The Libertarian Party of Pennsylvania - Forum

http://georgetaylorfoundation.spaces.live.com/blog/cns!3B5CFCE953E7F4B6!125.entry (http://georgetaylorfoundation.spaces.live.com/blog/cns!3B5CFCE953E7F4B6!125.entry)

It's one of three posts I'm going to put up here for everyone to give you an idea where I'm going with this idea.  Here's topic 1.  Freddie Mac/Fannie Mae and the Second Stimulus being considered by the Dems.



The economic situation in this nation is in disarray.  While we are not in recession by statistical measures, we are starting to see inflation rise rapidly as energy costs skyrocket.  Fueled partially, of course, by the devaluation of the dollar as we have seen the government bailout corporations who have not fulfilled their fiduciary responsibilities.

A large portion of the difficult times that we current face are the result of mass treasuries being sold off in order to stem off a liquidity crisis.  That sell off, however, has only exacerbated the problem of rapidly increasing inflation.  At the core of the problem was irresponsibility of both lenders and borrowers.  On one hand, corporations did not properly conduct background and income checks when determining the risk that potential lenders posed.  Irresponsible lenders, however, took out loans that maxed out their disposable income limits with no regard to future increases in prices, while maintaining an extremely low savings rate.  There have been cases where we have seen people earning $30,000 getting loans on a $400,000 homes.  That is unacceptable.

Another risky situation was the original stimulus package that Congress rolled out earlier this year.  Funded completely by borrowing from foreign nations in order to help spur the economy in the short run, we again are seeing the repercussions of the higher levels of inflations.  As the dollar weakens, the price per barrel of oil surges, we see rising home heating costs, gasoline cost, transporting costs, etc, which again devalues our dollar.  The rally in the stock markets that we have seen have been as a result of some confidence being put into the mortgage companies as well the fact that the Fed has not further expanded the money supply in this nation.

We must also now consider two acts that the Congress, currently being controlled by the Democrats, are seriously considering undertaking that could have tremendously negative repercussions for many years to come.  I want to preface this by saying that Republicans may not put up a strong opposition to these horrendous ideas, as, after all, we are in an election year and what is politically expedient and helpful to politicians’ re-election bids, are not the same as the interests in the long term stability of our economic situation or our country.  However, notice that I did in fact use the word politicians and not statesmen, something in which we are sorely lacking.

The first action of which I speak is the Democrats beginning to consider a second economic stimulus.  At this point, having seen the further devaluation of the dollar as result of the increased borrowing, this is wholly irresponsible and is simply a move on their part in order to secure votes.  Any “stimulus” package that would be enacted at this time would be received right around Election Day and would be the most egregious example of a political party’s attempt to buy votes in the modern era.  Times are no doubt hard, but a second package that will raise the inflation rate, devalue the dollar, and cause a drastic rise in oil will hurt American in the short term and long term.

The second action, which, thankfully, at least for the time being, is being considered, is a bailout plan for mortgage giants Freddie Mac and Fannie Mae.  I again reference my point about the irresponsibilities of institutions and individuals with regard to the mortgage fiasco.  The answer is not to straddle the American tax payer with over $5 Trillion Dollars in new debt obligations; and I make specific reference to the fact that a very large portion of this risk exposure is in the form of mortgages granted to people who are at an extremely high risk of default.  This will increase our current debt obligation by over 33% and further increase the risks of long term economic security.  These two entities must be taken over by private interests and run in and open manner, to be held responsible by investors, who willingly assume risk by purchasing shares of the corporation. 

The proper role of government is not to simply bail out every institution when times become difficult, whether they be airlines, automobile manufacturers, or financial firms.  Every time that the government steps in and “saves” a company, we are subsidizing a failing entity and the debt is simply restructured and apportioned to the tax payers, who, by and large, had no hand and stake in the company in the first place.  Shareholders are held to limited liability, being held responsible only for what they invested into the stock of the companies in which they choose to invest.  When this option is taken away from individuals and the risk is simply assigned to everyone, regardless of their wishes, the government is over stepping their bounds, regardless of their intentions to “help”.  Simply piling debt upon America at an alarming rate will have far greater and negative consequences on all Americans than allowing one institution to fail due to their own mismanagement.  The follies of our day are based in socialist actions on behalf of the government and not allowing the free market to work and when that occurs, we all suffer.

Unfortunately, Barr has proposed that the government should still get involved in some way:

http://www.independentpoliticalreport.com/2008/07/bob-barr-contradicts-lp-government-has-to-do-something-to-bail-out-fanniefreddie/ (http://www.independentpoliticalreport.com/2008/07/bob-barr-contradicts-lp-government-has-to-do-something-to-bail-out-fanniefreddie/)
Sorry Barr, but the mortgage crisis was a result of the lending companies KNOWING that they would have theit butts saved by the government. If you offer a form of assistance, all you're doing is letting the taxpayer foot the bill and delaying the inevitable. Let Fannie and Freddie fail because they created the problem.

Of course, Ron Paul still knows best: http://www.youtube.com/watch?v=7KBEr73zOPk (http://www.youtube.com/watch?v=7KBEr73zOPk)

Barr is an increasingly disappointing advocate for liberty. He won't be seeing any more contributions from me.