U.S. Is Finding Its Role in Business Hard to Unwind:
Between financial rescue missions and the economic stimulus program, government spending accounts for a bigger share of the nation's economy -- 26 percent -- than at any time since World War II. The government is financing 9 out of 10 new mortgages in the United States. If you buy a car from General Motors, you are buying from a company that is 60 percent owned by the government.
If you take out a car loan or run up your credit card, the chances are good that the government is financing both your debt and that of your bank.
And if you buy life insurance from the American International Group, you will be buying from a company that is almost 80 percent federally owned.
The mortgage number really jumps out at me. I'm really tired of Republicans complaining about Barack Obama's plan for socialism. We have socialism. The American government owns a car company and an insurance company. It's responsible for putting up capital so the construction and real estate industries stay afloat.
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"We have socialism."
I get bugged by the Founding Fathers argument too. I saw a Town Hall meeting ( on YouTube) where a young soldier back from the front was holding a constitution and asking where it said anything about Federal responsibility for health care, or whether we would find any opinion on the subject from the founding fathers themselves. What would the founding fathers think? Big applause.
There would be a round of boos if the (Republican) chairman had said something about the founding fathers being far more concerned - if they were to come back - with a huge standing army invading Mesopitamia. I am absolutely clear that that would be their major concern, not health care.
On the subject of American mortgages. 90% are now owned ( or backed I suppose) by the goverment - using Fannie Mae, and Freddie Mac. Both companys are effectively nationalised. Both are, probably insolvent. Both need more government money. Here's the thing - no other country in the world has a similar situation because no other country in the world had such a system ( with the possible exception of the communist world, as was - bur not China now). The government guarantee was always there, so FRe and FNM allowed the US mortgage buyer to get the full term Fixed rate loan unknown in the rest of the world ( why? Because when rates are low the lender is almost certain to lose money, in real terms, if you give a full term fixed loan at the low prices).
This allows for far higher home ownership in the US. In most free market systems - which the American system is not - you are stress tested to see if your present income can handle a sudden increase of 2-4% in the rates for variable mortgages. Fixed mortgages come in at higher rates automatically, and never last for more than 5 years ( 3 being the norm) . This cleary will reduce the number of people who can afford a variable rate of x%, compared to a fixed at x%.
That's socialist. Some Republicans point that out. What happens to home ownership if American doesn't have Freddie or Fannie? It drops by 80% to 60%. Socialism gives Americans home ownership. I think that may end, and the American proles now demanding Obama's head will beg for their socialism back.