick is home sick with croup today and Mia awkoe at 4am with a major blood nose :(

  2. The only reason the US government has stepped in (from what I understand) is because the umemployment caused by the collapse of those major companies would put a greater strain on its economy then would propping them up for a while. The ownership is not permanent, nor is it controlling, and for the likes of GM and Chrysler it allows them to get out of crippling UAW obligations to retired employees, which if you've ever seen them were ludicrous.

    It certainly is an odd scenario. I just hope the 'easy credit' trap is a lesson learned and not destined to be repeated. I'm being naive though, aren't I?

  3. "Whatever happened to the free market? What happened to unfettered capitalism? What happened to the trickle down effect? What happened to big business being deregulated to create employment for the masses?"

    Right on the button, and the irony is palpable.

    Panhandlers ... corporate style.

    (Sorry that was wrong. They have no style.)

  4. One of the sessions at the recent Sydney Writers Festival was something along the lines of 'Is Capitalism Dead?'

    I didn't attend it because I focused on the lighter topics but my friend did and apparently the short answer to that question was 'Not yet'.

  5. GM is now being called Government Motors.
    Expect to see an encore performance approx. 5 years after someone announces "the recession is over".

  6. Dream big, fall bigger: I really think that's the motto here sometimes. It's made me ever so grateful that I had more sense than my lender did; they wanted to give my $30k more for house-shopping, but I didn't take it.

    The whole country is a wreck.

  7. "What happened to the trickle down effect?"

    It became the 'being pissed on from a great height' effect the moment the economy went tits up.

  8. It is interesting about the mortgages Cazzie. Hope the kiddiewinks are ok tomorrow. I am ailing myself.

    Mutant, I have no probs with what the US gov is doing, but it is just so amusing in the land of free enterprise. Hope it doesn't turn out to be similar to British Leyland.

    LS, I reckon whenever any of the money men pass an ordinary citizen in the street, they should hang their heads in shame.

    I'm with you on the lighter subjects Victor. Of course capatalism isn't dead but it might find itself somewhat modified.

    Government Motors, haha Jayne. I hope you are wrong, but I have been around long enough to think you might be right.

    Good words Daisy. It will recover, and then perhaps fall again. Look after number 1 with common sense.

    Quite so Brian. I can't believe what is happening in your country at the moment.

  9. I know...Susan Boyle ending up in the staggers me as well.

  10. Citi Bank 34% govenment owned.

  11. Brian, I can say, thank god Sir Humpy is working in the background.

    Marvellous Ian. Reagan must be turning in his grave.