Secretary of the Treasury Hank Paulson issued a statement last Friday saying the federal government would NOT be bailing out mortgage lenders Fannie Mae and Freddie Mac.
That was Friday.
By Sunday, word came down the Bush administration was prepared to provide whatever funding necessary to ensure Fannie Mae and Freddie Mac would not go belly up.
As Cunning Realist noted Friday, this looked like it was going to be an exact repeat of the Bear Sterns debacle.
The Friday before Bear Sterns was essentially liquidated, the Bushies said there would be no government action to aid the firm but they would be monitoring the situation over the weekend.
Of course by Sunday night it became clear that the Bush administration considered Bear Sterns one of those "Too Big To Fail" institutions and was already in the process of providing $30 billion taxpayer dollars to back up Chase's acquisition of Bear Sterns.
Same thing happened this weekend.
As many have started to note, while the Bush administration has sold us for years on the Ownership Society in which people are supposed to take the risks and responsibilities for their own lives, livelihoods and retirements, what they've really been doing behind the scenes is creating the the socialization of capitalism - if you're big and rich and powerful, there's safety net for you in Washington DC ready print up lots of dollars and send 'em your way.
At least for the investment class, that is.
For the rest of us, bailouts only come when they are forced to do them (i.e., when the press cameras are on them.)
Thus New Orleans got "help" or what what Hank Paulson would call a "government bailout" when the media were paying attention.
He does not call the Bear Sterns/Freddie Mac/Fannie Mae taxpayer bailouts by that name however.
Rather they are instead a means of "providing liquidity to ensure an orderly operation of markets during a period of financial stress."
See the difference?
Anyway, when the press got bored with the Katrina story and went on to following the next ball of yarn, there wasn't much of a government bailout for the Katrina victims anymore anyway, especially once the Bushie cronies had gotten their hands on as much of the reconstruction funds as they could.
The same will happen for the homeowners going belly-up on their mortgages. It's an election year, so both parties are ready to "help" but you can bet the help will be pretty ineffectual for most and fade away after the election.
You see, Joe and Susie Upside Down Mortgage aren't "Too Big To Fail" once the election season is over and their votes are counted.
Ahh, yes, we are all equal in Bush's Ownership Society, but some of us are more equal than others.
As a side note to this mess, can you imagine if Bushie and the Republicans had gotten their way and had privatized Social Security and put the dough in blue chip stock like GM, Lehman, Bear Sterns, or Freddie Mac/Fannie Mae?
Yeah, that would have been fantastic for the long-term health of the Social Security program.
Okay, not really.
But it absolutely WOULD have been fantastic for the long-term wealth of the Wall Street shills and Bush cronies handling the money and taking their fees.
You know, the very same guys who created messes like Bear Sterns, Indymac, and Fannie Mae/Freddie Mac.
The ones we as tax payers are bailing out this morning.
The guys who are "Too Big Too Fail."