What a Monday morning surprise! After months of telling us that the economy is not really that bad, and that you really can’t call it something as bad as a recession, the Bush administration tells us that Congress must use the people’s money to bail out the two largest mortgage lending companies in the nation, Fannie Mae and Freddie Mac. And this must be done, right now. The plan is to lend these companies $300 billion or so of the people’s money with low interest rates and to further bail them out by buying up an undisclosed amount (possibly 3 trillion dollars) of the now nearly worthless company stock. The people would pay for the stock, but not get ownership!
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Apparently, massive welfare is ok for the rich but not for ordinary citizens. Socialism for the rich! Capitalism for the poor! This bailout would be a gift from taxpayers and their debt burdened children to the people that caused the mess and reaped the profits.
I have a better idea! Let the Fannie Mae and Freddie Mac go broke. Instead of bailing out the companies the government should seize what is left of their assets. Terminate Bush’s tax cuts for the rich. Reestablish very progressive taxes. Use these revenues and the money from the auction of Fannie Mae and Freddie Mac assets to bail out the people who have already lost their homes from default. Also help out people who have bad mortgages sold by rapacious lenders. Provide help to all mortgage holders and renters and homeless people that need it. Begin criminal investigations of the managers of Fannie Mae and Freddie Mac, and their regulatory accomplices, for unscrupulous lending practices. Use all fines and proceeds to help the poor. The rich can have whatever trickles up. Call it the trickle up approach.