I like Jim Henley’s one-liner: “Wouldn’t it save administrative costs if I just started giving my money to random rich people?”
(H/T: Outside the Beltway)
bailouts
Posted by E!!
on September 22, 2008
Congress, Economy, Fleecing the Taxpayers, Housing, Moral Busybodies, Not Good, Washington D.C., government bailouts / 3 Comments
Congress, Economy, Fleecing the Taxpayers, Housing, Moral Busybodies, Not Good, Washington D.C., government bailouts / 3 Comments
With the takeover of AIG, the federal government has wangled its fourth major bailout and taken control of its very first insurance company.
Both McCain and Obama have called the bailouts of AIG, Fannie Mae, Freddie Mac, and Bear Stearns “necessary measures.” McCain blames greedy Wall Street tycoons while Obama blames failed GOP policies.
Most sensible folks agree that the government’s implicit guarantee to Fannie Mae and Freddie Mac were a license to lenders to run rampant. Fannie and Freddie were able to buy bundles of home mortgages and/or mortgage-backed securities in massive quantities without contemplation of the financial risks.
Some economists blame the regulators/regulations. I disagree. The financial industry is heavily regulated. It was the government’s guarantee of Fannie and Freddie that emboldened lenders to put together dicey loans and encouraged undisciplined financial endeavors.
Government policy laid the foundation of the mortgage crisis more than three decades ago when Congress passed the Community Reinvestment Act of 1977. The law forced banks to loan money to low-income borrowers in order to meet the “needs” of the local community.
No worries, though. The banks knew they could sell off those loans to Fannie or Freddie, and F & F knew they could buy those loans with little regard for the risk.
I’m reminded of the past weekend here in Las Vegas when a few enthusiastic friends (first time visitors) went out and hit the blackjack tables.
A young man playing two hands was dealt four sevens. A friend advised him to split and play four hands. Pondering the risks, he hesitated – but the helpful friend offered to cover his losses and let him keep all the chips if he won.
What do you suppose that young man did?
He behaved as anyone would: he played all four sevens. And, unfortunately, lost on all.
So it goes on the tables of Sin City. So too, in Congressional corridors and bank board rooms.
Posted by E!!
on September 21, 2008
Corruption and Greed, Economy, Fleecing the Taxpayers, Government Spending, Housing, Liberty, Moral Busybodies, Not Good / No Comments
Corruption and Greed, Economy, Fleecing the Taxpayers, Government Spending, Housing, Liberty, Moral Busybodies, Not Good / No Comments
George Will recalls how in 1983 the U.S. government created Fannie Mae to advance its objective of increasing homeownership among Americans.
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In the midst of the dialectic maelstrom re: government bailouts (housing, investment banking, and now the auto industry), it is worth noting that if the matriarchal Nanny State had not baked her sugary, icing-laden Fannie Cake for the homeowner-less masses in the first place, we would not be suffering from these terrible stomach aches today.
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The creation of a quasi-governmental agency that implicitly guaranteed its obligations vis a vis the cash coffers of the American taxpayer so egregiously violated free market principles and common sense that I can scarce fathom how anyone thought it was a recipe worth mixing up to begin with.
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When a legislative prescription calls for one part socialism, we should tear the page to pieces while muttering, “We don’t serve that poison here.”
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I am reminded of this quote:
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”No man’s life, liberty, or property are safe while the legislature is in session.” – Mark Twain (1866)
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I shall now go chew on some Pepto tabs and try to quell this ache in my gut…
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(Hat Tip for the Twain quip to this list of 99 great libertarian/free market quotes by the guys over at All American Blogger.)
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(NOTE: The cooking analogies are dedicated to my new friend Kat who is a healthy cooking expert and the lovely much younger trophy wife of Blue Collar Muse. When she gets her blog up and running, I will link it up.)
