In his 2011 book, "To Save America", GOP presidential candidate Newt Gingrich wrote the following (from Bloomberg):

[The two companies, Freddie Mac and Fannie Mae] “are so thoroughly politicized and preside over such irresponsible lending policies that they need to be replaced with smaller, private companies operating without government guarantees, whose leaders focus on making a profit, not manipulating politicians".

I certainly agree with that. As I've detailed on this blog, government manipulation of the mortgage market is what led to our current financial crisis. The government created the housing casino market over a period of many years.

But Newt has some 'splainin' to do to Republican primary voters, and most especially to Tea Partiers who want to dismantle the ties between government power and private enterprise that transform free markets into government-manipulated markets, resulting in markets driven by politics rather than sound business decisions. Newt has to explain why his consulting firm, The Gingrich Group, was paid between $1.6-$1.8 million over a period of eight years for consulting services Gingrich rendered to none other than Government Sponsored Enterprise (GSE) Freddie Mac. Freddie and big sister GSE Fannie Mae got into big trouble in the housing market, and the taxpayers have bailed them out to the tune of $150 billion and counting. Fannie and Freddie are both asking for more bailout money, even as Congress is slamming F&F for paying millions of dollars in bonuses to F&F executives, as F&F lives on the taxpayer dole. F&F are poster children for crony capitalism.

Gingrich had this to say about some of his consulting fees from Freddie:

When asked at the debate what he did to earn a $300,000 payment in 2006, the former speaker said he “offered them advice on precisely what they didn’t do,” and warned the company that its lending practices were “insane.”

If that's true, good for Newt…but unnamed Freddie Mac officials are disputing that account:

None of the former Freddie Mac officials who spoke on condition of anonymity said Gingrich raised the issue of the housing bubble or was critical of Freddie Mac’s business model.

We should withhold judgement until we find out who these anonymous Freddie Mac officials are. After all, Gingrich is running for President, and the anonymous officials could be Democrats looking to derail Gingrich's presidential train. We've already seen what happens to GOP presidential contenders when they make a significant showing in the polls. When Perry was riding high, there was the ridiculous charge about the racist word on a rock at his family's hunting lodge in the 1980's. When Cain reached the top, all of a sudden 14-year old charges of sexual harrassment arose. And how many more times does the media have to discuss the fact that Romney is a Mormon ? That has become particularly nauseating.

There is one former Freddie official who has spoken about Gingrich's work with Freddie on the record:

Gingrich’s first contract with the mortgage company was in 1999, five months after he resigned from Congress and as House speaker, according to a Freddie Mac press release.

His primary contact inside the organization was Mitchell Delk, Freddie Mac’s chief lobbyist, and he was paid a self- renewing, monthly retainer of $25,000 to $30,000 between May 1999 until 2002, according to three people familiar with aspects of the business agreement.

During that period, Gingrich consulted with Freddie Mac executives on a program to expand home ownership, an idea Delk said he pitched to President George W. Bush’s White House.

“I spent about three hours with him talking about the substance of the issues and the politics of the issues, and he really got it,” said Delk, adding that the two discussed “what the benefits are to communities, what the benefits could be for Republicans and particularly their relationship with Hispanics.”

That sounds like a pretty far cry from Gingrich calling Freddie policies "insane", and it's no secret that Bush was on board with the goal of increasing home ownership as part of his Ownership Society initiative.

The Bloomberg account makes it clear that Gingrich was never a lobbyist for Freddie Mac, but in the early years of his association with the GSE, it sounds like Gingrich wasn't raising any red flags. It sounds like he was working in concert with Freddie Mac's goals.

As for the later years of Gingrich's Freddie association:

Former Freddie Mac officials familiar with his work in 2006 say Gingrich was asked to build bridges to Capitol Hill Republicans and develop an argument on behalf of the company’s public-private structure that would resonate with conservatives seeking to dismantle it.

He was expected to provide written material that could be circulated among free-market conservatives in Congress and in outside organizations, said two former company executives familiar with Gingrich’s role at the firm. He didn’t produce a white paper or any other document the firm could use on its behalf, they said.

Gingrich's mission was to "build bridges" with disapproving conservatives of the wisdom of Freddie's policies ??? Hmmm. It seems to me that Gingrich SHOULD HAVE BEEN one of those disapproving conservatives.

In summary – AFTER the housing meltdown, Newt Gingrich became a big critic of Fannie and Freddie's loose lending practices. Lots of politicians with their fingers in the wind fall into that category, and we shouldn't trust them for obvious reasons. Newt's problem is, he might be one of them.

One of the mysteries of this election cycle is how Rep. Barney Frank (D-MA) could possibly be leading his congressional opponent, Sean Bielat (R-MA), by 13 points in the polls. I confess I know next to nothing about Bielat, but I do know a lot about the incumbent Frank. Given this knowledge of Rep. Frank, unless Bielat opens his rallies with 'Sieg Heil' or 'Praise Lucifer,' I have to question the sanity of the Massachusetts voters.

A brief history. Barney Frank was at the forefront in pushing the quasi-government enterprise Fannie Mae to get involved in more and more questionable mortgage loans prior to the financial crisis. He resisted all attempts to rein in the systemic risks associated with Fannie Mae's activities, despite repeated warnings. I submit the following video as a memory refresher (for Democrats):

Notice who WAS trying to regulate Fannie Mae and who WASN'T. It flies directly in the face of the liberal claim that the Republicans were anti-regulation. In fact, Republicans were the almost the ONLY ones trying to regulate Fannie and deal with the systemic risk during the Bush years. The Republicans could not, however, overcome the objections of a unified Democratic party against them and get a regulatory bill passed. Nothing happened, and the mortgage meltdown is now history.

Barney Frank's gay lover was a Fannie Mae executive from 1991 to 1998:

The two lived together in a Washington home until they broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae, where he was the assistant director of product initiatives. According to National Mortgage News, Moses "helped develop many of Fannie Mae’s affordable housing and home improvement lending programs."

Critics say such programs led to the mortgage meltdown that prompted last month’s government takeover of Fannie Mae and its financial cousin, Freddie Mac. The giant firms are blamed for spreading bad mortgages throughout the private financial sector.

Although Frank now blames Republicans for the failure of Fannie and Freddie, he spent years blocking GOP lawmakers from imposing tougher regulations on the mortgage giants. In 1991, the year Moses was hired by Fannie, the Boston Globe reported that Frank pushed the agency to loosen regulations on mortgages for two- and three-family homes, even though they were defaulting at twice and five times the rate of single homes, respectively.

Three years later, President Clinton’s Department of Housing and Urban Development tried to impose a new regulation on Fannie, but was thwarted by Frank. Clinton now blames such Democrats for planting the seeds of today’s economic crisis.

"I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was president, to put some standards and tighten up a little on Fannie Mae and Freddie Mac," Clinton said recently.

After being instrumental in blocking regulation over two presidencies, guess who Barney Frank blamed for the lack of regulation, the mortgage meltdown, and the subsequent financial crisis ? If you said "right-wing Republicans," as Thomas Sowell pointed out in his recent column titled, 'Is Barney Frank ?', you win a cigar (one never used by Bill Clinton on Monica's Lewinsky). In his column, 'Is Barney Frank ?: Part II', Sowell shows further the depths of Frank's deception:

When federal regulators uncovered irregularities in Fannie Mae's accounting, and in 2004 issued what Barron's magazine called "a blistering 211-page report," Barney Frank lashed out — not at Fannie Mae, but at the regulators who uncovered Fannie Mae's misdeeds. He said "a leadership change" in the regulatory agency was "overdue."

Rather than regulate Fannie Mae, Barney Frank wanted to fire the regulators who uncovered Fannie's wrongdoings. This idiot's actions abetted criminality.

Fast forward to 2010. Guess who is the Chairman of the House Financial Services Committee today, the committee that oversees the mortgage and banking industry ? Yes, kiddies, it's STILL Barney fricking Frank, despite Frank's record of aiding and abetting the financial meltdown. Un-be-liev-able. Rewarding absolute failure must be a plus for Democrats these days.

