Commemorating the 1968 anti-Jewish campaign in Poland

Commemorating the March 1968 anti-Jewish campaign in Poland

by Don Hank

The Jerusalem Post recently ran a column commemorating the expulsion of Jews from Poland in March of 1968 in the regime of Wladyslaw Gomulka.

The Jews in communist Poland in 1968 were seen as sympathetic to Israel’s gains in the 6 Day War of 1967, by which Israel seized considerable land, including the Syrian Golan Heights and this angered the communist regime, leading to said expulsion of Jews.

Issues surrounding Israel are always delicate at best, particularly this Six Day War. Note that current Syrian president Bashar Al-Assad’s father Hafez was not yet the leader of Syria at the time of the war, but did side with Russia, which helps explain the Neocon hatred of Bashar Al-Assad today. On the other side of the ledger, Bashar Al-Assad, while still an opponent of Israel due to the loss of territory in the 1967 war, is a stalwart protector of Syrian Christians and other minorities.

Further, in 1994, at President Clinton’s persuasion, his father Hafez had adopted a conciliatory stance toward Israel. Yet when Bashar tried in 2007 to hold peace talks with Israel, the Bush administration took an inexplicable hardline approach. Likewise, Israel rebuffed him with surprising harshness as described here.

QUOTE:

“Attempting once again to break the impasse, Syria’s ambassador to the United States called for talks to achieve a full peace agreement with Israel in late July 2008. “We desire to recognize each other and end the state of war,” Imad Mustafa said in remarks broadcast on Israeli army radio. “Here is then a grand thing on offer. Let us sit together, let us make peace, let us end once and for all the state of war.”

Three days later, Israel responded by sending a team of commandos into Syria to assassinate a Syrian general as he held a dinner party at his home on the coast.”

The first paragraph of the above quote is confirmed here, but this source fills in a missing key fact: the Syrians were offering peace in exchange for return of the Golan Heights to Syria.

The last paragraph of this quoted portion is confirmed by no less than the Times of Israel here.

(Footnote: This bizarre behavior becomes understandable only in light of the US’s petrodollar agreement with the Saudis, by which the US became a de facto mercenary force for Saudi Arabia in exchange for the latter’s propping up the US dollar.  By virtue of its economic and security dependence on the US, Israel is also bound to the same terms, creating a de facto US-Israel-Saudi axis. The Saudis’ Wahhabi sect of Sunni will not tolerate any non-Sunni or secular leader in the Middle East and has enlisted US aid in ousting all such leaders since the mid-60s. Thus you will recall that the attackers on September 11, 2001 were almost all Saudis, who belonged to Al-Qaeda, a Saudi-founded and funded terror group. Yet GW Bush completely ignored these facts and gave the Saudis a pass, apparently believing the US public would never figure out the motivation behind his actions. Be sure your sin will find you out… Numbers 32:23).

Later, in the 70s, Russia staged a similar anti-Jewish purge. These events have led some to consider Russia (and to a lesser extent, Poland) to be anti-Jewish. Yet Putin has traveled to Israel and come back with glowing reports of a prosperous and friendly country. He not only apparently has his own personal positive feelings toward Israel but also knows that Russian Christians consider Israel to be the Holy Land that gave them the Bible and Jesus. Unlike Western leaders, Putin honors the culture and religion of his people. Despite propaganda to the contrary, Christians – whether American or Russian – are the most Israel-friendly group in the world. Putin has also negotiated extensively with Netanyahu, who seems to understand Russia’s potential role as an ally and protector, even as it judiciously maintains a precarious balance between Israel and Hezbollah in Syria.

I was in Poland in the early 70s and heard nothing about this purge. In fact I met Jewish people with important posts in the Polish government.

The point is that it was not the Russian or Polish people who spawned the anti-Jewish sentiment that boiled over in Poland in 1968 and in Russia in the 70s. It was the communist government.

While there are still ultranationalist Russian groups trying to stir up anti-Semitic sentiment, Putin has wisely charted a course that circumvents, and where possible, suppresses these groups. (I watch or read almost all of Putin’s press conferences and speeches and can confirm that no audience member ever asks Putin any anti-Semitic question. It is clear to me that he would severely reprimand anyone who dared to express anti-Semitic views.)

