Puplava is either incompetent or an outright liar....He keeps claiming that bailing out Wall Street is Socialism...Go back to school Jim...Its Fascism!...Big Big Big Difference. How can you take a guy seriously who is that wrong about something that important?...What happened to his much ballyhooed lawsuits for naked shorting?
".He keeps claiming that bailing out Wall Street is Socialism...Go back to school Jim...Its Fascism!."
You have to remember a few things: 1. Part of the reason for the problem is government interference anyway. Over the years many laws have been passed to encourage home ownership. Laws have been passed restricting mortgage banks from turning down applicants who are buying properties in distressed areas, even though it may not be great collateral. Race discrimination tests are applied to make sure fairness is being done, but that encourages granting applications that might improve scores in that area. Fannie Mae/Freddie Mac were pseudo governmental anyway. 2. There is certainly precedent, and it goes back to the policy of encouraging home loans. One possible policy is to make people pay a significant down, say half, before buying a home. Not many would own homes, but those that did would never default. Push down the down payment, and you have more defaults, and whoever is holding the mortgages when the downturn comes gets caught holding the bag. In the 30's FDR helped the banks. In the 80's Reagan helped the FSLIC/Savings and loans. 3. This is really a pretty small package. Sure, $700 billion sounds like a lot, but remember, this isn't being handed out gratis, it is being used to buy distressed assets. Considering that the government is buying them at a distressed price, they may actually make a profit on the deal, and certainly shouldn't lose too much. Contrast this with the S&L crisis where they just kept putting off a solution, and then the price kept getting higher.
If our policy is going to be no government help when the mortgage crisis comes every 30 years, that is fine, but that ought to be made clear up front. Then take away the restraints who who mortgage bankers can turn down, and let the free market work.
The guys that ought to be strung up, if you ask me, are the ones that killed it Monday so that $150 million of pork could be added. Those same people gave everyone the opportunity last week to, night after night, listen to comparisons to the 30s. Then, when the market tanks, we're surprised?
Sometimes in times of crisis you need to step up and do the right thing, and you don't get a second chance. Congress did try to avail itself of a second chance, but by then the damage of a week of comparisons to the 30s had been done. The Dow is down 11% since the vote Monday, and I don't believe it would be if they had just passed it in the first place.