As you probably know, if exposed to any news at all in the past week, the Federal Government is bailing out the financial industry to the tune of $700 billion. Their plan is to buy up bad mortgage debt with the hope of resolving the financial crisis and perhaps some day recovering that money. No government estimate has ever come in on time and on budget, so don’t bet your life on that $700 billion being enough.
To put that $700 billion in perspective, with that same amount of money, we could have followed Boone Pickens plan and erected enough wind power facilities to generate 20% of the US energy needs with wind power!!! Instead, we are buying BAD MORTGAGES!! Think about that. Instead of burning coal and oil, we could use wind for 20% of our energy, but we are buying bad mortgage debt instead!
As it turns out, the funniest aspect of the debates last week, and the saddest, was an accusation made by Senator Obama. Obama stated that regulations had been hurled out the window by the Republican administration, and that disregard for government regulation resulted in our current financial malaise.
But it wasn’t deregulation at all, it was the weakening of mortgage requirements. Mortgage requirements, specifically for the poor and minorities, were severely weakened over a much longer period than the tenure of the Bush Administration, going back as far as the Carter Administration. Regulations as a whole were not reduced on Wall Street. In fact, regulations on public companies are more stringent today than they ever have been.
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