Friday, September 26, 2008

Freddie and Fannie (because its the trendy thing to write about)

I wanted to draw up an analogy between panda bears functioning in the wild who become impotent in captivity and Fannie and Freddie’s stratified existence stretched between natural-free-market signals as a proposed completely government owned status, which I feel is much like wild animals in a zoo. In all reality the more I think about the analogy the more it makes sense: except for the pressure Fannie and Freddie had to decrease interest rates to make housing "more affordable." What does make sense is that a zoo is a place that usually has really wild animals trapped and controlled in small cages where they are given controlled resources and their cages are painted to look like nature. I think that fits perfectly into a representation of how the government treated Fannie and Freddie. They controlled them and did not let natural processes take their toll/role. The most ironic part, which I personally love, is that panda bears have forgotten how to reproduce. This is a perfect representation of how when any entity is pulled away from a grind stone be it natural selection or creative destruction in the market place and brought under the protective wing of a subsidizing branch, like the government or a zoo that entity looses it's natural ability to compete. A firm cannot use price signals or profit measurements to gauge its effectiveness. God knows a panda bear is not even attempting to measure it's effectiveness at staying competitive when it gets into a zoo. I think more likely a panda bear is sitting on its haunches and getting fat. Fact this is probably why people work out. We can rationally process the fact that we are away form the grindstone of natural selection and therefore, on some level, strive to self-enact some force of evolution or betterment. Fortunately for humanely, most of us haven't realized that the only force that can effectively evolve a society is death; those who do try to enact that force again generally get put in prison. On the other hand we have many people who have learned this mechanism works the same way in markets and that it is good for markets to evolve. I only pray they let it happen, less we all end up like impotent pandas in a zoo.

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