Federal Bubbles

Auto sales were down from an annualized 14.1 million (Aug)
to 9 million (Sep). The reason is that the Feds created
another bubble with the Cash for Clunkers giveaway.
The housing bubble was created by the CRA of 1977 and
decades of threats of Civil Rights lawsuits if bankers didn't
make loans that they knew were bad. Investment bankers - who
were not subject to bank regulations - made huge fees by
securitizing the debt instruments. The politicians took credit
for the increase in home ownership and then blamed the bust on
"greedy capitalists."
"Stimulus" money is creating another bubble which will burst
probably next year. The $787B in taxpayer money injected into
the economy runs out at some point. If we buy $300B in toxic
mortgages, then what will a mortgage or CDO be worth when
taxpayer bailouts are removed? The $8K for "first-time buyers"
will end soon. The Fed's rate is one-fourth what is was when it
stoked the housing fires. Will bankrupt states fund new "shovel
ready" projects or will their unemployment soar?
Stock in corporations making student loans lost 90% of their
value when Congress reduced the subsidy. Now the Feds want to
directly fund student loans through the bureaucrats at the
Department of Education. Colleges like Hillsdale [MI] and Grove
City [PA] saw the danger decades ago and challenged [then] HEW
in court and lost. These private colleges must compete with the
deep-pocketed Feds to make a college education - without Federal
control - available.
The debt is soaring and unemployment is at 9.8% - the highest
since 1983. Those who follow the bubbles - like lobbyists and
their employers - can make fortunes. Taxpayers will pay the bill
with hidden taxes like weak dollar/inflation or indirectly through
taxes on businesses or bailouts of bankrupt states (CA, NY, IL, MA
etc).