Category Archives: political

Is Fannie Mae Still Buying Mortgages?

I refinanced my mortgage several months ago, seeking to capitalize on the ridiculously low interest rates the Fed insists in poisoning our economy with.  While they may be a boon to me, ultimately, these low rates will lead to money creation and ultimately a bubble somewhere;  If I had to guess, probably in US Treasury bonds.

This post could go several ways, as there are a couple of problems here.  One is the low interest rates, courtesy of the central bank, and not market forces.  The second is the function of Fannie Mae in the marketplace.

Are low interest rates good?  If you are a borrower, I’m sure you would answer in the affirmative.  If you are a lender or investor, they may not be such a boon.  I don’t know what the magic rate for interest rates, but I think it should be set in the marketplace without interference from the Fed or the government.  Because of the practices of the Fed, specifically purchasing treasuries and setting the interest rates that banks are charged, interest rates can be manipulated to be either high or low, which impacts decisions that market participants make.

Often we hear complaints about capitalism, and some may have validity.  Unfortunately, if you are looking at the United States and complaining about some excess or another, I don’t think you can pin the problem on capitalism, since we don’t have it here.  There are some elements of capitalism, but in my opinion, there are more instances of government interference that impact the market, minimizing its ability to correct imbalances or misallocations of capital.  The method used to keep score in the marketplace, money, is subject to manipulation.  As a business man, decisions you make can be severely impacted by a subsequent decision by the Fed or the government.  It is like attempting to play a game with the rules constantly changing.  Imagine playing football where the field changed dimensions, or where the football changed shape or weight.  Certainly, it is still possible to play, and the game could certainly be interesting, but as a coach or player, it is difficult to be consistent, as what worked one week may not be effective the next week.  The manipulation by the Fed and the government by picking winners or losers makes our markets not free, and our economic system not capitalistic.  We currently have a form of crony capitalism that is trending towards socialism.

As an investor, government manipulation of interest rates and the resulting bubbles makes investing very treacherous.  What may be a good strategy with one Fed stance may suddenly prove to be unprofitable when the Fed changes direction.  I believe that this uncertainty is at least partly fueling the uncertainty that is gripping our economy.

What the heck is Fannie Mae doing purchasing my mortgage?  While there may be some well-intentioned purpose for this risk transference scheme, the eventual effect of such a transaction is to eliminate risk from the bank that issued the mortgage and transfer the risk to Fannie Mae.  But guess who ultimately guarantees the mortgages held by Fannie Mae?  The US government, or all of us, ultimately, since Fannie Mae is a government-sponsored enterprise.  The government is still purchasing mortgages, thus relieving the banks of long-term risk from the mortgages if they are risky.  Certainly the level of documentation required to get a mortgage is much higher than it was in 2005 when we obtained the mortgage.  I’m sure the banks are doing a better job of ensuring that the people that they sell mortgages to can pay them back, but I submit that if they were going to keep the mortgages on their books, they would have a different level of scrutiny than if they can off-load them to Fannie Mae within 6 weeks of closing.

Have we learned anything since the last meltdown?  It appears that it is still business as usual.  What do you think?

Why does the nanny state interrogate my kids?

My kids went to the pediatrician for their annual check up.  We were trying a new one since we had good reviews about one who was only about 20 minutes drive away compared to 40 minutes for the old one.  With any new doctor-patient situation, we had to fill out tons of paperwork and the kids were weighed, measured, etc.

Then the questions started.  Some were for me, and some were for my kids.  All of the questions asked of me were what I would consider standard questions, but the ones for the kids were a little strange to me.  Keep in mind that this was a doctor’s office, and for a well-visit, not an ER visit with bruising or obvious signs of abuse.

So they asked my kids “Do you eat fresh fruits and vegetables?”  One of my sons knew what was going on, and answered in the affirmative.  “Do you get enough to eat?”  Apparently the consensus was that we don’t feed them pizza enough.  Whatever.  Then a question that drew my ire.

“Does your family have any guns in the house?”  I tried to get their attention and play it off as a joke question by telling them to show the nurse their guns, by flexing.  However, the kids weren’t that swift on the uptake, and told the nurse that not only did we have guns in the house, they had a gun.  That is actually true, I did get them a small .22 to teach them to shoot, but they don’t have access to it or the ammunition.  Now I don’t like the question of what guns I have at the home getting out;  I’d like to keep such information surprises for any intruders, but I didn’t like the way the questions were going.  Last time I checked, I had a right to keep and bear those and other arms I may have.  Why is that a health issue?  How is that any of the medical system’s business?  They didn’t ask if I had books in the house, or a snake (we don’t), or birds (can’t they make people sick sometimes?).  I thought I’d do a little research about these guns.

What I discovered is that the nanny-state nurses should have asked me if I have a swimming pool, as far more children die by drowning than by guns, even when suicides are included.  Using the CDC statistics for the ages from 0 to 9, (the range that includes my kids) from 1999-2007, I found that 1250 were killed by firearms, for a rate of .35 per 100,000.  For comparison, falls claimed 743 victims, with a rate of .20, and poison killed 977 kids, for a rate of .27.  What was far more dangerous?  Drowning claimed 6514 children, for a rate of 1.79 per 100,000.

These statistics are for young kids.  When you look at the data for older kids, all the way to age 19, drowning claims 10,932 for a rate of 1.48, and firearms kill 27,270.  But of those, 17,351 are homicides.  The accidental firearms deaths were 1515, or a rate of .21, and suicides were 7765 for a rate of 1.05.  Now I don’t want to question if those suicides wouldn’t have happened if a gun wasn’t available.  There is no way to know that, and there are plenty of ways to kill yourself:  pills, hanging, letting your mother-in-law drive, noodling, defenestration, even drowning.

The point here is that for young children, drowning is far more likely to kill them than firearms, so it would seem that the nurse should have asked about a pool before she asked me about firearms, unless there was some agenda here by someone.  For older children, suicides are still a danger, so it is important to have a healthy relationship with them.  And of course, teach your kids the safe way to handle guns, and don’t allow them access to them without proper supervision and training.  After all, they need to be able to hit what they are aiming at.

It may be worth your time to teach them  the answer to questions like “do your parents have guns in the home?” by teaching them to flex, and say “yeah–these guns.”  Or even “They’re right here–why don’t you ask  them?”

What do you think?  Is this another example of the nanny state gone crazy?