The irony of it all is that the Neocons in the West are trying to minimize, smear and eventually overthrow Putin simply because he will not kowtow to them. Yet they must realize that, should Putin leave office, a real hardline warmonger could come along and replace him. One of the main complaints among the Russians is that Putin is too soft on the West but that is because his is a 100% diplomatic style. I think Putin is by far the smartest statesman the world has seen in a long time, perhaps ever.

Thus the Neocons are on a reckless, potentially suicidal course that could end in WW III, a nuclear one at that.

Donald Trump is the only candidate who does not talk like a warmonger. Ironically, despite all the propaganda to the contrary, the world is probably safer with a Trump presidency.

Revolution USA, repeat history with a twist

by Don Hank

A look back at the French revolution reveals many surprising commonalities with today’s situation in America.

Yet, if the Tea Party Revolution succeeds, it will not be due to a revolutionary mindset as best described by Olavo de Carvalho (my review; full text). It will be the opposite, but with a similar historical lead-up and tactics ( hopefully with less bloodshed).

The main factors in both revolutions are:

Economic

Intellectual

Spiritual

Political

One of the main factors in the French Revolution was an economic one: worldwide famine caused by a weather anomaly. What later came to be known as the Little Ice Age contributed mightily to the timing of the revolution, as detailed by Brian Fagan.

In our case, while there is no famine, there is a shrinking economy, and a looming double-dip recession or even a full-blown depression, as predicted by economist Paul Krugman. Many realize government policy actually caused the initial failure of banks and the consequent economic slide. Most do not.

Regardless of the origin of this current economic malaise, it will eventually parallel the situation in France in 1788/9. Already, the number of unemployment recipients is staggering and is further gnawing at our national treasury, just as the excesses of Louis XV and XVI gnawed at and eventually drained, France’s treasury.

Added to this in France was the intellectual factor, i.e., the wide circulation of the ideas of the enlightenment, which generally called for equality among all people, undermining the notion of divine right of the nobility. In fact, the successful American Revolution added fuel to this equality movement.

But the American Revolution also contributed in a political way to the revolution: In an attempt to vindicate his father’s waste of national funds in the unsuccessful Seven Years War against traditional enemy Britain, Louis XV, Louis XVI, the incompetent king and husband of Marie Antoinette, decided to help the Americans in their war with Britain. Success in that war did not translate into political success for Louis XVI, however, because the aid the French had sent us bankrupted France and further undermined the King’s authority and popularity. Other political factors include the popularity of revolutionary-minded Minister Jacques Neckar and of Maximilien Robespierre. The former’s dismissal gave more fuel to the movement while the latter’s oratory inspired the people to revolt.

It bodes ill for Michelle Obama that her extravagant vacations and leisure life are garnering her the monicker “Michelle Antoinette” – even among Democrats.

It is intriguing that the scenario of the French Revolution is now being turned upside down:

Economically, while most of the ills caused by the government in France were unrelated to the will of the public, the ills in our country were by consent of the governed, who foolishly installed politicians imbued with Keynesian economic ideas. A close look at globalist G.W. Bush, son of globalist George Bush Sr., would have shown us this flaw in his character. Obama, obviously driven by leftwing ideology, could scarcely have been expected to reject the idea of bailouts for banks and businesses, which then could be controlled by the government. This amassing of power in the hands of globalists and Marxists was accomplished by stealth, but it was ultimately the uncritical masses who chose them.

Intellectually, while the ideas that bolstered the French Revolution were strictly leftist revolutionary, the ideas of the Tea Party, promulgated by media personalities and a few politicians, and increasingly, by bloggers and internet activists, are spreading and causing a new kind of movement that could best be called antirevolutionary, if we accept the definition of the Revolution as set down by revolutionaries themselves over the centuries (again, I refer to the masterful work by Olavo de Carvalo).

Spiritually, the French revolution marked an upsurge in the religion of humanism, which has held for centuries, while the tea party revolution marks a turn toward traditional Christian values and beliefs that the French would call “reactionary.” It is no exaggeration to call humanism a religion in this context. The spiritual descendants of Voltaire include Sartre, Camus and a host of artists dedicated to proselytizing for atheistic humanism. A look at French cinema (works like “Jean de Florette,” “The Stranger” and “Madame Bovary,” for example) make this fanatical missionary spirit abundantly clear. Meanwhile, in America, the new heretics, like Jim Wallis and wishy-washy feel-good, “cool” pastors are being rejected for what Americans see as the “real thing,” solid men of God dedicated to the winning of souls from perdition.

