Re: [Marxism] Early notes on the present financial crisis

["S. Artesian" <sartesian@xxxxxxxxxxxxx>]

Some answers.

----- Original Message ----- 
From: "Shane Hopkinson" <chen9692000@xxxxxxxxx>


 * When Fannie and Freddie were 'nationalised' that means that working class 
people who hold mortgages lose their houses (?), that stockholders (which 
would be big capitalists) have their assets protected (along with directors 
jobs as Fannie/Freddie) courtesy of the taxpayer (who would get that bailout 
loan repaid IF they ever make any money again - which they won't). Socialism 
for the rich?
__________________

Nobody is losing their houses simply because of the seizure of the GSE's. 
Default and foreclosure rates are increasing due to the overall collapse of 
the housing market, the increase in rates of the adjustable rate mortgages, 
and the GSE's increased role in issuing mortgages as the private mortgage 
issuers contract.

Stockholders, both of the common stock, and preferred stock will not have 
their assets protected.  They are considered owners and thus their shares do 
not represent a contractual obligation upon the company.  The direct debt 
that the GSE's have issued, along with the securitized mortgage packages, 
are considered contractual obligations, and the implicit "full faith and 
credit of the US govt" in the GSE's status now has been made explicit.  The 
executives of the GSE's most assuredly won't wind up applying for food 
stamps.
__________________
>
> * There was a special trading day on Sunday - to allow Lehmann to trade 
> derivatives. Now what why is this? Who would trade with Lehmann who were 
> about to declare bankruptcy except to get some money out of the 
> derivatives and pass the bad debts back to Lehmann who then fall on their 
> sword. Is that too conspiratorial?
________________

Interesting.  I didn't tumble to that part.  My guess that it was done to 
unwind contractual positions in credit default swaps, and probably 
repurchase agreements in order to provide as much "inventory" as possible to 
Lehman before Chapter 11-- the inventory will then be used to pay some 
percentage of Lehman's outstanding obligations.
______________
>
> * Some bourgeois commentators are now claiming (of course!) that this is 
> all the fault of government interference and the markets should be left to 
> 'correct' themselves but if Keen (below) is right thats just not an 
> option.
___________________________

Commentators always claim that. It's the tweedledum to the tweedledee. The 
fact is most of the subprime mortgages were issued in 2006 and the first 
half of 2007.  These were issued without government interference, government 
regulation.  Equally of a fact, difficulties in mortgage repayment rates, in 
loan quality, and in the housing construction market were being reported as 
early as 2005.
____________________
 Is there a simple way to explain to people whats happening in class terms? 
Obviously some capitalists will go under - but ultimately its workers who 
will pay (even those yuppie bond traders have discovered they are capital 
dependent).
_______________________
Simple way?  Not one red cent for universal health care!  We need every 
penny to bailout our brave investment bankers, who have sacrificed so much 
for so long!





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