If you give food to a starving stray dog – then he’ll keep coming back for more and you’ll never get rid of it.
That’s what Congress is about to learn after feeding Freddie and Fannie a few scraps from the $300 Billion bailout package signed into law last week.
Freddie Mac reported its quarterly earnings this morning – a loss that was about three times larger than Wall Street was expecting. That news naturally brought out the Wall Street talking heads and financial gurus to remind us that Freddie and Fannie are holding or are guaranteeing Five Trillion Dollars of mortgage-backed securities and outright loans. It also refueled the speculation that the dog would be back begging – only this time it wouldn’t be for scraps, but rather a seven-course dinner complete with a bottle of Dom Perignon.
I was extremely disappointed and upset the $300B bailout packaged sailed through Congress with the ease that it did. I was upset with the Democrats for pushing it, with the Republicans for supporting it, and with President Bush for signing it into law. The free-market system of capitalism took another hit and is starting to crumble under the years of Liberal attack and by Conservatives who seem to have lost their will to fight for what once was the lifeblood of America.
Not only has this highly-questionable and controversial legislation spread the wrath of Moral Hazard from Wall Street onto Main Street – it is a ringing endorsement of the Liberal view that realizing the American Dream of home ownership is a right guaranteed and protected by the government. Moreover, it has shifted market risk inherrent in the free-market system of capitalism away from the lending institutions and their shareholders – and dropped it squarely upon the heads of taxpayers who will never see a nickel of the profits when our tax dollars lift them from the ashes of mismanagement back to profitability.
Congress has set a precedent that will be difficult to reverse. Once starting down that path, turning back will be almost impossible.
Let’s just hope that the elections are over before the dog comes back for its steak and lobster tail dinner.