Friday, September 19, 2008

Some more financial crisis thoughts

Only a few more days of astrological summer remain and we awoke this morning with a strong hint of what’s to come. Although the temperature at my home, and in coastal Southern Maine, didn’t get quite as low as the forecast yesterday hinted it would be, I consider 40 degrees to be cold. Now let’s be fair about that; in a few months we’ll be saying, “Wow! 40 degrees! Boy that warmth feels nice.” But that’s not today. Today it’s cold.

A couple of measures in Washington might be worth mentioning. The news this morning reported that Congress met well into the night last night trying to find a solution to the financial crisis facing this country. I discussed that a little yesterday (see the post below). I don’t think any conclusions were reached, but a draft of something could be ready by later today with debate next week.

I like a comment made a couple days ago by House leader Pelosi. She said the Democrats had nothing to do with the crisis. I guess she forgot the Fannie Mae, which was created way back in the 1930s, was established by Democrat Franklin D. Roosevelt. It started out as a safety net for housing loans guaranteed by the government. Later, it, along with its later developed cousin Freddie Mac, was then given to a private group to administer. The government’s involvement in protecting the financial institutions making loans continued to evolve, mostly under Democrats.

One of the biggest changes was in the late 1970s when a law was enacted not only allowing but urging financial institutions to open up home mortgages to more and more financially risky home buyers. That was under Democrat Jimmy Carter. In the 1990s, a Presidential Order set in motion a flurry of home building and the expected risky loans that the law allowed. That was an order by Democrat Bill Clinton.

My Fearless Friend, a retired real estate agent, pointed out to me yesterday in an e-mail that the order was very much abused by both low income loans and speculators alike. He feels without any substantiation that many of the speculators did their business and then simply walked away from the risky investments. (Hmmmm! This just popped into my head: FF helped me buy my home here on the South Side of Route 1 and he introduced me to a loan person. Did I do business with a speculator in the mid 1990s? Naw! That person was representing a respectable company. I think. In any case, GW and I paid off our loan very early so we weren’t caught up in this current mess.)

And finally on this one. A couple of years ago a bill was worked through Congress that took some time away from corporations filing for bankruptcy. It was that law that prevented AIG, and probably others, from having enough time to attempt to internally resolve their plight without having to go belly up. Who led that charge through Congress? Does the name Democrat vice Presidential nominee Joe Biden ring a bell?

So, Mrs. Pelosi, proclaim innocence all you want. History does not support your claim.

The other item is oil drilling. Maine’s Tom Allen and Mike Michaud both voted favorably for a late night partial lifting of a ban on off-shore oil drilling by the House of Representatives. I believe Sen. Collins, part of her desire to appease the Democrats, will vote in favor when the measure hits the Senate. President Bush says he will veto the bill. A couple of features bother the President. The ban on near-off-shore drilling remains and it gives states, not the federal government, the option of allowing drilling.

The price of oil, controlled by countries other than the United State, is a national problem, not just a state one. It is believed that the more American oil we use, the lower the cost and thus energy cost will be. This one isn’t over yet and there’s a good chance Congress will adjourn for the elections next week without doing anything, a Democrat controlled Congress trademark.

The weekend is coming. We’ll have a chance to give the old “Phew!” a chance to renew our thoughts.


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