Semi-Private doesn't Profit

So the 24/7 news channels are bludgeoning their consumers with non-stop coverage of the Fannie/Freddie bailout. And while Rome is burning the politicians are playing partisan violins.

What anyone who's been involved or reported on politics knows is that congress and the administration are going to inflict a cure that's worse than the disease. Whatever Frankenstein fix is passed, the American public will be told the other party's to blame while the only party that can pass a bailout without bipartisan support is the democrat party.

And with the presidential election less than 40 days away and a lowly 9% congressional approval rating, the democrat controlled congress is not going to shoot themselves in the foot without making look like the republican minority pulled the trigger.

But politicking aside, the bailout of these semi-private institutions wouldn't not be necessary had they been subject to the free market without government entanglement because market forces would have not taken the risk of giving mortgages to consumers who could not afford them. It was the government, not the free market, that directed these entities to grant loans that had a high risk of default.

This is not to say that once the madness got to fevered pitch with massive amounts of paper trading and the money that followed didn't intoxicate those who would benefit from the risk and would likewise not be responsible for the mounting crisis.

The lesson here is that when the government is part of an institution, that institution is immune enough to the full forces of the free market: AmTrack and the US Postal Service are prime examples.

Both AmTrack and the US Postal Service have not realized a profit, though both have raised their rates and not reduced costs. Because these are not true businesses that have a responsibility unto themselves or their consumers.

Now the time-bomb has blown at Freddie and Fannie and the taxpayers are left picking-up the tab and the democrat controlled Congress may become the minority again soon.