Adam Smith would roll over in his grave...the U.S. Government is now the single largest source of outstanding mortgage loans
and consumer credit loans. This is a first - at least in modern history.
Not only does Freddie Mac and Fannie Mae originate nearly all mortgage loans in the country, which shouldn't surprise anyone, since Uncle Sam took over the two organizations in 2008 - Uncle Sam now holds the majority of ALL outstanding paper on houses and consumer credit in the U.S.
This is an ugly place to be - it is a house of cards waiting to fall.
Uncle Sam owes $14.5 trillion and the U.S. consumer owes Uncle Sam roughly $6.5 trillion... so who is it that pays for all this debt? You and me, the American worker. Uncle Sam doesn't really have any money, now does he. He only has what the private sector gives him... and right now, he's spending it faster than we can create it.
The harsh reality is unless we cut real expenses, the "free markets (i.e. capital markets)" that drive the American free market system, are going to come to a crashing halt and disappear. Don't believe me? Take a look at the mortgage market and tell me where the private sector, capital markets are today? They darn near don't exist. This is what will happen to the rest of the U.S. capital markets if we continue to let Uncle Sam take over private enterprise and "guarantee" companies against failure.
We must let companies succeed or fail based on their own merits. If we don't the capital markets will dry up and disappear - just like we see in private sector mortgages today.www.iangilyeat.com