Over the Christmas holiday a nasty thing happened: Tim Geithner’s Treasury Department decided to lift the cap on aid to the Government-Sponsored Entities, Fannie Mae and Freddie Mac, apparently in response to Obama administration fears that the two agencies would become insolvent. The cap was raised from $200 billion on each and government backstopping of the mortgage market will apparently now extend into infinity for at least three years, through 2012.Here's the analysis:
That is a terrible story and it is also sort of a taboo story, since we don’t really have a system of media now that is willing or even able to digest that dark and complicated truth. Instead, our media — which has always been at best an inadvertent accomplice to these messes — is basically set up to take every revelation about the underlying truth and split it down the middle, feeding half to one side of the political spectrum and one half to the other, where the actual point is then burned up in the useless smoke of a blame game.It's not about Republicans or Democrats or what they think or who's going to be elected, it's about the cold reality of accountants' calculations and what we're going to have to pay because of this madness.
Update: B-Daddy has more.
1 comment:
KT,
Thanks for the link. If we accept you argument that this is a balance sheet recession, which I do, then all of the actions taken to date will only prolong the agony. It would also appear that the nascent recovery is just a re-inflating bubble doomed to collapse again. If the Republicans would accept these facts and go full force against all new spending and bailouts, they might emerge with huge victories as this stupidity plays itself out.
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