Politically, the situation is similar between France then and the US today. The National Assembly in the 1780s had been at loggerheads with the King over issues like equality of taxation (only the commoners were taxed, nobility and clergy were exempted). It was the people against the tyrant at the top. Today we see the will of the people in Arizona, for example, being thwarted by the heavy hand of Obama and an activist court.  In reaction to the general perception of such tyranny, the true patriot tea party candidates (as distinct from the GOP-led imitations) are overthrowing incumbents in many elections. The GOP establishment, even with endorsements from once-popular heavy hitters like Sara Palin and Jan Brewer, is no longer able to sell their wishy-washy candidates at face value. Given the economic climate, the established church is no longer able to sell open borders and amnesty to their parishioners. Even popular icon Ann Coulter can’t pied-piper her followers into accepting a coalition with the homosexual agenda. The establishment is slowly cracking.

Conservatives and libertarians are forming a natural coalition and spreading the ideas of liberty and constitutional government but without the leftwing claptrap.

It is too early to predict anything, but the climate is right for a revolution that is, like the first American Revolution, not a revolution at all but rather a return to common sense, natural law and the God of our fathers.

Bank robbery in reverse

Remember when it was little guys who robbed banks?

By Don Hank

Remember when little guys robbed banks? Well, now big crooked bankers rob us, thanks to the crooks we put in office.

Alternet recently ran an amazing article on the ten most corrupt capitalists. I take issue with the use of the word “capitalists” to refer to people whose behavior is best described by the term “fascist” or, as my UK friends politely say, “corporatist.”

But the point is, as a quick scan of that column shows, if you want to get rich through corruption, the winning formula is to be an investor who is well connected to government officials. The popular bank bailouts, started under G.W. Bush and pursued enthusiastically by the Obama administration, are the quintessence of the concept. The idea is to hit up the taxpayer to make your banking buds richer. Of course, no kickbacks ever occur, because crooked politicians wouldn’t stoop that low.

Most of us are vaguely aware that this phenomenon of government-private partnering as part of a get-rich scheme is not just happening in America. It is all the rage in Europe as well, and the following illustrates to just what extent.

Previously, we had run a German language column (no translation yet) at Laigle’s Forum exposing a giveaway of hard-earned EU taxpayer money to millionaire investors in Panama under the wafer-thin guise of “carbon credits.” I sent the column to a number of outlets and a Swiss publisher asked for permission to reprint it there. Briefly, the column shows that the investors received the cash because they planned to build a hydroelectric plant instead of a coal-fired power plant.

What’s wrong with that, you say?

Two things come to mind:

1—There never have been nor ever will be coal-fired power plants in Panama. Thanks to the country’s rich water resources, rivers brimming with enormous flows and lakes to back them up, anyone proposing the construction of a coal-fired plant would become laughingstock immediately. Therefore, the incentive is not an incentive.

2—The same people who want to give the “carbon credits” to Panama for not proposing a coal-fired plant are keen on distributing “carbon credit” wealth to the Tata company to build a coal-fired plant in Gujarat, India under the paper thin pretext that this plant is more efficient than ordinary coal-fired plants.

In other words, there is always an excuse to rob from the poor to give to the rich. The governments of 2 continents saw how readily we swallowed the warnings that the banks would all collapse without a bailout, and now the sky’s the limit.

Now here comes an even taller tale of poor-to-rich wealth redistribution — but a true one (sorry, I was unable to find an English language report on the web).

The report comes from a small conservative blog but is backed up by facts from German radio/TV giant ARD and the widely read mainstream German daily Welt, and my translation follows:

Banker profits most from bailout?

The billionaire rakes in an additional 12 billion from the billion euro grab in Germany. He’s friends with EU Chief Commissioner Jose Manuel Barroso. Get the picture?

Naturally, the report by the ARD didn’t come out until after mental pygmies in the Bundestag (German Lower House) agreed to the package.

