It's not a bailout, it's a rescue. Hello CNN! Hello NBC!

A lot of airwaves and newsprint are being used to talk about the pros and cons of the so-called "bail-out" that is backed by Prez Dubbya and SecTreas Paulson.

There are a bunch of reasons to hate this idea. There maybe one GOOD reason to do it.

A little history. Back in the 1990s, Freddie Mac (FM1) and Fannie Mae (FM2) were essentially constituted to provide an available outlet to 100% home loans to those who were living "on the margin". This is a nice way of saying that these two institutions were supposed to finance the entire cost of a new/used home purchase for those who would otherwise not qualify. I should point out that this is one of the dumbest of downright dumba** ideas, which is to lend LARGE sums of money to people who cannot be reliably expected to pay that LARGE sum of money (PLUS INTEREST) back. Social engineering does not play nice with the cold hard reality of the mathematically-based world of finance.

Back in 2004, a bunch of Republicans wanted to create new oversight on FM1 and FM2 because of concerns about increasing number of home loans going into default. Dem representative Maxine Waters and Dem representative Barney Frank had nothing but high praise for then Freddie Mac chairman: Waters said "We do not have a crisis at Freddie Mac and particularly Fannie Mae under the outstanding leadership of Frank Raines."

Well, Mrs. Waters, it looks like you may have been wrong.

This is not a simple problem, but essentially it's like this. There are a large number of loans that have been either defaulted on or are likely to go into default in the near future. Most of these loans were either interest-only or "sub-prime" adjustable rate mortgages. To put it another way, these were very risky loans that would have only been successful assuming that property values continue to rise over time. However, with so many loans now in default, banks are not only seriously containing new loans, but they are even reluctant to lend money to corporations or for other reasons. Further, with the glut of housing now on the market housing prices are in free fall. Banks not wanting to lend money is bad for companies like General Motors or U.S. Steel, who often borrow money on a short-term basis to make payroll, etc.

Back to my main point. Everybody is calling this a "bailout". A bailout in classic terms, is when a large amount of money is essentially gifted to some organization in order to sustain their "liquidity of assets", which is a fancy way of saying that they continue to have enough money for day-to-day operations (like paying rent, payroll and the light bill).

The proposals in both houses of Congress is not a bailout. It's a rescue. What Congress will do is use $700 billion of U.S. Taxpayer money (incidentally, money that we don't have and will probably have to borrow from either China or the Middle-east) to purchase the risky loans from a large number of banks. This means that these risky loans will be owned by the People of the United States. The U.S. will be responsible for controlling these assets (homes and properties) and selling them off over time. The banks and mortgage brokerages will then have new money assets that they can use to begin lending money again.

Over time, as the properties held by the U.S. government raise in value again as the economy corrects they will be sold to new buyers under safer more conventional loans. In theory we could even make some profit on the sale of these properties over time.

However, this is socialism, pure and simple. Capital assets will be held by the U.S. government. I hate it. I hate the liberal progressive social tinkering in the real-estate lending process that has brought us to this crossroads. Clinton should have done something about in prior to 2000. Bush should have done something about in 2001-2002. But we don't have a choice. If we don't approve this, banks will stop lending money to anybody and you won't be able to buy a car or appliance unless you can pay cash. And when people are no longer willing or able to buy consumer goods, that's when our economy completely collapses.

Oh, by the way, you and I are to blame for this. We elected the moronic chuckleheaded U.S. Representatives and Senators that allowed this to happen. When O' when are we going to learn?