Corporate Welfare

Your Tax Money, Being Spent on Encouraging Lobbyists to Pressure Lawmakers to Support the Ideas Produced by Your Tax Money, etc.

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So, in the Bailout's latest thought balloon, the Treasury Department is preparing to buy up scores of billions of mortgage-backed securities from the government-owned Fannie Mae and Freddie Mac, on the condition that (in the Washington Post's words) "mortgage lenders would have to set exceptionally low interest rates, for instance, no more than 4.5 percent for traditional, 30-year fixed-rate loans." Treasury might pay for this credit-loosening exercise by selling a big new batch of 30-year bonds. While you try to wrap your head around that particular Mobius strip, here's a passage I found interesting:

A source said Treasury officials suggested at the meeting that the Realtors start a grass-roots campaign to press the mortgage rate plan with lawmakers.

Treasury officials described the situation as fluid and said the plan was still being finalized, according to people in contact with the department. The officials expressed concerns yesterday that premature disclosure of the plan could prompt Americans to put off buying homes and hold out for a better rate, sources added.

Lots to chew on just in that passage, let alone the whole article and the idea behind it.

Mike Flynn's anatomy of the financial breakdown here, and for those non-subscribers out there, you really ought to pick up the January issue of reason for a big package on the bailout, the role of regulation (both the "de" and "re" varieties), and suggestions for better government policies to address the the recession. 

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  1. Everyday I feel like more of a chump for not being in debt to the tune of 500% of my yearly income. All the borrowed money I could have used on cool gadgets, bar skanks, and pot I could get my hands on . . . (sigh)

  2. Even NPR’s financial news this morning was pointing out that this plan would be likely to have unintended consequences.

  3. Epic. Flail.

    Yes, I mean “flail.”

  4. If they come out with this, I am finally buying my multi million dollar home in Georgetown. Get a 4/5% rate on it live on my credit cards while the fed inflates my debt down to nothing. Then sell the house for a big profit and retire to Baden Baden and forget the whole thing.

  5. Epic Flail

    Sounds like an alternative rock band.

  6. Not bad John. Though I would suggest you should cache a year’s worth of food and stock up on guns and ammo. Just in case of . . . FINAL CONFRONTATION!

    “You’re listening to Klost home of the Apocalypse. The call in question of the day is who will be the new king? I’m sending in an ICBM across the wasteland for all of you on the yellow brick road to Vegas looking for a hero. If you find one send him my way, baby.”

  7. I still want to know how they plan to borrow this money. Who exactly, at this time, has a few hundred billion lying around that they feel like lending to the feds?

  8. Nage,

    There is no metro stop in Georgetown. So it will take a while for the starving hordes to get me after we blow up the Key Bridge and barracade M Street. In the meantime, I will be sure to buy a brick colonial that can be easily fortified and has a large basement for storage and good fields of fire.

  9. I still want to know how they plan to borrow this money.

    The usual way. The Fed will create money out of nowhere to buy up a bunch of existing bonds on the open market, then the Treasury will be able to find buyers for their new bonds.

  10. John,

    Ah. Hope for the best, prepare for the worst. I like the way you think.

  11. It worked for Fannie Mae.

  12. Lobbying, that is.

  13. A source said Treasury officials suggested at the meeting that the Realtors start a grass-roots campaign to press the mortgage rate plan with lawmakers.

    I hope they remember to say, “And this property scheme will NEVER be worth less than it is today!”

  14. Since the point of fixing the mortgage rate at 4.5% is to prop up house prices, why not address the problem directly by setting a floor on house prices?

    The Home Value Protection Act: no residence can be sold for less than the current owner paid for it.

    Now the repeated-sales house price indices will only ratchet upwards. I think it will get passed if I argue that there is no other option.

  15. A source said Treasury officials suggested at the meeting that the Realtors start a grass-roots campaign to press the mortgage rate plan with lawmakers.

    Hopefully this guy is working closely with the government on this important plan.

  16. NEED
    MORE
    BULLETS

  17. John–You’ll save a spot for me, right? I’m just over on Virginia Ave. and I *promise* I won’t bring any starving hordes with me.

    C’mon, I’ll even bring my own shotgun and shells for when the zombie hordes start staggering down Wisconson Ave. AND, -I have tequila….-

  18. A source said Treasury officials suggested at the meeting that the Realtors start a grass-roots campaign to press the mortgage rate plan with lawmakers.

    So the government is lobbying the private sector to lobby the government.

    Seriously fucked up.

  19. I’m starting to take the bullet idea seriously. Unfortunately I live over here on the San Francisco Penninsula. If the panty-wasted nits around here start rioting, I don’t have any clear route out of the penninsula. Maybe I should get a helicopter to go with my bullets.

  20. Naga,

    Six-String Samurai?

  21. has a few hundred billion lying around that they feel like lending to the feds?

    China.

  22. Wow, man. Is’t almost like the Treasury department is a wholly owned subsidiary of the mortgage industry!

  23. Brandybuck,

    Well when the apocalypse comes, fight your way over to the south. I’ll make you Marchwarden of Florida. Pro Lib has turned down the post to pursue his hereditary throne claim on Scotland.

    D-FENS,

    Correct. I saw it a few months ago. AWESOME!!!

  24. Am I still Marchwarden of Texas?

  25. Until you foolishly attempt to vie for my throne, yes.

  26. Ooh ooh, i call Marchwarden of East Virginia! Doesn’t sound like much, but chances are i’ll have the opportunity to purchase aircraft carriers for pennies on the dollar!

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