Now that the you-know-what has hit the fan and the American economy crashed and burned in large part due to Frank and his merry band of regulation resisters and bad mortgage pushers, Barney Frank is singing a brand new tune, even though the finanial regulation reform recently passed by Congress and signed by Obama did nothing to regulate Fannie Mae. Frank counts on you forgetting all about the old tune he sang for the last two decades. Now Rep. Bawney Fwank says he wants to abolish Fannie Mae and her little brother Freddie Mac, just in time for the ELECTION. How convenient:

In an appearance on Fox Business Network tonight, Frank said they should be replaced with new programs to support affordable rental housing.

"I think they should be abolished," Frank said. "The only question is what do you put in their place. This is a situation where given the importance they had come to play in housing, you can't tear down the old jail until you build a new one. And that's a process that we've started."

Frank went on: "I have been very critical for a long time that not everybody should be a homeowner. There are people in this society who for economic and frankly social reasons can't and shouldn't be homeowners. I do want some government help to build affordable rental housing."

"There were two problems with the housing market," Frank said. "People were making loans that shouldn't have been made, and Fannie and Freddie were then buying those loans in the market. One of the things we have already done is to take every possible step to stop the bad loans from being made."

Translation – When Frank says he has been very critical for a long time that not everybody should be a homeowner, he means he turned on a dime after the housing crash and is hoping nobody notices what he said and did for all those years before. He hopes nobody notices that Barney Frank led the charge to our mortgage meltdown. Thanks to our lamestream media, lots of people don't know. Barney Frank is emblematic of everything that is wrong with Washington D.C. He couldn't tell the truth if his hair was on fire. He lies, misdirects, never accepts responsibility, and has absolutely no problem with being so profoundly dishonest. He is an amoral slug who would say or do anything to keep himself in power.

And the Massachusetts voters are about to re-elect him. It's astonishing.

Btw, the bailouts of Fannie Mae and Freddie Mac have cost taxpayers nearly $200 billion so far. The final cost could go as high as $363 billion over the next three years, according to the agency overseeing those entities, making Fannie/Freddie the single largest bailout hit to the taxpayers by far. Thanks, Barney.

Housing sales fell 27% last month, the biggest drop in 15 years. The official unemployment rate is 9.5% (the real unemployment rate is over 16%, and may be much higher), and weekly unemployment claims rose to their highest level since last november. This year's federal deficit is expected to be $1.3 trillion, the second trillion+ dollar deficit in a row. The country is over $13.2 trillion in debt, the largest dollar debt in American history by far, and it is growing by leaps and bounds. The CBO calculated that President Obama's budgets will add $9.5 trillion to the debt over a decade, over twice as much as any previous admiistration. Most of the states are broke. We are drowning future generations in staggering debt, and we still have $55 trillion in unfunded future entitlement liabilities to deal with, plus ObamaCare looming on the horizon to drastically increase Medicaid spending. The Democrats are looking to impose the largest tax increase in history at the end of the year, during a very weak economy, the weakest in nearly 30 years. Then Obama wants to impose Cap-And-Trade to drive up everyone's energy bills, to "skyrocket" the price of electricity, as Obama said himself. It's almost as if he intends to ruin us. The Democrats are throwing one overhand right after another into the face of our economic futures.

Everybody agrees Obama's stimulus plan didn't have it's intended effect. The White House claimed the stimulus would keep unemployment below 8%, and the Gaffemaster General, VP Joe Biden, said in this "recovery summer," we'd be adding 500,000 jobs per month by now. Clearly, the stimulus didn't come close to those numbers, but borrowing $800 billion to throw around did have some effect. Nobody could spend that much stimulus money with NO result, not even Obama and the Dumbocrats. The problem is, almost all of the stimulus spending only has a temporary effect. When the artificial borrowed stimulus bump runs out at the end of the year, we'll face our ACTUAL economic state (and we'll be another trillion deeper in debt to boot). With economists forecasting flat growth or even a double dip recession THIS year, what will happen when the stimulus funds run out ? Some even think we're in a depression, and point out some comparisons between the Great Depression and now. Not surprisingly, investors are growing wary of the stock market.

The government is running out of avoidance tricks. We can't put interest rates much lower, we can't keep borrowing money to artificially prop us up, and the fed can't print more money to escape reality.

Recovery summer has become recovery bummer, and recovery future is looking more like future shock, when the irresponsibility of these insane fiscal policies (which are actually a lack of fiscal policy) will have to be faced. As they say, "you can run, but you can't hide." We can't hide from our fiscal sins forever. We can only run temporarily, as Obama is doing now. Soon, we'll be out of breath from running, and big bad Mr. Reality will catch up to us. That will be the moment the full weight of our fiscal folly descends down upon us.

All this news led Gaffy Biden to say yesterday,, "no doubt we're heading in the right direction."

Really, Joe ? Then just what in the hell would be the wrong direction ? Mass suicide via poisoned Kool-Aid, or what ? Gaffy must come from the Jim Jones school of economics. Jones wanted to create a socialist paradise on earth too. It didn't work out quite as planned.

Not that I'm pessimistic or anything. I do have a solution – counterfeiting. Print your own money. That will work, and if you get busted, to paraphrase the great economist Thomas Sowell, just tell the feds you weren't counterfeiting, you were engaging in monetary policy. That's what the Federal Reserve calls it when they print money backed by nothing.

Alternately, we could get Congress to start behaving responsibly, but what are the chances of that ?

Democrats have been telling us that Harry Reid's comments about President Barack Obama were NOT racist. Reid said Obama could become President because he was "light skinned" and had "no Negro dialect unless he wanted to have one." Dems also tell us that Bill Clinton's remarks about Barack Obama were NOT racist. Clinton told Ted Kennedy that "a few years ago, this guy [Obama] would have been getting us coffee." Dems also tell us that VP Joe Biden's comments about Obama were NOT racist. Biden said Obama was "clean" and "articulate." In trying to make sense of these new standards for non-racism the Democrats have created, it suddenly hit me…..I am light skinned with no Negro dialect unless I want to have one (aka, white). I'm also clean, articulate enough, and I know how to make coffee……………..OMG ! I'm qualified to be President Of The United States ! Plus, I have a few qualities our current Prez does not have. I have worked extensively in the private sector and have run a successful business. Holy cats ! Maybe I'm OVER-qualified.
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For anyone who did not see John Stossel's program about crony capitalism on the Fox Business Network last night, you really missed something. The program will air again on friday. Don't miss it, even though the depravity of our federal government, exposed by Stossel, might make you ill. You will see how big government works hand-in-hand with big business to distort the free market, discourage innovation, beat down the little guy, and rape the taxpayers in the process. You will see how the government picks winners and losers in business. Some of the winners are – big tobacco, big pharma, big health insurance, one window company over all the others, big toy companies. See how big business writes the government regulations that benefit themselves. It is absolutely perverse, and as always, the ONLY solution is to limit government power over our lives.
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Related to Stossel's story about crony capitalism, some people might want to rethink labeling President Obama as a socialist, or at least amend it. In light of how Obama and company are either taking over or micromanaging business and the market, consider the following definition (which doesn't apply only to Obama and the Democrats, not by a long shot. That party called the Republicans does it too).

Fascism – a radical and authoritarian nationalist political ideology and a corporatist economic ideology.

Sound familiar ?
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After the government bailed out every big business in sight over the last 16 months or so (see – fascism and crony capitalism), President Demagogue Obama gave a speech last night where he pretended to be a friend to the people (lol) by calling for a new tax on the banks. Here's President Demagogue Obama:

"We want our money bank and we are going to get it," [Obama] said, surrounded by members of his economic team.

Obama said his commitment is to "recover every single dime the American people are owed. And my determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people."

Sounds good, right ? After all, we're only punishing those mean old bankers. How can that not be good ?

Here's how. First, most of the large banks have already paid back those TARP funds with interest, resulting in a net profit for the taxpayers, yet they will still be hit with Obama's new tax. Second, don't forget that many banks were forced to accept TARP funds from the government, even when they didn't want them. They will be hit with Obama's new tax too. Third, the ones who will really pay the bank tax are THE CUSTOMERS OF THE BANKS, in other words, the taxpayers themselves. Obama will be getting our money back by TAXING US more. Fourth, it wasn't only banks that received bailout funds. There's GM, GE, Fannie Mae, etc. Where is their tax ? Thanks, President Demagogue, but no thanks.

