Our Upside Down Government

So much of what our government does is upside down.

The Democrats want to confiscate profits from oil companies, which have one of the lower profit margins as an industry at 9%. This is money that we badly need for the oil companies to plow back into further exploration and production.

But now we turn around to the banking and mortgage industry, which is losing huge sums of money due to reckless lending, and are going to bail them out to the tune of $300B! Not only that, some of the key provisions of the bill were written by banking lobbyists. Never mind that the chairman of the Senate banking committee, Chris Dodd (D-CT) got a special mortgage deal from Countrywide, the largest benificiary of this bailout.

This bill will allow these mortgage companies, like Countrywide, to cherry pick the worst loans in their portfolio and dump them on the FHA. How's the FHA doing? Darn it, the FHA has experienced loan defaults at more than twice the industry rate for the last 6 years! And this bill will place on the FHA balance sheet all of the worst ARM loans made by the mortgage industry, for the taxpayers to cover.

It gets better. This bill will let certain non-profit groups originate loans with no documentation and no down payments and then hand them off to the FHA. Didn't we just do this? Have we learned nothing? I thought the Democrats were against "corporate welfare"? Get your checkbooks out.

Our government's upside down governing goes on and on. The newly passed farm bill will funnel hundreds of billions of dollars to the farm industry at a time where crop prices at are an all time high. Most farmers have never made so much money. Even worse, the "floor" price for crops has been raised to the level of the new incredibly high levels. That means that if crop prices later come down the taxpayers are on the hook for the difference. All of this nonsense raises prices for everyone on everything from cheese to grains and everything in between.

On the flip side, our government then turns around and has to pay out subsidies to lower income families who can't afford the food that the government made more expensive. What many people don't know is that the farm bill legislation is always "bundled" with the food stamp bill. Not all members of Congress have agriculture as a major constituency, but all have people that benefit from the food stamp subsidy. This is how the farm bill always gets broad support.

Going back to energy, Obama wants to seize oil company profits, and redistribute the money to families who are being challenged by high fuel prices, among other things. But it is Congress' energy policies that have directly contributed to high energy prices and have placed us in a situation where there are no short term solutions.

Too often our government is like the woman who swallowed the fly, with each action striving to fix the problem caused by the last problem, and causing the next.

Disclosure: at the time of this publications, the author was long BAC.