published Sunday, November 27th, 2011

The biggest bailout

Democrats and many in the news media place the blame for the economic crisis overwhelmingly on the private sector -- rather than on a federal government that has racked up a $15 trillion national debt and has imposed regulations and tax rates that destroy job growth.

Well, some responsibility does rest with the private sector. Some companies and individuals committed outright fraud.

And it wasn't fraud but poor judgment that harmed the economy in other areas.

U.S. automakers, for instance, long had unsustainable contracts with autoworker unions. That added greatly to the cost of cars made by the companies and made it harder for them to compete with foreign cars -- including some which are also made in the United States. That and poor management decisions ultimately put some of the car makers in desperate financial condition, leading to federal bailouts.

So obviously it would be naive to suggest that the private sector did nothing to bring about the economic crisis and the ongoing, massively high unemployment rate in our country.

But since we've brought up the bailouts, perhaps you would like to take a quick guess as to exactly who got the biggest bailout from the federal government.

Was it one of the major banks, which have drawn so much of the anger of the liberal so-called Occupy Wall Street protesters around the country?

Was it one of the auto companies perhaps?

Not at all.

In fact, the recipient of the biggest single bailout from Washington is not really a private-sector company -- at least not in the way we would normally understand that term.

So who is it?

It's government-run mortgage giant Fannie Mae.

So far, Fannie Mae has received nearly $113 billion in bailout money from U.S. taxpayers.

And the damage that Fannie Mae is doing to our economy and to our people is far from over.

Just recently, it requested an additional $8 billion from the federal government. What is the purpose of that money? It's primarily to cover Fannie Mae's losses from only a three-month period: this past July through September.

No private-sector company has received the level of government bailout funding that government-controlled Fannie Mae has received.

As if that were not bad enough, another government-run mortgage business, Freddie Mac, has received tens of billions of dollars in bailout funds, too. And like Fannie Mae, Freddie Mac recently requested an additional $6 billion from Uncle Sam -- meaning you -- mainly to cover its third-quarter losses.

When it's all said and done, the Freddie and Fannie bailouts may wind up costing taxpayers a fifth of a trillion dollars!

That's almost an unimaginable sum.

Yet the bailouts resulted from Washington's decision over a period of years to pressure banks to give home mortgages to people who in many cases had risky credit. Fannie Mae and Freddie Mac bought up lots of those risky mortgages -- placing the burden on taxpayers when large numbers of home buyers began defaulting on loans they never should have received in the first place.

So while criticism is directed -- in some cases appropriately -- toward private-sector companies that helped create the economic crisis and then received bailouts, a large share of that blame rests squarely on the shoulders of our irresponsible federal government.

Unfortunately, there seems to be far less interest in the news media in highlighting gross federal irresponsibility than in focusing on "corporate greed."

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nucanuck said...

This massive global debt bubble that is now bursting was a public-private joint venture adroitly led by a bi-partisan cabal of financial and government leaders. These wise men actually thought that they were expanding the possibilities across the economic horizon. Sadly, we now know that debt/leverage has it's limits, whom-so-ever the borrower may be.

Placing blame on lowered taxes or mis-spending will never be agreed upon or change the outcome. It is, however, time that we come together and acknowledge that every lender and every borrower must suffer whatever necessary to resolve their contracts, either by payment, default, or some combination. Nations, banks, corporations, states,counties, cities,and individuals are going to default over the next few years while we become painfully aware that borrowed growth really isn't growth at all.

Out of the ashes will come a new financial architecture structured to avoid the errors we have made, and it will...until our collective memory slate has been wiped clean by time...in about another eighty years.

November 27, 2011 at 1:40 a.m.
acerigger said...

They're gonna get Newt to fix it for 'em.

November 27, 2011 at 4:44 a.m.
conservative said...

"Unfortunately, there seems to be far less interest in the news media in highlighting gross federal irresponsibility than in focusing on "corporate greed."

