Common Sense Fresh Ideas

Tactics w/out Strategy: Fannie & Freddie Bailout

All across the newswire this morning is what appears to be unanimous support for propping up Fannie and Freddie by providing access to $2.25B each in loans from the Fed, part of the Fed’s standard borrowing facility, and a plan for the US Government to buy stock equity, if necessary.

What this means is two-fold. First, the outstanding mortgage securities held by Fannie and Freddie total $5.3T which means the $4.5B in line of credit is a drop in the bucket at less than 1%. We’re not going through what pundits are calling the worst financial crisis since the Great Depression because 1% of our loans are failing. Second, Congress and the White House have committed to the idea of bailing out our mortgage giants to avert a possible run on the dollar which could result from failing to back up assets with an implicit guarantee of the US government.

Unfortunately, these

Fannie & Freddie Update

No glib politician, let alone Treasury Secretary Henry Paulson, will be able to talk their way out of this one.
   
      

Hyperinflation – Coming Soon to the US!

So, reading the news this morning, Drudge.com came across this gem at Bloomberg.com: "Fannie, Freddie Are Too Big to Fail, Lawmakers Say". Here’s a little snippet for your reading pleasure…

"The federal government can’t afford to take over all of
Fannie Mae’s and Freddie Mac’s operations, because such a move
would more than double federal government debt outstanding and
“have disastrous consequences for the dollar,” said Joshua
Rosner, an analyst with Graham Fisher & Co. Inc. in New York."
http://www.bloomberg.com/apps/news?pid=20601087&sid=avnMyKESZ2qk&refer=worldwide

Before we get into why a bailout of Fannie and Freddie would double our national debt, let’s remember that Fannie Mae was ostensibly created in 1938 to "provide liquidity" to the mortgage market as part of FDR’s New Deal. The benefit to government for their generosity in creating this "liquidity" was a "guarantee fee" paid to Fannie Mae/US Gov’t for assuming the credit risk of the loan. So, in other words, the tax payer assumed the risk in return

Creating New Jobs for Michigan: Trash to Cash

Michigan autos are getting hammered with no end in sight.
It’s no secret that things will get worse before they get better. For that reason and more, Michigan
needs job growth in areas other than auto.

An objective look at Michigan’s assets shows an abundance of labor, both skilled and unskilled, and a bounty of both Michigan and Canadian trash. A "bounty", you say? Yes. With an expansion of the bottle bill
to include all things recyclable, we could collect, recycle and produce
newly recycled goods and the remaining non-recyclable trash can be converted into cellulosic ethanol, local fuel for our ailing autos.

To show you that this is idea is not a pie-in-the-sky fantasy, just take a look at what Canada’s doing:

Canada plant to make ethanol from garbage:
Edmonton, Alberta, is the latest municipality to attempt turning their
garbage into fuel. The city plans to put an ethanol-producing facility
into operation by 2010. Engineers say it will be

President Bush Playing Oil Politics

Today, President Bush presented lifting the ban on offshore drilling as the best short term solution to high oil and gas prices. He goes on to blame Democrats as obstructionists and the reason for high gas prices. The fact of the matter is that since President Bush came into office, the monetary supply has doubled and the value of the dollar has halved as a result, no doubt as a result of his unprecedented unrestrained spending policies. Therefore, gas prices 5 years ago would double as well.

To his credit, he is correct in saying that we need to reduce our dependence on foreign oil, but increased domestic oil drilling and refining capacity will have no effect on prices in the short term. At the minimum, we’re looking at 3-5 years to before added capacity reaches the pump and even then, prices will still move higher.

Demand from China, India and others

Welcome

Dear Reader,

Welcome and thank you for visiting joemchugh.com. If you’re like me, you would like to see more ideas and policy coming from Lansing and Washington that encourage actual job growth rather than veiled proposals to subsidize certain companies and industries. To that end, employing Common Sense & Fresh Ideas and with your help, we’ll put forth our own ideas. We may even take steps to implement them with or without support from our elected officials.

Together, we’ll turn the state of Michigan and other states into a lean, green job making machine. Share your ideas with the rest of community by adding a blog post and comments. Also, we’ve established a PAC to contribute to those elected officials that support our cause and sway the votes of those on the fence. Sign up for a small monthly contribution of $5 or $10 today.

To much shared success and a new Michigan,

Joe