We all know of the financial market issues going on right now. We also know of the government plan to bail out and take over the companies at the heart of the issue.
Now i think it is wrong for the government to just jump into this option without looking at all of the possible fixes for the issue.
Well, in the case of the Freddie Mac, it seems like the best idea is to let the market take care of itself. In a report Freddie Mac has offered a plan that would not need government intervention. They are proposing to offer $10 billion stock sale. This would allow them to sell an additional $10b worth of stock which will bring them more capital to help them with this major situation. Not to mention, more buying of stock will drive their stock prices up which will bring more capital to the company. This would be the perfect solution for the problem.
My prediction is that the government will not allow this to happen. The government has this notion that the only way that anything runs properly is if it runs it. The government will take it over and in 5 years or less there will be a need to pump billions more each year to continue propping it up from failure. It will turn into another Social Security monster, one that we will never get out of.
More government, More control, More failure.
Viva Liberty!
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