What is the true cost of the proposed government bailout?  While most of America was enjoying the last weekend of summer and watching football, our unelected and unaccountable bureaucrats at the Treasury Department and the Federal Reserve were busy working on how to “solve” the financial crisis that seems to grow bigger and worse by the day. The “initial” solution that they came up with will cost between $700 billion and $1 trillion. That is the initial estimate of the cost. You can bet it will go much higher.

Wall Street has essentially collapsed and its geography has been forever change due to the deadly combination of greed, ineptitude of oversight, and government interference in the form of too much bad regulation. All this coupled with the Fed eternally manipulating interest rates and printing money in a vain attempt to affect a positive outcome and stave off the looming crisis as it simmered only served to compound the problem, and we are seeing the results. The result is an economic collapse or meltdown.  It is primarily due to government manipulation and meddling in something it has neither the authority nor the tools nor the competence to be meddling with. It is the result of “command economics” and central planning. Central planning is always bad for an economy, and in this case really, really bad planning results in a really, really bad problem

Admittedly, there was a certain degree of satisfaction watching the likes of Nancy Pelosi, Chris Dodd, Harry Reid, Barney Frank and the rest of the criminals on Capitol Hill standing there like deer in the headlights, with the shock and awe clearly displayed on their faces after their conference with Treasury Secretary Paulson and Fed Chairman Bernanke. One has to wonder, though, if the looks of grave concern were precipitated by the fact that they had just been told that the economy would imminently collapse if AIG were allowed to fail, or if it was because they understand that they are complicit in this financial catastrophe and are terrified that they will be found out. 

Sadly they have no real cause for concern, though, because the only pseudo-mainstream publications that actually report the truth of this mater and name who is complicit in creating the conditions and ignoring the signs that allowed this financial meltdown to occur are your usual “right-wing conspiracy” theorists like the editors and reporters at the Wall Street Journal, Portfolio, National Review, Weekly Standard, Investors Business Daily and the like. Guaranteed you won’t hear Katie Couric and Charlie Gibson bringing up names like Donna Shalala, Jamie Gorelick, James Johnson or, heaven help us, William Jefferson Clinton.

A remarkable thing is occurring before our very eyes in Washington, though – Republicans and Democrats seem to be genuinely working together to implement a solution as quickly as possible to calm fears and the markets. Certainly there are many differences being voiced, but in general they are all in agreement and the final product will be a matter of hammering out the minutia, so to speak. This is actually more frightening than the actual financial crisis. Why? Because these are the folks that got us into this mess in the first place due to their own narrow self-serving interests, incompetence and corruption, and purposeful lack of oversight of the Leviathan wherein this meltdown began – Freddie Mac and Fannie Mae.

The solution as it stands would give at present would give Treasury Secretary Henry Paulson extraordinary, unprecedented and essentially dictatorial authority to essentially do what he pleases with $ 1 trillion in taxpayer money. The Wall Street Journal called it for what it is: “Lots of money. Lots of power. Naked, ugly dictatorial power.”

The actual language in the proposed bailout Act as written by Treasury lawyers doesn’t inspire comfort either: “Decisions by the Treasury pursuant to the Authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” This language is self-explanatory. And it is frightening.

And this is most likely only the beginning, the tip of the proverbial iceberg. On Monday former President Bill Clinton called for a bailout for all those homeowners who can’t afford to make their mortgage payments. The auto industry in Detroit is lining up for handouts to the tune of $50 billion minimum, a deal that has all but been cut between Detroit lobbyists and Speaker Pelosi. One can be sure that credit card debt will mushroom sooner rather than later and all those banks holding that debt will be demanding their share of the taxpayer-funded pie. The airlines won’t be far behind as they are being crushed by unprecedented fuel prices. And on it goes with no end in sight, and that is precisely the problem with government bailouts on such a massive scale; once they begin they do not end.

Right now it is difficult to assess whether we are still at the crossroads or if we have turned a corner toward authoritarian socialism, but is the language in the proposed plan is any indication suffice it to say that things to not look good for the future of a free market or for liberty in the US. And this is unconscionable.

In undertaking to engage in the extraordinary practice of massive government bailouts and nationalization of the most fundamental sector of the economy the US government has stepped into territory unknown since before the Revolutionary War. In fact, it was this exact type of arbitrary government authority that was the reason for fighting the Revolutionary War. While the talking heads on TV and radio speak of entering into “uncharted territory,” the brutal fact of the matter is that this is far from uncharted territory for this same unchecked and arbitrary government power was seen, understood and resisted the Founding Fathers of our republic as they were not afraid to call it for what it is. It is called tyranny.  

