“So let’s call a spade a bloody shovel: nationalize Freddie Mac and Fannie Mae. They should never have been privatized in the first place. . . . Stop lying about the financial viability of institutions designed to hand out subsidies to favored constituencies. These [government sponsored enterprises] were designed to make losses. They are expected to make losses. If they don’t make losses they are not serving their political purpose. So I call on Secretary Paulson, Chairman Bernanke and Director Lockhart to drop the market-friendly fig-leaf. Be a socialist and proud of it. Come out of the red closet. The Soviet Union may have collapsed, but the cause of socialism is alive and well in the USA” — London School of Economics Professor Willem Buiter, writing in his blog at FT.com.

from the 7/15/08 WSJ Political Diary

HKO Comments:

I think he hits it dead on. The idea of using free market institutions to enforce government policies and programs is fraught with conflicts. As one libertarian scholar once said, “whenever anyone gets in bed with the government, someone gets screwed.”

I have always been skeptical of the often promoted public/private partnerships.

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