Friedman in the News

Fannie Mae seeks $15.3 billion more in aid: Fannie Mae needs another 15 billion dollars worth in federal assistance, which brings them to a total of already 75 billion dollars. Along with needing more money, Fannie Mae was previously warned of their losses, and it will continue into 2010. Not only is Fannie Mae having issues but their sister company Freddie Mac “is turning out to be one of the most expensive aftereffects of the financial meltdown”. With both companies the total bill will be around 126 billion dollars. Unemployment is still high, and millions of people are still losing their homes through foreclosure “Fannie Mae reported Friday that it lost $74.4 billion, or $13.11 a share, last year, including $2.5 billion in dividends paid to the government. That compares with a loss of $59.8 billion, or $24 a share, a year earlier”. Fannie Mae was seized by federal regulators in 2008 and at the end of 2009 the Obama administration promised to cover their losses until 2012. Fannie Mae and Freddie Mac play an extremely important role in the mortgage market; they purchase and sell nearly half of all mortgages. Since the real estate market crashed, they have really been suffering “During the most recent quarter, Washington-based Fannie suffered $11.9 billion in credit losses and a $5 billion write-down for low income tax credit investments”

Friedman believes in separate economic and political activities. He believes the economic freedom in an overall part of total freedom. If you don’t have a free economy you don’t have freedom, and economic freedom leads to political freedom. Friedman believes that the economic and political system are not separate, they are a conditional relationship. The example we used in class is that people who have more money tend to have more freedom then those who don’t have money.

Ethical issue: If economic and political systems are separated, what happens when such companies like Fannie Mae and Freddie Mac need some kind of loan?

I believe that Friedman would not be against giving loans to such companies as Fannie Mae and Freddie Mac. Friedman believes that government should be dispersed, he imagines a fifth branch to the government, that an economy will serve to limit and disperse, the more freedom we will have , it will then limits governments influence. Friedman also believes that the government plays the role of the umpire. The government is there to regulate and serve the economy.

Marx in the News

On February tenth public service civil servants went on strike across Greece. It was a one day strike against rigorous measures; officials stated that it was essential against their financial crisis. The article Greek Civil Servants Strike Over Austerity by Dan Bilefsky talks about how Greece has been under pressure from the European Union to cut most of their high budget’s. Greece is in danger of “failing to refinance some $28 billion in debt” ( Bilefsky, 2010). One out of three people are employed in a civil service. Civil service offers Grecian’s a job for life, but now they are being face with economic problems and “had exposed a general ignorance about the harsh realities of the global economy” (Bilefsky, 2010). Protesters stated that they are fully aware that they need to make sacrifices or going against their socialist Prime Minister where as others were hoping that the European Union would come and rescue them. This economic issue is not just effecting Greece but now is spreading to Spain and Portugal where they fear that budgets will not be trimmed. The government has frozen workers salaries but the government has publicized a 2.75 billion in public spending cuts “It also aims to raise $6.87 billion more from new taxes and measures aimed at fighting tax evasion, which analysts said deprived the federal budget of $44.2 billion last year” ( Bilefsky, 2010). The Greek government also introduced a higher gasoline tax.

Marx’s ethos is grounded in self- interest. It is guided to the productive power of labor who’s division will lead to a general opulence and civil law and order. Marx has three main points to his philosophy and Greek Civil Servants Strike Over Austerity covers his third point increase in production leads to a decrease of workers. The government is not spending money properly which leads to an increase of production and a decrease in workers. Lower cost of productions lead to the depreciation of labor value that leads to the division of labor which leads to wages to go down, that leads to unemployment and unemployment leads to undercutting of each other.

People need to survive, but with wages being cut people are being alienated and are only receiving enough to live. They are not receiving enough money to survive. Government spending is finally catching up to them and they are not able to give out the funds that need to be given out. The Greek civil servants will do anything to work because they are not making enough money, so they are reaching out to other Europeans nations because they need their help.