Obama continued:

"Our country has endured the deepest recession we've faced in generations, and much of the turmoil was caused by irresponsibility on the part of banks and financial institutions,"

Yes, much of the turmoil was caused by irresponsible lending on the part of banks and financial institutions…………….but why can't anyone on Capitol Hill ever fess up to the fact that THE FEDERAL GOVERNMENT WANTED AND ENCOURAGED THEM TO DO IT ? The entire financial house of cards surrounding the housing market and the credit crisis was legislated into existence by the freaking Congress of the United States, starting all the way back in the Carter administration and never stopping. Prior to Congress manipulating the market, we had usury laws. We didn't have subprime mortgages. We didn't have Fannie Mae securitizing, bundling, and selling half the loans in the country. We didn't have commercial banks in the mortgage market. We didn't have Congress fining banks and denying mergers for not making enough loans to poor people. When is a presidential administration or a Congress going to admit that they brought the whole recession into existence with their boneheaded policies to "help" people ? Damn, they must think we're stupid.

Btw, President Demagogue. The country is $12 trillion in debt, and you are on target to add another $9-10 trillion to that number. WE WANT OUR MONEY BACK. So do our children, whose futures you are mortgaging. You can start by not spending all our money in the first place, you phony populist mouthbreather.
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Maybe we need a dark-skinned black person for President. One with a Negro dialect who can add two plus two and come up with four. That would be a great improvement.

“Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership.” - Senator Barack Obama, in a 2006 floor speech preceding a Senate vote to extend the federal debt limit.

Ah, how I liked THAT Barack Obama back in 2006, when he was railing against the irresponsible fiscal policies of President Bush and his GOP-led Congress. I even went out and bought Obama's book, The Audacity Of Hope. Obama seemed different. He was the post-partisan, responsible voice for change. Obama's book turned out to be pretty light on substance, but his rhetorical fluorishes promised a new kind of politics that could bring left and right together for the betterment of the country.

Too bad it was all rubbish. Obama's idea of bipartisanship is to have Democrats write all the bills, to ignore all Republican suggestions, and to have Republicans sit quietly in the corner and go along with whatever Obama and the Dems want. When Republicans refused to do that, an absolute certainty, Obama and company then demonized them as the "failed policies of the past," the "party of no," "racists," "dividers," "rightwing domestic terrorists (my personal fave)," and so on and so forth.

Speaking of the failed policies of the past, Democrats voted as a bloc against raising the federal debt limit back in 2006, when Obama was allegedly so concerned about shifting bad policy choices onto the backs of our children. Since then, after the Democrats took over Congress and eventually the White House, the debt limit has been raised three times. Now the Senate needs to raise it again, because we are going to exceed the current $12 trillion debt limit next month. We're going to have to keep on raising it too, because both the White House and Congressional Budget Office agree that Obama and the Democrats are going to add another $9 trillion to the debt (and the Dems have lots MORE groovy new spending plans they haven't implemented yet.) Apparently, Obama isn't quite so concerned about the burdens our children will have to bear anymore. Instead, he has declared open season on their futures. Ironically, it's the young people who seem to support Obama the most. Go figure. It's like falling in love with your executioner.

The rest of the world has taken notice of America's massive financial irresponsibility and is proposing changes. China wants to back away from buying U.S. debt, alarmed over massive American money printing (backed by nothing). China sees rampant U.S. inflation coming as soon as the recession ends. Can't argue with them there. The UN wants to move to a new world currency other than the dollar for similar reasons. The dollar just hit a new low for the year, and we're still hemorrhaging jobs at an alarming pace, with unemployment at a 26-year high. In addition, the FHA, which has taken over as the new securitized subprime mortgage lender of choice after the private lenders stopped making those boneheaded loans in the wake of the housing meltdown, is coming perilously close to not meeting it's 2% reserve requirements, as the economy continues to tank and foreclosures continue to rise. A new bailout for the FHA, perhaps ? Hey, why not ? What's another $100 billion these days ?

So naturally, with all this "good" news abounding, our Vice President, Joe Biden, recently declared, "The recovery act has played a significant role in changing the trajectory of our economy." Sure, Joe, whatever you say. Everything's going great. Keep creating your own reality. Pay no attention to the man behind the curtain.

When all is said and done, the plans of the Democrats are the same as they always are, and as simple as the directions on a bottle of shampoo – Spend. Tax. Repeat.

The children be damned.

In my previous understanding of free market capitalism, business had the opportunity to succeed or fail on it's own merits. If a company was well-run and consumers desired it's products, the company was successful. If not, the company wasn't successful, and it failed. It was survival of the fittest. That Darwinian concept led to the existence of the best and strongest companies, who provided the best and strongest products. The notion is part and parcel of Adam Smith's "invisible hand" free-market economic theory. While free market capitalism is not perfection (some businesses will fail and there is an inherent inequity of wealth), from a historical viewpoint, free market capitalism seems to be far superior to any other economic alternative that has yet been devised. The United States Of America, the world's lone superpower (for now) stands as profound evidence of that fact. We didn't win the Cold War because we were lucky. We won because we had a superior economic model.

But, as I said, that was my previous understanding. It was pure, perhaps a little naive. My current understanding is this – we don't have a free market capitalist economy at all. Not at the higher levels, and by osmosis, not at the bottom either. Contrary to Barack Obama's statement that he will grow the economy from "the bottom up", all prevailing evidence suggests our economy is grown from the top down. If it wasn't, then it wouldn't matter if the financial and credit markets froze up or not. We wouldn't be facing a second Great Depression over it, because we could still grow the economy from the bottom, as Obama says. We all know that can't be done, because when the top fails, there is no access to capital from the top to start new businesses at the bottom, and there is reduced access to jobs from the top to accumulate individual wealth at the bottom. When the top can no longer perform it's economic functions, it's the bottom that feels the heat the most. As much as I detest the term "trickle down" economics, that is exactly the way it works. Trickle down isn't just some Republican shibboleth, it's the nature of capitalism. If a little guy needs $30,000 to start a small business, and the big guy doesn't have the $30,000 to lend, it's game over. No new business for the little guy. As is often said, nobody ever got a job from a poor person. In the vast majority of cases, jobs and businesses are created from existing wealth, not out of nothing. Obama even disproves his "from the bottom up" economic theories with his own policies, which require intervention from the federal government, the ultimate top, to be implemented.

Enter Henry Paulson, Secretary of the Treasury, and his massive $800 billion bailout, along with all the other bailouts and "stimulus packages" from Democrats and Republicans, which at this point will soon reach $2 trillion in expense to taxpayers. There is nothing about these bailouts that smack of free market capitalism. Instead, they replace free markets with centralized government planning. In one of the largest of all ironies, it was government interference in the mortgage market which led to the housing bubble and subsequent collapse in the first place. Government abetted the housing situation every single step of the way in the name of the beneficent goal of increasing home ownewship in America. Democrats abetted it, Republicans abetted it, and they both patted themselves on the back, saying "look what wonderful men and women we are, America. We're doing such good things for you. Re-elect us." Then, when it blew up in their faces, as was inevitable, those same politicians claimed no responsibility and disingenuously blamed it all on "the failures of the free market." The pols, in their infinite wisdom, decided that the solution to the financial crisis, which was brought into being by government intrusion into the free market, was MORE GOVERNMENT INTRUSION. Why we are looking to people like Barney Frank (D-MA) and Chris Dodd (D-CT) for solutions to the financial crisis totally escapes me. I sure wouldn't look to Ken Lay to fix Enron. This is the same thing. Pols like Frank and Dodd are the problem, not the solution.

