Big Enough to Take Away Everything You Have - Part 1

It is no secret that we are in a recession; that the economy is in bad shape. Businesses and corporations are closing; Mrs. Fields and Circuit City are gone. Others are suffering, and people are losing their jobs. There’s a problem, and the Democratic rule in Washington tell us they have the answer, but what their plan does is take one crisis and set it up as the starting point for another. The current Stimulus package won’t help in the way it’s being showcased; it will not help the American people.

But first, when did our current economic crisis begin? Scott Powell of Barron’s Magazine, an American financial magazine, writes on this very issue in an editorial entitled The Culprit Is All of Us. Powell writes how it was during the Carter administration that our crisis began with the “passage of the Community Reinvestment Act to stem bank redlining and liberalize lending in order to extend home ownership in lower-income communities.” Then in the 1990s, “the Department of Housing and Urban Development took a fateful step by getting the GSEs to accept subprime mortgages.”

Contrary to what the media has made you believe, Powell points out the Bush administration “made many mistakes, but deregulation was not one of them,” in fact the Bush administration and a Republican Congress “approved the most sweeping financial-market regulations in decades.” During the first three months of their first term, the Bush administration warned that Fannie Mae and Freddie Mac posed a potential problem, and even after those scandals were made aware “regulators sent Fannie and Freddie back into the market to continue buying subprime loans, lending and borrowing with implied taxpayer backing”. The poor and middle class were encouraged to buy houses they couldn't afford, and as Powell adds, “speculators were lured into excessive risk-taking; banks were rewarded for lowering their loan standards; and Wall Street found new windfall profits from securitizing and reselling bad loans in bulk.”

Freddie and Fannie didn’t fail eight years ago; they didn’t fail four years ago. Freddie and Fannie failed in the late summer of 2008 with a Democratic congress. So what did the government do? They took control of Freddie and Fannie. Just a short time later Wall Street crashed. What did the government do then? They gave the surviving banks a bailout, which was a failure. Later there was a similar act when GM, Ford, and Chrysler began to fail.

NBC’s David Gregory of Meet the Press broke the government bailouts and stimulus packages down. “The first stimulus, $168 billion; the money allocated for Fannie Mae and Freddie Mac, 200 billion, only about 14 billion of that has been drawn down by Freddie Mac; the bailout of AIG…122.8 billion; the bailout money known as the TARP, you've now got the second half of that authorized, that's $700 billion, some of that for the auto, Bank of America, Citigroup; the proposed stimulus--or recovery plan, as you put it, $825 billion.  That is $2 trillion from February of '08 and, if it's passed in the middle of February, to February of '09.”

So we have one bailout that was a failure to failed banks, another went to failing auto corporations, and President Obama is pushing for a package that he says would save the economy and the American people, because something has to be done now! No good news has come from any of these bailouts, all you have is the receivers asking for more money, but apparently this pattern isn’t enough to get Washington to reconsider this form of the package.