It is no secret to anyone who has read the Constitution of the United States with even a modicum of understanding that al three branches of the Federal Government have been violating their Constitutional authority for quite some time now. However, the actions taken by the government over the course of the last week are truly unprecedented. No branch of the government has any Constitutional authority whatsoever to takeover operations of a private business. No government authority is granted by the Constitution to appropriate public fund for such purposes. And certainly no Constitutional authority exists to allow for granting dictatorial powers to a cabinet secretary to run and attempt to manipulate the economy as he sees fit. It is unprecedented and entirely unconstitutional.

And yet knowing it is unconstitutional, out of fear this Congress will overwhelmingly approve this illegal action. And they will hope and pray that it works. And if it doesn’t? It this plan doesn’t work – and keep in mind that there is no Plan B because this is Plan B – amid all the uncertainly that would follow such events, the one thing you can be assured of is even more invasive and strict government intervention. But to what end? Government issued and approved credit becoming mandatory and the sole acceptable manner of conducting commerce? Government seizure and control of all banks and credit issuing agencies? Where does it end?

And what if it does work? What if those administering the government later decide that the government should remain in total control of the financial sector and through still more illegal Acts of Congress continue to "renew" the contrived authority to seize and maintain private companies in conservatorship? What then? 

Perhaps most frightening is that no one in government is listening to anyone who is raising these concerns because that is what happens when fear rules the day, and more alarming still is the known fact people will accept anything that promises even temporary security when real fear is being held over their heads. Hitler, Stalin and Mao did not rise to power because people were happy and comfortable and felt secure politically and economically. Fear is a dangerous weapon and history has shown time and again how fear, when employed and exploited by government, always proves fatal to liberty. And when government moves quickly to address a problem, even a well-intentioned solution will result in some very foreseeable repercussions that no one in Washington wants to acknowledge, much less address.

When a people willingly sacrifice their liberty – as is about to occur here – they are no longer sovereign, but subjects, for a republic exists only when a free people willingly submit to a governmental authority de jure, that is an established and mutually agreed upon system of government that by law may operate only with clearly defined limitations, purpose and intent. Should said government exceed any or all of those limitations, thereby exceeding its constitutional authority, it is the responsibility of a free people to take what power with which it is vested – that is all real power – and bring an abrupt end to government abuses of authority. 

In a republic, government exists and operates at the pleasure and by the authority of the people. That is what is meant by government de jure – government by and of legitimate law. When government abuses its power and acts outside of its legally defined authority it acts arbitrarily and becomes a government de facto, that is government by decree or imposition. In such a case citizens are no longer sovereign, but subjects; and, so it almost goes without saying that given the purpose of government being control, thus it’s natural tendency to encroach on liberty and thereby necessitating a clear legal definition of its valid scope of authority, once government exceeds said limitations of authority with impunity it will continue to do so. And in doing so it will continue to encroach upon and usurp individual rights and liberty unless the people fulfill their own obligations as a free people and stop it. 

In a republic such as ours, all true, valid and legitimate power and authority is vested in the people, not in the government. That is unless or until the people relinquish that power either by action or inaction to the government. Such is our present predicament.

As stated above, we all know that all three branches of our government have been exceeding their legitimate authority for many, many years now, encroaching on liberty and violating the Constitution. With this latest government incursion and illegitimate execution of authority it does not have the stakes have become frighteningly high and all too real in a vey short span of time. Now is the time for the people to decide: subject or sovereign, courage or cowardice. This action now being undertaken by the US Government takes the idea of sanctioning the violating of the Constitution to an unprecedented and very dangerous level. This time the politicians and bureaucrats have not only arrogantly wiped their hind-sides with the Constitution, but once they are finished wiping they intend to rub it in our collective faces – but only if we let them. 

If we rise up and let our voices be heard, they will respond, for nothing motivates career politicians like fear, especially in an election year and with the elections a little over a month away. We have a choice: we can make our collective voices heard now, loud and clear and force them to respond, or we can wait and see what happens. The problem with the latter choice is that the next time the people decide to rise up in the face of tyranny they may have to do it with torches and pitchforks and rifles.

So what is a trillion dollar government bailout really worth? What does it really cost? The true cost of the thing is liberty and a free market economy. The price we will eventually pay is subjection to tyranny.

You may want to read Part I , Part II , and Part III prior to reading this, as this is a multipart series.

