Friday, September 26, 2008

Financial Frustrations in Perspective

I'm just mad right now.

As I think we all should be. See, we are sure going to miss all that money we have to spend bailing out banks and insurance companies...

According to this article in the Marietta Daily News by Don McKee, this financial bailout has been anticipated by many over the course of the last five years, but CONGRESS has stalled attempts to reform.

Does it make you want to know how your congressmen and senator voted?

Does it make you want to vote out the bums who waited around until it was to late to do anything?

An Article Among Many

In September 2003, President Bush recommended what even the New York Times described as "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."

Bush's plan called for a new oversight agency for Fannie Mae and Freddie Mac, the mortgage industry giants that urgently needed reining in. Immediate opposition came from such groups as the homebuilders association and Democrats in Congress concerned about low-income and affordable housing.

This was how Rep. Barney Frank of Massachusetts, then the ranking Democrat on the Financial Services Committee, put it: "These two entities - Fannie Mae and Freddie Mac - are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Republicans had a majority in Congress but only by the narrowest margin in the Senate, which meant any measure opposed by the Democrats could not get through, particularly since it would take a super majority of 60 votes to overcome procedural roadblocks.

When Congress convened in January 2005, then-House majority leader Tom DeLay of Texas predicted regulatory reform would come. The House approved a reform bill that included affordable housing funding, while the Senate Banking Committee voted 11-9 in a party-line vote for a bill that did not include the housing provision.

In a Senate speech on May 25, 2006, Sen. John McCain pointed to Fannie Mae's self-serving accounting manipulations by senior management, resulting in a $10.6 billion accounting scandal that included phony earnings to trigger big payoffs for the former CEO.

McCain called for reform "without delay." As a co-sponsor of the Senate reform bill (S.190), he urged quick passage. He told the Senate:

"If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole. I urge my colleagues to support swift action on this....reform legislation."

But for the third straight year, regulatory reform of Fannie Mae and Freddie Mac foundered, "derailed by partisan disagreements over investment portfolios and an affordable housing fund," Congressional Quarterly Weekly reported. The Senate bill never made it to the floor because of those "partisan disagreements."

In August last year when the financial system was rocked by big losses in Europe on packages of U.S. mortgage securities, Bush rejected a plan to let Fannie and Freddie go over their mortgage investment limit. First, he said, Congress should reform the agencies.

No, said Democrat Christopher Dodd, chairman of the Senate Banking Committee and a presidential candidate: "There is no reason why such reform is a necessary precondition to a modification of the cap."

Now we'll see if they can put Humpty Dumpty together again.



Kyle said...

The financial crisis is much more profound then the mere housing crisis. Let me give you some sobering bits of info which may really keep you up at night.

For starters lets look at our National Debt. Current estimates are 10+ Trillion dollars. However, this was before Fannie Mae, Freddie Mac, AIG, and the bail out. And just for an FYI Fannie Mae and Freddie Mac have Account Receivables of 5.3 trillion dollars. Yes, 5.3 Trillion dollars. However, now that the Govt. has nationalized Fannie Mae and Freddie Mac the US Govt. (We Taxpayers) assume this amount. In essence all people who had homes through those financial institutions now are paying the Govt. What does this mean? Well, now the US Govt. assumed the role as the financier to the tune of 5.3Trillion dollars in home loans. In essence with these recent bail outs coupled with the 700, oops! I mean now 850 Billion dollar bail out the national debt is "really" approaching 16 Trillion. OK, so what am I saying. Well, Our GDP (Current Assets) is 13.8 Trillion. However, our National Debt is 16 Trillion. Guess what that means? Ding! Ding! Ding! You win the prize! The US is officially insolvent now that we can't even pay off our debts with our total net worth. We are officially bankrupt. But wait it gets better. Since we can't "grow"(GDP) our way out of this we are going to do the only thing we can do. We are going to borrow and print. Ooops! That's right we wont be able to borrow much longer because countries wont lend us the money anymore so I guess we will print. We are about to see a 1970s Stagflation that is about to occur in this country. However, its going to be stagflation on steroids. But here is the problem. Last time around we had only a 1 trillion dollar National debt and we still were a manufacturing powerhouse. Now we have nothing. We are financially finished and the sooner people wake up to this the better. We will eventually call our currency and deem it worthless. Next we will have martial law in order to quell any dissent. At that point we will usher in the new Amero Dollar which will become the new standard. The US will then use a ratio of lets say for arguments sake 5:1 thus meaning every 5 US dollars will be exchanged for 1 Amero. This will immediately reduce our National debt to one fifth of what it was, strengthen our new currency, and assure all of our lenders that we are solvent. Sounds great! Not so. Before this we will have to go through such financial turmoil that it will be on par with the Great Depression. Also, we as US citizens will lose our sovereignty. We will be under national law, we will lose our gun rights, and we will have European Socialism. By the way this is the "best" case scenario. the reality is that it will NOT work this way. Currently Russia is sending strategic air bombers over to South America. They have also told of their intentions to re-establish a new Cuban Missile Crises. Also, they have been working on Plasma stealth technology making their planes invisible to radar. This technology makes our stealth fighters look like P 52s of WWII. In essence when we fall into this next depression the powers such as Russia, China, and many Middle Eastern countries will NOT let us regroup and introduce our new master plan of the Amero and attempt to regain world dominance. At this point in time they will smell weakness and we will see WWIII. With only 300 million people we will be battling 2 major superpowers Russia and China. China alone has 1.3 Billion people. Prepare now. I hope your heart is right with the Lord. the times ahead will be challenging to say the least.


Pastor Jim said...

Wow Kyle, great information here. I hope my readers take the time to digest all this info.

Pastor Jim said...

Though I'm not as sure as you are about the Amero scenario as you are. I have a bit more confidence in the name - and the military - of the USA. That is one commodity we have the market on. It is the stability under our markets that protects us (to a degree).

But I'm with you on the perilous times in which we live.