Bo as Emblem of State Capitalism

by Chidem Kurdas The fallen Chinese political chieftain Bo Xilai and his wife are starting to sound like a bizarre combination of Macbeth and his Lady, the US Department of Housing and Urban Development and Fannie Mae—yes, the government created and backed housing finance entity. Under the leadership of the Mao-admiring “new left” Mr. Bo, the … Continue reading Bo as Emblem of State Capitalism

Fannie, Dodd-Frank and Barney Frank

by Chidem Kurdas Barney Frank  won’t run for Congress after his present term expires.  This May there were news stories about his  ex-lover getting a high-paying job at mortgage finance giant Fannie Mae while he sat on the Congressional committee that oversaw the government-sponsored entity.  Regardless of what voters now think of Mr. Frank, Dodd-Frank, … Continue reading Fannie, Dodd-Frank and Barney Frank

Fannie Freddie Lawsuit and Risk Arbitrage

by Chidem Kurdas Last week the Federal Housing Finance Agency filed suits against 17 major banks and mortgage businesses for misleading Fannie Mae and Freddie Mac regarding the risks of mortgage securities sold to these government-sponsored enterprises.  Though it targets banks, the litigation shows the mode of operation of Fannie and Freddie. This development is … Continue reading Fannie Freddie Lawsuit and Risk Arbitrage

Resource Allocation Distortions in the Great Recession: Empirical Evidence

by Mario Rizzo The recent annual report of the Bank for International Settlements (BIS) has focused attention on the sectoral imbalances in the previous boom that resulted in the Great Recession. This is a refreshing change from the excessively aggregative analyses of the Keynesian-stimulus crowd.   It is well known that John Maynard Keynes himself was … Continue reading Resource Allocation Distortions in the Great Recession: Empirical Evidence

Policy Makers and Irrational Exuberance

by Chidem Kurdas Robert Shiller says the speculative bubble in real estate was driven by “a contagion of optimism” that pushed up prices and expectations in a feed-back loop. This epidemic apparently engulfed regulators as well.  “Government policy makers breathed in the same optimism, which no doubt encouraged them to be lax on regulatory restraint,” … Continue reading Policy Makers and Irrational Exuberance

Fannie, Freddie and Mortgage Addiction

By Chidem Kurdas In the first inning of what looks to be an intricate political game, the Obama administration and its financial industry allies suggested that the economy needs the federal government full force in the mortgage market. The case was pithily made  by bond honcho Bill Gross,  who oversees more than $1 trillion of … Continue reading Fannie, Freddie and Mortgage Addiction