Your bailout at work

You'll recall that the reason we had to sell your children into debt to bail out Henry Paulson's Wall Street buddies was "to get the banks lending again," so that the money would trickle down to "Main Street."

How's that working? From a Jefferies research note this morning:
While government intervention may have caused a temporary bottom in the equity markets, signs of improving credit conditions continue to be limited to the inter-bank lending market (now guaranteed by the Government). Jumbo mortgage rates continue to trend higher and wider vs. the U.S. 10 year on a relative basis. This comes as Wells Fargo, a bank that recently received cash from the government, yesterday published a 9.5% rate for a 30 year fixed rate jumbo mortgage on its web site. This is a further sign that tight consumer credit will continue to put pressure on the economy making the prospects for a recovery in the short term more difficult.

Ever-increasing bailout expenditures and serial consumer stimulus checks mean huge increases to an unsustainable national debt. That means higher interest rates, and this exposes the lie of the "rescue for Main Street."

Why are the taxpayers lending to Wells Fargo at 5%, only to have Wells Fargo lend the money right back to Joe Taxpayer at 9.5%? Why not cut out the middle man and have the government issue mortgages directly at 5% or 6%? That's similar to McCain's recent trial balloon. It's a stupid, socialist idea. But not nearly as stupid or socialist as what Paulson is doing now.

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