Has America created its own variety of communism with the U.S. Treasury Departmentâs bailout of two beleaguered government-sponsored enterprises (GSEs), Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE)? According to Rogers Holding CEO Jim Rogers, the answer is yes.
âAmerica is more communist than China is right now,â Rogers told CNBC Europeâs âSquawk Box Europeâ September 8. âYou can at least have a free market in housing and a lot of other things in China. And you can see that this is welfare for the rich. This is socialism for the rich. Itâs bailing out the financiers, the banks, the Wall Streeters."
Rogers, known for launching the Quantum Fund with left-wing heavyweight George Soros, said the bailout was not benefiting homeowners or helping average citizens improve their standing for a home mortgage.
âItâs not bailing out the homeowners who are in trouble, by the way,â Rogers said. âItâs not bailing out people who want a mortgage â itâs just bailing out financial institutions. This is not my idea of the way things are supposed to be, but if thatâs what America wants, you know, it can elect people who are going to do it. I think itâs a mistake.â
The Rogers Holdings CEO had little confidence that Democratic presidential nominee Sen. Barack Obama, Ill., or Republican vice-presidential nominee, Alaska Gov. Sarah Palin, would be able to do anything to steer Fannie or Freddie on a more stable path.
âThis is a big huge mess and neither one of them has a clue as to what to do next year,â Rogers said. âBank stocks around the world are going through the roof, thatâs because theyâve all been bailed out. You donât see the homeowners in Kansas going through the roof because theyâre not being bailed out.â
Rogers had previously called for Fannie and Freddie to be allowed to go bankrupt. âThey should not be bailed out,â he told âWorldwide Exchangeâ July 15. âThis is outrageous. Who are these people who are taking our money and doing this and ruining America?â
âLet the patient go bankrupt,â he said. âWe have courts in America; they will be reorganized.â
Fannie Mae and Freddie Mac were âwove a mantle of invincibilityâ through lobbying according to a September 8 Wall Street Journal âDeal Journalâ blog post. According to the Journalâs Heidi N. Moore, the mortgage giants had $170 million in lobbying bills in the past decade and spent $3.5 million on lobbying just in this yearâs first quarter, spreading their largesse among 42 outside lobbying firms.
Earlier on September 8, CNBC âMad Moneyâ host Jim Cramer called the bailout âa homerun planâ on MSNBCâs âMorning Joe.â
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