According to the report, the billionaire gets an additional 12 billion euros because ordinary Germans are being forced by greedy hands with long arms and fingers reaching into the multi-billion euro grab bag shoveled in by the Bundestag.  Is it insane to wonder whether money is being transferred to certain parties in Germany from these 12 billion extra euros that the billionaire will rake in? Are we out of our minds to think about a secret ugly but juicy kick-back?

The ARD web site explains the European Central Bank (EU) is buying Greek government junk bonds and that Spiro Latsis, Greece’s most powerful banker, is the chief beneficiary. He owned the government bonds, which fell to a value of zero until the EU bought them back from him at face value. Latsis is a personal friend of EU Commission Chief Barroso, who is one of the decision makers in the bailout process. The conflict of interests is obvious, and the ordinary Europeans who paid the bill now know the story.

Once they have taken our last dime, we may all finally figure things out.

Just don’t expect to get your money back.

The most confused man on the planet

Bailout based on phony “crisis”

Commentary by Donald Hank

I had reported before the first bailout vote that I had called my own bank and asked if I could still get a home-equity loan in the amount of about $50,000.

The loan officer, with just a glance at my records, was able to ok that.

I asked him why they were able to do this at a time when everyone was talking about a credit crunch. He said it was because this bank (PNC) had always been careful whom it gave loans to.

Now an independent analysis shows the whole “crisis” may have been manufactured — or at least blown way out of proportion — by government. Whatever the case may be, it resulted in the election of Barack Obama, whom a majority of voters said they “trusted” to restore the economy — even though it was clear his own party had contributed mightily to the weakening of banks.

Now, the international research and consulting firm Celent, has presented an analysis suggesting the whole “crisis” is bogus.  Independent analyst Cliff Kincaid reports:

“Using charts and graphs of data from the Federal Reserve and other agencies, the Celent study says that statements from Paulson and Bernanke about a “credit crisis” affecting businesses, real estate, banks, and state and local governments were just not true.”

 

Madoff gave huge support to the Left

What a surprise.

While the Left constantly accuses conservative capitalists of being greedy, the world’s biggest rip-off artist of all time (aside from the Social Security Administration) has given almost a third of a million to far-left political candidates and the abortion industry, displaying a clear-cut sympathy for the Left and their vision for America.

America has seen a veritable parade of leftists (both RINOs and Democrats) committing crimes (Blagojevich is only the latest example) but so far shows not a glimmer of understanding that Leftism goes hand in hand with deviant, anti-social behavior, blithely voting for the Left and even believing – on Lord knows what basis – that the Left has the answer to our economic woes.

Read about it here.

 

GW Bush’s “Christian” globalism-socialism gobbledygook

George W. Bush could well be the most confused man on the planet. He calls himself a conservative but never saw a socialist give-away program he didn’t like. Unlike other conservatives, he seems to see the Constitution as more of an obstacle than a boon to his vision for America. He clearly opposes sovereignty for the US and has taken us to the brink of an EU type supranational government, greatly facilitating Obama’s job.

Speaking of the bailouts, President Bush has said that he must go against his free-market principles to save the free market. Even after the banking crisis broke, his HUD web site called for a “Zero Down Payment Initiative” that would have forced banks to require no down payment for loans.

It is becoming abundantly clear that, at the rate government is jettisoning principles, we will soon have no free market left. The government now owns a significant share of banking interests and is greedily eyeing our auto industry. You the taxpayer are a silent – or rather muzzled – shareholder.

Many can’t decide if Bush is a socialist or if he is really naïve. But if he is really that naïve, then he possibly belongs in the Guinness Book of World Records!

Personally, having heard Bush speak, I believe he has a grossly distorted idea of Christianity and thinks that the US government must be kind to the enemies of our people (all but the man who threatened his father), treating them as we would ourselves but treating ourselves like slaves and letting our enemies abuse us. Mainstream “Christianity,” which is little more than a tool of the Left, teaches that nationalism is an evil. This teaching fits nicely with Bush’s notions of globalism (which he inherited from his father), melded with his naïve and distorted “Christian” socialism (a misinterpretation of Biblical precepts concerning the poor), his open-border, pro-amnesty policies and his receptiveness to supranational government. His fairly plain Christian views on abortion and family make him palatable to the Christian “right,” which has no understanding of the Left and their intentions. This group, which talks suspiciously like the “Christian” Left, has shown a dangerous willingness to coexist with socialism and global governance that is, as we speak, resulting in their own irrelevance in world politics.