It's much worse than that. Those in the mess media who broadcast THEIR NEWS are socialists. They want gov intervention, regulation and complete gov control if they can get it. They have had a monoply but have seen an errosion with the advent of the internet, talk radio and Fox News. They purposedly ommited the role Demoncrats had in using the Community Reinvestment Act ( a socialist term if there ever was one ) to force banks to grant loans to people with bad credit, no credit, no assets, no income and no chance of ever repaying the loan. Failure was not an option, it was inevitable.

November 27, 2011 at 9:10 a.m.
fairmon said...

Who can name one thing the government has intervened in that has not resulted in much higher cost and a "bubble" that has or will burst? Energy, housing, healthcare, education, financial entities to name a few. Once they have made a mess their attempts to fix it only makes it worse.

November 27, 2011 at 10:31 a.m.

Who can name one thing the government has intervened in that has not resulted in much higher cost and a "bubble" that has or will burst? Energy, housing, healthcare, education, financial entities to name a few. Once they have made a mess their attempts to fix it only makes it worse. mrHarpp

i uh uh uh-greee!

November 27, 2011 at 12:52 p.m.
nucanuck said...

Our government leaders are a revolving door with corporate leaders. They are one and the same.

We have a corporatacracy/oligarchy, governance of,by, and for the few.

Mis-calculation and greed are bringing the system down. We have to be strong enough and wise enough to figure out the new way forward.

November 27, 2011 at 3:25 p.m.
carlB said...

nucanuck said... Our government leaders are a revolving door with corporate leaders. They are one and the same. We have a corporatacracy/oligarchy, governance of,by, and for the few. Mis-calculation and greed are bringing the system down. We have to be strong enough and wise enough to figure out the new way forward. November 27, 2011 at 3:25 p.m.


Reply: nucanuck,Why do the "elected leaders" keep denying that the USA has been put into the conditions exactly as you said? Yes, it was the fraud occurring within the private financial systems and the increasing global global economy effect and the Bush tax cuts with the added Bush administration spending which
increased the National Debt to $12 Billion dollars through Bush's budgeted eight years. It is not hard to understand why the private corporations continue to drive the US workers benefits down to equalizing with the developing countries that they invest in to get their goods manufactured.

November 27, 2011 at 10:53 p.m.
nucanuck said...

Carl, the oligarcy may have lost some ground, but they are not suffering and they are still in charge. There are some good people in government and we have to hope that they will emerge in America's time of need. The continued jockeying for power will just take us further south. I am sick of these fools blaming one party or another, screeching about socialism as though they had even a faint clue, or yakking about tax rates. We have to move past that, if we can. If we can't...well...it's going to be a long trip down for a once great country.

November 27, 2011 at 11:08 p.m.
carlB said...

free press editorials » the biggest bailout Democrats and many in the news media place the blame for the economic crisis overwhelmingly on the private sector -- rather than on a federal government that has racked up a $15 trillion national debt and has imposed regulations and tax rates that destroy job growth. Well, some responsibility does rest with the private sector. Some companies and individuals committed outright fraud. And it wasn't fraud but poor judgment that harmed the economy in other areas.


Reply: For you to have any credibility, your opinion should include the "time line" of the loss of jobs and the effects of the 2007 deep recession and the time line of the increasing National Debt during the Bush w.'s eight years.
Also, what would have happened if President Bush and Sec. Paulson had not borrowed the %700 billion dollars of unfunded TARP money in September 2008 before Obama was elected President?
What does what happened in 2008 after the 2007 deep recession was admitted to, indicate what the crisis conditions of this Republic were?

November 27, 2011 at 11:40 p.m.
rolando said...

Yep. Everything from increased sunspot activity right down to Little Suzy losing her favorite dolly in a tornado/hurricane/what-have-you is the fault of Bush and the Republicans.

Only our own Dear Leader -- The Chosen One -- His Holiness The Obama [and his Democrats] can possibly save the day.

Yup, yup, yup.

