MSN and The Economist point out the deep flaws of the bail-out fund backed by Treasury Secretary Henry Paulson that would try to artificially prop up the value of mortgage-backed securities. The fear motivating the bail-out fund is that if the banks and investment firms unload their mortgage-backed securities during the mortgage meltdown, the low prices they’ll get will reveal just how worthless many of the securities they hold are, and result in their net worth being revealed as much less than they publicly claim. It brings back memories of Enron. Bill Fleckenstein of MSN calls it a “super-duper bad-loan bailout scam.”
If the Treasury Department hoped its meddling would reassure the markets, it failed. As the Economist notes, “stockmarkets fell on the day of the announcement. To some, the Treasury’s participating signalled that things were worse than feared.” It was the same kind of clumsy attempt to manipulate the markets that occurred during the Hoover Administration and the first couple years of the Roosevelt Administration, which exacerbated and lengthened the Great Depression.
We’re not in for a repeat of the Great Depression — especially since many of our trading partners are doing quite well — but a recession is possible, and government meddling that vainly seeks to prevent a market correction will only make it worse.
CEI’s John Berlau wrote in the Wall Street Journal about how federal agencies contributed to the mortgage bubble and the proliferation of fraudulent mortgages. I have previously written about the mortgage meltdown, and how the very lenders that today are faulted by government officials for overlending and “predatory lending” to people of modest means were earlier faulted by government officials for not making enough loans and for supposedly not giving enough mortgages to members of certain groups (“redlining”).
RSS Updates 
RSS E-Mail Updates 
Twitter 
Facebook 
CEI.org 
WorkPlaceChoice.org 
GlobalWarming.org 
CEI On Demand Video 
Liberty Week Podcast 
{ 1 comment }
One of the most watched events in recent television programming was the presidential debate, “town hall†style. Like many other Americans, I tuned in to watch despite my disillusionment with American government over the last couple of decades. I watched it without many expectations, knowing that no matter how direct a question was asked, the responses would be somewhat non-committal, and sound bite ready. The major news journals in the United States were certainly taking notes, as the New York Times depicted the debate as “90 minutes of forced cordiality†and the Boston Globe stated that it was “mercifully free†from the personal attacks I was beginning to get used to and tired of. It certainly was full of tension and made for good T.V., to say the least. McCain continues to pursue policies nearly identical to George W. Bush despite his “maverick†status, such as off shore drilling and staying the course in Iraq. (The irony is astounding: what makes him a maverick is that he wants to do the same things as one of the most unpopular presidents in living memory. The BIG joke is that he is rebelling against the American public.) Obama relied heavily on criticizing the Republican Party, stating that they were the ones that created this mess and he’s going to get us out of it. If we had to go by what they actually said, there’s no telling just which one is the best for getting our economy out of these turbulent times. Obama’s position on “predatory lending†is not a good solution – it’s sure to lead to more unemployment – is more a declaration of intent to appease the banking industry.
Post Courtesy of Personal Money Store
Professional Blogging Team
Feed Back: 1-866-641-3406
Home: http://personalmoneystore.com/NoFaxPaydayLoans….
Blog: http://personalmoneystore.com/moneyblog/
Comments on this entry are closed.