If my theory is correct, Bush has zero understanding of the Left, which laughs at people like him.

But his policies are no laughing matter.

Just say no to civility

Just say no to civility

Commentary by Donald Hank

Note that almost everything you find on Laigle’s Forum is a counter-attack against  the Left, which seeks to destroy all that is good and decent on this planet, including traditional family, truth and knowledge, the free market (our life blood), population and economic growth and freedom of expression. They have dressed up their monstrous, failure-bound platform to make it palatable to the chronically inattentive and are succeeding, not because they are intelligent, but because so few can see a pattern in their behavior.

Now, mainstream Christianity today believes that any person or group devoted to opposing something is not being “civil.” Note, for example, that Rick Warren justified his participation in Obama’s inauguration on the basis of this notion of civility.

But Jesus was never civil. He was an in-your-face provocateur. Even the early Christians never teamed up with the worldly leaders of their day (be not unequally yoked), and were not civil toward sin. Paul bluntly condemned many specific sins, including those indulged in by the rich and powerful.

William Buckley defined conservatives best when he said it was their duty to “stand athwart history yelling stop!”

That is wiser than most suspect. By definition, conservatism may not stand for any one particular goal, because goals presuppose a movement, and conservatism may not be a movement. Rather it must be an anchor. Except in cases where the status quo is ungodly, it must be an essentially non-moving entity, or a non-movement. But to be effective it must stop other movements that oppose it.

Because of its nature, it has been reluctant to do so. It just wants to exist.

But ironically, if it keeps just wanting to exist, it will very soon cease to exist, because the forces of change are upon us and won’t go away without a fight.

But the end thereof are the ways of the Left…

The Left wants you to believe they are for the oppressed and the downtrodden. Yet their ideological brothers killed 100 million innocents in the last century (see the book “The Black Book of Communism” by Stephane Courtois), most of the victims representing the oppressed and downtrodden classes.

It seems the “beloved leader” of North Korea has a policy of jailing, torturing and then killing not only those he perceives as his enemies but also their children and grandchildren.

Kim Jong Il, the most far-left of all modern leaders, has produced a gulag whose cruelty goes far beyond Hitler, Mao and Stalin, and in fact, beyond anything the human imagination can conceive of.

The evidence that, at bottom, the Left is nothing less than a collective of evil people of murderous intent is abundantly clear when you look at any example of a nation in which the Left has had complete control, unopposed. Ironically, it was a group of French communists who tallied up the body count of communism, showing it to be around 100 million in the 20th Century alone, eclipsing all the killing by all wars and other evils perpetrated by any other group.

Yet, incredibly, the Left goes on unabated and almost without resistance, spreading the absolute malarkey that religion is dangerous, while atheism – the essence of the Left – represents enlightenment.

They point to the Crusades and the 30 Years War as if these were the distillate of what Christianity has produced since the beginning, and when confronted by the inconvenient facts of the slaughter of innocents in leftist regimes, they shrug them off, attributing this cruelty to an aberration, to accidents of human personality.[1]

So what do you say when someone tells you that Christianity is no better than leftism because both Christians and leftists have killed people?

It is true that people calling themselves Christians have done wrong, as have leftists.

But the harm attributed to Christians was done in disobedience to God’s commandments.

The harm attributed to the Left was done in perfect obedience to a humanist system in which there is no absolute commandment, nor is there a concept of absolute right or wrong. In fact, leftism is a system based on “change” or in other words, revolution. By definition, such a system cannot be stable or lead to the stable utopia targeted by its proponents.

Thus, in both systems we have humans imperfectly executing commands. But in one, the humans in charge are, all too often, disobeying God. In the other, they are almost invariably obeying the wishes of imperfect humans, including themselves.

Thus when the humanist system fails, it does so because it was not only executed by humans who believe they are the center of the universe but is designed to be executed on the premise that man is the center of the universe. Thus it is designed for failure.

