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Obama - Let's Do Another Fannie
The Treasury Department came out with some proposals today on how to fund infrastructure investments. Nothing new; an infrastructure bank that would borrow money outside of the government using government guarantees, and a newfangled debt instrument called:
America Fast Forward Bonds
I love the name. AFFs will be the Street name. AFFs will be structured like BABS (Build America Bonds). This is a hybrid security that will be issued by a Muni. It will be taxable (unlike regular muni's), it will therefore have a premium yield to non-taxable muni paper. The Federal government will pay (1/3) of the interest due on the bonds. There will be no direct Federal Guarantee on the bonds, but there will be a perception that the Feds are behind the notes.
The Transportation Infrastructure Finance and Innovation Act (TIFIA) will be expanded and it will provide - "loan guarantees, and lines of credit to regionally or nationally significant transportation projects". Loan guarantees and lines of credit are off balance sheet financing. (Note: What is TIFIA? Never heard of it)
The infrastructure bank the President wants is also going to be involved with raising money outside of the Federal budget and debt limits. According to the White House the new bank will - "invest through loans and loan guarantees."
All of the proposed borrowing will be outside of what is defined at the Debt Limit. These new debts will not be included in the calculation of Debt to GDP. The President's proposals are gimmicks to hide debt. The description provided by the White House on how the infrastructure bank would work tells it all. I think there are at least two lies in this statement:
The Bank will operate as an independent, wholly owned government entity outside of political influence.
This language is very similar to Fannie Mae and Freddie Mac. F/F were supposed to be independent. They were quasi government entities, but politics dictated what they did.
The liabilities and guarantees of the proposed infrastructure bank, and the AFF bonds will be off of the federal balance sheet - identical to what happened with F/F. Every bond that F/F issued said in bold print on the front page: This Bond is not an Obligation of the USA.
Of course the USA was forced step up and assume all $6 Trillion of F/F debt that was issued before 2008. The outcome for the infrastructure bank will be no different. Who was it that said that repeating the same mistake over and over, and expecting a different outcome each time was the true definition of insanity?
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Slightlyskeptical, I'm highly skeptical that such a thing couold ever work. For one, writing down mortgages goes straight to the taxpayers tab. Secondly, who will decide who is creditworthy and who is not? Have you seen the default rate on those that have already gone through the existing wrte down/refinance party? Third, how will this profit the government more than the money they are outright printing now? Do you think they have any intention of paying interest that is above the very inflation they are creating? There is a greater chance of doing the Greek haircut routine than anything that would actually benefit the American taxpayer. We are the sheep to be harvested when the time comes. Any powers we give them hastens the day the butcher shows up for our hide.
That makes too much sense. Of course, the libertarians (like me...) will scream, "Fascism!"
But seeing how the banking authorities and their lobbyist cronies have royally screwed the populace for years and years, leaving them to do their evil business is far more dangerous than having a negative label.
Do the same with the airlines and airport safety but that's where I draw the line.
And the Irish. No Irish!
:/
I will get lonely if you kick me out, Orly. Besides, if the Irish didn't invent Blarney, there would be no functioning political system in the U.S.
Oh, okay...
And the Irish!
:D
Naive only because we do not need more central government control, we need less. Put it in the hands of the Feds and you get the $200 toilet seat syndrome ... $195 goes into the pockets of fat cats.
Therein lies the rub.
In a Pollyanna world, government would be looking out for the people. It's terrible what all this has come to.
:(
Sadly, the mortgages in question are worthless, because any shelter 'value' is conditional (energy availability/dependency, access, location, trade/commerce, water availability, etc).
Re-financing at any price will leave borrowers underwater.
There would be no proceeds to distribute to anyone. One cannot 'fix' a perpetual motion machine, it never works in the first place.
Hmmm. Hey, let's re-finance the cars, then! There's an idea!
:D
When do the tires fly off as we speed down the road with fiat rocket fuel to burn ?
What the hell? Why don't they just print the money to do the projects? I know, I know. Someones got to scam the interest on these bonds. Sorry, I'll get back in line....
