October 5, 2008

V-P Debate Sidelight To Financial Crisis

Winner by an “eyelash” – in the one and only debate by vice-presidential candidates last Thursday in St. Louis – was Alaska Gov. Sarah Palin, Republican.

Liberal media yelled “foul” – reporting that she “winked” six times at Senator Joe Biden, Democrat, and wore red shoes a la Dorothy in the movie “Wizard of Oz.”

Identity of the wink-counter was not revealed. However, he/she must be well read in poetry. We are reminded of the lullaby by poet Eugene Field:

Winken, Blinken and Nod one night

Sailed off in a wooden shoe.

Sailed on a river of crystal light,

Into a sea of dew.

“Where are you going, and what do you wish?”

The old moon asked the three.

“We have come to fish for the herring fish

That live in this beautiful sea;

Nets of silver and gold have we!”

Said Winken,

Blinken,

And Nod.

ADRIFT WITH A GOLD NET

Palin’s winks and red pumps were frivolous sidelights to serious business in Congress – saving world banks from collapse with an infusion of $700 billions of U.S. cash – bumping the national debt to something over $10 trillion.

See the National Debt Clock. (Click here)

As the late U.S. Senator Everett Dirksen liked to opine: “A billion here, a billion there, and pretty soon it amounts to real money.”

Everett Dirksen

Big, financial problems bubbled to the surface two weeks ago with near collapse of the government-charted Federal National Mortgage Association (Fannie Mae) and the Federal Home Mortgage Corporation (Freddie Mac.)

Goal of both was to guarantee “sub-prime” mortgages to poor people. Commercial banks around the world were pressured to follow suit.

This was a noble gesture, but money is impersonal. No repay, lender goes bankrupt – even Uncle Sam.

MONEY CHANGERS SPOOKED

As Fannie Mae and Freddie Mac wobbled, commercial banks everywhere spooked. They couldn’t bankroll mortgage defaults.

The U.S. Congress – led by Republicans in the House of Representatives – was reluctant to pour good money after bad.

A vote by the House – sole holder of purse strings – was against bailing out Mae, Mac, frightened world banks, and the U.S. Stock market.

Many banks -- at home and abroad -- filed for bankruptcy. The stock market nose-dived.

Alarmed House of Representatives called for a re-vote. Most hard-money Republicans relented. However, many banks with gobs of sub-prime mortgages had already thrown in the towel.

This time, 33 Democrats and 25 Republicans switched votes. Thus, the House adopted 263-171 the infusion of government cash into the banking system.

TO THE RESCUE

Unfortunately – or maybe not in the long run – several, large banks with over-loads of sub-prime loans collapsed.

Some hard-hit institutions and investment firms were bought for pennies on the dollar by bigger banks and investment firms.

World stock markets dipped sharply but leveled off. A reflection of reality is probably a good thing.

The U.S. Senate hurriedly rubber-stamped the House vote and rushed the 442-page rescue bill to the White House. President Bush signed it into law within a few minutes.

Nevertheless, the stock market continued to drift. The world’s saving, loan and investment firms await in trepidations the stock averages on Monday.

UNCLE SUGAR

Some Democrat legislators complain that the bailout package did not constrict Wall Street sufficiently -- or help low-income families.

Representative Barney Frank, chairman of the House Financial Services declares: “Starting in January, we have to rewrite how we finance in America.”

He made it clear that his plan would be comparable to the program of President Franklin Roosevelt’s Depression era New Deal.

That is sweet talk for ultra-liberals, but they ignore the role of the Second World War in bailing out Roosevelt’s programs: “tax and tax, spend and spend, elect and elect.

In the meantime, Fannie Mae and Freddie Mac are back in business.

World banks Wall Street investment firms are buying failed mortgage companies -- now that American taxpayers are going to make them whole.

Let’s hear it for Uncle Sugar – and political leaders like Sarah Palin who can wink at adversity while skewering it.

By Lindsey Wilger Williams, retired newspaper publisher and syndicated columnist