We are witnessing continuing frenetic government activity all with the goal of reversing the course of the current financial crisis. It seems that if someone can think of something to try, it is tried.
Just think about it:
- Fanny Mae and Freddie Mac get in trouble so the government pumps in $90 billion and assumes hundreds of billions in potential liabilities.
- Banks and mortgage companies get in trouble making bad mortgage loans and the government offers $700 billion to solve the problem.
- Banks get a little short on cash so the government pumps in billions by buying preferred stock.
- AIG makes stupid mistakes so the government gives it $100 billion to tide it over.
- The auto companies made poor decisions about the type of cars they offer so the government loans them $25 billion to keep them afloat.
- Two mortally wounded companies – General Motors and Chrysler – decide they would rather die together than die alone and the government is asked to contribute $10 billion to the burial fund.
- Banks make thousands of mortgage loans to individuals who did not have the resources to pay them off so one politician proposes $300 billion be allocated to pay the loans and make the banks whole. Continue reading