We have now discovered that the real purpose of Paulsen's bailout wasn't to buy up distressed mortgages, it was merely to hand hundreds of billions of taxpayer dollars to selected big financial outfits, even if some of those outfits, like J.P. Morgan/Chase, didn't want or need the money. We don't know how much of our money each financial institution received, because the promised bailout transparency has not been provided by the government. We don't have any of the promised Congressional oversight of the bailout, because that committee hasn't even been formed yet. What we do have is another screaming example of how special interests control Washington D.C., and how the federal government controls the economy (poorly). As for our two presidential candidates, Barack 'Change" Obama and John 'Maverick' McCain both voted FOR the bailout. The only saving grace is that the majority of Republicans in Congress voted AGAINST it. Too bad those Republicans don't have much power anymore. No good deed goes unpunished. Republicans were also the ONLY ones who tried to reign in the subprime mortgage insanity before the meltdown occurred. Too bad the American people didn't know any of that before the elections. But they knew Obama stood for "hope" and "change." That's a tribute to our American media. We knew how much the RNC allocated for clothes for VP candidate Sarah Palin, but we didn't know a damned thing about how the financial crisis happened. Obama told us it was all the fault of Bush's failed policies of deregulation, which leaves out SO much of the story as to be a virtual lie. Obama failed to mention that Democrats were for mortgage deregulation too, going all the way back to the Carter administration, and that Democrats fought tooth and nail against regulation of the housing markets during the Bush administration. McCain said he tried to reform Fannie and Freddie, which is true, but McCain should have jumped on the financial crisis issue with both feet, and he didn't, allowing Obama to claim the issue, and the presidency. Maybe Mac really doesn't understand the economy. I doubt Obama does either, but the Big O had a better handle on the partisan blame game, regardless of the facts.

Predictably, a bunch of other interests are lining up at the federal government's bailout trough now, and the feds are even talking about starting a new Department Of Other People's Money (they'll probably settle on another, more politically correct name, though) to bailout any company who DESERVES one. The automakers will receive $50 billion, and apparently without any real business plan to show how their companies will become suddenly profitable following their huge infusion of taxpayer cash. Several different state governments are lining up to receive federal funds, since their coffers have been reduced by the recession. On the horizon, the airlines and credit card companies are waiting for theirs.

In the end, our estimable federal government has pronouned that the way out of our economic problems, which, in the final analysis, have been brought about by living beyond our means, both collectively and individually, is to LIVE EVEN FURTHER BEYOND OUR MEANS. Their solutions to spending money we don't have is to SPEND EVEN MORE MONEY THAT WE DON'T HAVE, and on steriods this time. And then they throw in a couple meaningless caveats about living responsibly, so they don't sound like the crazed corporatist shills they are. I suggest we tell the federal government that we will start living responsibly when the government does, and not a moment sooner. I'm 55 years old, and I've yet to see the federal government accomplish anything nearing financial responsiblity, no matter how many trillions of dollars they appropriate from the forgotten man, the taxpayer. Politicians don't get elected by promising responsibility. They get elected by promising free stuff and goodies. They get elected by deception, and by telling the electorate anything that will make the electorate feel a little better, no matter how irresponsible the political pronouncements may be. That's why we have a $10 trillion debt, $53 trillion in unfunded liabilities, $620 billion annually in interest on the debt alone, an insane self-destructive energy policy, and we just elected as our next president the guy who promised us the most new free stuff. We might as well be voting for the new American Idol winner, the one with the prettiest voice. In fact, I think we just did.

Senators Barack Obama and John McCain hooked up for another presidential debate last night in Tennessee. This one was moderated by liberal Democrat Tom Brokaw from the pro-Obama network NBC, in contrast to the first debate, which was moderated by liberal Democrat Gwen Ifill from the pro-Obama network PBS. At least Brokaw isn't writing a book subtitled "The Age Of Obama." I'm not sure who will be moderating the third and final debate next week, but in the interests of fairness and balance, I'd suggest someone like Keith Olbermann from the left wing network MS-NBC, or maybe Obama's spokesman, Bill Burton. I'm sure any Democrat will suffice. Except for a Blue Dog.

Tom Brokaw made sure that this so-called townhall meeting was just one more boilerplate debate filled with the same old stock questions. It was designed to introduce nothing much new, and therefore was less likely to lead to any major gaffes or shakeups. The advantage in such a status quo scenario goes to the person who is already leading in the polls. And wouldn't you know, that person just so happens to be Barack Obama.

If you saw the first presidential debate, you didn't really need to watch this one (but here's the transcript anyway). The questions were all the same, and the answers were mostly the same, with ONE BIG EXCEPTION. Obama in particular gave the exact same responses as he did last time, so there's really nothing new to report from his side. Obama has memorized his talking points better than any candidate in recent memory. He is so disciplined and programmed that I have actually reached the point where I know exactly what Obama is going to say before he says it. If Obama becomes ill in the next 30 days, I think I could fill in for him on the campaign trail. I've seen and heard the Obama show so many times that I have it down cold (I need to get a life). McCain was a little more extemporaneous, but he covered a lot of the same territory as well.

As far as who won the debate, I gave the first 15 minutes to Obama, the next hour to McCain, and the last 15 minutes to Obama. I thought McCain won the economic part of the debate (with ONE BIG EXCEPTION), and Obama won the foreign policy portion. I realize that's just my perception, and that the winner is subjective. Democrats think Obama won. Republicans think McCain won. I always like to flip through the various television networks after a debate to hear what they think, and it was just as I said. NBC, ABC, CBS, PBS, and MS-NBC (the pro-Obama networks) were all saying how great Obama did. Over on the token right-leaning network, FoxNews, 86% of the viewers were saying McCain won. The dumbest thing I heard post-debate was Keith Olbermann and the lunatic fringe on MS-NBC saying that McCain had somehow played the race card when he pointed at Obama and referred to him as "that one" when describing an Obama Senate vote. Some people just shouldn't be handed a microphone, and the Olbermaniac is one of them.

I'd give McCain the nod as overall winner of the debate, but I have to deal with the ONE BIG EXCEPTION I mentioned earlier. During a discussion of the financial crisis, McCain said the following:

I think that this problem has become so severe, as you know, that we're going to have to do something about home values. You know that home values of retirees continues to decline and people are no longer able to afford their mortgage payments. As president of the United States, Alan, I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes — at the diminished value of those homes and let people be able to make those — be able to make those payments and stay in their homes.
Is it expensive? Yes. But we all know, my friends, until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy. And we've got to give some trust and confidence back to America.

If this is what it appears to be, it is a $300 billion plan for the government to nationalize bad mortgages at taxpayer expense. This would be on top of the $700 billion bailout plan for Wall Street that has already been passed, and on top of the bailouts of AIG, Bear Stearns, Fannie Mae, and Freddie Mac. If this is what it appears to be, John McCain just lost my vote. In my world, conservatives don't bail out people who bought houses they couldn't afford. In my world, people are responsible for their own actions. The taxpayers are NOT responsible. If this is what it appears to be, all McCain's talk of reducing spending and lowering taxes flies right out the window. I've had it with politicians who call themselves fiscally conservative, but govern like they are liberals, throwing around taxpayer dollars like candy. We just had 8 years of that, and I'm not voting for it any more. I'm done. You can't say you want to freeze government spending, as McCain has, and then turn around and say you are going to spend another $300 billion. This insanity has got to stop, and the only ones who can stop it is We The People. Our politicians have lost their minds.

And did anyone notice that both candidates dodged the most important question asked during the entire debate, the one about how we deal with the looming Social Security/Medicare funding crisis ? That issue deals with $53 trillion in unfunded liabilities, which will make the current financial crisis look like chicken feed, and neither candidate gave anything close to an answer. There was no Straight Talk, and no Change We Can Believe In on that question, just two pandering politicians trying to fool the public in order to get elected. The leadership deficit continues.

The Chairman of the Senate Banking Committee, Chris Dodd (D-CT), has NO idea how the mortgage crisis happened. I repeat, he is the CHAIRMAN OF THE SENATE BANKING COMMITTEE !!! Dodd says, "American taxpayers are angry and they demand to know how we arrived at this moment."

