The full faith and credit of the United States of America - which used to mean something - is getting behind mortgages for up to 150% of what a house is worth. Yes, you read that right. Our brilliant federal officials are guaranteeing mortgages to underwater homeowners for more than their houses are worth! It was bad enough that our government caused the housing bubble by strong-arming banks into writing mortgages to people who couldn’t pay them back. Now that housing prices have tumbled and foreclosures have gone through the roof, our government is propping up what’s left of the housing market by pushing 150% mortgages with all of us on the hook for them.
When Treasury Secretary Tim Geithner issues bonds, (tries to borrow more trillions of dollars), buyers say “Uh-uh. No way am I going to lend you any more money. Not for that low interest rate.” However, the US Government isn’t about to let interest rates go up because that would hasten its bankruptcy.
We all know people with huge credit card debt. How did they get there? Did they pass hard-copy dollars when they bought things? No. They used digital dollars. When they reached their debt ceiling, what did they do? They got another credit card and rolled their debt over onto it. Did any hard copy dollars change hands? No. They continued doing this as long as they were allowed to. Let me repeat that: As long as they were allowed to. This is what the US Government is doing through the Federal Reserve - rolling old debt into ever-increasing new debt. How long will they continue doing this? As long as they’re allowed to.
And who allows them? We do.
The economic mess Dear Leader inherited from Bush is nothing compared to what he’s inheriting from his own first term.