Part IV

A Government Sponsored Culture of Corruption

Freddie and Fannie took on increasing amounts of high-risk debt because they could do it with impunity: they are backed up with an implied guarantee from the government, so for them high-risk is really no risk at all – even if the loans go into default, Fred and Fan will be OK because they know the government will throw lots of money at them. Why? Because they own more than one half of the mortgage debt in the US. So they, and the government, encourage privately owned financial institutions to get on board the high-risk-high-profit gravy train and they also begin assuming high-risk debt. Banks and holding companies begin to consolidate and merge – money is flowing all around, the economy is humming right along and the Dow hits record highs. Unfortunately for the rest of us, many of those companies and individuals who were raking in the money were doing so because of what would otherwise have been considered unethical business practices had government not been promoting it.   An atmosphere of corruption facilitated and even encouraged by the government is only going to breed more corruption. 

Housing was more in demand than ever, so… the price of housing goes up, and up, and up. The demand is still there, so when the opportunity presents itself to make even more money, people and institutions will do it. Given the fact that the government was at least tacitly blessing these questionable activities, if not outright threatening regulatory enforcement if companies refused to participate, many people were taken advantage of by such relatively new inventions as so-called Ninja loans (No Income, No Job and no Assets) where said loans were made when there was really no probability that it would ever be paid back. Granted, one would think that when pursuing a loan for a home that one would have adequately assessed one’s financial standing and come up with a line in the sand that was an absolute limit, knowing they could afford nothing more. You can’t argue with ignorance or sheer stupidity. 

If people are too stupid to understand what they can or cannot afford, there’s not much one can do to help. A substantial part of the problem here, and certainly a part that only served to feed the beast and make matters even worse is the “credit culture” that practically puts having as many credit cards as you want in the Bill of Rights and very bad regulations that allow banks and financial institutions to give credit cards to an unemployed homeless guy with leprosy and dementia, and then encourage him to seek even more credit. 

Credit cards are great, right? You only have to make the minimum payment each month and you can spend as much as you want – and, the more you spend the bigger your credit line seems to get. Let the reader understand that I am not making excuses, but simply relating a contributing factor. When you go into a broker and sit down to get pre-approved to buy a home and you have determined that your absolute maximum price you can afford is $200,000 you have given this a fair amount of thought. Then the broker sifting through your paperwork tells you that your assets show that you can really afford a $285,000 home. And then you start thinking about the one you saw last week that you thought was out of your price range and reconsider – and buy it. Eventually you realize too late that the broker was wrong and you were right in the first place. You default, the bank takes the house and turns around and sells it and continues to make money – that is until people stop buying houses. Then the whole bubble bursts and the ugly truth rears its head. And that is what happened leading up to the collapse of Freddie Mac and Fannie Mae.

Let me reiterate once more: I am not advocating excuses for any people who knowingly overextended themselves and ended up in foreclosure sitting under mounds of debt that they could not pay off. Fiscal responsibility is an individual responsibility, and most of us understand and adhere to it. Unfortunately there has been a general attitude of entitlement in this country for a long enough period of time that many people simply think that having credit so they can get stuff they know they cannot afford is a Constitutional right. And, it doesn’t help matters when the government steps in and acts as if this were so, creating a regulatory structure that not only encourages but forces banks and financial institutions to make loans to people it otherwise wouldn’t because of quotas and threats of enforcement of anti-discrimination statues, etc.

The people on Wall Street and those who administer the financial markets of this country are not stupid. If someone with no job, no assets, no income, and no way of ever paying off a loan can to them and asked for a loan to buy a nice house in the suburbs, under normal circumstances the banks would have turned them down flat. But the government stepped in and said, in effect, “you have to give them a loan because they deserve a home and a line of credit, and if you refuse we will have to audit your business practices.” In the beginning, the banks weren’t given a choice. In the end, they succumbed to greed as they apparently could no longer resist the temptation to get themselves in deeper and deeper, issuing more bogus loans and justifying it by the “collateral” supposedly backing up those loans. But, the wealth of the companies was measured in terms of the “pledged collateral” and assets backing up those loans, so on paper they were rolling in money. In reality they were being bled dry.

To say that the bursting of the mortgage bubble caught some off-guard is completely and utterly moronic, because common sense ought to dictate that when you make a loan to someone with no assets, job, or income, you will not be getting that money back anytime soon. The people who were making the decisions at these institutions are not by any means stupid: they knew full well what they were dealing with and what they were doing. They knew exactly the risks they were taking, and believed the potential for profit was worth the risk. And they were wrong. And they were warned many, many times.

Some people, however, apparently did see the eventual bursting of the bubble. In fact, the Bush Administration proposed some sweeping overhauls back in 2003. In a New York Times article dated Sept. 11, 2003 the Times reported that, “Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.” This was seen as “is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken.”

Furthermore, then Treasury Secretary Snow said that “Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.”

However, “The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.”

