Why Freddie Mac & Fannie Mae Collapsed

"The president has asked me to work with Congress to act on this plan immediately," the Treasury secretary, Henry M. Paulson Jr., said Sunday [in above photo, July 13, 2008] on the steps of the Treasury building. "Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form [emphasis mine as a point of this article] as shareholder-owned companies. Their support for the housing market is particularly important as we work through the current housing correction."

While senior Democratic and Republican officials in successive administrations have for many years repeatedly denied that the trillions of dollars of debt Fannie and Freddie issued is guaranteed, the package, if adopted, would bring the Treasury closer than ever to exposing taxpayers to potentially huge new liabilities. The two companies could face significant new losses this year as the wave of housing foreclosures continues. Officials seemed to suggest, however, that they had little choice but to intervene...

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Freddie Mac and Fannie Mae are government sponsored corporations that go back to the 1930's. Freddie Mac (Federal Home Loan Mortgage Corporation) came into being in 1970. Fannie Mae (Federal National Mortgage Association), established as a response to the Great Depression, was privatized in 1968 to help balance the US budget at the height of the Vietnam War. We now have another war that has distracted our attentions to the real problem that never went away.

Most of the various native societies which the European waves of exploration, and later cruel exploitation, traditionally have in common is a ritualized mystical understanding of the interconnectivity of the whole of nature. The local symbols and rituals might look and feel very different, but essentially it is exactly the same symbolic understanding that one finds within the roots of even our own Judeo-Christian/Islam heritage, once we sift away a history of various political agendas that have diluted away perhaps our own biblically-relative reservoir of this mostly unconscious wisdom - a wisdom based on a flow of social evolution that goes back prehistorically. Genetically, and imprinted or expressed in the most ancient recesses of our central nervous system, this "wisdom" theoretically goes back to the most basic one-celled creatures of our oceans over 3 billion years ago, which learned to adapt to and then slowly transform over geological history an environment that would today instantly kill any complex organism. In a more fundamental way, the intuitive wisdom of our deeper symbolic universe expresses how all energy and mass in the universe is inextricably entangled. Carl Jung made a deep study of this underlying wealth of symbolic understanding found within the core of most cultures, and suggested through his theories of psychology that the quest for one's fulfillment can be found by taking a personal, mystical journey to the soul.

Let's for a moment free the "soul" from anyone's local religious and sociopolitical relativity.

Now, it may not make a whole lot of logical sense to a European when a Cherokee sends forth a prayer to the spirit of the white-tailed deer along with the arrow he has sent into its chest. Equally, it may not make scientific sense when a traditional Navajo clan performs rituals that includes returning to the harsh environment of the US southwest symbolic bits of their sustaining corn. Potlatch ceremonials certainly threatened the economic agendas of the Europeans wishing to exploit the resources of the Pacific northwest.  Thus the fledging Canadian and US colonial governments tried banning this Nootka and related societies' practice of wealth redistribution.  In a Potlatch, the wealthy in the local society often gave away some of their most prized possessions, either into a community pool or into a ritual fire, as a way to reduce the local stress of extremes in personal wealth accumulation. In the cultures that evolved out of the Vedic Creation Stories, including Buddhism, the common way in which one greets another holds this old wisdom: "Namaste!" Which is an informal expression of "namaskar,"and means, "The divine in me acknowledges and respects the divine in you." The placing of the right palm (represents divine nature) to the left (represents physical nature) into a prayer pose in these every-day, unconscious greetings among local people symbolizes the integration of this duality of one's true nature. This ancient Indus Valley culture also gave us the concept of "karma," whch is not to be confused with the "cause and effect" mechanics relative to energy systems in physics, though it's a close analogy. If we go back to the more pagan or mystical roots and influences of Christianity, we find the exact same expression. It is these bits of a symbolic universe that helps preserve a memory of how interconnected anyone's activity is within an ecosystem The economic policies that are entrenched in the G-8 is unfortunately but an expression of an old attempt to subjugate nature, the classic "devil or egocentric archetype." At some point in the evolution of the human brain to adapt and survive socially, we met up with the classic issue of either identifying with the ego formation of that brain or the underlying nature of consciousness.

Any social institution - be it religious, scientific or even economic & political – that inculcates this deeper understanding and respect for behavioral patterns that are in harmony with the underlying ecology of nature will naturally yield unfathomable dividends. But since these "dividends" cannot by their very nature "belong" to anyone in particular but to the whole of the temporary natural system that wrought it, this of course threatens the narcissistic point inherent in the economic policies of the G-8, and of course the banking structures that frame these policies.

This echoes also with Socrates' philosophy on economics. He stated that wealth does not produce goodness but that it is goodness which brings about wealth, even in how one's nation accumulates wealth and vitality. Socrates further suggested that goodness consists of caring for one's soul. If one cared for one's soul, one would be intuitively unable to act against the flowing laws of nature. The wealth from investments based on that understanding - which includes what climatology is beginning to teach us and a history of economic collapses, war, intentional ethnic destruction & pandemics... and dark ages that have yet to teach us anything - won't crash like Fani-Mae and Freddi-Mac.

In another article, someone suggested in a comment that with the Internet, perhaps many of the issues now plaguing us will in a few decades become past history, due to the free and almost instant exchange of information. The Internet in effect can become a tool to learn from everyone's mistakes on this planet almost in the moments as they occur. It is that historic inability to link a watershed of past actions with current issues that has plagued western civilization for many centuries, and no economic policy coming from this White House or the G8 has yet figured that one out.

Allied to all this, and I keep saying it and I'm going to again in this article. Simply due to genetics, the female brain better communicates between its hemispheres. As the first comment below suggests, this is perhaps a naturally selected characteristic of that gender most invested in nurturing life into its fullest potentials, ie: to feel the possibilities in the future. The male ego in this gender-equal dynamics ought to be there to protect that essentially female nurturing of the possibilities in the future. We ought to better understand what female intuition is all about, and not feel so threatened by it, but rather learn how to better develop it in the male brain.

Cutting edge research in neurobiology seems to indicate that under the right conditions of nurture through the childhood stages of brain development, these more dense synaptic connections can in many ways be equally expressed in both the male and female brain.  Many societies have incorporated into their cultural patterns the very mechanical processes this requires, such as the meditation and yoga practices of the far East and the rituals and vision quests found in many African and native American societies.... well, in fact, from all corners of the world.  Just like learning to walk, it is a process of continuously but gently pushing the envelope a bit against the resistance of the status quo.  In matrilineal Navajo society, a pregnant mother and all her "aunts and grandmothers" talk to the unborn fetus to explain how the day-to-day activities of home and hearth relate to the cosmos.  This traditional transmission of society's underlying wisdom then continues seamlessly once the child is born. 

I feel quite certain that had something like an ERA succeeded in getting past 2/3 of the US states long ago, many of the issues now threatening society would never have occurred. CG Jung suggested that the very point of human life is to learn how to better integrate within ourselves the archetypal male and female characteristics.  I hope Obama choses a good woman as his running mate.