Obama’s August Surprise – Mortgage Bailouts!

Rumors are swirling around Washington and Wall Street that Obama may try to help Democrats’ dim midterm election prospects by having Fannie and Freddie forgive principle on underwater mortgages.  Obama would basically accomplish this by executive order and thus relieve Congress from their role as holder of the purse strings. 

James Pethokoukis, Reuters: Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie… [MORE]

Irresponsibility doesn’t even begin to describe this maneuver. Fannie and Freddie are already financially teetering; such massive write-downs will have to be passed off to the already burdened taxpayer. Needless to say, it is again spending more money we do not have. Should this surprise take place, Congress should share the blame by passing laws that basically gave away their Constitutional authority to the treasury and executive branch.

This may buy the Democrats some votes in the short run, but can you image just how pissed off everyone who struggled to responsibly pay their mortgage is going to feel about footing the bill for someone else?  The anger that is going to generate against Democrats might be the kind of anger the party may never recover from.

Via: Memeorandum

Via: Reuters

Why are we bailing out Greece?

This has to be the most twisted thing I ever heard. The International Monetary Fund is going to give Greece a $140 billion dollar bailout. Since the United States is a member of the fund, part of that $140 billion will come from us. Our cut comes out to about $7 billion.

NY Post: US taxpayers will be helping to foot the bill for the Greek bailout, via the Interna tional Monetary Fund. And if the Obama administration doesn’t draw a clear line, Uncle Sam may soon be on the line for even more and larger European “rescues.”

The Greek government, with its high taxes and profligate spending to support large bureaucracies and social programs, is bankrupt. Its bonds have been downgraded to junk status. …

Concerned that the fiscal damage could spread throughout the EU and the world, other European Union members and the IMF have pledged $145 billion to bail out Greece. And since the United States is the largest contributor to the IMF budget, our government will be funneling billions of American tax dollars to Greece.

No one wants to see Greece fail — the economic stability of Europe is important. But US taxpayers have funded bailout after bailout, and our country faces a debt crisis of its own.

Our unemployment rate stands at nearly 10 percent. The public debt now stands at $9.2 trillion. The Congressional Budget Office predicts that America’s debt held by the public will reach 90 percent of gross domestic product within 10 years under President Obama’s budget. Without dramatic spending restraints, America is on a path like the one that led to Greece’s financial catastrophe. 

In these days of massive bailouts, giant stimulus packages and a new trillion dollar health care program, $7 billion sure does not sound like much. However, just like the bailouts, the stimulus and health care reform, the $7 billion dollars for Greece is money we don’t really have. Basically we are over spending to save a nation that over spent.  Has anyone in Washington noticed the irony in that?

What I would like to know is after we have spent ourselves into a whole, just like Greece did, who is going to bail us out? 

Via: Memeorandum

Via: The New York Post

Please Sir, May I Have Some More? Freddie Mac is looking for another $10.6 billion

This is why "systemic risk" and "too big to fail" are concepts we never should have followed. 

Exhibit A: WASHINGTON – Freddie Mac is asking for $10.6 billion in additional federal aid after posting a big loss in the first three months of the year. It's another sign that the taxpayer bill for stabilizing the housing market will keep mounting.

The McLean, Va.-based mortgage finance company has been effectively owned by the government after nearly collapsing in September 2008. The new request will bring the total tab for rescuing Freddie Mac to $61.3 billion.

Freddie Mac says it lost $8 billion, or $2.45 a share, in the January-March period. That takes into account $1.3 billion in dividends paid to the Treasury Department. It compares with a loss of $10.4 billion or $3.18 a share, in the year-ago period. 

What we have here is a classic example of what our grandparents use to call "throwing good money after bad". Because we have already sunk over $50 billion into rescuing Freddie Mac, we are forever on the hook to bail them out or we risk loosing more than had we just let them collapse on their own.

Freddie Mac and Fannie Mae were part of the fundamental causes to the economic meltdown of 2008.  It is irresponsible to the point of being criminal that the Democrats did not address these two entities in their Financial Regulation bill.

We all know that Freddie will get the cash, because they are "too big to fail" and the "systemic risk" of their collapse to the economy is too great. Next quarter, Freddie will be back with a new set of losses and we can start throwing more good money after bad all over again.

Via: Memeorandum

Via: Associated Press

Girly Man Schwarzenegger seeks $8 billon bailout for California

Oh, so that Arnold Schwarzenegger was acting all Girly Man and gave Obama an “A” for effort.