Well, Mr. Dodd, as CHAIRMAN OF THE SENATE BANKING COMMITTEE, you know damned well how the mortgage crisis happened, and the truth is slowly coming out. The mortgage crisis was created by Democrats like Chris Dodd, who repeatedly blocked regulation. Even former Democratic president Bill Clinton knows that, though I'm surprised he is admitting it. I'm always shocked when a Democrat tells the truth. It's a rare occurence. Most Dems are stonewalling for all they are worth. Here's President Clinton being interviewed on ABC:

CHRIS CUOMO, ABC NEWS: A little surprising for you to hear the Democrats saying, "This came out of nowhere, this is all about the Republicans. We had nothing to do with this." Nancy Pelosi saying it. She signed the '99 Gramm Bill. She knew what was going on with the SEC. They're all sophisticated people. Is that playing politics in this situation?

BILL CLINTON: Well, maybe everybody does that a little bit [lie, he means. Yes, the Dems certainly do that. Constantly]. I think the responsibility the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac.

Gosh, that sure doesn't square with the contention by Democrats and the pro-Obama mainstream media, who are so certain that it was those Bush deregulation policies of the last 8 years that caused the problem (a curious hypothesis, since the Bush administration didn't propose any deregulation of the financial industry during the last 8 years. The GOP only proposed REGULATION of the financial industry, and the Dems shot it down, every time).

The following exchange on Fox News sums up nicely how the mortgage crisis happened.

JIM ANGLE, CHIEF WASHINGTON CORRESPONDENT: Fannie Mae and Freddie Mac, backed by the federal government, buy mortgage loans from the lenders who make them. But four years ago, both were in trouble over shoddy accounting. Fannie Mae Chief Franklin Raines, President Clinton's former budget director, was fired. To placate those in Congress who watched over them, Fannie and Freddie promised to do more to help poor people get mortgages. That led them to buy riskier and riskier home loans from private lenders creating incentives for everyone to make shakier loans.

PETER WALLISON, AMERICAN ENTERPRISE INSTITUTE: The problem is that they encouraged very bad mortgages to be made by banks and other institutions, because Fannie and Freddie would buy them.

ANGLE: Eventually, they bought trillions of dollars worth of mortgages, a substantial portion of them based on poor credit, then resold many of them to financial institutions who thought they were safe because the federal government was behind them.

PETER WALLISON, AMERICAN ENTERPRISE INSTITUTE: As a result of this appearance that they were backed by the government, people never paid very much attention to the assets they were acquiring or the risks they were taking.

ANGLE: And so shaky mortgages spread throughout the system. But in 2005, the Senate Banking Committee, then chaired by Republican Richard Shelby, tried to rein in the two organizations bypassing some strong new regulations.

WALLISON: Which would have prevented Fannie and Freddie from acquiring this bad — these bad mortgages. It actually gave a new regulator for Fannie and Freddie the kinds of powers that a bank regulator had.

ANGLE: All the Republicans voted for it. All the Democrats, including the current chairman, Senator Chris Dodd, voted against it, and that was after Fed Chairman Alan Greenspan had issued a stark warning to senators that Fannie and Freddie were playing with fire. Greenspan said without stronger regulations, "We increase the possibility of insolvency and crisis. Without restrictions on the size of Fannie Mae and Freddie Mac, we put at risk our ability to preserve safe and sound financial markets in the United States."

Guess how Democrats responded to the "strong new regulations" of Fannie Mae and Freddie Mac that Senator Shelby and other Republicans proposed ? They claimed everything over at Fannie and Freddie was just fine and dandy, they attacked the regulators, and they called Republicans racists for proposing the regulation, like they always do with any GOP legislation they don't like. Political correctness over sound policy, that's the Dem mantra. In the interests of fairness, some House Republicans also opposed the regulations, though the vast majority were for it. Virtually ALL Democrats opposed it, and that's why the regulations died.

When Barney Frank (D-MA) became the incoming Chairman of the House Financial Services Committee after the Dems won Congress in 2006, he said this at the National Press Club on December 11, 2006:

Now let me turn to housing — we have more to do yet in the deregulation. I’m just saying that one of the things that we did was to try and reduce the reporting requirement from the banks to the financial detectives. And far too much has to be reported now, in my judgment, of a routine nature. And the metaphor that I use is that we have told the law enforcement people to find a bunch of needles, and then we have set about building them a very big haystack. And we ought to thin that down so they can do a better job. One of the things that I want to stress to my liberal friends is that excessive regulation or ineffective regulation is bad for regulation. Regulation is very important. The market does need some corrections, but if you overdo it, then you weaken your case.

Yet, the Dems claim Bush was the deregulator of the mortgage industry. NOT. Barney Frank was against every attempt by Republicans to regulate Fannie Mae and Freddie Mac, as was Chris Dodd, as was Nancy Pelosi (D-CA) over in the House, as were virtually all Democrats. Remember this when the lying scumbags try to blame this all on the Republicans. The Democrats protected Fannie Mae and Freddie Mac at every turn, and now we are all left holding that big bag of crap.

And guess who received the second most campaign contributions from Fannie and Freddie ? Mister Hope and Change himself, Barack Obama. Number one is Chris Dodd. They say if you want to know the truth about something, follow the money. Yes, indeed. That's all you have to do here.

Here's another interesting quote from Barney Frank, made in 2003 during Senate hearings about regulations of Fannie and Freddie that the Bush administration was calling for:

Some of the critics of Fannie Mae and Freddie Mac say that the problem is is the federal government is obligated to bail-out people who might lose money in connection with them. I do not believe that we have any such obligation. And as we said that it’s a self-fulfilling prophecy based on people. So let me make it clear: I’m a strong supporter of the role that Fannie Mae and Freddie Mac play in housing. But nobody who invested in them should come looking to me for a nickel, nor anybody else in the federal government.

Think of this when you hear Mr. Fwank making jokes about how the GOP killed the bailout deal the other day, and about how Fwank says the GOP put their hurt feelings above the good of the country. Fwank is full of it. He wouldn't tell the truth now to save his life, but he sure as heck will lie to save his job. Read many of Barney Fwank's statements about Fannie-Freddie here. It's enlightening.

Congressman Ron Paul (R-TX) sometimes seems like an island of sanity crying out in the middle of an ocean of lunacy. That's what I thought when I heard Paul talking about the current financial crisis and the bailout plan. Paul says the bailout amounts to nothing but propping up the same failed policies and systems that brought us to where we are today. It's hard not to agree with him:

WOLF BLITZER ("Late Edition" host): What do you say to the president who wants you and your fellow Republicans and Democrats to quickly pass this $700 billion bailout package?

PAUL: Well, I think that's a mistake because we don't have the money. But that doesn't mean you have to do nothing. I mean, we could reform the system. We could return to sound money. We could balance our budget. We could change our foreign policy. We could take care of our people at home. We could lower taxes.

There's a lot of things that we can do. But the worst thing that we can do is perpetuate the bad policies that gave us this trouble in the first place, and that is that we no longer, over the last quite a few decades, believed in free-market capitalism. Capital is supposed to come from savings. We're supposed to work hard and save.

As a matter of fact, the Chinese work hard, right now, and they save, and they're buying up the world. But we borrow and spend and consume, and now it's caught up to us and it's undermining our whole system. … So this $700 billion is not going to do it.

And:

"This is Wall Street in big trouble and sucking in Main Street, now, and dumping all the bills on Main Street. … And you can't solve the problem of inflation, which is the creation of money and credit out of thin air, by more money and credit out of thin air, and not changing policy. We have to change basic policy.

"Yes, it would be painful, but it wouldn't last so long. What they're doing now, they're propping up a failed system so the agony lasts longer. They're doing exactly what we did in the Depression."

"So, yes, there are going to be losses, but everybody lived beyond their means when the prices of houses were going up. Nobody cared about it. They kept borrowing against it. Oh, yes, that was fine and dandy. Everybody was making money, and the owner of the home kept borrowing and living beyond their means. Now they have to live beneath their means.

"What the government is doing now — and this new program is trying to prop up prices. You want the price structure to adjust. You want the price of houses to go down. You don't want to fix the price of housing. You can't price-fix. We've had too much of that.