So, even though people in the know were openly acknowledging a very major problem and preparing somewhat for the inevitable downturn that they had to know would lead to a financial collapse, there was still little incentive to alter the prevailing practice of the day when both companies were exempted from antifraud provisions of federal securities laws. The result? No changes, just more debt. Freddie and Fannie continued to accrue debt and sell it to other firms, all of which were now totally on board the high-risk mortgage gravy train.

Not everyone saw a problem with this, however: “’These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,’ said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ‘The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.’'' You see, to some politicians, most of them progressive Democrats, pandering to a voting bloc is more important than the financial stability of the nation.

So for the far-left progressives who are in denial that their precious pandering policies are about to ruin the nation financially, and continue to blast the current President and any conservative thinker who would dare to question the validity of the standard progressive, or for that matter Congressional, solution of throwing as much money as possible at problems, might I inquire as to who you think will be paying for this? The progressive left blames the free market, but the real problem is that the market is not free and hasn’t been for decades due to government meddling in things it has no business meddling in. And now it owns businesses – and a ton of debt. That means YOU own a ton of debt, and you and your posterity will be responsible for paying it off because, despite its assertions to the contrary amidst the clatter printing presses running overtime in the basement of the Fed, you know and understand if you have read some of my previous articles on the subject of the government and its debt, that the Federal Government is flat broke. It has no money, and only keeps running because the Treasury auctions off that debt to the entity – or country – bidding to charge us the lowest interest rate.

This brings me to a final point. Remember that $2.3 trillion dollar figure we were discussing a while back?   Well, that seems to have changed too. Recently the Fed printed out another $180 billion to pool with other central banks from around the world and pump into the global economy. Congress will likely will approve the recommendations of Fed chief Bernanke and Treasury Secretary Paulson and authorize close to $1 trillion for a new government agency and program to by up all the bad debt in the country. It’s amazing how fast things can happen in Washington when those responsible for it realize that the proverbial you-know-what has hit the fan and splatter all over their vile and corrupt faces. You may also factor in the very real possibility of Congress approving even more that the $1 trillion figure requested so it can bail out homeowners. There will also be more industry bailouts, because now that the government kitty has been tapped, there will be no end to the number of industries holding out their hands for money.

Finally, as if the news could not get any worse, consider that a certain far-left progressive who would be President will tack on an additional 800 billion to 1 trillion dollars to these figures with new government programs. 

It is time to act sensibly here and do something about this mess before we totally implode. 

What can we do about it? For starters bombard your representatives with angry email. Flood their accounts. Flood their phone banks. If you scare them they will react, because for the most part, they are cowards. Then in early November ask yourself this question before you go to the polls: “If two quasi-government agencies and a bunch of corrupt, rotten and unaccountable politicians got us into this mess, how will the same people and more government get us out?” Then vote.

You may want to read Part I and Part II prior to reading this, as this is a multipart series.

Part III

An Economic Bermuda Triangle

Those who are to blame for this crisis are the ones who engaged in predatory lending practices and those who enabled them to do so. Who would that be? Let’s start at Freddie Mac and Fannie Mae and then skip on over the Capitol Hill and the White House.

Who’s been working over at Freddie and Fannie? Funny you should ask that. According to the Investors Business Daily, when “Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud. Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million. Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses. In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.” Hey – isn’t that the same Jaime Gorelick who was on the 9/11 Commission? And isn’t that Franklin Raines the same guy who was Director of the U.S. Office of Management and Budget under Clinton? Coincidence, or...?

Below is a list obtained from OpenSecrets.org: 

Top 12 Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008

Name                             Office State Party     Grand Total    Total  PACs   Total Individuals 

1. Dodd, Christopher J     S         CT        D          $165,400      $48,500           $116,900

2. Obama, Barack            S          IL         D          $126,349      $6,000            $120,349

3. Kerry, John                  S          MA      D          $111,000      $2,000             $109,000

4. Bennett, Robert F         S         UT       R           $107,999      $71,499            $36,500

5. Bachus, Spencer           H         AL       R            $103,300      $70,500          $32,800

6. Blunt, Roy                   H         MO      R            $96,950       $78,500             $18,450

7. Kanjorski, Paul E        H          PA      D            $96,000        $57,500            $38,500

8. Bond, Christopher S    S          MO     R            $95,400        $64,000            $31,400

9. Shelby, Richard C       S          AL       R           $80,000        $23,000             $57,000

10. Reed, Jack                  S          RI        D           $78,250        $43,500           $34,750

11. Reid, Harry                S          NV       D           $77,000        $60,500           $16,500

12. Clinton, Hillary          S          NY       D           $76,050        $8,000              $68,050

Nancy Pelosi is number 17 on the list. The full list names just about everybody in both houses of Congress. Get the picture? 

