What is This Thing?

Government Sponsored Entities are something that most readers of blogs are not really familiar with reading about or having to talk about. In the Washington belt they are called “GSE’s” for lack of an imagination. A Government Sponsored Entity is the end result of the old New Deal legislation that had to put on a new face after the populace discovered what the older meaning was.

They are, in fact, taxpayer-funded and tax-payer promised “free-market” enterprises that are really socialist endeavors of the federal government. By all means, allow me to explain.

In the New Deal days, Fannie Mae and Freddie Mac were banking enterprises that were, at first, entirely funded by a market place of willing buyers. They did so under the guise that the feds would rush in, like the 7th Cavalry, and fight off evil doers and make sure that people that borrowed for housing or business loans could do so without those evil entrepreneurs coming in to make a profit. Under the LBJ administration, the definition changed to make sure that tax-payer money would underwrite all of these loans in spite of the fact that profit turned out to be in-dispensable to the markets at large. Go figure that?

Let a few years roll by, and beginning in the Carter administration increasing pressure was built on lending institutions to credit people that could not otherwise get credit. It sure sounds good if you are a local organizer for a certain political party, but it was built up under the guise, again, that tax-payer money is going to be there to back up bad loans. Enter the Clinton administration and you even have the Attorney General threatening prosecution to burn down institutions that would not lend to just about everybody. Janet was good at burning down places, and I reckon that it was just a hat-in-hand thing to extend that to Fannie Mae and Freddie Mac lenders that did not want to play.

The Bush administration is on record of having fought these GSE’s on more than one occasion, and they went so far as to have to fight the likes of Barney Frank for the right to place restrictions of the loans that were being imposed on an otherwise sound financial institution. They had to fight others as well. Does the name Franklin Raines ring a bell for anyone? That is right! The former CEO for Fannie Mae and now the economic advisor for the President elect.

Now let us go into another area, which will likely not make our Republican friends happy. What is a Government “bailout”?

Let me propose, ladies and gentlemen, that it is one and the same thing.

It is nothing more and nothing less than a government takeover of institutions that do not need to be taken over by the federal government.

For the sake of argument, let me say propose that I am a maker of the “widget.” For a while, the market is good and I am able, with the excess profits, good and fair labor costs and a lack of excessive international tariffs, to make enough money to pay for everything. My widgets are not necessarily the best widgets ever made, but they are nice enough and appeal to enough of the market that I can maintain at least a balance in what is otherwise a growing economy.

Then the world economy goes bad. The excessive union costs for labor come back to bite my company. Excessive tariff laws and federal tax structures that are designed to place my company in a position of paying a good part of my profit to the government also come back to bite my company. Now, let’s place into being the fact that my widgets are having a hard time in a global economy. They are not bad, by many comparisons, but other governments are understanding the tax structures here and the power of the dollar, and they make it even better by not buying dollars bills on the global market, reducing our buying power and so making their own products more competitive amongst our competitors. Further, the Unions are now complaining that I am not keeping up with what they think is our wage scale. I threaten to move overseas and they threaten to go on strike. Without a better economy, the result becomes inevitable.

Now the populace goes into a panic. They work for me and other capitalists like me, and they are told repeatedly by a press (sold into a leftist mentality) that all of us capitalists are bad. Not withstanding the fact that if I had not made these widgets, in the first place, then there never would have been unions or a tax structure or tariffs or salaries to worry about. Never minding any of that, now I go to the government begging for what I call a loan, or, in the case of banking institutions, not even that.

My own ancestors, as this point, do not know who the hell I am or what I stand for. They would have good reason to doubt me. My ancestors would never have dreamed of going to the federal government and begging for a single damned thing. My widget company has become a tool of the federal government and can barely be discerned from any socialist enterprise that has ever had the misfortune to breath upon this planet. My company’s doom has been visited upon me because of a series of bad decisions and an overgrowth of federal despotism. The “Widget Company” is now a tool of the federal government and a willing slave to their regulations and will.

I have a question now for this intelligent and responsible readership.

What happened to our balls? What happened to the idea of having a freedom to either gain or fail according to what we design or do not design? Do we not have any juevos at all now? Or, for the active female readership, what happened to the ideal of personal responsibility? We are in a place now that because we have allowed the federal government to outgrow its usefulness and Constitutional responsibilities that we now want that same overgrown bulk of inhumanity to become out overlords? What the hell has happened to us? Are we all now willing slaves?

I am the eternal optimist. I think not. I think that we have knowledge and can overcome the weaknesses that we have visited upon ourselves. Otherwise, I think, the intelligent among us have to walk the path of Cicero. We have to remember the place that put our Republic on the world map. God bless capitalism and God bless the Republic.