Vicious Rants of an Angry Yellow Man

Unemployment is rising, the government has to bail out Fannie and Freddy, commanders in Afghanistan are saying that we are not able to hold back the insurgency there. All these are the big news in the last few days. Yet the media and the Republicans are talking about lipsticks on a pig as if this expression have not been used by McCain and Cheney before. People are admiring Tina Fey, I mean Sarah Palin, while ignoring what is really important for our country and the world. Hey, what happened to country first?

The government has now bailed out Bear Stearns, Indymac, and Fannie and Freddie. There are proposals in the works to give auto companies low interest loans. I won't call that a bailout but it will cost the taxpayers. Every time the government and Wall Street tell us that this institution is too important to let fail completely you can be sure they are reaching into our wallets. Well, as I said before with the S@L debacle people never learned from their mistakes if the government is willing to bail them out. They learned that if you get big enough the country will guarantee that you won't die.

Economists point out that investors, many of them foreign, believe that F and F are government enterprises and are backed by the credit of the U.S. So if we let them fail, the confidence in the U.S. will deteriorate and lead to disaster in the financial market. As I wrote in my previous blog, this U.S. deficit is a matter of national security. We are at a point where we have to worry about the sophistication of the foreign investor. Actually I believe overwhelming number of them know that F and F are private companies but they also know that the U.S. will not let them fail. So that's why they invest in them. But the problem is that if the U.S. abandon F and F, the fear is that the foreigners will pull out of the T-bills and T-bond markets leaving us broke. So despite the incompetence of F and F executives, greedy mortgage brokers and home buyers, the taxpayers are the ones left holding the bag.

F and F should never have been government agencies. Their existence have enabled more people to buy houses, sure. But the result is that prices of homes are artificially high as more credits are available because the government is guarnteeing mortgages which private companies will not. They also provide more capitals to banks to loan out, keeping mortgage rate artifically low. It puts people who are not financially stable into homes that are higher prices than they should be. It also help speculators flip more houses. Thus this create hotter markets than possible by true capitalism. Now they are going to decrease the power of F and F when the market stablizes, (who knows when that will be?) Some people are already complaining about this loss of power, particularly Democrat lawmakers like Barney Frank. Well, to me, good riddance, let the market find the right prices and the right numbers of homes purchase without this artifical help from the government.

How are we going to do all these bailouts and still give tax cuts as both candidates claim? Our deficit is 10 trillion. It seems everyone is still wanting to get a tax cut. Remember the rebate we had this summer? That's essentially a tax cut. Did it do anything for the economy? So to believe that a tax cut will solve our problem is nonsense. We may get out of this depression eventually but this deficit is going hurt our long term economy, it will be passed on to our children and grandchildren, and it will hurt our national security. Still not too late for all you "country first" folks to sign on my plan to reduce our deficit. (See previous blog)