"We need a market economy. We need to believe in ourselves. We need to believe and understand how the economy got us — how the government got us into this mess. And believe me, it wouldn't be that tough. It would be a bad year. But, this way, it's going to be a bad decade."

Paul is exactly right. His recommendations, while painful, are sound. But our current government is all about pain avoidance, not sound policy. It's about getting elected, not sound policy. It's about special interests, not sound policy.

Paul also says neither John McCain nor Barack Obama have any answers for the financial crisis. I can't argue with that either.

You can find the text of the mother of all corporate bailouts here.

The scope of the mortgage bailout bill is limited in only two ways – 1) The Secretary of the Treasury, Henry Paulson, has a spending limit of $700 billion in buying up bad loans from the mortgage companies (not that he couldn't ask for more later), and 2) the bailout lasts for a period of two years.

Other than that, the Secretary has unlimited power in the mortgage bailout. He will be limited by no law and governed by no authoritative body. As is stated in the text of the document, “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

Gulp. That's a lot of power, taxpayers.

We better be darned sure that we have absolute confidence in Henry Paulson and whoever his successor might be to go along with putting taxpayers on the hook for $700 billion in bad debt. As Michelle Malkin points out on her blog, Henry Paulson has not been exactly on top of things regarding the mortgage crisis. Neither has Congress, to say the least. Both the Treasury and Congress underplayed this crisis for a long time. Now we are about to write these same people an enormous check to fix an enormous problem that they let grow and grow for years.

I'm not going to say to much more about this right now, because there is going to be LOTS of debating in Congress this week. Things could change quickly. Both Democrats and Republicans are going to want to add things to the bailout bill, which is understandable. Paulson wants the bill to go through clean in order to strike quickly and prevent financial meltdown.

Hey America, how do you like your brand new insurance company, AIG ? We bought an 80% stake in that company for the bargain price of $85 billion. How about your nifty new mortgage companies, Fannie Mae and Freddie Mac ? They've been nationalized. They belong to all of us now. Who knew this was what Bush was talking about when he advocated an "ownership society" ? Bailing out the financial industry might end up costing us a a trillion or two, but no worries, it's only money. YOUR money, make no mistake about that, but what's a few trillion among friends ?

And from the looks of things, We The People are about to own a whole bunch more neato stuff too. Our fearless future leaders are both committed to bailing out the auto industry. Democrat Barack Obama has committed to providing up to $50 billion in loans to the automakers. And now the Republican candidate, John McCain, has gotten in on the action too. McCain reversed his previous position against loans to automakers while touring a GM plant in Grand Rapids, Michigan:

"I'm here to send a message to Washington and Wall Street: We are not going to leave the workers here in Michigan hung out to dry while we give billions in taxpayer dollars to Wall Street," McCain said. "It is time to get our auto industry back on its feet. It's time for a new generation of cars and for loans to build the facilities that will make them."

Yeah ! We'll show those sob's over on Wall Street ! We'll give taxpayer money away to everyone !!! That'll teach 'em ! Excuse me, readers, I have to go puke. I'll be right back…….

Associated Press reports that $25 billion in loans to automakers may whiz through Congress before the november elections, buoyed by the support of Barack Obama and John McCan (how do you like bipartisanship now ?).

Yeah, what the heck, as long as our leaders have abandoned all pretense of fiscal sanity, why not ? Bring on financial Armaggedon. Every day is Halloween, and we're using taxpayer money for candy. Ooh, look at JohnnyMac, all dressed up like a conservative, here's a big bag of taxpayer money for you. And Barry, you look so cute in your JFK suit, here's another bag of money for you.

$!*&##**! and !*&@**$$!

Somebody please tell me this is all a bad dream. This ship of fools is driving us right off the edge of the world.

I've been watching the notion of fiscal conservatism (responsibility) die a slow death for a long time now, but I have to admit, I never expected the death knell to sound with a Republican occupying the White House.

I know I probably shouldn't be a stickler about the United States Constitution, since we don't use it anymore, but are ANY of these bailouts Constitutional ?

Ah, never mind. Who cares ? It's a Brave New World, the previous rules no longer apply. I can hardly wait for the coming veto-proof Democratic majority, you know, the ones who REALLY like to spend taxpayer money. We are freaking doomed.

Are we really going to stand by and let all this happen ? Are we going to allow our government to endlessly nationalize industries and socialize business losses at taxpayer expense ? That is an incredible moral wrong, but it sure looks like we're going to let them do exactly that. I don't see anybody marching on Washington D.C. What's it gonna take, folks ? They are literally stealing the money right out of your pockets, and you don't seem to care.

And Joe Biden, saying tax increases are freaking "patriotic" ??? *$$!&%# you, Joe.

Thanks for listening to this rant. Maybe my sense of optimism will return tomorrow, but right now, I need a damn drink.

Update 9/21/08: Now for the coup de grace. Bush has announced a $700 billion mortgage bailout. And Democrats are saying Bush didn't go far enough, if you can believe that. The nightmare continues.

Barack Obama refers to "failed Bush-McCain policies" so often that I think he may have a kind of Bush Tourette's Syndrome. No matter what the issue is, Obama blames Bush and his separated-at-birth twin brother John McCain. Yesterday's e-mail from the Obama campaign was no different:

For eight years, Bush-McCain economic policies have favored reckless deregulation and huge tax loopholes for big corporations. Now, as these corporations crumble, American taxpayers are facing costly bailouts. More of the same failed ideas are not going to solve our economic problems. I'm calling for a $1,000 tax break for middle-class families — not just because they need help dealing with the rising costs of gas, food, and health care, but also because our economy needs to be reinvigorated from the bottom up, not the top down. I'm proposing a second stimulus package to save over one million jobs and provide immediate relief to struggling families. And I'll end the "anything goes" culture on Wall Street with real regulation. We can see clearly that our economy is stronger when we protect investments and pensions, and avoid devastating bankruptcies and bailouts.

But what are these "failed Bush-McCain economic policies" that have "favored reckless deregulation" ???

Bush Administration Press Secretary Dana Perino also wants to know. Here's an exchange she had with reporters yesterday following Bush's statements about the economic situation:

REPORTER: Well, I want to give you a chance to respond to what Speaker Pelosi is saying [Pelosi blamed Bush for the mortgage crisis, while exoneration Democrats], because it really seems like the — at least the sort of finger-pointing is ratcheting up, accusing Republicans, and it sounded like the White House, of mismanagement of financial-market regulation. It really seems as though there's a accusation that the White House is to blame in some way, or the Bush administration policy is to blame in some way. Your response?

PERINO: Well, unfortunately — unfortunately, I don't think that the reaction of finger-pointing from Democrats to the White House is anything new. I would ask you to go back and look and ask Speaker Pelosi or any of the other Democrats who are pointing fingers, what specific regulation did they want that we blocked? What specific regulation did we eliminate? In fact, it was the White House that worked to try to get them to act on GSE reform as early as 2003. Unfortunately, they did not act on that until most recently when there was a crisis and we got the authorities that we needed in August of 2007. What we were looking for in that GSE reform was a strong regulator. That's what we wanted. It was more regulation, more transparency, and a stronger independent regulator who could actually look at the books of the GSEs, Fannie Mae and Freddie Mac, and tell us exactly what was going on. In addition to that, we wanted FHA modernization so that more low-income people could have their mortgages backed by the FHA. They didn't move on that until there was a crisis at hand. We wanted rules — they're called RESPA rules, I can't remember what it stands for, it's Real Estate Settlement Act — but it would help people understand what they're getting into when they have a loan. Unfortunately they didn't act on that. Hank Paulson's regulatory blueprint that he laid out early last spring fell on deaf ears to the Democratic members of Congress.

As I discussed in my last post, the Bush administration only attempted to REGULATE the financial industry. It proposed no deregulation. John McCain also attempted to regulate Fannie Mae and Freddie Mac in 2005. Democrats united to shoot down all those measures.

The U.S. Constitution empowers Congress with controlling monetary matters. Regulation of the financial industry must go through Congress. President Bush can't do it. Can anyone point me to any regulation that Democrats proposed prior to the mortgage crisis ? Anyone ? Inquiring minds want to know.

