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The government's "$6.3 trillion scam"
Friday, February 05, 2010
Jonathan Weil must have had little wisps of steam coming out of his ears as he read the email response to his queries from the White House Office of Management and Budget and affixed a title to yesterday's commentary at Bloomberg.
Obama’s $6.3 Trillion Scam Is America’s ShameIt quickly progresses to calling the U.S. housing market a giant Ponzi scheme that sucks in America's newlyweds via the homebuyer tax credit and ends with a lame excuse from the OMB about why they won't include Fannie and Freddie in the government's official budget - it would be "too disruptive to change how they are accounted for".
Look through President Barack Obama’s proposed 2011 budget, and you’ll see a line calling for a $235 million increase in the Justice Department’s funding to fight financial fraud. Lucky for them, the people who wrote the budget can’t be prosecuted for cooking the government’s books.Whether on Wall Street or in Washington, the biggest frauds often are the perfectly legal ones hidden in broad daylight. And in terms of dollars, it would be hard to top the accounting scam that Obama’s budget wonks are trying to pull off now.
The ploy here is simple. They are keeping Fannie Mae and Freddie Mac off the government’s balance sheet and out of the federal budget, along with their $1.6 trillion of corporate debt and $4.7 trillion of mortgage obligations.
Never mind that the White House budget director, Peter Orszag, in September 2008 said Fannie and Freddie should be included.
Maybe the world should stop looking at Greece and start looking at the U.S.
4 comments:
Better late than never. Where was this when TARP was being debated? I mean even Fred Thompson tried. To actually lead to meaningful changes, the outrage has gots to be fanned white hot to the point where someone actually starts crucifying Paulson, Geithner, Bernanke and all the other principals. Oh yes, and the Maestro should get to spend the rest of time debating and cleaning up after a four-legged herd of himselfs.
1: You allowed Banks to write mortgages, then sell them. Moral Hazard.
2: You allowed Wall Street to Misrepresent the quality of Mortgages as Triple-A. Fraud.
3: You deregulated the industry.
Then it all broke, and now you complain about the bailout?
Cause and Effect.
IF you don't fix the CAUSE, don't blow hot air about the Effect.
@anon2. You have to follow that line of logic back one more step to arrive at the root cause. Government regulation is not the answer because that is just another method to concentrate power so that it can be abused. Any fractional reserve lending is fraud and potentially leads to a run. However, what goes on between consenting creditor and debtor should be none of anyone else's business as long as the consequences are confined to them alone. There is no need to regulate a bank's reserve ratios provided it is not to be backed by any form of public guarantee, whether that be what the GSEs do, FDIC or the FED via the currency. In fact, without a guarantor (the FED), a bank could issue notes to kingdom come but no one would accept them and the situation is self-limiting. The FED and pseudo-regulation is the root cause because it makes the public a creditor in a scheme that primarily benefits only the banks. The system was bound to break down because it is intrinsically a fraud. That having transpired, bailing it out was the worst outcome possible because not bailing it out was everyone's chance to get rid of it.
Government Regulation controls FRAUD. Enron-Worldcom-[Many More]-Madoff.
Canada, who did not deregulate their banks, did not have to Bail Out Banks.
We've just seen that writing mortgages to unqualified applicants AFFECTS Us All.
You are ignoring TBTF, small banks can be allowed to collapse, big bank collapse brings on a Great Depression. What channel do you watch? FOX - Saudi Controlled - NEWS? Of Course, they want America to FAIL.
I'm just fearful for Glen Beck, when his listeners find out he's an ENEMY COLLABORATOR, they will rip him to shreds.
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