Remember when the Carter administration bailed out Chrysler? Somewhere there are a bunch of German fatcats laughing their heads off. Jimmy Carter could not have predicted the European future of the American automaker. But shouldn't the truth in front of his face have been enough to dissuade? Lee Iacocca makes an unconvincing welfare queen.

So do Fannie Mae and Freddie Mac. Let them perish. The government has taken over Fannie Mae and Freddie Mac. The Bush administration threatens to transfer as much $100 billion from the federal treasury into the formerly quasi-private lending institutions. If the siphon of taxdollars is that large, the bailout willl be more than 100 times greater than the one Lee Iacocca scammed taxpayers out of in 1979.

It's as unjust to burden taxpayers with paying for the mistakes of lenders as it is to reward the lenders who made those mistakes with an infusion of hundreds of billions of dollars. This is called a moral hazard. By rewarding failure now, the Bush administration will instigate more failure in the future. With no strong incentive to avoid rash lending--indeed, with the bailout providing the opposite instruction--reckless lending institutions like Fannie Mae and Freddie Mac will continue their recklessness.

Banks should lend people money, not governments. Political incentives, rather than financial ones, govern the actions of government bureaucrats. They don't lose their jobs when they lose the company's money. They lose their jobs when they fail to lend money to people in preferred ethnic and socio-economic groups. In the truly private sector, success is rewarded and failure is punished. Government bureaucracy, unfortunately, won't ever go out of business. In fact, the more disastrous the government's failure, the stronger their argument to stay in businesses better suited for, well, business.

The government's failure is the reason why New Deal relics like Fannie Mae came into existence in the first place. By manipulating the currency, Franklin Roosevelt fostered instability in the financial markets. The brilliant Garet Garrett provides context: "One effect was that private borrowing and lending, except from day to day, practically ceased. With the value of the dollar being posted daily at the Treasury like a lottery number, who would lend money for six months or a year, with no way of guessing what a dollar would be worth when it came back paid? 'No man outside a lunatic asylum,' said Senator [Carter] Glass, "will loan his money today on a farm mortgage.' But the New Deal had a train of Federal lending agencies ready to start."

Fannie Mae was the caboose of that train. Thankfully, when enthusiasm for socialism started to wane in the late 1960s, the federal government let loose Fannie Mae. Now, eighty years after launching Fannie Mae, and forty years after partially privatizing it, the federal government is again hitching Fannie Mae to the federal gravy train. Why am I doomed to repeat George Santayana's most famous bit of wisdom?

I think the key term you used is "moral hazard". Perhaps there are huge economic incentives that accompany this bailout, but at what cost? As you've said, this will encourage more failure which solely benefits the plutarchs at the expense of the American people.

What has happened to big government's opposition party? It doesn't exist anymore. It's been co-opted by big government and her allies in greed. What we are now seeing is a blind and complete devotion to the caprices of the ultra-rich and privileged, irrespective of any ideological or philosophical principle.

Why doesn't the media/everybody treat these group of failures with the same vitriol as BIG oil??!!

Businesses can't be expected to always operate perfectly, because of human imperfection. So the free market is not perfect. (The same point applies to government agencies, though.) But businesses can't be expected to operate responsibly when they know they will not have to take responsibility for bad investments.

What bothers me here the most: In the headlines, business in the free market looks incompetant, when in fact it wasn't a free market, but one already skewed by moral hazard, and it wasn't even purely a business, but a quasi-governmental agency. Government gets to look more competant (instead of getting the blame they deserve), when if fact they simply have the ability to give away huge amounts of stolen money.

I love this telling excerpt providing another good example of why government should stay out of these things: “Under the Constitution, the original dollar inflated less than 10 percent in 125 years leading to the establishment of the Federal Reserve. Since 1914, the currency has been inflated more that 2,000 percent.”

Thus, the transfer of responsibility from the Congress to the Federal Reserve in 1913. From the elected representatives of the people to a, so-called, group of experts headed by a Presidential appointment.

I think somebody said something about goverment that governs least governs best. Catchy.

"This is called a moral hazard. By rewarding failure now, the Bush administration will instigate more failure in the future."

Why The Left Hates America II
(Subtitle: Conservatives and Their Love of Big Government and Propaganda)

Intellectual Morons
(How ideology makes smart people fall for Bush)

Horse or horse(however it decides to spell or capitalize it today):
Someone who can't come up with an argument that is worth argueing against.

Give us a real opinion with substance and you will get real commentary and focused debate. But then again you are probobly for "change" and that really, really says so much and at the same time so very little.

right on AB, i want to see heads roll!!

"Why am I doomed...?"

Guess it's an Alzheimer's epidemic?