Quick hits on the Fannie Mae/Freddie Mac bailout

Posted By Daniel W. Drezner Thursday, September 11, 2008 - 2:02 PM Share

My latest Newsweek International column is online -- it's a quick take on the global implications of the Fannie Mae/Freddie Mac bailout. Here's the opening paragraph:

The U.S. Treasury Department's takeover of Fannie Mae and Freddie Mac is one of those mega events that simultaneously calls for instant analysis (and lots of it) and time out for a deep breath or two. The move is so vast in its implications and says so much about how the world has changed, it's about as hard to take in as a view of the grand canyon. In the spirit of deep breathing, here are four thoughts to keep in mind about the buyout.

I think there's something revealing that I thought I was doing instant analysis, while my editor thought it was deep breathing. Read it for yourself and let me know which it is!

EXPLORE:ECONOMICS, GLOBALIZATION, INTERNATIONAL RELATIONS, HOUSING CRISIS

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DON STADLER

8:23 PM ET

September 11, 2008

My bull???? meter went off

My bull???? meter went off when I read this:

"During Cold Wars, countries desperately try to avoid economic interdependence."

How many 'Cold Wars' have there been? I'd argue for at least two - the post WWII period and between Germany and France after the Franco-Prussian war. There were plenty of economic ties betwen the various powers before WWI, not excluding France and Germany. Not to mention growing economic ties between the USSR and western Europe post 1970.

Neverthe less you my be correct - this is not a Cold War and is unlikely to become a full-scale Cold War. Not so much because of economic ties as because the major threats to Russia do not lie in her west with Europe and the US. China and the Islamicists are the major threats. The chances are good that Russia will ultimatelly decide t warm relations with the west.

BRAD SETSER

3:44 AM ET

September 12, 2008

dan -- you knocked about

dan -- you knocked about $200b off the US current account deficit. last I checked it was still around $700b on pretty much any metric you wanted to look at (and certainly on a rolling 4q basis) -- we will get new data soon, but $500b is a low ball number. we may get there next year if oil keeps falling, the us economy remains in the dumps and us interest rates stay low, but we aren't there yet.