America and many other nations have failed to recognize the importance and vital role of markets. As a result, governments, including in the US, have socialized and centralized economies. We are now bearing the unavoidable consequences.
This crash has only just begun. Prior leftist design made these scenarios a foregone conclusion. Postwar peace dividends; the gradual globalization of free trade; successive demographic waves (e.g. the baby boom, women entering the workforce); and a long-term debt binge after abandoning the last of any gold standard have delayed the inevitable. Myriad socialist programs and government interventions have encouraged malinvestment and created unsupportable entitlements, which have together put the entire US in hock.
Unfortunately, it is only going to get worse because bureaucrats and officials from both parties have no idea what is happening or why — Ron Paul and Jim Bunning excepted, along with possibly a few others. As a result, politicians and regulators are leading (so-called) us in the wrong direction, i.e. toward more and bigger trouble.
Jim Rogers engaged in vigorous debate with CNBC analysts in mid-July. This clip illustrates how little America realizes, much less respects, the inevitable disaster that is socialism or the benefits of markets over centralization.
Even paid-professional financial commentators on CNBC cannot see the wall that we have crashed into — even though we’ve been barrelling at it for decades.
Watch the whole thing in the video above. Highlights include:
Bertha Coombs from CNBC around 1:30: “Jim, what alternative is there to coming in and propping [Fannie Mae and Freddie Mac] up? They play a critical role in the mortgage market. If you don’t have them buying up mortgages, that’s just going to keep our housing that much worse…”
After Jim Rogers challenges her assumptions and assessment, Ms. Coombs continues:
“What do we do? Let them fail? And then what? What happens to mortgages? Who buys them up?”
This cluelessness is so totally straight out of some Atlas Shrugged nightmare.
If mortgages in America represent a sound investment, all manner of private interests will participate. If mortgages in America do not represent a sound investment, why in hell do these mortgages exist and what on earth is our government doing buying them? This insanity represents professional financial commentary in America today. Unbelievable.
Ms. Coombs of CNBC later continues: “…there is an argument to be made that some of this is also a failure of confidence, and a lot of folks, there are people who would say there are short sellers like you that are talking down these companies and out there saying that they are insolvent when in fact they have reserves that are above their mandates.”
Jim Rogers: “Oh, please, Bertha, I would urge you to pull out their balance sheet. If you think Fannie Mae or Freddie Mac are solvent, then I would urge you to get a balance sheet and an examiner, to get somebody who can explain this to you. Fannie Mae is not solvent. Even Poole of the Federal Reserve has acknowledged that they aren’t solvent. If you are blaming all this on short sellers, then you should have another job.”
No diggity, Jim.
Did you see the madness in her comments? Regarding the financial state of Fannie and Freddie, she appeals not to fundamental facts or finance but to government mandates, i.e. regulation. She is calmly and politely stark, raving crazy.
She further mentions the tactic of blaming short sellers. She provides no backup whatsoever. Jim’s response is ideal.
I will say, though, that she is right that folks like Jim Rogers have eroded confidence. For instance, I no longer believe in the confidence game aka con that the Fed, Treasury, Fannie, Freddie, and all their backers (folks, on your left, you will see Congressman Barney Frank counting all his new coin) have been running. It’s a shell game, and we’re the suckers.
Let’s repeat a series of Ms. Coomb’s questions: “What do we do? Let them fail? And then what? What happens to mortgages? Who buys them up?”
She, like our current policymakers and bureaucrats, believes in socialism. This is not mere opinion, conjecture, hyperbole, or device. It’s definitional.
She is a socialist. She actually believes that if Fannie and Freddie weren’t buying these homes, that is, if the US government were not buying mortgages and nationalizing housing, then we’d fall apart.
In a way, I have more respect for the lobbyists and influence peddlers who just want to get paid. At least they aren’t this stupid.
She is 100% wrong. In fact, the reverse of her claims is true. It is because the US government has been buying homes via the ambiguity of Fannie and Freddie (and thousands of other policies and programs) that we have this mess. And no one can see this fact even as we slam into this very wall.
Jim Rogers is totally right. She is totally wrong. That we now have CNBC professionals spouting socialism is pretty terrifying.
