Diary

What would Fred do?

Leading off with the disclaimer — I have seen or heard nothing recent from Fred Thompson in reference to the current finance-credit-Wall Street crisis : he’s been silent (AFAICT) since his Sept 8 Townhall piece in which he blisters the bailout of Freddie and Fannie, and gives a scathing review of how we got to this point.

I find it odd and troubling that Fred, McCain’s dear friend and close advisor, has gone dark at this time, when core conservative principles offer us the best and truest guidance in a situation desperately in need of wise counsel, and Fred being the modern beacon of core conservatism. Yet, silent he is, and EPU can’t help but suspect that he has offered his wise counsel to McCain, and yet McCain cannot see his way clear to follow that counsel. McCain has gone in, as he must, on a crusade, once again, to ‘fix things’. That is his nature and calling. Methinks that Fred has been publicly silent because anything he would say would interfere with McCain’s dealings. I’m okay with that — I understand, and I also know that plenty of other core conservatives (like Rush) are carrying the free-market banner at the moment.

So this is my disclaimer — I’m channeling Fred. I don’t pretend to be an economist, a lawyer, or a savvy politician. But hey, if Little Johnny Edwards can channel babies, EPU can sure channel Fred. My IQ is at least 40 points over that of Edwards, and possibly 60 points over that of Biden. I know, I know, that only puts me around 130 [but trust me – don’t play cards with me]. And I have studied at the feet of Edmund Burke, John Adams, William Buckley, Russell Kirk, Ronald Reagan, and Fred.

So here goes….So, first, just a bit about how we got where we are. We got here because government got into the mortgage business, and because inevitably Democrat corruption and tampering led to the creation and inevitable collapse of the subprime market. Repubs tried in vain to rein in this stuff, but were blocked by the Dems. Multiple times. There are lots of details, but that is the short of it. One looks on vain for ANY Constitutional justification for a single bit of government involvement in the market via Fannie and Freddie.

Yet here we are, and the question arises – since government got us INTO this mess, should government

  • [attempt to] get us out of, or otherwise ameliorate the effects of, the government-inflicted damage? or
  • let the free market take care of things, with its brutal but effective cleansing?

The answer? Both. I believe that Fred, were he the GOP nominee at the moment, would have hit Washington last week with a couple of agenda items:

  • lay the groundwork for destroying the things that caused this crisis, so that we are not doomed to repeat it and not doomed to socialism. Specifically:
    • Kill Freddie and Fannie — break them up and sell off the assets.
    • Loudly and forcefully lay the blame for this crisis at the feet of the Democrats, in particular Barney Frank, Chris Dodd, the Clinton Administration’s zealous enforcement the of Community Reinvestment Act, ACORN (and by extension Obama), as well as Franklin Raines and that other idiot on Obama’s staff [name eludes me].
    • Open FBI investigations of Fannie, Freddie, and follow wherever that leads. If there is any justice, the names Countrywide, Conrad, and Dodd will become household names.
    • Start divesting the federal government of all public-private holdings
    • Lift the mark-to-market accounting requirements that came about as an over-reaction to Enron.
  • Second, in terms of the current drought of credit anywhere: refloat the credit market.
    • Like it or not, refloating of the credit market is a must. The credit market literally is the motor oil of the economy. We must have it operational. Good companies are now going down along with the bad.
    • As I think our own blackhedd has suggested [forgive me Francis if I misrepresent], the merest framework of the Paulson plan involves no taxpayer money per se, but is essentially ‘printing money’ by selling a butt-load of T-Bills and using them to buy up MBS’s (at somewhere above current market value but below a fair market value) and hold them till maturity, which will serve to refloat the credit market, and ease us into a survivable hard-landing rather than a full-tilt crash.
    • Like it or not, it’s better than a crash, and after all, it IS the federal government that caused this. That plan does not lead us down the path to socialism. When the MBS’s mature, we cash them in, and we are done.
    • Do nothing else. No paying off distressed mortgages, no more bailouts, no money for airlines, bowling teams, or unions. There will be closures, foreclosures, bankruptcies of both companies and individuals, but while the Constitution allows the government to provide for the general welfare, it does NOT provide for a risk-free existence for every individual and company in America. This semi-bailout might not sound conservative, but I submit that it falls to the government to take an extraordinary act for the benefit of America in general, while safeguarding the free market that is literally the engine of America’s unprecedented long-term prosperity.

Anyway, that’s what Fred would do. How do I know? Hey, because I channeled him, and you can trust me on that.