When a godly system fails, it does so due to disobedience – that is, man behaving in a man-centered manner. It is designed to succeed but fails when its executor behaves like a leftist! Thus Leftism fails when executed both by Leftists and by others (G.W. Bush, for example).

So the question that demands an answer is:

Why choose a man-centered (leftist) system that is not only designed by humans but also executed by humans when you can choose a system that is designed by God and, if executed according to design, will ineluctably succeed?

The Left is the quintessential “patient in charge of the asylum,” but the “right” is so splintered and disarrayed, and currently, so steeped in a hopelessly naïve, smarmy, sentimental version of “Christianity” that they perfectly embody the “ripe plum” that Premier Krushchev predicted would soon fall into the lap of the communists.

 


[1] The Left also muddy the waters by portraying Hitler as a right-winger. In fact, Hitler’s system was based on a utopian vision, a hallmark of the Left.  Hitler denied divinity, jailing and even executing many religious leaders. Note also that the European Right shared a vision of monarchic divine right that was quite alien to Hitler’s utopia.

The lawsuit none dare mention

The lawsuit none dare mention

 

By Donald Hank

People all around the world are concerned about the lawsuit brought by Hillary supporter Phillip Berg, charging Barack Obama and the DNC with improprieties centered around Obama’s apparent inability to prove he is a US citizen, and in fact his having presented patently false documents, making him constitutionally ineligible to become the next president of the United States. The latest development is that the failure of Obama and the DNC to respond to the charges brought under this suit is, legally, an admission of guilt, making him ineligible for the presidency. It’s all over the internet.

But the silence in the media is deafening. None of the talk hosts will touch the story. Neither will Fox News.

Just this morning I received emails from two different Brazilian friends, including philosopher Olavo de Carvalho, whose columns we proudly present at Laigle’s Forum from time to time.

One email says:

Dear Don

Please clarify this: “Press Release: Obama & DNC admit all allegations in Berg v. Obama”? http://obamacrimes.com/index.php/component/content/article/1-main/38-press-release-obama-a-dnc-admit-all-allegations-in-berg-v-obama 

Is this a hoax? If correct, why nobody says anything about it? The ‘official’ great media I can understand but why don’t conservatives like you say anything?

All the best and thanks for any help,

[name of prominent Brazilian activist]

  Continue reading

French mainstream press confirms our assessment of the financial crisis

French mainstream press confirms our assessment of the financial crisis

 

Some American news consumers insist that anything not based on mainstream reports is not worth their while reading. In fact, I just heard Alan Colmes attacking Jerome Corsi on his book The Obama Nation and one of his chief criticisms was that Corsi uses conservative media as factual support.

Now, I have previously refuted at this site the leftist view that our current financial crisis is due to rampant laissez-faire free-market finance. I have shown, based on various sources, that in fact, the blame lies squarely with the government, and particularly with the CRA and its beefed up enforcement under Clinton, and unfortunately, under second-term George W. Bush as well. Certainly, some readers who think like Alan Colmes were skeptical and dismissive of my facts, even though most come from neutral sources.

That is why I was delighted when a French colleague recently sent me an article from the online version of the daily newspaper Figaro confirming my assessment of the financial crisis and its origins.

Now, while the Left in France does classify Figaro as right of center, you need to understand that this is a highly respected century-old publication that enjoys a very large hardcopy readership, with over 400,000 copies distributed and with an amazing 4.224 million unique on-line visitors, making it the number one news site in France today.

By contrast, the newspaper at the other end of the political spectrum, Libération, has a hardcopy readership of only 160,000 and claims only 150,000 visitors to its web site.

Clearly, French readers on both the Left and Right trust and prefer Le Figaro.

 This is why I took the pains to translate Figaro’s recent article “Subprime accused, State guilty” by Vincent Bénard.

This translation is one item you can safely forward to your most skeptical friends.

Donald Hank

 

 

Translation  of :

Subprime: market accused, State Guilty

 
09/09/2008 | Updated : 10:43 |

 

Vincent Bénard, President of the Hayek Institute of Brussels, author of “Le Logement, crise publique, remèdes privés” (Romillat), reviews the subprime lending crisis and takes the side of the free economy when Freddie Mac and Fannie Mae, two mortgage refinancing agencies, are placed under the conservatorship of the United States government.