At the very least since the Clinton Administration took power, and likely long before – like circa 1970 – there has been a financial Bermuda triangle between the White House, Congress and Freddie and Fannie. Money and power and influence and corruption swirl round and round, yet the data, evidence and memories of those involved in government sanctioned corruption seems to just disappear into thin air – especially when the good times go bad and someone else has to be blamed. It seems that it is always the same people involved in making your money disappear – and right into their own bank accounts in one way or another. Ah, the revolving doors of Washington DC!

When you look at this list of politicians who took Freddie Mac and Fannie Mae contributions over the last twelve years and read their names and party affiliations, one quickly realizes that the spirit of bipartisanship is indeed alive and well, at least when it comes to taking campaign contributions from quasi-government agencies chartered by Congress, certainly with that potentiality in mind.  

The whole list it is very incriminating to politicians of both parties. It is interesting to note, however, that most of the high dollar recipients were Democrats. This by no means absolves the Republicans - in fact it damns them. Not the number one recipient of these contributions, Senator Chris Dodd, Chairman of the Senate Banking Committee. This Senator also received a sweetheart deal on a loan, as it turns out. Surprised? You needn’t be, because he is not alone. 

According to Portfolio.com, “Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, refinanced properties through Countrywide’s “V.I.P.” program in 2003 and 2004, according to company documents.”

Here’s something else that won’t surprise you, because the MSM and the Democrat Party don’t want you to know about it, lest your feathers get a bit ruffled. “Other participants in the V.I.P. program included former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke. Jackson was deputy H.U.D. secretary in the Bush administration when he received the loans in 2003. Shalala, who received two loans in 2002, had by then left the Clinton administration for her current position as president of the University of Miami. She is scheduled to receive a Presidential Medal of Freedom on June 19.”

Have you noticed anything that these folks, I mean crooks, have in common. They all worked… for a certain guy… at a particular address on Pennsylvania Avenue… Have you figured out the connection yet? Here’s one more clue just to help you out: “James Johnson, who had been advising presidential candidate Barack Obama on the selection of a running mate, resigned from the Obama campaign after the Wall Street Journal reported that he received Countrywide loans at below-market rates.”

There are many, many more. All of these former high ranking government officials who worked for a particular Democrat who served two terms between 1992 and 2000, and who received VIP treatment were referred to in Countrywide company emails and documents as “FOA”s, or Friends of Angelo – Countrywide CEO Angelo Mozilo. 

It appears, again according to Portfolio, that Angelo had many, many friends in very high places. “Henry Cisneros, who served as secretary of Housing and Urban Development in the Clinton administration; former White House staffer Paul Begala, now a commentator on CNN; and Postmaster General John Potter. Countrywide also offered special discounts to Congressional staffers involved in housing issues.”

Angelo’s tentacles were far reaching: Countrywide spent over $1.5 lobbying Capitol Hill in 2005. Here’s an interesting anecdote. “Jimmie Williams, a Countrywide lobbyist in Washington, was remarkably candid in emails about the purpose of V.I.P. loans. In November 2002, for instance, Williams urged Feinberg’s boss, Doug Perry, to give “specialized handling” to an application from a staff lawyer for the House subcommittee that monitors the Department of Housing and Urban Development. HUD regulates real estate settlements and closing costs and runs the Federal Housing Administration, the agency that guarantees mortgages. Williams pointed out that Clinton Jones III, senior counsel of the House Financial Services Subcommittee on Housing and Community Opportunity, was “also an adviser to ranking Republican members of Congress responsible for legislation of interest to the financial services industry and of importance to Countrywide.” Jones borrowed $101,800. So what. Who is this Clinton Jones, anyway?

Clinton Jones III is now vice president for industry relations at Fannie Mae. The lobbyist, Williams, is currently state director for federal residential-mortgage bundler Freddie Mac – you know, the guys who bundles up all this bad debt and sells it to firms on Wall Street. Also worthy of note is the fact that depending on the year, Fannie Mae bought anywhere from 10 to 30 percent of its loans from Countrywide, which they would bundle with other bad loans and then sell again. Are you holding your nose yet? Wait – there’s still more! 

Many current and former Freddie Mac and Fannie Mae executives received VIP loans from Countrywide. Former Fannie Mae C.E.O. James Johnson was given home loans at relatively low interest rates, and Countrywide waived points for him. In fact, company documents show that after leaving Fannie Mae, Johnson received more than $7 million in VIP loans. Just in case you forgot, that’s the same James Johnson who Senator Barack Obama appointed to vet his potential VP candidates. I think you get the point.

These were the just some of the players involved in the high-risk mortgage game. Granted, many of these people just named would have no problems paying back the loans, but when one is given such VIP treatments and so many of these types of VIP loans are made that may preclude a company such as Countrywide from adequately covering its costs, who do you think that cost gets passed on to. Did your Countrywide mortgage rate increase over the last couple of years? Mine did. Gee, I wonder why?

