Uncle Sam To The Rescue!
Shortly, Treasury Secretary Paulson and President Bush will announce their plan to freeze sub-prime loan rate “resets.” Is it any wonder why we like to call Democrats and Republicans, “Remocrats” and “Depublicans”? The two parties may sound different, but once in office do the same thing: encroach on personal liberty. Seems to us that the federal government shouldn’t be able to fix prices, much less for five years. The firms should work it out themselves, deciding with which of their clients to renegotiate. (Of course, we don’t carry any truck for these firms, who recklessly loaned people money and/or cranked out CDOs because they were literally printing money on these securities. In fact, let the chips fall where they may.)
So, is the government creating a moral hazard? You bet. I mean, what about those of us who bought houses over the last few years—houses we could afford? You know, those of who considered the teaser rates from all these fancy, risky loans for about ONE MILLISECOND before rejecting them?
Sen. Clinton warned Wall Street yesterday that she too would happily intervene to try to manage the economy, “if she thought the free market was failing middle-class Americans,” reports The New York Sun today. (She also said she would raise taxes once in office.) Speaking to supporters at the Nasdaq MarkeSite in Times Square, she called for a similar 5-year interest-rate freeze, but, in addition, she wanted the federal government to pony up $5 billion in emergency aid to “help prevent foreclosures by, among other things, providing financial counseling to those families at risk,” the paper reports. Hmm. Which of you out there would love to counsel some over-leveraged yuppie and get paid for it by the gub’ment? Didn’t think so.
