Wish list

Heard that they are having hearings on bailouts and free handouts over in DC. While the lawmakers are at it, can they throw in a couple of trillions for the following wish list?

• Nationalized healthcare for all residents with options for foreigners to avail of healthcare benefits for a nominal fee.
• Free food and clothing for all US residents with drop box provided at street corners to discard leftover clothing and food.
• Free checking accounts with a guaranteed minimum of $100 at all times for all residents.
• Nationalize the airways with maximum ticket prices not to exceed $100 (with plans for extension of the $100 ceiling to international routes).
• Guaranteed free education, housing, healthcare and any other benefits one can think of for residents under 15 and guaranteed social security benefits for all residents above the age of 15.
• Citizenship for just about anybody who steps foot into the country (even if the individual is in transit). Of course, immediate retroactive citizenships for just about any illegal alien at this point in time is indisputable.
• Authorize and bear costs of building custom designed homes to house just about anybody who feels like they are not satisfied with the one they have already.
• All mortgage down payments capped at 1% of the total value of the house with the remaining payments paid monthly by the home-owners future grandchildren.
• Mandatory one month ‘all expenses paid for’ vacation at a location of the individual’s choice for all US residents above the age of 30.

Some more ideas are in the works, but as soon as they get started with the list above, we could add more…

Olivier Blanckart, 'MoMA Don't Preach', 2008, adhesive tapes, cardboard, kraft paper, trampoline, ink jet print, Life sized. From a recent visit to P.P.O.W Gallery (exhibition runs from Sept 4 to Oct 4, 08')

The real reason behind the great Freddie Fannie bailout...

Today, the revamped housing bill will be signed into law and included in the sops are huge giveaways to Fannie and Freddie Mac. Martin Mayer in his column 'Mortgaged to the World' in today's Times gets it exactly right on why we had/need to bail out Fannie and Freddie Mac. Yep, it is to finance the budget deficit and our wars fought in faraway lands (the deficit by the way is set to top off at half a trillion dollars next year).

Historically, foreign central banks that found themselves with excess dollars as the result of the American trade deficit invested that money exclusively in Treasury notes and bills. As a service, the New York Fed made those investments for them, guaranteeing them the best current price and retaining legal custody of the paper as their agent.However, by the mid-1990s the countries that had large trade surpluses with the United States — primarily in East Asia and the Persian Gulf — began to demand a better return on investment than that offered by Treasury paper.

In response, the New York Fed began to buy them “federal agency” paper — including large amounts of obligations from Fannie and Freddie. This paid somewhat better interest, and while it was not officially guaranteed by the government in the way Treasury bills were — well, you know, if push came to shove, Washington could be counted on to do the right thing.
But the truth is that nobody knows. Fannie and Freddie have financed several hundred billion dollars of doubtful mortgage paper that may or may not pay off enough to meet their debts, and they cannot predict whether they will have gains or losses from their gigantic exposures in the derivatives markets.

If the government had not guaranteed the full payments of principal and interest on their paper, the foreign governments that own so much of it might have had to show losses on their dollar-denominated accounts. To say the least, this would make them reluctant to continue to finance our trade deficit, our wars and the strength (such as it is) of our dollar.