3WOOD'S Econ 101

Obama enlists Fannie and Freddie in bid to boost mortgages

The Obama administration launched a new initiative Monday aimed at supporting affordable mortgages, backed by the federal government.

Several cabinet agencies announced a new program to provide assistance to state housing financing agencies (HFAs), administered in part by the government-run Fannie Mae and Freddie Mac companies.

The U.S. departments of Treasury and Housing and Urban Development (HUD), along with the Federal Housing Finance Agency (FHFA), will allow state financing agencies to issue new bonds, while Freddie and Fannie will provide the state funds with credit lines, which the federal government will backstop.

"State and local housing financing agencies play a critical role in our housing financing system," said Assistant Treasury Secretary Michael Barr, who characterized the program as part of President Barack Obama's bid to maintain affordable housing in the midst of last fall's credit crisis.

So here we've got Obama using the Federal check book and the financially destitute Fannie Mae and Freddie Mac to issue even more debt, but this time through the States. Many states are at or approaching bankruptcy (California, anyone?) and rather than fix their financial models by cutting spending and encouraging business growth they are instead turning to borrowing even more money to avoid making hard decisions for another day.

My gosh! We are becoming awash in debt as a nation. Debt, as a percentage of GDP is quickly approaching 10%, a level which only your worst banana republics achieve.

Instead of issuing more and more mountains of debt with no provision for repaying it, we should instead be:

1. Tightening our belts and cutting spending. The trouble is, elected officials want to transfer that pain to somebody else and they are doing so by borrowing.

2. Cut taxes and regulation to encourage private business to grow. My gosh, Obama himself admits that his Cap and Trade nonsense will cause electric rates to skyrocket, let alone what health care reform is going to do. How do you think that will affect small business and job growth?

3. Stop treating small business and entreprenuers as something to punish and instead encourage them, leave them alone and get our of their way.

4. Enact tort reform so lawyers and greedy people will stop using our court system as an ATM.

5. Stop using our public schools as a recruiting arm for the Democratic Party (mmmm mmm mmmmm, Barack Hussein Obama) and start teaching the children how to read, write and do math so they can be competitive in the job market. I say, back to basics in the public schools.

6. Enact term limits now. This has gotten ridiculous. Morons like Pelosi and Barney Frank can screw up the country with impunity because they know they have a position for life. And I have no love for long time republicans either.

Let's try that for a while and see how it works.