How socialists bypass oversight, accountability and increase the national debt, whilst pretending they aren’t
In a word, they “guarantee” loans to their buddies.
In a few weeks, the US debt clock will tick past 35 trillion bucks. This represents all the pork ad vote buying of decades, accelerated since the financial crisis of 2007/ when it broke through 9 trillion dollars.
GDP was around 15 trillion, now it is around 27 trillion. So, debt to GDP has worsened from around 60% to 130%. Put it another way, a dollar of Federal debt “bought” a dollar 67 of activity in 2007, now a dollar of debt “buys” just 77 cents., Talk about diminishing returns!
This is not the whole story. Not even close.
We know the social security debt is not on the books as “Federal debt”. There is a promise to pay the liabilities – well more accurately, taxpayers are o the hook for the shortfall.
In the US, the Huse of Representatives is responsible for the spending of every red cent. Well, nominally anyway. It signs off every spending bill and has oversight of every department and agency.
This is even more true now that the Supreme Curt has reversed the Chevron doctrine.
But this is not the truth, the whole truth and nothing but the truth.
Remember how Fauxcahontas set up the Consumer Protection Agency – who then refused to “open its kimono” in front of the House Finance sub-committee about the activities of hat newly created agency? How about when Biden blackmailed the Ukrainians into sacking the prosecutor investigating his crack and hooker addicted son?
Hyst a few examples of what has been going on for decades.
Consider the housing agencies – set up to provide subsidised loans to low income families by buying up mortgages issued by banks – Freddie Max and Fannie Mae (who I call Fraudie and Funny). These two agencies carry “implicit” Federal guarantees for mortgages worth trillions. The banks love these agencies to bits. The banks lend mortgage money at, say 7% and “sell” bundles of mortgages to Fraudie and Funny at, say, 5% - making a ice fat 2% times the mortgage duration of, say, ten years. Every mortgage bundled and sold makes the banks 20^!!! Lovely jubbly! Fraudie and Funny borrow the money at a spread of around 1% above Government bod yields – trading off the implicit Federal guarantee – more lovely jubbly for investors who get quasi-government paper at 1% more than government yields – say it is also a ten year duration, so investors make an extra 10% over ten years. Who loses? Well, all the low income families that should be getting subsidised mortgage rates at the same or LOWER rates than the government borrows at!
Mortgages pooled and sold ff by banks can carry values of over half a million bucks – hardly low income mortgages!
Fraudie and Funny used to run around 7-8 trillion bucks worth of mortgages – meaning banks would apportion profits of around 700-800 billion bucks over the ten year average life of mortgage pols and investors (many of whom were sovereign wealth funds and central banks) would make an extra 70-80 billion a year, All by depriving the poor of cheaper, more affordable housing. Thank Barney Frank for that.
Seven trillion bucks is enough to buy 70 million homes at 100,000 a pop outright – a subsidised mortgage rate for, say 4% would cover 25 times that number or a dozen tines for homes costing 200,000 bucks each over the last two to three decades.
How many low income Americans are currently renting instead of buying – instead of using the original design of Fraudie and Funny?
Maybe e day there will be a Large Language Model coupled with AI that ca answer questions like “how much did Bank of America/Merrill Lynch and BlackRock contribute to Democratic Party campaigns over the five years before ad after 2007 – same question for BlackRock and again for Sallie Mae ad Citi, - especially “woke” BoA/ML How about Goldman Sachs (and Paulson).
I think the balance sheets of Fraudie and Fannie have wound down a lot since the days of “robosigners” like the infamous Linda Green and the ratings agencies rating everything AAA and BlackRock being give the mandate to manage the pools of impaired and defaulted securities via TARP.
There are other agencies operating with implicit or explicit guarantees – like Sallie Maw (Student Loans Marketing Agency - SLMA), the FHLBC and Tennessee Valley Authority – the latter two were and are, I think explicitly guaranteed by the Federal government.
The Federal Reserve is a fan of the implicit Federal guarantee of Fraudie and Funny, and has the odd 2.3 trillion bucks worth!
Why bring this up now?
Two things caught my eye recently.
One was the antics of the National Socialists in the UK who are about to launch a “British Energy Agency” – which will try to get round the debt constraints of the UK’s 3 trillion pound national debt and starting 112 billion pound fiscal deficit, (4-5^ of GDP) by operating “off the books” – the UK is heading for a currency crisis ad a downgrade to single A or below,. It simply cannot pay its way with all the huge spending plans it has earmarked.:
The other was this headline:
“The Loan Programs Office of the U.S. Department of Energy (DOE) has made a conditional commitment for a loan guarantee for up to $861 million to finance construction of solar-plus-storage projects and standalone storage projects in Puerto Rico.”
As far as I know, this is an “initiative” of the DoE that requires no oversight or accountability and, because it is a guarantee, if the project goes belly up, the US taxpayer is on the hook.
Which begs the question “how many other loans of this type has the DoE “guaranteed”? It has a loan office that is, presumably, not answerable to the Treasury or anyone else, least of all the House of Representatives!
Which leads to another question “How may Federal departments and agencies have similar “loan offices” and programs to guarantee loans to their buddies for crackpot schemes that would not pass scrutiny of the House or an accountant?”
Is this sort of practise operating at all the State, City ad Local level across the US also?
Wouldn’t you like to know what the performance of projects like this has been in the past and how it is going to be monitored in the future – assuming it is still legal now the Chevron doctrine has been pulled!!!!
If you add all the implicit and explicit “guaranteed loans” together the enormity of the debt should become apparent.
35 trillion “official” and the odd, what, 50 trillion in “guarantees”?
It could easily be a 100 trillion bucks – costing 4 trillion a year in interest – sucking up all Federal income taxes.
Businessman Trump could easily have tied Cackler Harris to the mast of the ship of fools called the SS Democratic Party were he to even mention this in a debate, but I see he refuses to debate the moron. Good for him. She has the credibility of Hunter Biden. In any event, it is not an election issue and is complex.
Onwards!!!
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