The cause is understood by many observers: the subprime financial crisis is due to the madness of the markets and shows the limits of unbridled finance.  And they urge more public regulation of financial institutions.

Free enterprise is the whipping boy again, because there is no market more perverted by the intervention of the federal government than that of mortgage credit in the United States.

The two institutions with the cute nicknames Fannie Mae (FNMA) and Freddie Mac (FHLMC) bear a heavy weight of responsibility in the financial unmooring of the American banking system.  The former was initially a government agency created in 1938 by the FDR administration to issue low interest mortgages thanks to federal guarantees, which supplied liquidity to a home loan market at low rates accessible to lower-income families.

In 1968, the Johnson Administration, realizing that the State-guaranteed commitments of Fannie Mae were becoming broader and would be subject to the lending capacity of a treasury department mired in financing the Vietnam War, arranged for it to be privatized.  Then in 1970, the Nixon administration created Freddie Mac to provide a semblance of competitiveness in this mortgage credit refinancing market.

This background provided Fannie Mae and Freddie Mac with a hybrid status of Government Sponsored Enterprise (GSE).  Thus, they were private but legally bound to deal exclusively in home loan refinancing under federal control in exchange for tax breaks.  Worse yet, while being officially private, the two agencies have always been considered – thanks to their public sponsorship and their social role, to benefit from an implicit guarantee on the part of the American Treasury!

Privatized benefits, collectivized losses: such a cocktail was bound to prompt the executives of the GSEs to take excessive risks if the state sponsorship came up short.  This is exactly what happened in the 1990s.  It was reminiscent of a famous French scandal…[The author is referring to the Credit Lyonnais scandal in which the French government bailed out that bank]

The sponsorship of these two enterprises was transferred to the US Housing and Urban Development Department (HUD) in 1992, because that agency wanted to influence GSE-financed loans to satisfy a major objective of any self-respecting politician in America, namely, increasing the home ownership rate among low-income populations, notably minorities.

Thus, the HUD forced Fannie Mae and Freddie Mac to increase both the volume and the proportion of refinanced subprime credits (up to 56% in 2004).  To make matters worse, one of the HUD bosses, fearing that the declaration of risks taken by the two GSEs in order to satisfy these rules, would cause the markets to lose confidence in them, solved the problem by making it perfectly legal for them not to disclose too many details about their exposures.

Thus, using increasingly complex mortgage products, Fannie Mae and Freddie Mac refinanced more than five trillion dollars in credits, or 40% of American homes, including more than half of subprime credits even though they did not have enough of their own funds to commit to such amounts.  As a result, the banks issuing these credits could afford not to be too particular about the loans they authorized, because there were two refinancers on the stock market to back them up.  Countrywide, the bank whose lending policies to lower-income families is now vilified, was incensed only three years ago by the executives of Fannie Mae for their brash subprime lending policies.

But the downturn in the economic boom multiplied borrower defaults, and the two GSEs are threatened with not being able to meet their obligations, which could spread to all institutional investors.  Now the State is urgently calling for their rescue, which will cost the taxpayer several hundred billion dollars.

A second public intervention expanded bank excesses in granting credits to insolvent families.  In the 1990s, studies showed that members of black and Hispanic communities had loan applications turned down somewhat more than whites or Asians, although these refusals only amounted to one application out of four.  Certain lobbies saw in this not a logical reflection of less wealth in these communities but rather proof of purported racism in the financial world.   

An antidiscrimination law of 1977, the Community Reinvestment Act (CRA), was thus strengthened in 1995 to crack down on banks refusing credit to minorities under penalty of greater sanctions.  The banks were thus obliged to partially relinquish the precautionary role they normally play when refusing a loan to a person who is objectively less solvent.  No big deal: Fannie Mae and Freddie Mac were there to refinance these shaky loans!

Today, many experts believe that, without the CRA, and without the GSEs, minorities would have more access to property than they now do, less quickly but more soundly.  By trying to artificially accelerate what the free economy accomplished at its own rate, it was the State that, through both regulations and legislation, led the actors in the credit chain to behave irresponsibly, causing a serious financial crisis and resulting in the failure of many families it purported to help.

Translated by Donald Hank

 


[1]