File under: How the poor pick up the tab for the rich; or is it, How the rich pick the pockets of the poor? You choose.
Hank Paulsen, U.S. Treasury Secretary, spoke to us all this morning. According to today's front page of the Wall Street Journal, Paulsen is "confident" that Congress will bail Fannie and Freddie out because:
... of their size and scope, Fannie and Freddie's stability is critical to financial market stability," he said in a speech at the New York Public Library. "Their continued activity is central to the speed with which we emerge from this housing correction and remove the underlying uncertainty in our financial markets and financial institutions."
That's a clue to a future grab at plenary power over the country's financial markets and matters.
Two other articles in the WSJ caught my eye over the past couple of days... The first, alluded to in the title, is Mark Gongloff's column yesterday, Like S&Ls? Paying the Tab for a Cleanup, about the possibility of the Government resurrecting a Resolution Trust Corporation to resolve the current Banking and Credit Crisis as its predecessor did to resolve the Savings and Loan crisis. The line about robbing the poor to pay the rich -- well, that's straight from NYU economist Nouriel Roubini. Don't believe him? Check out the numbers -- the S&L bailout cost the American taxpayer $76 billion dollars (according to the FDIC); the subprime bail out could cost us an estimated $1 trillion dollars -- 'nuf to make you gag on your godiva chocolate.
So the Federal Reserve worked feverishly over the weekend to save Fannie and Freddie and take over Indy, or as the WSJ reports in Treasury and Fed Pledge Aid For Ailing Mortgage Giants this morning: The Fed "maneuvering, attempted to shore up confidence in Fannie Mae and Freddie Mac by announcing a plan that placed the federal government firmly behind the battered mortgage giants."
Such a pickle.
Obviously, we need something to distract us while we watch the machinations and see the stock market's reactions after the ordinary citizens have had the weekend to mull over the news of the FED's late Friday take over of the thrift IndyMac. Today, the small investors may sit tight, buy more or they may rush the markets and pull retirement funds out of their 401s, SEPs, and IRAs. Early notice has the market bouncing miraculously back. So in the meantime, here's a brine pickle recipe -- usually made in a "crock" -- thus suitably apt for the times.