Saturday, July 19, 2008

Fannie and Freddie bailout 101

by William L. Anderson

One way to make someone’s eyes glaze over is to explain the various relationships in financial matters. Discussions of swaps, equity, options, short-selling and the like quickly become technical and esoteric, and most people instantly tune out what is being said.

Unfortunately, this situation convinces people that finance is complicated and cannot be understood – and so it must be left to the "experts" who are assumed to know better. Thus, the average person – the taxpayer who will be left on the hook – does not really understand why entities like "Freddie Mac" and "Fannie Mae" are in trouble, and why their "bailouts" are a disaster. They only know that the people who are supposed to be "in charge" of these things are declaring success

For more on this op/ed, go to

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