Data shows overwhelmingly that Fannie-Mae and Freddie Mac are not to blame for financial crises – Op-Ed: Karl Frank – Call Newspapers

Image via Wikipedia

As seen in the editorial section of Call Newspapers in St. Louis, MO…

Reader analyzes how PMEs have covered current economic crisis

March 11, 2009 - We live in the age of personal media environments, or PMEs, with newspapers, Internet sites, blogs, cable news stations, radio stations, viral e-mails, et cetera.
PMEs are customized information sources we build for ourselves over time that closely align with our particular ideologies. We mold our PMEs to reaffirm what we already believe as true.
We largely ignore and discredit news items and opinions that are contrary to our belief systems, and we focus in on anything that supports our mindsets.
How have our PMEs covered the economy? Media Matters for America analyzed 139.5 hours of programming on the stimulus plan on all major news stations from Jan. 25 through Feb. 8. They found that CNN, Fox News and MSNBC did not have a single economist on to discuss the stimulus plan.
What about the rest? "Of the 460 guests making appearances, only 25 were economists — a mere 5 percent."
If news outlets really cared about informing their viewers, why would they fill the airwaves with pundits over experts?
A good example is this idea that Fannie Mae and Freddie Mac are to blame for the current economic crises because of their participation in backing sub-prime loans.
The data shows otherwise. By 2006, more than 70 percent of the sub-prime mortgages were privately held and backed — Fannie and Freddie held only 24 percent.
As a matter of fact, when you dig in to the Treasury Department data, as McClatchy Newspapers did, it is surprisingly glaring how wrong this pundit-forced accusation is.
Space does not permit the details, but two items will shed light on the sub-prime mess. One is David X. Li’s Gaussian Copula Formula, adopted by Wall Street to assess the risks of credit default swaps.
According to Wired.com, in 2001, there was $920 billion in these credit default swaps outstanding; in 2007, more than $62 trillion. That’s right, $62 trillion. There was 48 times more fiat money in Wall Street gambling on the securities of home mortgages than there were sub-prime mortgages — more than four times the entire U.S. Gross Domestic Product.
The second issue that requires your research is the Commodity Futures Modernization Act, a 262-page amendment added at the last minute to an appropriations bill by Sen. Phil Gramm. This bill later became known as the "Enron Loophole" and is the law that made these credit default swaps on mortgages possible.
So, how could the market that had worked so long and so well for us fail?
The simple answer is that it failed because it was not our grandfather’s market anymore. It was a new, untested and radical market, based largely on a faulty mathematical formula, poor legislation, and, of course, a certain degree of consumer ignorance and Wall Street greed.
If your PME has been telling you otherwise, it may be time to review the reliability and credibility of your sources.
Karl Frank Jr.
Oakville
Editor’s note: Mr. Frank has served on the Mehlville Board of Education since 2005.

Reader analyzes how PMEs have covered current economic crisis

Ohio School Janitor Job Gets 700 Applicants

Image by JoetheLion via Flickr

When I am debating public policy with friends and family, those on the conservative side often say something like, “I don’t want my hard-earned money going to people who just sit at home living off the government.”

I usually reply with two things, “You are going to pay one way or another.  Maybe it will be through higher crime rates, or maybe something less direct, like a bad economy, low stock prices, or reduced value of the dollar.  Wouldn’t you prefer to invest in your community on the front, constructive-end over the unsafe, uncertain tail-end?”

And then I say, “Most people who are out of work during high unemployment and recession want to work….”

MASSILON, Ohio — Evidence of the slumping economy is stacking up at an Ohio school which has nearly 700 applications for one open janitorial job.

Officials at Perry Local Schools near Canton in northeast Ohio say they’ve extended the deadline until Monday to accommodate the overwhelming response to the week-old posting.

The full-time position at Edison Junior High School pays $15 to $16 an hour plus benefits.

Superintendent John Richard says many applicants are laid-off workers with heart-wrenching stories about the tough economic times.

Forty-nine-year-old Donna Croston says she applied after losing jobs at two nearby factories that closed.

Croston says her chances of being hired amid the hundreds of applicants are slim, but she’s hoping to get lucky.

Ohio School Janitor Job Gets 700 Applicants

Daddy Hogwash Remainders: December 11, 2008

Did our cosmos exist before the Big Bang?

Gmail adds SMS text messaging for some

Tivo now injecting ads on paused TV

Get moving on your health spending account

Brain enhancing drugs: Legalize ‘em, scientists say

Bush opens up on struggle with alcohol abuse

What recession?  Diamond sells for $24.3 million

Stewart and Huckabee Clash over Homosexuality

Colin Powell: Can we continue to listen to Rush Limbaugh?