"Bailouts"

I'm amazed at how out to lunch a lot of lefty's are on the Fannie and Freddie "bailout".

First some history --If you look really close, you will find that the "F" in both of those stands for FEDERAL. They were initiated in 1938 under FDR and for 30 years was ALL Federal. In 1968 (Democrats in charge of all branches of government), they were moved to a rather odd state of affairs where effectively the profits could be privatized, but since their names stayed FEDERAL, many people (and countries) erroneously assumed that purchasing their bundled mortgages was backed by the "full faith and credit of the US Government", just like bank deposits. They hold something like 6 TRILLION in debt, which is more than the GDP of Japan and close to half of the GDP of the US.

The S&L bailout of the early '90s had a similar history. They had been around forever and regulated heavily since the '30s, but Carter decided to remove a lot of restrictions on them, mostly in order to encourage them to shore up the sagging home sales that had been decimated by the high inflation and poor economy of the late '70s (Carter's economy). By the early '90s, that mess cost the US $150 Billion. In comparison, the current estimate for Fanny and Freddy is "only" 25 Billion (done by CBO, Democrat congress, so it MUST be right!).

Why bail them out? Well for starters, it doesn't help the STOCKHOLDERS in Fanny and Freddy at all--they are out a whole lot of money in lost stock price. What it DOES do is preserve the financial markets, without which, both our and the world economies would be headed for something worse than the 70's and maybe in "depression territory". Once the left creates huge bloated FEDERAL entities it is only a matter of time before they have to be "bailed out" with more good money thrown after bad.

Not many folks in business would argue in favor of massive federal organizations being created to do what the private sector can do better in the FIRST PLACE, but it seems that one party always thinks that it is good idea to try it again. Predictably, the task gets beyond the capability of even the massive federal bureaucracy and they decide that "privatization/regulation" is going to be successful. Of course, government being government, what they do best is "blame the other party", so over time they at least fail at the regulation, but often go well beyond that and either "strongly encourage" or "force" the originally federally created entity to provide goods/services/finance to people that are poor credit risks (but vote). It is a semi-privatized version of the old old government story of "buying votes".

Once the federally created entity gets in enough trouble that it can no longer be hidden by just pointing at the other party--S&Ls, FNMA, FICA, etc, then somebody steps up to fix the problem. (oddly, that always seems to be Republicans) ... Bush 1 in early '90s with S&Ls, Bush 2 in '08 with FNMA ... of course Bush 2 made the mistake of trying to do something to fix FICA BEFORE the "crises" happens, but he paid dearly for that attempt! Americans seem to want to ignore reality as long as possible. Last big fix to FICA was Reagan in '92 ... REALLY the "largest tax increase in history" since the upper limits keep growing. Again, note the Republican cleaning up the Democrats mess--and, they of course love to howl when the cleanup of their own mess adds to the deficit!!

It used to be that Democrats handed out programs and Republicans raised taxes to pay for them. The Democrats and MSM liked that relationship. Reagan changed that, while he DID raise quite a few taxes, he decided that ultimately that wasn't a good answer for the country since the high taxes continued to push down the potential for economic growth, thus reducing the standard of living for all. The cutting the taxes ignited the 30 years of best in history US economic growth that we have just gone through.

BUT, folks still seem to believe that one can create a whole bunch of new programs that will somehow "redistribute the pie" without stopping the pie from growing. It has never worked in the past because the folks that make the pie figure that there ought to be some reward to all that work they are doing. Eventually, Democrats pretty much want to turn the country into a giant concentration camp, only what they WANT is the top 1-5% of the folks working like dogs and getting as little as they can possibly give them and the other 95-99% voting Democrat and complaining that the 1-5% aren't working hard enough.

If ONLY the top 1-5% were actually as stupid as the Democrats typically believe they are, that might have some prayer of working.