When Barack Obama, Nancy Pelosi, and pretty much all the rest of the Democrats blame the mortgage crisis entirely on Republican deregulation, they dishonestly ignore their own involvement. The last significant deregulation of the financial industry, the Gramm-Leach-Bliley act, which has been pointed to as a significant contributing factor to the subprime crisis, occurred in 1999 and was signed into law by Democatic president Bill Clinton. Gramm-Leach-Bliley passed the Senate by a vote of 90-8, so it had wide bipartisan approval. Obama's VP nominee, Joe Biden, voted for it, as did nearly the entire Democratic leadership. John McCain did not vote on the final version of that legislation. The Democrats hailed the passage of Gramm-Leach-Bliley at the time, saying that it would significantly boost the availability of low-income housing. It certainly did that. Unfortunately, we've since discovered that low-income people often can't afford expensive housing, so may of those loans are in default.

I ask you – had Barack Obama been in the Senate in 1999, how do you think he would have voted on a measure to boost low-income housing ? This is the Barack Obama who has been ranked as the most liberal Senator by the National Journal, the Barack Obama who votes with the Democratic leadership an astounding 97% of the time (so much for him being a "new kind of politician who works across party lines". The guy who really does that is John McCain). Is there ANY doubt that Obama would have voted in favor of that legislation ? I certainly think he would have.

Obama also favors a second stimulus package, that will only add more to the national debt, because it's not paid for. Is this what we need after the pols in D.C. have put taxpayers on the hook for hundreds of billions of dollars in bailouts, with god only knows how much more to come ? No, it's precisely what we don't need. It is nothing but a further abandonment of responsibility, designed solely to get votes in november by pandering to the public.

Thus far, I've heard no real ideas from our politicians for solving this crisis, outside of maybe Ron Paul (that's the guy the other GOP presidential candidates thought was a mere curious oddity during the primary debates). The rest have their heads buried in the sand. All those bad loans held by the bailed out companies are still bad loans. There has been no reckoning. The only way bad debt is resolved is thru liquidation. Little of that is occurring. Our politicians are taking every measure possible to avoid that reckoning, which is only going to lengthen the mortgage crisis and cost the taxpayers a bundle in the process.

Both of our presidential candidates supported the government takeover of Fannie Mae and Freddie Mac. Both of our presidential candidates now think Fannie and Freddie need to be restructured and monitored.

Thanks candidates. Now that the horses have left the barn, I'm glad you both wish to close the barn door.

But Fannie Mae and Freddie Mac were GSE's (Government Sponsored Enterprises). Our eminent politicos in Washington D.C. had intimate connections with both of them. These GSE's were filled with government cronies. Shouldn't someone in Washington have seen this problem coming, and shouldn't someone have taken measures to keep the horses in the barn long before things spun totally out of control ?

The answer is, someone DID see the Fannie-Freddie problem coming. The Bush Administration saw the problem coming five years ago, and recommended a series of preventitive actions. As the New York Times reported in an article called 'New Agency Proposed To Oversee Freddie Mac And Fannie Mae':

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

But the Bush recommendations were never acted upon, and the Fannie-Freddie problem grew and grew, resulting in a government takeover that puts taxpayers on the hook for potentially hundreds of billions of dollars.

Why weren't the Bush recommendations adopted ? You can find the answer in the same NY Times article:

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

"These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

"I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing," Mr. Watt said.

Democrats condemned Bush's plan because they thought it would reduce the availability of low-income housing. This is a microcosm of the entire mortage crisis, because the populist intent of the mortgage and banking regulation changes for the last 30 years have been based upon expanding the availability of such housing. The government encouraged and often forced lenders to go outside their own lending comfort zone, and into risky loans. Now we are reaping the results of that irresponsibility.

Now for the kicker. Guess who Democrat Barney Frank, who led the opposition to the oversight of Freddie-Fannie, blames the problem on ? If you answered 'Bush and Republicans', you win first prize.

Democrats are also the biggest benefactors of Fannie-Freddie lobbyists. Barack Obama may talk about reducing the influence of lobbyists and special interests, but his campaign has received the second most political contributions from Freddie-Fannie lobbyists. The top three are all Democrats. As John Gibson reports for FoxNews:

Lehman Brothers collapse is traced back to Fannie Mae and Freddie Mac, the two big mortgage banks that got a federal bailout a few weeks ago.
Freddie and Fannie used huge lobbying budgets and political contributions to keep regulators off their backs.
A group called the Center for Responsive Politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. senators getting big Fannie and Freddie political bucks were Democrats and No. 2 is Sen. Barack Obama.
Now remember, he's only been in the Senate four years, but he still managed to grab the No. 2 spot ahead of John Kerry — decades in the Senate — and Chris Dodd, who is chairman of the Senate Banking Committee.
Fannie and Freddie have been creations of the congressional Democrats and the Clinton White House, designed to make mortgages available to more people and, as it turns out, some people who couldn't afford them.
Fannie and Freddie have also been places for big Washington Democrats to go to work in the semi-private sector and pocket millions. The Clinton administration's White House Budget Director Franklin Raines ran Fannie and collected $50 million. Jamie Gorelick — Clinton Justice Department official — worked for Fannie and took home $26 million. Big Democrat Jim Johnson, recently on Obama's VP search committee, has hauled in millions from his Fannie Mae CEO job.

Remember this the next time you hear Obama blaming "the failed policies of George Bush" for the mortgage crisis. Republicans surely aren't blameless in this, many of them also favored the deregulation policies, but Democrat policies were driving the trainwreck, and as I just showed, preventing reform. The last significant deregulation bill, which allowed investment banks (like Lehman Brothers) into the subprime loan market, was signed into law by Bill Clinton. You can read a brief history of housing deregulation in an old post I wrote called "Did Deregulation Cause The Subprime Crisis ?"

When I heard the Senate passed S.2636, The Foreclosure Prevention Act of 2008, by a vote of 84-12, I immediately wanted to know who the 12 Senators were who voted against it. Those might be 12 Senators I could support. Those might be 12 Senators interested in doing the right thing, as opposed to the pandering election year thing that actually makes the problem worse. Those 12 Senators might actually be, gasp, fiscally responsible, a notion that almost seems quaint in these days of mutually assured fiscal destruction (spend, spend, spend, borrow, borrow, borrow, tax, tax, tax, prop up the economic house of cards for another day, the future be damned, this Titanic is a really nice ship, what's that sticking out of the water up ahead ? Aw, who cares, I'm too fat and lazy to bother turning the wheel, I'm sure it will all be fine, ooh, did we hit something ?).

It came as no shock to me that all 12 of the Senators who voted 'Nay' on S.2636 were Republicans. Every single Democrat Senator voted for the taxpayer funded boondoggle, except for Obama and Hillary, who didn't vote. Here are the S.2636 'Nay' voters. Kudos to them:

Barrasso (R-WY) Bunning (R-KY) Coburn (R-OK) Corker (R-TN) Crapo (R-ID) DeMint (R-SC) Enzi (R-WY) Gregg (R-NH) Hagel (R-NE) Inhofe (R-OK) Kyl (R-AZ) Warner (R-VA)

It also came as no shock to me that the fiscally conservative position of these 12 Republicans is the minority position within their own party, a party that gives lip service to fiscal conservatism, but in reality has morphed into something else entirely, especially during these last 7 years (FYI – Senator John McCain supports S.2636, even though he didn't cast a vote. He has given it verbal support, contradicting statements he made against an unwise mortgage bailout only a couple weeks earlier). This bodes very poorly for our future. When Republicans aren't interested in fiscal responsibility, we're in big trouble, because the big spending socialist Democrat foxes sure aren't going to guard the fiscal hen house.

One of the 12 'Nay' voters on S.2636 was Senator Jim Bunning (R-KY). Here are a few of his comments on the Foreclosure bill:

“This is an unusually bad bill, and I have opposed it from the start. The course it has followed almost guarantees that it will be filled with the worst kind of gimmickry. And it is. The Senate may be the world’s greatest deliberative body, but this bill is anything but the product of deliberation. It is a jumble of disjointed ideas, unlikely to solve the crisis at hand, and it’s unpopular.