Well, the trillion dollar coin got shot down, for now, and the Dems need to keep state and local political machines and public sector unions in the green, right here in the present.
Sounds like this came from a community organizer gone fascist banker.
Dear Lord, this has been a tough 2 or 3 years. You have taken my favorite actor, Patrick Swayze, my favorite musician, Michael Jackson, my favorite salesman, Billy Mays, my favorite actress, Elizabeth Taylor, my favorite singer, Whitney Houston, and my favorite announcer, Dick Clark. I just wanted you to know that my favorite politician is Barack Obama.
They are the same thing. Mugabe went from "community organizer" to "fascist banker" pretty quickly in Zimbabwe.
Did wonders for their economy and currency.
Good Fannie and Baaad Fannie?
That's just too easy for this crowd;)
At least something might get build, and paychecks will be printed. Inflationary, though
yes, because if there's anything holding back the US economy, it's our dreadful infrastructure.
I think we went down this "infrastructure" bullshit before-it enriched the big road contractors, the building trade unions and their honchos, and won swing states like OH because it kept their unemployment down for the election- so basically-it fucking sucked
About time for another unexpected bridge collapse.
"The President's proposals are gimmicks to hide debt." Of course. He may be trying to destroy America, but he's not stupid.
Paper promises Bruce, all of it. Show me the underlying collateral motherfucker.
Look in the mirror, amigo.
You and anyone else who pays tax is fiat's collateral.
Thank goodness for physical assets and a reliable tribe. When fraud becomes the status quo, possession becomes the law. Good luck coming for that collateral when none of us have an "official" wage to tax.
Just another way to print currency. WE NEED TO PRINT MORE! Its very simple, in a debt based system you need to print more, always. Who else to do it better than a .gov sanctioned bank?! If you can fog a mirror you get credit!
What is the big difference between these bonds and the Build America Bonds? It seems re-packaged and re-labeled but nothing much has changed. The money will go into infrastructure, so that's good, right?
If US municipalities are already under tremendous strain, how is it possible for them to underwrite these bonds without some sort of guarantee from the Feds?
Will these bonds be bought by pension funds and if so, is that a good idea?
Inquiring minds want to know...
:D
I say make the passing of the law contingent on the repeal of Davis-Bacon.
wrong, government is always building infrastructure for the last century. if these guys were around when Henry Ford started up they would have built a string of livery stables and nationalized the pony express.
the municipalities are not under strain-but they will put all of dumbfucks that weren't dumb enough to get jobs working for the fucking govt years ago under strain as they ratchet every tax they can to the hilt. and very few cents on the dollar gets out into the public with the "infrastructure" boondoggle-alot of it filters to the building trade unions.
Why would they have to ratchet taxes if they were not under strain?
If they raise taxes, who is going to buy the bonds? Government workers? And if that is the case, isn't that some sort of incestuous symbiosis?
That sounds gross.
:D
Let me guess, 3.75% for a nice 30yr non gubby backed infrastructure bond? Where do I sign up?
As long as they're tradeable, it's the best of both worlds.
another hot potato.
Might be able to coerce the private sector into buying them...think they got their hands full with "wild speculations" myself. Obviously the other side of the aisle would have to have explained "what's in it for them" (aka "the white people") and then the whole shebang would have to be vetted by Wall Street (what isn't to like abou Government guarantees?) clearly the President wants to know "where the Phuck his bridges are" that he said would be built going on 6 years ago. And obviously I don't blame him for that. Life is so much easier if you have a gold standard...or at least "figuring out why that trillion meant nothing" is. All I have to say is "this time with feeling!" annnnnnnnnd....ACTION!
after the great successes achived by the cooperative arrangement among government, banks, realtors, and homeowners, one wishes there could be an arrangement among government, industry, and universities.
http://www.nsf.gov/eng/iip/iucrc/about.jsp
Future H1B's step right up!
But that way, leftist agendae would be codified. Maybe a review board without a liberal bent? More in the middle of the road?