Thought this was timely. A new ETF (exchange traded fund) launched this week bucketing a group of global companies supplying rare earth elements. It got off to a fast start with investors quickly bidding up share prices.
Friday, October 29, 2010
How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis
I just read this excerpt of life in the sub-prime trenches according to author Michael Hudson. It is a stunning account. Unfortunately the new financial regulation policies do not address most of what was going on.
Friday, October 22, 2010
Two stories posted on Prof. Mankiw's blog at Harvard:
Barney Frank, Then and Now
A news story from 2003:
A news story from yesterday:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry....
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
A news story from yesterday:
In a sharp-edged debut debate, US Representative Barney Frank, a Democrat, and Sean Bielat, his Republican challenger, squared off yesterday over national security, illegal immigration, and the roots of the mortgage crisis....
Bielat, a former Marine officer from Brookline, said Frank had contributed to the downfall and subsequent recession by supporting lenient lending standards for prospective home buyers.
“He has long been an advocate for extending homeownership, even to those who couldn’t afford it, regardless of the cost to the American people,’’ said Bielat, 35.
Frank, a leading liberal who has represented the state’s Fourth Congressional District for nearly 30 years and became chairman of the House Financial Services Committee in 2007, said he and other Democrats fought to curb predatory lending practices before the recession but were thwarted by Republicans. He said he had supported efforts to help low-income families rent homes, rather than buy them.
“Low-income home ownership has been a mistake, and I have been a consistent critic of it,’’ said Frank, 70. Republicans, he said, were principally responsible for failing to reform Fannie Mae and Freddie Mac, the mortgage giants the government seized in September 2008.
More news today on Bloomberg regarding the impact China's export quota on rare earth elements is having oon prices.
In my Principles of Economics class, we were recently comparing types of economic systems, particular Command Economies versus Free Market. We used the example of natural resource allocation. I mentioned the trade dispute between Japan and China regarding exports of Rare Earth Elements. See below story and impact on U.S.: