The metaphor of the two bridges is perfect. A classic attempt to defer blame by pointing out the part you were ostensibly “responsible” for is not the problem. “Structurally sound” thus is code for “the bridge washed out in one complete piece”.

Of course it didn’t stay that way for very long afterward… but when it washed away it was PERFECT.

When did we go from a nation of people with the common sense to do the best we can holistically (hey, your bridge design is great — but building it on sand is really dumb) to people who do it “by the book” to the exclusion of not-so-common sense?

A 30 year fixed rate mortgage without a pre-payment penalty is safe? No other country in the world has anything like this product. You have to be looking at a couple of generations of interest rate and house price stability before this product even starts looking sensible. For a while it seemed to make sense, given F&F’s massive size, as they were able to “hedge” against interest rate risk by owning a large fraction of the world’s entire exposure to SFAS 133 interest rate swap derivatives. That illusion came crashing down in the accounting scandal surrounding Fannie’s 2005 10-K.

The myth of conforming mortgage stability somehow maintained itself because the other toxic alternatives the MBA gang got up to during the bubble were even crazier. Sure we Canadians have 30-year, etc. amortization, but the interest rate is only fixed for a couple of years. That protects the banks.

American tax law, which allows writing off mortgage interest, provided an indirect subsidy to the mortgage industry that fended off collapse until now, but none of this ever made sense.

The long term US economy is sound? Not with the debt levels we have as a nation, business and individuals. How do we pay it back? Not with job off shoring, layoffs, and downsizing. Hey Hank, its JOBs man, and good paying ones as well. Otherwize kiss your housing and consumer market recovery good by for a generation or more. We’re in deep doo doo

Please try it again. It’s playing for me, and I tried it with both IE and Firefox. If it’s still not working, I’ll check with our Admin to see if he can figure out the problem.

The You Tube link is no longer available. I really wanted to see his demeanor after reading a selected transcript on AOL before coming here. Just the fact that he is preparing us for a difficult time says it all. I mean we must be in really big bad doo doo! Of course then he has to go on and on about how the system is sound. Just to cover his bases. Hey Hank when does the dike bust open?

Fannie Mae and Freddie Mac
End of illusions
…
Why does America need government-sponsored bodies to back the type of mortgages that were most likely to be repaid? It looks as if their core business is a solution to a non-existent problem.

I’m afraid Ron Paul is the closest thing left to anything that resembles a Republican. I think at the Republican convention, in the interest of disclosure, they should change the party’s name to “Corporate Socialists”.

Stephen King is about right. Can you imagine what the financial news would be like if they were dedicated to “The whole truth and nothing but…”?

The rating would have to be “R” for “disturbing content.”

There had been an old bridge that was deemed no longer safe on a river in AZ. [I think it was in Black Canyon.]A new bridge had been built. After some heavy rains, the new bridge washed away and the old bridge remained standing.

Mom said the engineer who designed the bridge was being interviewed by a reporter. The conversation went something like this:

Engineer: The bridge was structurally sound!

Reporter: Then why did the bridge was away?

Engineer: The bridge was built on sand.

Reporter: Why didn’t the old bridge wash away, even though it was deemed unsafe for use?

Engineer: It was built on rock.

My first thought was that clearly they should have hired an engineer with some familiarity with the Bible. The second- obviously a bridge isn’t structurally sound when it’s sitting on shifting sand.

Now every time I hear “Our economy is fundamentally sound,” I think of the collapsed bridge and wonder what our foundation really looks like.

Igor says “faux”- probably as good a description of our economy as any.

I was going to hold my fire until tomorrow’s Crack of Doom, but that reference to “horror show” has forced me to share the following

“Stephen King: Public funds needed to resolve financial crisis – and taxpayer will pick up the bill”, Independent, July 21, 2008.

It’s such a Doomish coincidence that the managing director of economics at HSBC shares his name with Maine’s favorite scare-monger. “Afraid,” concurs Igor

All of his “LONG TERM America is fundamentally sound” stuff was the worst. It reminded me of Annie singing “The sun will come out tomorrow”. No good news, just a feel good song.