Another Awful Day For The Bush Economy

September 5, 2008 – 11:35 pm

First, there is this gem:

Senior officials from the Bush administration and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, and told them that the government was preparing to place the two companies under federal control, officials and company executives briefed on the discussions said.

The plan, which would place the companies into a conservatorship, was outlined in separate meetings with the chief executives at the office of the companies’ new regulator. The executives were told that, under the plan, they and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.

It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in the nation’s history.

You may wonder how exactly the federal government is going to pay for such a massive bailout, and you would have a valid point considering:

The unemployment rate jumped to 6.1 percent in August, its highest level in five years, pushing the troubles of American workers to the center of the political debate as the presidential campaign enters its final weeks.

For the eighth consecutive month, the nation’s employers shed jobs, 84,000 last month, the Bureau of Labor Statistics reported Friday. In all, 605,000 jobs have been lost since January. The steady rise in unemployment, from 5.7 percent in July and 5 percent in April, is one that many economists associate with recession.

So, let’s recap. The federal government, already in debt close to $10 trillion, is going to spend your tax dollars to bail out two failed quasi-governmental business entities at a time when less Americans have jobs.