So, you had at least one major mortgage company giving away sweetheart deals to those who wield political power and leaving the rest of us to make up the difference coupled with pressure from the Clinton Administration to approve loans to millions of people who couldn’t afford them and shouldn’t have been given loans and lines of credit in the first place. What, then, do you have? According to the left you have a conspiracy theory, for it is understood in official circles that there were no Democrats involved. That means the MSM doesn’t tell you about it – so you have to hunt around to find the information, even though everyone in Washington knows who did what.

According to Politico, Nancy Pelosi had this to say “Eight years of weakened regulation of our nation’s financial system — including a failure to regulate risky, and often predatory, lending practices — by the Bush administration and Republicans in Congress have led us to this point, and could further erode our nation’s economic health.”

Doesn’t seem to jive, now does it? Remember too that Pelosi has a vested interest in NOT being found complicit I this scandal – she’s Speaker of the House and number 17 on the recipients list for Freddie and Fannie. Funny how these things always seem to triangulate in Washington, isn’t it? 

Obviously, if you’re thinking that there might be some hearings on this little matter of our entire financial sector imploding, you can forget it. The left will blame Bush and McCain and the MSM will ignore the inconvenient fact that Obama is up to his ears in this mess – if for nothing else than really, really bad judgment in appointing or having anything whatsoever to do with a miscreant like Johnson. If everyone is making some money, then all is well among the corrupted elite; no harm, no foul, right? That is at least if you’re the DC insiders making the money, cutting the deals, brokering power and influence, and covering your tracks – or at least trying to.

So, as the financial feeding frenzy really ramped up, Freddie, Fannie and the bulk of the remaining major lenders began delving into the high-risk loan market and issuing lines of credit and approving loans for more and more people who shouldn’t have had them while jumping in bed with Congress and the apparently the whole former Clinton White House. They just couldn’t control themselves, I guess, with the potential sitting there for such huge, monetary gains and political favors waiting to be granted. 

Part II

Here’s the Deal-eo

Before I get into the down-and-dirty politically-incorrect reality of what is presently transpiring in the national cesspool known to most people as Washington DC, let me first provide the reader with a breakdown of where we are so far. The government has thus far exceeded its Constitutional authority in bailing out the following companies and financial institutions: Bear Stearns $29 billion; Freddie Mac and Fannie Mae $200 billion initially (with a potential ceiling of $1.5 trillion, yes, trillion, due to the debt they carry); AIG 85 billion; the “officially” acknowledged version of the federal deficit $400 billion; loans floated to various other smaller banks and institutions, plus FDIC replenishment $109.6 billion. Put this all together and as of today we’ve just tacked another $1.2 trillion onto the taxpayer’s bill. 

But it gets better, as we may as well just factor in the actual debt that Fannie and Freddie have accrued, $1.5 trillion, because you and I both know the bottom line is that when the government steps in to pay for something, they pay the full asking price. So the real number up to $2.3 trillion. But we’re not done yet. Far from it. You know that “official” deficit figure of $400 billion? Well, that does not include the obligatory welfare/nanny-state social and financial programs such as Social Security, Medicare and Medicaid, federal education loans, grants and the like. Oh, and don’t forget the trade deficit where we lose big to foreign tariffs and, of course, the interest we will ultimately have to pay to all those other corporations and foreign central banks who are buying up US debt auctioned off by the Treasury like candy. So just keep that little $2.3 trillion kiss-in-the-mail in the back of your mind and understand that the actual figure is far, far higher. 

On September 15 the Investors Business Daily published an Op-Ed piece called, “The Real Culprits In This Meltdown.” This piece sums up the current financial crisis nicely and places the proper blame exactly where it ought to be placed – on those people who were responsible and complicit in the criminal activity that resulted in the unprecedented action of the US Government nationalizing industry. 

First off, let us understand exactly what was the catalyst of this mess. Subprime lending is a high-stakes financial game played by massive financial institutions, most notably Freddie and Fannie, where loans are made with the higher expectation of risk and are therefore made with a higher interest rate than normal. This means loans are made to people or entities that the lender understands may not be able to pay back, and so a higher interest rate is the price of the loans. If the loan is paid back the lender wins big. But if the loan is defaulted upon, the lender loses all.

The notion of subprime lending generally refers to those types of loans in categories apart from those specified in loan guidelines established by Freddie Mac and Fannie Mae, which is a bit of irony seeing as the whole problem snowballed from these two institutions. Loans would be considered subprime due to several factors including, but not limited to, income, income and job history, and the credit status of the borrower. “Subprime” also denotes bank loans taken on property that cannot be sold on the primary market and such lending encompasses a variety of credit instruments, including mortgages, car loans, and, of course, the all-American staple that those with no money just can’t do without, credit cards.