From The LA Times: 

Reporting from Sacramento - Facing a budget deficit of more than $20 billion, Gov. Arnold Schwarzenegger is expected to call for deep reductions in already suffering local mass transit programs, renew his push to expand oil drilling off the Santa Barbara coast and appeal to Washington for billions of dollars in federal help, according to state officials and lobbyists familiar with the plan.

If Washington does not provide roughly $8 billion in new aid for the state, the governor threatens to severely cut back -- if not eliminate -- CalWORKS, the state's main welfare program; the In-Home Health Care Services program for the disabled and elderly poor, and two tax breaks for large corporations recently approved by the Legislature, the officials said.

Schwarzenegger also will propose extending a cut in the state payroll that is scheduled to expire this summer. That cut has translated into 200,000 state workers being furloughed three days a month, the equivalent of a 14% pay cut. Lawmakers would have the option of extending the furloughs, imposing layoffs or some combination of the two. MORE

California created their own mess and still refuses to be adults and live within their means. I see no good reason why the rest of us should bail them out. Is it not bad enough that Dingy Harry’s backroom deals will force us to pick up Nebraska’s Medicare payments and host of other things?

If Schwarzenegger gets this bailout, expect to see other broke states line up with their hands out. Worse yet, with each bailout, Washington will gain new control and Obama will no doubt be cashing in favors too.

Let California go bankrupt, it’s the type of tough love they desperately need.

P.S. Left Coast Rebel, let me know where and when to send the Care Packages to see you through the rough spots.

Via: Memeorandum

Via: The LA Times

Newspaper Bailout: Could Someone Please Tell Obama We Are Broke?

From The Hill:

The president said he is "happy to look at" bills before Congress that would give struggling news organizations tax breaks if they were to restructure as nonprofit businesses.

"I haven't seen detailed proposals yet, but I'll be happy to look at them," Obama told the editors of the Pittsburgh Post-Gazette and Toledo Blade in an interview.

Sen. Ben Cardin (D-Md.) has introduced S. 673, the so-called "Newspaper Revitalization Act," that would give outlets tax deals if they were to restructure as 501(c)(3) corporations. That bill has so far attracted one cosponsor, Cardin's Maryland colleague Sen. Barbara Mikulski (D).

Aside from the fact that a newspaper bailout would make newspapers beholden to government, what I find particularly galling about such a bailout, is that the free market has already spoken against newspapers. People do not value newspapers anymore. The current woes of the newspaper industry is not due to the current economic down turn, rather it is the Internet and the newspapers own biases that has played a key role in their demise.

The newspapers are unable to combat the Internet’s one-two punch of speed and free content. The only saving grace newspapers could have would be to provide unique content. Unfortunately it is the newspapers' own biases that are destroying its one hope. Since so many of the newspaper’s editorials seem to share the same rehashed opinions, more people turn to the blogosphere (both left and right) for fresher opinions.

So the question becomes, why should taxpayers be forced into further debt to pay for something the vast majority of them don’t want or find value in?

Obama had some pretty naïve opinions on the matter too. From the Toledo Blade:

"Journalistic integrity, you know, fact-based reporting, serious investigative reporting, how to retain those ethics in all these different new media and how to make sure that it's paid for, is really a challenge," Mr. Obama said. "But it's something that I think is absolutely critical to the health of our democracy."

Talk about a real knee slapper. Just last week the fringe media was hyperventilating over the whole Joe Wilson nonsense, while two aspiring journalist on the Internet were exposing the scope of corruption from the criminal enterprise known as ACORN. Yet, Obama thinks the fringe media is worth a bailout? The fringe media was wasting their time on political theater, while the aspiring Internet journalists were exposing corruption that could save Americans up to $8.5 billion dollars. To make matters worse, exposing ACORN only cost about three grand. The New York Times spends 100 times that amount in a day and the Times was wasting its week trying to paint Joe Wilson as a racist.

Obama went on to say:

"What I hope is that people start understanding if you're getting your newspaper over the Internet, that's not free and there's got to be a way to find a business model that supports that."

OK fine, let the newspapers find a new business model, but let them do it on their own dime. The nation is deeply in debt and there is no good reason for us to saddle our children with more debt just to pay for something most of us no longer want.

NO BAILOUTS FOR NEWSPAPERS, THEY’RE NOT WORTH IT!

Via: Memeorandum

Via: The Hill

Via: The Toledo Blade