For all that talk about the $700 billion bailout package and what it will ultimately cost taxpayers the Federal Reserve gave us a glimpse recently when they announced that the mortgage debt they took over in teh Bear Stearns rescue has been written down from $29.5 billion in June to $26.8 billion at the end of September.  That’s $2.7 billion in just three months or a  decrease of $900 million per month.  If that keeps up taxpayers would see nearly $11 billion in losses after a year.

The Fed is counting on the market stabilizing and for a return to normalcy in the credit markets but that is far from assured at this point.  Another problem is that taxpayers really don’t know what is in the Bear Stearns portfolio.  There could be some reasonably good debt that will regain its value but there is just as big a chance that much of the debt is of poor quality and that the writedowns will continue for the forseeable future.

It looks like we have truly mortgaged our future with the government rescue plans and our children and grandchildren will pay a very heavy price for this folly.

In Hamlet Lord Polonius offers his son dome advice as he returns to school;

Neither a borrower or a lender be;

For  loan often loses both itself and friend,

And borrowing dulls the edge of husbandry.

Perhaps John  McCain would have benefited by having read some of this sage advice before announcing his own economic rescue proposal during Tuesday night’s presidential debate.

As if it wasn’t bad enough that our government has already bailed out Fannie Mae, Freddie Mac and insurance giant AIG at taxpayer expense and the president signing the $700 billion bailout bill now McCain is jumping on the bandwagon in an effort to lure voters to his side.

Under McCain’s plan the government would purchase some $300 billion in mortgages at their full value and then re-write them to take into account the current home value and make the payments more affordable to homeowners.   It sounds great if you are a homeowner who is struggling to meet mortgage payments and is now upside down due to falling home values but why should taxpayers foot the bill for someone else’s mistakes?

Most of the homeowners who are in trouble purchased more home than they could afford thanks to easy credit and low interest rates that were only guaranteed for a short period of time.  When the rates reset to market rates suddenly these homeowners found themselves rapidly falling behind on their mortgages.

Now in desperation to attract voters McCain has come up with a scheme to help out these troubled homeowners by turning the government into a mortgage lender and servicer.  How in the heck does that benefit most taxpayers?  Neither the mortgage holder or the borrower will lose undet this plan as the government will essentially make them whole. That’s financial responsibility?

Or what about homeowners who used the inflated value of their home to borrow more money and are really in the hole.  The taxpayers are supposed to bail them out as well.  I have a friend who is in sch a fix.  He borrowed against his home  to fix it up for sale and when it came time to sell the market was far too soft for the price he sought.  He has lowered his price several times but is now at the point where if he did sell he would owe the bank money so he is considering walking away from the house.  While I have sympathy for him I think he should pay the price for being overly optimistic on what price his house would fetch.  A the same time at least he borrowed to legitimately improve the home.  Most home equity borrowers took their  booty and spent it on vacations and investments that have now turned south putting them further into debt.  Now they too are looking for the government to bail them out as well.

Who’s to say that the McCain plan isn’t just another step along the path to socialsim?  Since when does a capitalsit society ask the government to step in and in essence nationalize the financial system?

Yes this economic crisis is painful.  Costs for food and energy are putting a squeeze on the middle class like they haven’t seen since the Carter years.  Fear and panic on Wall Street is as bad as it has been since the crash in 1987 if not 1929 as politicians of all stripes have preferred to to put their fingers in the dike rather than take strong decisive action to calm the markets.

The end result is that this plays right into the hands of liberal Democrats who stand to clean up in November and pick our pockets starting in January.  Voters should beware of what they wish for when they vote for change next month.

Rep. Jeff Flake (R-AZ) a notorious champion of fighting earmarks in Congress has taken yet another bold step by launching a new website today at PorkParade.com.

In his press release Flake said that “Congress will only end its enthusiasm for pork when enough citizens make their displeasure known,” and that he hoped the new website will give Congress that message.

For those that sign up for e-mails the site will periodically send messages on how his effort is going.  The site will also utilize microblogging site Twitter to send regular messages from the House floor and for those that are already using the service they can particpate via #pork.

Flake also hopes to load videos on YouTibe as well as bookmarking stories using delicious.com.

With the Republicans in the minority and likely to stay that way after November grassroots efforts such as this will be the most effective way to get reluctant Republicans and recalcitrant Democrats to get off their collective butts and finally bring spending under control.

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