Now that we understand what we are talking about, let us move on.

Let’s jump back in time to the late 1970s for a moment. You remember it, don’t you? The booming economy, massive economic development, national pride abounding, and all under the leadership of the best President that the United States that has ever had: Jimmy Carter! You remember that little gem he got Congress to pass called the Community Redevelopment Act that was meant to promote minority home ownership? Well, that particular piece of legislation was employee by the Clinton Administration fro the first days he was in office to ensure that he could declare how he was the champion of the poor and of minorities and how it was he who was able to provide them with “affordable housing.” Do you know what “affordable housing” is? “Affordable housing” is when people who can’t afford it buy a house and you and I pay for it. 

So, Clinton used this legislation to pander to minorities and the poor. In doing so, he also put the full weight of the Federal Government behind it so as to “encourage” lenders to “help” the “less fortunate” to obtain “affordable housing.”   What that really means is that Clinton resurrected the Community Redevelopment Act and to make good on his campaign promise to provide said “affordable housing,” it quickly became well understood that every lender had to make “affordable loans” “available” to basically anyone who was not of white Anglo decent who wanted one. Of you were a lender, you did not want to turn anyone down, because then you were subjecting yourself to bearing the full brunt of the US Government penal code as enforced by the relevant agencies. You could be investigated for anything from “unfair” loan practices to racism and discrimination, and as we all remember after Waco and Elian Gonzales, Janet Reno was more that anxious to wield her power.

Caught up in the hysteria of the typical liberal obsessions of enforcing multiculturalism and pandering to the poor, the Administration was more than willing to levy hefty fines and other penalties on those who did not share the Administration’s enthusiasm for such high risk lending. Any anyone who does not think that such conditions not only enable but strongly encourage predatory lending practices – that is lending to people that you know will never be able to pay it back – needs to pull their head out of their hind-side and get with the reality of the actual situation as it was and as it presently is.

Bad things happen. It screws up everything – even the correct understanding of what, exactly, government is supposed to do and, more importantly, what it ought not to do. For those within the government, especially you “progressive” and faux-conservative politicians out there, here’s a little clue: the government has no business messing with the economy. Our government has become so monstrous that the confused masses of America now overwhelmingly look to this Leviathan to cure all that ails our nation. Why? Because they’ve been taught to. They don’t know that government has no such Constitutional authority as helping citizens and funding businesses and fixing the economy. Perhaps they (especially politicians) ought to actually read the document some time – it is very enlightening indeed.

Here’s how bad it is: when most people are asked who is to blame for the economy being screwed up, they tend to answer that the government is responsible. This answer is not at all incorrect. But, here’s the problem: when asked how the woes of the economy ought to be healed, most believe that the government needs to “do something about it.” Then they demand that Congress and the President act now! Seriously – isn’t the government the entity that is responsible for screwing things up in the first place? Now we are demanding that this screwed up government “fix” things? We want to entrust an impotent and self-serving Congress with a 9% approval rating and an Administration with little understanding of Constitutional restraint to “fix” things? The government has no business messing with the economy in the first place because in doing so it just messes things up even more and ends up costing the taxpayers (don’t even get me started).

On Sunday Treasury Secretary Henry Paulson announced that Freddie Mac and Fannie Mae were being placed in a “government conservatorship.” The plan to take control over the companies was approved by Fed Chairman Ben Bernanke. Paulson also affirmed that the Treasury would do “whatever it takes” to keep these two bastions of government excess from failing. Initially the Treasury would receive $1 billion in preferred shares, and then is initially prepared to provide up to $200 billion to help the companies heal from their financial hemorrhaging over excessive risky home loans. Remember that word: initially… you’ll see why in a minute.

The CEOs of both companies were fired – sort of. Freddie Mac’s Richard Syron and Fannie Mae's, Daniel Mudd, were respectively replaced by David Moffett, a former top official at US Bancorp and Herb Allison, formerly with Merrill Lynch. But, Syron and Mudd won’t be leaving immediately – they’ll be sticking around for the transition. If that weren’t enough, The Treasury's plan puts the two companies under a conservatorship, giving management control to their regulator, the Federal Housing Finance Agency.   FHFA was created recently by Congress specifically to oversee Freddie and Fannie. Are you beginning to see the pattern here?   Try Googling FHFA.gov to find its website and you’ll see that there is none. Either the agency is too new, or the government has become so big there’s no more room left in cyberspace for any more.gov websites. I am inclined to believe the latter.

