Friday, January 30, 2009


It would be instructive if the reporting would properly define the money Washington is giving away.
The mortgages made according to Freddie Mac and Fannie Mae rules and purchased by them are guaranteed by the US Treasury. The federal government had an obligation to make the banks whole for any of those mortgages. This is not a bailout. It is paying a contracted debt - ill conceived though it may have been. Of course, they could have repurchased all of those mortgages for less than half of the additional “bailout” money. The difference went to pet projects of our bipartisan scoundrels in Congress.
Money given to the auto industry is a true bailout. Giving non-competitive companies large amounts of money, with no reason to suspect that money will resolve their operating problems, is a truly absurd. What will make the Big Three any more viable when that money runs out? The problem is their non-competitive labor contract. No amount of money will make then viable when their labor costs to build the same car – if they could build the same quality car – are over $4000 per car higher.

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