“It turns out that the American people don’t like the idea of bailing out banks and their neighbors who gambled on home prices. The voters understand what is going on in Washington, better than we do.

“Another provision that deserves far more scrutiny is the $4 billion in community development block grants that will be allocated to state and local governments to buy foreclosed properties. To begin with, this program is very poorly managed. The Wall Street Journal called it among the worst-run programs in Washington, and there is a lot of competition for that title…

Let’s not have any illusions. This extraordinarily unwise grant of taxpayer money is really just a bailout for banks in disguise. It goes to states, but the ultimate beneficiaries will be banks that made risky loans. Instead of selling foreclosed properties on the open market, these banks will have the luxury of selling to local officials with whom they may already have a relationship. These officials will be buying properties not with their own funds, but with ‘O.P.M.’ O.P.M. stands for ‘other people’s money.’ And, in this case, the O.P.M. comes from you and me, the American taxpayer, and millions of unborn Americans that we are saddling with even more debt.

Another provision that could benefit from more thoughtful deliberation is the $100 million of spending on counseling. … We also don’t know all that much about the non-profit groups that will get the money. Are some of these groups funded mostly by credit card companies? If so, they will have a clear conflict of interest. Maybe they will actually advise people to abandon their homes to foreclosure in order to pay credit card debt. That would make the foreclosure situation worse, not better.”

But Mr. Bunning, if Congress actually considered the effects of the bill before they voted on it, they might not get it passed in time to pat themselves on the back for the fall elections. What's important is that Congress DID something, even if it's the wrong thing. That's how they get votes. That's how demagoguery works.

The mortgage crisis can only be resolved by a revaluation of housing prices, which is what this temporary housing problem would have brought about had it been left to run it's course. It is counterproductive in the long run for the government to move in and try to keep property values artificially inflated. Free market capitalism doesn't mean that the market will go up, up, up forever. Sometimes it needs to go down too. Pushing huge new costs onto the taxpayers is NOT the answer here.

As for John McCain, Senator Obama has been going around saying it took McCain three tries to get the correct housing crisis response. I say McCain had it right the first two times, and abandoned the right thing the third time, when he caved and started pandering like the rest. The government (actually the taxpayers) shouldn't be in business of bailing out banks and homeowners who made unwise economic decisions. All this bill accomplishes is to move the Titanic a little closer to the iceberg.

The short answer is…yes, it did. It made the mortgage banking industry much more speculative than it was under the former Depression-era banking regulations. The Depression-era banking regulations were designed to, not surprisingly, protect against severe economic recessions and depressions (like maybe what we are moving into now ?)

Deregulation also resulted in record levels of home ownership for lower and moderate income persons, so the news hasn't always been bad. There are two sides to that coin, and the fact is, to a large extent the government pushed the banking industry into what it has become.

While watching Chris Wallace's sunday morning show last week, I heard Senator Chuck Schumer (D-NY) talking about the economy, which he referred to as the "Bush-McCain economy". Good old Chucky, ever the partisan. Schumer, an Obama supporter, must not have received the message that Obama is beyond partisanship and into unity.

But regarding financial deregulation, is Schumer correct ? Is this the "Bush-McCain economy" ??? It's certainly not McCain's, at least not any more than it's Schumer's. And for the most part, it's only Bush's in the sense that Bush didn't reverse deregulation, which has been going on for 30 years. In fact, Deregulation was a done deal by the time Bush took office. The last vestige of the Depression-era banking regulations was thrown off in 1999, when Bill Clinton signed the Gramm-Leach-Bliley Act into law, which repealed the Glass-Steagall Act of 1933. Repeal of Glass-Steagall allowed commercial & investment banks to consolidate, a move that contributed to the 2007 subprime mortgage crisis. The effects of these regulation changes aren't felt the next day, they are felt years later.

Banking deregulation really started with the 1977 Community Reinvestment Act (CRA) during the Carter era. The CRA was designed to meet the credit needs of low and moderate income neighborhoods. It required banks to offer credit throughout their entire marketing area, rather than only in the wealthier areas (a practice known as 'redlining'). The bankers were almost unanimously opposed, but the measure was put through to increase home ownership and loans to small business. In 1995, Clinton updated the CRA, and the revisions were credited with helping to substantially increase the amount of loans to small businesses and to low to moderate income home loan borrowers. A large part of the increase in home loans was due to secondary mortgage market loans. The revisions also allowed the "securitization" of CRA loans containing subprime mortgages. Public securitization of CRA loans started in 1997. These are the roots of the subprime mortgage situation. So if you ever hear Hillary on the campaign trail blaming it all on Bush (and you surely will), know that she is not being honest with you.

Deregulation resulted in the huge increases in home ownership that we have today, by allowing low and moderate income people to purchase their own homes. This has been a great boon to lower income people for the most part. It also in turn drove up the price of housing (supply and demand). Bankers became more and more creative with these mortgages due to the government mandates, and they also became, as I said before, more and more speculative, and far less conservative than they were under the Depression-era regulations. Now, pols like Chuck Schumer are looking to pass the buck when the dark side of deregulation rears it's head (and there definitely is a dark side. The subprime crisis isn't the first time. Maybe you're old enough to remember the S&L crisis of the 80's that followed Reagan era deregulation manuevers). Guys like Schumer think the public is too stupid to figure out the truth, and the truth is, deregulation is not all bad. Neither is it all good, and both political parties have been involved in it.

But since politicians are politicians, some Democrats will just blame it all on Bush, knowing they are lying the entire time, especially the ones like Chuck Schumer who have been around for a long time. Bush has a lot to answer for, economically speaking, but deregulation isn't really on him. I suppose you can blame Bush for not reregulating the deregulated financial industry, he IS the president after all and he could have tried to do that, but I wonder what guys like Chuck Schumer would be saying when home ownership opportunities for lower and moderate income people dried up following such a move. Never mind, I already know the answer.

President Bush and Hillary Clinton have both called for a 5-year freeze on sub-prime mortgage rates to offset the rising foreclosure rates sweeping the country. From the article:

[Treasury Secretary Henry] Paulson, who has been leading the effort to craft a plan, said on Monday that the program would only be available for owner-occupied homes — as a way to make sure that the break is not granted to real estate speculators.

The plan emerged from talks between Paulson and other banking regulators and banks, mortgage investors and consumer groups trying to address an avalanche of foreclosures that are feared as an estimated 2 million subprime mortgages reset from lower introductory rates to higher rates.

The higher rates in many cases will boost monthly payments by as much as 30 percent, making it extremely difficult for many people to keep current with their loans.

The plan is aimed at homeowners who are making payments on time at lower introductory mortgage rates but cannot afford a higher adjusted rate.

Through October, there were about 1.8 million foreclosure filings nationwide, compared with about 1.3 million in all of 2006, according to Irvine, Calif-based RealtyTrac Inc. With home loan defaults still rising, the trend is expected to worsen next year.

Here's what I'm thinking. What is the true problem with housing ? The answer is – the price of housing is overinflated. This is in no small part due to all these unwise loans that were granted to people who couldn't really afford them. That artificially raised demand above where it would normally have been. Home ownership is at an all-time high. I'm not sure how lenders and borrowers could be so ignorant as to not see that 1) adjustable interest rate mortgages mean that the interest rate will go up in the future, or that 2) rising interest rates means that the borrowers monthly payment will go up in the future, or that 3) making risky loans is bad business for both the lender and the borrower, but c'est la vie. It is what it is. The result of it is that now, foreclosures are going up, and the price of housing is going down. I don't want to see people being booted out of their homes, but it occurs to me that falling housing prices, though temporarily painful, is exactly what needs to happen for the long term good. If housing wasn't so expensive, then mortgage payments wouldn't be so high, and foreclosures wouldn't be so high. Falling housing prices is a natural market correction, and will help people. All the details of the Bush and Hillary housing bills have not been seen yet, but my fear is that they will go too far, and government interference will keep housing prices artificially inflated more than they should be. I hope I'm wrong. The 5-year freeze on certain sub-prime rates by itself shouldn't be too harmful, but as always, beware of Big Brother's good intentions.