According to the Wall Street Journal, with the government seizure of Freddie and Fanny, “the U.S. mortgage crisis entered a new and uncharted phase, potentially saddling American taxpayers with billions of dollars in losses from home loans made by the private sector. Bush administration officials argued that the cost of doing nothing would be far greater because of the toll on the economy of falling home prices and defaults in the $11 trillion U.S. mortgage market.” Potentially? Are they kidding? The bill is already in the mail.

But, the best is yet to come. Secretary Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors world-wide.

Do you know what that means? Think back to where the Treasury pledged to initially provide up to $200 billion and how Secretary Paulson stressed that the Treasury will do “whatever it takes” to save Freddie and Fanny. Factor that in with the $5 trillion of debt that is owned by foreign central banks and investors and then put Congress into the mix, and guess what you have? A Congressional authorization for our comrades at the Federal Reserve to do “whatever it takes” even to the tune of, oh, say, $5 trillion. After all, it won’t really be “debt,” because said “debt” will just go back to the Treasury to be auctioned off to more foreign central banks and investors. And eventually, our taxes will go up and we’ll pay for foreign bankers to get filthy rich. 

Keep in mind that the whole reason Freddie and Fanny were created by Congress is summed up in the following signature mission statement: “Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac raises capital on Wall Street and throughout the world's capital markets to finance mortgages for families across America.” Translated from Congress-speak this means: all investments through Freddie and Fanny are safe because Uncle Sam guarantees them. 

There is no risk at all to the investor. And that is exactly the problem. That is exactly why government should never, ever be involved in messing around with the economy.

From the Wall Street Journal: “The intervention also marks the failure of the public-private experiment that was created to boost home ownership among Americans. Fannie and Freddie were created by Congress to help prop up the housing market, and investors have long believed the government would bail the companies out in a crisis. But the companies have long been owned by private shareholders seeking to maximize profits.”   And they will. And the people will be angry, but Congress won’t care. You can bet on a new-and-improved “public-private scam that will certainly fleece the taxpayers of even more money. 

One economist from the University of Pennsylvania's Wharton School said, “Without government support for the mortgage market, home prices would fall much further, exposing the country as a whole to greater economic strain.” Any reasonable person who has ever read the Constitution with even a modicum of understanding and who gets the basic principles of supply and demand as the basis of a free market capitalist system of economics would argue the exact opposite. Why? Because of the difference between a supply system vis-à-vis a command system: once the government enters into the business of supporting various sectors of the economy the entire economy becomes de facto an artificial bubble, ever more removed from the reality of the market and prompting more and more government intervention until the government has to take control of or nationalize most of the economy in order to regulate prosperity and production and keep the whole thing from imploding. The problem here is obvious: Freddie and Fanny are the most startling examples of who our Founding Fathers never intended the government to be involved in such things.

Today President Bush had this to say: “Putting these companies on sound financial footing, and reforming their business practices, is critical to the health of our financial system and to making further progress with the housing correction that today is weighing heavily on our economy. Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing." He went on to stress that this is not a government bailout. 

Well, if a pledge of $200 billion for starters with a real possibility of running into the trillions is not a government bailout, I don’t know what it is. Wait a minute - maybe I do. It’s called nationalization. It’s called command economics. It is a deadly endeavor for a free republic. It is the inevitable result in a series of mortal errors that began with the creation of a central bank, the Federal Reserve System, by the Federal Reserve Act enacted December 23, 1913. That Act alone was a treasonous violation of the Constitution that has effectively sealed the ultimate fate of this republic – unless it can someday be repealed. It was shortly followed by another treasonous abomination, the 16^th Amendment ratified 03 February 1913 resulting in the Federal Income Tax Act of 03 October 1913. All must be repealed because all are deadly to a free republic because they by their nature usurp Liberty and encroach upon the rights of the individual. Not surprisingly a progressive income tax and a strong central bank are number 2 and 5, respectively, of Karl Marx’s list of 10 essential measures that must be enacted in order “to centralize all instruments of production in the hands of the State, i.e., of the proletariat organized as the ruling class; and to increase the total productive forces as rapidly as possible.” For those who are interested, this list is located toward the end of Chapter II of the Communist Manifesto. 

Every American should read the Communist Manifesto. They should read it so that they all understand what happens when government gets too big. They should read it all be frightened and angered. They should read it so that they can better understand why our Founding Fathers gave us the Constitution of the United States of America, and why that document was crafted so as to never to be tampered with or reinterpreted, lest we lose our Liberty to government hegemony, for such hegemony against individual Liberty is the only possible result when government grows too big to be stopped. It feeds on Liberty and snuffs out freedom. And this is only the beginning – unless it can be stopped.