Finance Buyout/Bailout Madness

I'm beginning to think this whole credit crisis buyout/bailout is a scam. Bernanke says Congress must act quickly or the entire economy is at risk. Why didn't he say this a month ago? Why didn't he say this a year ago? This credit crisis isn't new. Why must it be passed with no analysis and no debate? The Bush administration knew it was coming in 2003 when it tried to fix Fannie Mae and Freddie Mac. McCain introduced legislation in 2005 to fix it. Democrats blocked both attempts. The crisis hit a year ago. So why did government piddle around for a year, or 3 years or 5 years, allow this crisis to hit, then suddenly proclaim Congress must enact an unprecedented power grab into the financial markets to resolve it, especially when there are other, far less intrusive options on the table? Article calls this response blind panic. I guess that's another alternative explanation.

I'm tired of the double-speak about this crisis. I'm tired of talking heads and government aristocrats calling these mortgage securities illiquid and claiming there is no market for them. They're not telling us the whole story. There is no market for them at a given price. They are illiquid at a given price. They are liquid, and there is a market at a lower, fire sale, price. The primary reason the companies aren't selling them at that lower price and eating the losses is the companies know they are going to get bailed out. The secondary reason they don't want to sell them is the mark-to-market accounting mandate makes the fire sale price lower than it would be naturally.

I have an alternative plan to fix the markets:

1. Inform everybody there will be no more buyout/bailout/rescues ever. Investors who made bad investments will reap what they sowed and eat their losses, so they better find a way to minimize them.

2. Repeal the mandate for mark-to-market accounting that makes no sense on long term investments like mortgages. This will allow companies holding those mortgages to sell them at a natural discounted price.

3. Completely privatize Fannie Mae and Freddie Mac so they can never corrupt our financial markets again.

4. Repeal the Community Reinvestment Act so lenders can never be forced to make bad loans again.

5. Force the Fed to enforce its mandate to keep inflation low instead of allowing socialists like Greenspan to use irresponsibly loose monetary policy to create economic bubbles like the dotcom and the housing bubble.

6. Abolish the income tax and adopt the FairTax.

Newt Gingrich provides a rational analysis of the Paulson plan, which he understands will become the Paulson, Obama, Pelosi, Reid plan, and finds it wanting. He alternatively proposes 4 market-based solutions that will fix our economy by extracting government from our markets.

If Finland implements gun control, crime will rise in Finland the same way it rises everywhere else in the world where gun control is implemented.