AIG, Fanny Mae, Freddie Mac Who's Next?

It has been amazing to watch the government spend the American people's money as of late. Today was the last straw as I heard the Bush administration try and explain the necessity of bailing out the insurance giant AIG. Now, the federal government essentially owns more than 40% of America's mortgages and about 1/3 of America's insurance basically meaning that the American taxpayer has re insured about 1/3 of America's citizens and businesses and essentially owns 40% of America's homes.

This has been yet another example of the federal governments hunger for power and they've taken another step closer to ensuring that we can soon become a socialist country. Today we celebrate the birth of this Nation with the passing of The Constitution by the Constitutional Convention, yet our government has once again trampled that document under foot with no regards to the impact upon the American people or our economy. Short sighted economist and politicians see the benefit in "saving" these companies, but when viewed in the long run the benefit is non-existent. That is to say that we as a Nation will ultimately be harmed by their wanton lust for power.

To put it as basically as I can the market weeds out weak performing companies and those companies are either swallowed by stronger companies or they hire a turn around team that puts it back on the path to success, or they go the way of all the earth meaning they die out. When the government interferes weak companies are allowed to continue to suck resources away from stronger companies and thereby continue to weaken the economy. Also the market when left alone regulates itself with frequent fluctuations and market corrections. This allows people to enter the market and build wealth. If the market continues to grow without fluctuations and corrections it would be impossible for families to purchase homes or for novice investors to make any gains because everything would be priced out of reach. Additionally in the insurance industry there is a practice that every company does when they are struggling. They sell insurance policies to competitors (of course the insured is notified and can choose to cancel their policy and look for another, which the government guarantees that if an insurance company goes out of business and your policy is effected by it you are guaranteed insurance by another carrier). Nobody would have been left without insurance with the fall of AIG, nor would they have gone out of business. They would have been forced to sell off business at discounted rates and their financial rating or as it is known in the industry their S&P or Moody's rating would have suffered but they would have survived. Just ask Conseco Insurance, they had to do that not too long ago and they are still around and building a strong business model having learned from their past mistakes. The government has done nothing but put a larger burden upon the American people and AIG has learned nothing in the process.

Now with regards to Fanny Mae and Freddie Mac, where was the government on this one? Both were federally chartered companies with a massive amount of oversight, so how did they get in such bad shape? Right now the Democrats are blaming the Republicans for the whole debacle, but where does the blame rightly belong? It can be traced back to the deregulation of the industry in which investment banking was separated from commercial lending and rates were at a point of such historical lows that the banks were encouraged to lend money to anybody. Does anybody remember the rise in "affordable" housing and the push by the government that every American had the right to own a home (a right not mentioned in the Constitution, but a right declared by the all powerful federal government). This all happened during the Clinton administration, not the Bush. He is just the unlucky cuss who got stuck with it. Senator McCain actually sponsored a bill that would have created some tougher regulatory oversight on these two mortgage giants, but the democrats in Washington refused to take it to a vote. Millions of dollars were funneled to democrats through these two companies. Now with the bail out and American taxpayer dollars going to pay the $47 million compensation for the CEO of Freddie Mac will our dollars continue to be funneled to the democrats and to other pet projects of the democratic party? I guess we will see, or not.

Now we are stuck with the bill, we will continue to pay our taxes, we will continue to pay our insurance premiums and mortgage payments but we will not be any better off because we will be paying for this for decades to come.

Who's next to step up to the window and collect their check from the government? Where is it going to stop? How much will they spend to screw the American public? These are questions that I fear to hear the answer to. No, I don't want to see America suffer economic depression, but things like this happen to benefit the economy, if it didn't we'd be paying $1 million for a small 1 bedroom home right now. The market has to be allowed to correct itself or when it finally gets too heavy to be propped up it will come crashing down with deadly force and there will be nothing anybody can do to stop it, and then we will be at the mercy of the government and they will control every aspect of our lives. I desire freedom, isn't that what this country is all about? When we continue to allow such actions by our government we continue to relinquish our rights as a free people and we are forging the chains which will bind us down in servitude to a pompous and self-aggrandized bureaucracy.