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This is from USA Today. They point out how manufacturing was at one time at almost 25% of the economy its now down to 8%. Apparently the Tea Party taking their marching orders from Airbus and other over seas companies wants it to go lower. You gotta love the Tea Party...they are sure looking out for America.
But the biggest problem with the Ex-Im Bank is that government-backed loans, and subsidies in general, distort the economy. Every loan program transfers risk from lenders to taxpayers. This creates what economists call a moral hazard: Because the loan amount is guaranteed, banks have less incentive to evaluate applicants thoroughly or apply proper oversight.
These programs privatize gains and socialize losses. Lenders get to loan billions of dollars and collect high fees, yet they bear almost none of the risk if the borrower defaults. The biggest lenders behind Ex-Im loans are the usual suspects: politically connected giant banks like J.P. Morgan and Citibank.
Good link..thanks. According to the link Ex-Im has gone from 3.2 billion in 1986 to over $27 billion last year, and has $134 billion in outstanding liability. And I found this to be very interesting:
Quote:
Originally Posted by de Rugy
Just as Fannie Mae and Freddie Mac convinced low-income Americans to take out risky loans to purchase homes they otherwise wouldn't dream of buying, the Export-Import Bank sways governments in developing countries to splurge on shiny new air fleets, futuristic wind farms, and unnecessary luxury tour buses-all made, of course, in the U.S.A.
Fannie and Freddie were private companies, with shareholders and highly paid CEOs. But they'd achieved this dominance because of the implicit guarantee they had from the U.S. government.
In doing so, they sucked Countrywide and Mozilo into the vortex:
Quote:
"...Countrywide tends to follow the most flexible underwriting criteria permitted under GSE and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE programs. When necessary—in cases where applicants have no established credit history, for example—Countrywide uses nontraditional credit, a practice accepted by the GSEs."
Mozilo was a crook plain and simple. One can argue the particular but Mozilo was and is nothing more than a government protected theif.
Actually very fitting for this thread. If Warren's stated positions were actual positions of principle she would be demanding that those like Mozilo were prosecuted.
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