Congress must raise Debt Limit for Trillion Dollar Give-Away to Rich

[UpInArms]

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aB_rf1rurtio

$800 Billion

The program may be worth about $800 billion, split into $50 billion tranches, said four people briefed on drafts of the Treasury's proposal who spoke on condition of anonymity because details haven't been finalized. The funds, which would last for at least two years, will likely accept mortgage-backed securities and collateralized debt obligations, they said.

The Treasury plans to hire asset managers to purchase the assets through so-called reverse auctions, seeking the lowest prices, one of the people said. Congress will need to raise the limit for the federal debt to allow the government to borrow enough to fund the program, the person said.

U.S. NATIONAL DEBT CLOCK


US National Debt Limit Raised Ahead of Budget Busting Bailout Legislation
Politics / US Debt
Jul 25, 2008 - 12:04 PM

By: Peter_Schiff

With President Bush no longer threatening a veto, the subprime mortgage and Fannie and Freddie “bailout” bill is now sailing through Congress. In anticipation of its enactment, Congress had the foresight to raise the national debt limit to $10.6 trillion. Who says that politicians don't plan ahead?

Once signed into law, the budget busting legislation will hand the Administration a blank check to prop up the ailing home lenders. The ultimate cost is anybody's guess. I believe that the price tag will be higher than just about anyone imagines. Paulson's Bazooka will be locked and loaded with enough fire power to blow what's left of our economy into the dustbin of history.

Though the government and Wall Street assure us that these bold moves will save the housing market, and the economy as a whole, from collapse, the reality is that the solution is far worse than the problem. As painful as the failure of Freddie and Fannie would have been, bailing them out will hurt even more. In other words, it's not the disease that will kill us but the cure.

Ironically, while government is rightly criticizing mortgage lenders for ditching lending standards during the boom (well after the horses had left the barn) the new law will actually encourage lenders to be even more reckless then before. By taking all of the risks out of mortgage lending (provided of course that the loans are conforming), the government is telling lenders not to worry about the loans they make, because if borrowers do not repay, the government will.

Since this bailout eliminates all market based deterrents to reckless lending for conforming loans, the only checks remaining will be those imposed by Freddie and Fannie themselves through the criteria they set for those loans. And although they have taken some steps over the past few months to tighten their minimal “standards”, the political agenda behind the bailout will cause this nascent effort to lose steam. In essence, the government's main goal is to prop up home prices. Since American homes are still overvalued given the fundamentals, their prices can only be pushed up with reckless lending and inflation.

As a result of this bailout bill, the share of mortgages owned or insured by Freddie and Fannie will likely swell from near 50% today to over 80% within a year or two, turning a $5 trillion problem into a $10 trillion fiasco. If the government succeeds in keeping real estate prices propped up, it will only do so at the cost of sending all other prices through the roof. More likely, real estate prices will continue to decline despite government efforts to levitate them, compounding the problems and the losses.

How many trillions of dollars will this mal-administration and its crooked cronies cost the American taxpayer?

:faint:

[Newsjock]

1. Never fear! Our congressional Democrats will fight for us!

Nancy Pelosi will write a strong memo before caving in. Now that's what I call leadership.

[samplegirl]

2. K & R

[beyurslf]

3. How do we afford a trillion dollar bailout over 2 years but cant afford to give everyone healthcare?

[Wilber_Stool]

4. What we need to do is

freeze the assets of all that are involved in this bailout. Just like we do to anyone that threatens the national security of our country.

[Fumesucker]

5. When people have to start dropping the cable.

They may then pay enough attention to reality for it to sink in a bit.

It's not what we don't know that hurts us so much as what we think we know that isn't so.