Send Better Gaffes!

The HuffPo tells us that Sarah Palin gaffed with these comments about Freddie Mac and Fannie Mae:

Speaking before voters in Colorado Springs, the Republican vice presidential nominee claimed that lending giants Fannie Mae and Freddie Mac had "gotten too big and too expensive to the taxpayers." The companies, as McClatchy reported, "aren't taxpayer funded but operate as private companies. The takeover may result in a taxpayer bailout during reorganization."

Hmm - apparently this is a gaffe because, since there has been no cash outlay as yet by the taxpayer, it is not accurate to say that Freddie and Fannie were "too expensive".

Really?  Did the concepts of "opportunity cost" and "implicit cost" go on a post-convention vacation?  The implicit Federal guarantee of Freddie and Fannie distorted the mortgage market in many ways, the costs of which are coming home to roost to all  of us, taxpayers included.

And that implicit guarantee had a value to Freddie and Fannie investors, presumably offset by a cost to... hmm, taxpayers?  Taxpayers!  And in the current market environment I think it is fair to say that the two entities were leaning pretty heavily on that guarantee, so the implicit cost had, let's see, gone up and arguably become, yes, too expensive relative to the dubious mismanagement practices being underwritten.  That said, taking over the two firms under new management does not reduce the current cost of the guarantee except to the extent that better management, better incentives, and/or better regulation will improve their performance.

DEVELOPING:  I want to weave in glorious examples of the implicit future costs of Social Security and Medicare as examples of programs routinely called "too expensive" even though they are adequately funded today.  And in a Mad Crescendo I may even mention a favorite Dem talking point - the "cost" of the Iraq war as represented by a decline in our national prestige, a non-cash outlay if ever there was one.

Or I may go to dinner.  We make these tough calls every day.

Comments

[Barney Frank]

I took her comment to mean that it would be too expensive to the taxpayers to let them fail, since they have always had an implicit guarantee and now have an explicit one.
Weak.

[liontooth]

From the same McClatchy story bold emphasis mine,

Paulson told Republican John McCain that Fannie and Freddie — which purchase mortgages from banks and package them into popular bonds sold to investors — would be seized and placed under temporary control in one of the largest government bailouts ever.

[kim]

Way off topic but all you climateaudit fiends ought to go see Ian Joliffe's kneecapping of Tamino's defense of the Piltdown Mann's fraudulent Hockey Stick.
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[Charlie (Colorado)]

Yeah, this one's going in the list tonight, along with the AIP is a terrorist group one.

In the mean time guess what's at this link?

[SEW]

Merrill Lynch and the others were relying on this guarantee too. So were the foreign buyers of the bank mortgage debt. So were the foreign aid recipients of food, cash and medical entitlements that are going on their second five year financing cycle.

Who owns the mortgages, food, cash and medical entitlements? The foreigners own the mortgages and we are their food, cash and medical entitlements. Taxpayers can't figure out we're giving away the money, our mortgages, medical care and pay security. Incomes will just continue to fall as long as we have these foreign aid five year cash cycles. The programs don't generate enough American jobs, so why wouldn't America pay for the foreign aid policies?

[GMax]

How about we scrub these mortgage pools and the good ones we move into the Soc Sec trust fund ( with a law change of course ) so that the Soc Sec can invest in mortgages and get the higher return implied instead of Treasury securities? And the US should probably scrub up both entities and then put them up for sale to get whatever the cleaned up entities will bring in an auction sale. It would be billions for sure.

[Neo]

Speaker Nancy Pelosi (D-Calif.) has accepted an invitation from San Francisco’s archbishop to discuss whether she should continue to receive communion at the Catholic Church in the wake of comments she made about abortion.

San Francisco Archbishop George H. Niederauer said he had received letters and e-mails from “many Catholics” expressing dismay over Pelosi’s remarks, in which she said the matter of when life begins remained controversial within the church. He said many of them questioned whether she should be able to receive communion from the church.

Pelosi is still clinging to her Voldemort Catechism.

[JM Hanes]

Charlie: (Is Chaco OK with you?)

You're everywhere!

