The Presidents Address

If what the President is selling us is roughly truthful, it's something we have to do and it's also not going to cost the taxpayer money, or at least, much money. The problem comes in accountability.

President Bush is proposing to buy sub prime mortgages at pennies on the dollar. Essentially, the corporate bail out involves corporations taking their losses square on the nose, up front. The overall loan portfolios of the various banking and mortgage institutions thus rise in value because they clear out their bad loans, sell them (at a discount) to the Government and then they can sell off their loan portfolios that have been purged of bad loans. Our financial institutions own too many mortgages in portfolios of investments that are simply NOT diverse enough. Until they sell them, there's not enough money moving around in our system.

The reason for this is the Government is a Big Check Writer. Namely, it can write the check, if for no other reason than it can print the money. So far, actually, so good.

What we, the voting public and taxpayers need to realize is that it's Government. With them, THERE IS NO ACCOUNTABILITY unless WE demand it by constantly watching Government. Once Government OWNS the loans they become immediately attractive to investors that will try to carve them out of Government hands at even steeper discounts than they were purchased for.

Look at this way, spread around $30,000,000.00 in political favors to various lawmakers and they'll pass a bill that will let you buy $1,000,000,000.00 in securities for half of that. That's a bargain. If you thought you'd seen graft in Washington before, wait until about 280 men and women are all that stand in between you and a bargain like that. 280 men and women that can and will be bought, CHEAP.

So the problem is not that the basic outline of the "bailout" (which really isn't one) is a boondoggle. The problem is that it opens the door to the most incredible boondoggles that could ever have been imagined in Washington history.

We're going to get some version of this bailout. It's a sort of Heimlich maneuver for our financial markets that are choking on too big a bite. If you vote one political party or the other to blame one or the other and then go back to sleep, you'll be robbed blind over the next two to four years by the biggest parade of carpetbaggers and scalawags in United States History.

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