November 28, 2011 at 8:08 a.m.
carlB said...

rolando said... Yep. Everything from increased sunspot activity right down to Little Suzy losing her favorite dolly in a tornado/hurricane/what-have-you is the fault of Bush and the Republicans. Only our own Dear Leader -- The Chosen One -- His Holiness The Obama [and his Democrats] can possibly save the day. Yup, yup, yup.


rolando, Whether it was Obama, Hillary or another Democrat elected as President, just as the conditions were similar to the 1929 great depression. The Republicans would not have any plans for stabilizing the 2007 deep recession, therefore preventing another depression while waiting on the private sectors to step up to "fix" what they destroyed other than looking out for their own financial concerns.
Since the voters did elect Obama for President you along with his other opponents are trying to convince the voters that they made a mistake by voting for a Democrat and especially Obama. "Go figure"

November 28, 2011 at 10:48 a.m.
rolando said...

Well, Carl, it is The Obama's watch now, isn't it?

He is three years into it, now. Yes, three. [Remember his "special", superego Great Seal?]

It is time to stop blaming Bush/Clinton/Reagan/FDR/et al. It is now The Obama's Depression.

Oh yeah, history shows it was FDR's unconstitutional dicking around with the economy that prolonged the First Depression by at least 10 years. The Obama is doing the same with His Depression.

If another Democrat is elected to the Presidency, let it be other than another Marxist/Socialist/wealth-redistributer.

November 28, 2011 at 4:57 p.m.
carlB said...

rolando said... Well, Carl, it is The Obama's watch now, isn't it?


Reply: No, rolando, the "Obama watch" is not mine. The "watch appears to be yours and it is apparently clear the you are not watching what he is doing and have no, intention of accepting him or any other Democratic person.


rolando said "Oh yeah, history shows it was FDR's unconstitutional dicking around with the economy that prolonged the First Depression by at least 10 years. The Obama is doing the same with His Depression."


Reply to rolando; the least I would expect from you is to be honest when looking at the facts of the 1929 great depression. The 1929 depression WAS not the first depression. Check out 1883-1884. I cannot accept your opinion on what happened after FDR was President in 1933. There were four years that the Republicans were in control after the start of the 1929 depression. What were the private sectors and the Republicans doing to end the depression before FDR's terms? I am a "Republican watcher" and their attitude toward the American workers and their families does not appear to have changed any toward the good.. Not any elected person will do everything perfectly, but they should try to do what is best for the long range good of this Republic. Yet, when someone as you and others only want to form their opinions on untruths and then try to rewrite history to put the blame on someone else without having a plan to correct our crisis conditions. I have to ask as an example, what is your objective of making this untrue statement "The Obama's Depression" when we are not in a depression?

November 28, 2011 at 8:45 p.m.
carlB said...

nucanuck said... Carl, the oligarcy may have lost some ground, but they are not suffering and they are still in charge. There are some good people in government and we have to hope that they will emerge in America's time of need. The continued jockeying for power will just take us further south. I am sick of these fools blaming one party or another, screeching about socialism as though they had even a faint clue, or yakking about tax rates. We have to move past that, if we can. If we can't...well...it's going to be a long trip down for a once great country. November 27, 2011 at 11:08 p.m.


Reply: nucanuck, Yes, with the division of the voters who are only interested in backing the party because of their political and ideological beliefs instead of keeping the proper balance to have sustainable long range stability. However, this Republic was setup and taken on a path of un-sustainability by our elected people and the Capitalist setting up the free global trade agreements and the fraud occurring in the private financial sectors, causing the 2007 deep recession. Now the anti government people want to take our country back to the pre-FDR days where the did not have control lover the financial systems and definitely did not have a role in helping the people survive during the 1929 greAT depression. Do the majority of the voters want to go back to these conditions? It certainly appears that many of the people on this board would like another greAT Depression to destroy this Republic as we know it since the policies of FDR were put in with the new deal.

November 29, 2011 at 11:58 a.m.
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