[Sara (Pal2Pal)]

CANADA REMINDS US THAT THE DEMOCRATS REFRAIN - THAT THE WORLD DOESN'T LIKE US ANYMORE (BECAUSE OF BUSH) - IS A CANARD

[jpe]

Did the concepts of "opportunity cost" and "implicit cost" go on a post-convention vacation?

I'm sure that's how Palin had conceptualized the problem. She must've learned about opportunity cost at one of the 6 colleges she attended.

[PeterUK]

"Speaker Nancy Pelosi (D-Calif.) has accepted an invitation from San Francisco’s archbishop to discuss whether she should continue to receive communion at the Catholic Church in the wake of comments she made about abortion."

Told you,excommunication.Nancy is going to burn in Hell

[Chuckie Schumer]

NYT July 14, 2008:
"“The Treasury’s plan [$300B line of credit] is surgical and carefully thought out and will maximize confidence in Fannie and Freddie while minimizing potential costs to U.S. taxpayers,” Mr. Schumer said. “While Fannie and Freddie still have solid fundamentals, it will be reassuring to investors, bondholders and mortgage-holders that the federal government will be behind these agencies should it be needed.”"

LUN

[Captain Hate]

Burn, Nan, Burn!!!

She really should be called on the carpet for deliberately misstating Catholic teaching after proclaiming that she'd studied it for a long time. At least SloJo, in his weirdly verbose manner, gave a somewhat coherent description of what Catholics believe. Pretty bad when Biden is the clear winner in a battle of wits.

[Neo]

Don Surber has a Biden-under-the-bus pool.
I'm wondering how long before Obama economic advisors Franklin Raines and Jim Johnson, who have served as CEO-s of Fannie Mae, and Rep. Rahm Emanuel, who served on the Board of Directors for Freddie Mac, are all under-the-bus as well.

[kim]

Three hundred billion dollars is surgical? Keep that doctor away from me with that big knife.
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[clarice]

PUK, She won't be excommunicated. She'll leave the mtg making some mealy mouthed apology (clarification) that she erred in commenting on Catholic doctrine and the faithful should look to the church , not her, for an explication of when life begins.

She may or may not be denied communion but we will never know that.

[Neo]

CHICAGO -- Declaring that clergy have a constitutional right to endorse political candidates from their pulpits, the socially conservative Alliance Defense Fund is recruiting several dozen pastors to do just that on Sept. 28, in defiance of Internal Revenue Service rules. The effort by the Arizona-based legal consortium is designed to trigger an IRS investigation that ADF lawyers would then challenge in federal court. The ultimate goal is to persuade the U.S. Supreme Court to throw out a 54-year-old ban on political endorsements by tax-exempt houses of worship.

This ought to become a campaign issue.

[kim]

TCO dances among the crickets at Open Mind. Good one, pal.
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[narciso]

That Biden line about their being no Sunni in Anbar/Dulaimi; qualifies as a Gerald Ford"Poland is not under Soviet Occupation"
remark. We know he meant Shia; which isn't true either, it would have been under his
partition plan, though.

We have 5 trillion dollars in possible
exposure with Fannie and Freddie Mae, thanks in part to Gorelick, Raines & Johnson's malpractice to be charitable. I can just imagine the shape those books were in; when Paulson's team examined them; that's way to big for the taxpayers to handle; yet we can't let them meltdown.

[M. Simon]

kim,

What is Open Mind?

[kim]

It's Tamino's blog. He's actually close minded, calls himself Hansen's Bulldog, and put up a defense of Mann's statistics 6 months ago, citing Ian Jolliffe as authority. Apparently it's taken Jolliffe six months to find out about it, and now he has told Tamino that he has misrepresented him and called for an apology. Great fun.

On Tamino's original post I told him it was complete rubbish, but I was plagiarizing a real statistician, JeanS.
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[kim]

Apparently Ian Jolliffe is the world authority on Principal Component Analysis, an illegitimate variant of which Mann used to construct his fraudulent hockey stick.
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[M. Simon]

kim,

Ever since the cooling phase was well underway (5 years of declining ocean temps) I haven't kept up. I'm more focused on Bussard Fusion for my technical entertainment.