Because no one seems to know how to cut a budget, I thought I would start with the part that threw our markets into a tumble in the first place. Freddie Mac and Fannie Mae were originally government sponsored entities meant to provide backed mortgages in a pool to make affordable housing for the moochers. To add insult to injury, In the 1990’s, the government changed acceptable mark to market accounting practices to disallow “redlining”certain areas.
This prevented the market from using an assessment tool that is needed to value these mortgages. Ergo, the banks had to take on very risky loans which in turn forced them to turn to creative accounting to make the books look green. At a certain point, when you put too much crap on your credit cards, you are upside down.
So, the idiot Congress back in 2007 decided to absorb these corrupt utopian programs from 1938 and the 1970’s into the Federal Government. This in turn became TARP1 and TARP 2 to replace the bad loans the government forced the banks to take in the first place. Then Frank n’ Dodd made a bill that sucked and really did not help.
Freddie Mac and Fannie Mae just asked for more billions.
The lesson of the story is for every action, there is a reaction and everything Government is a Ponzi scheme from hell.
Conrad Black weighs in.
08/15/11 – The Supreme Court is on it now.
08/30/11 – The Atlantic shows how the government interference created a two tier housing market.
09/02/11 – So the idiot US government forces banks to make risky investments and then sues them over it? I can’t see that. Judge needs to throw that nonsense out and find the US Government (Our Federal Family) liable for ALL damages. I would swear we are living in a banana republic right about now.