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Mitchell's Disgracing Support for Bailout - 10/06/2008

On 9/29, all eight of Arizona's representatives opposed the $700 billion bailout bill.  We had a chance to defeat this monstrousity.  But instead, the bill was laden with pork in order to win over votes, and win votes it did.  When it came to the floor again last Friday; John Shadegg, Ed Pastor, Gabrielle Giffords, and Harry Mitchell all flip-flopped and voted Aye on this bill.

The proposed intention of the bill was to help out failing banks and stabilize the economy which would ultimately be good for Main Street, not just Wall Street.  In the coming weeks, I predict that we'll hear the tune change a little, and it'll go something like this: "$700 billion was just the tip of the iceberg, it's not enough money, we're going to need more."

Of course, our government doesn't have $700 billion, so they're going to borrow it from the Federal Reserve, who's simply going to create it out of thin air.  Dumping that kind of cash into the economy is going to cause massive inflation.  If you thought food and gas were expensive now, just wait a few months.  Increasing living costs will make it more difficult for people to make their mortgage payments, increasing foreclosure rates, and decreasing property values.

I have a few predictions that I'd like to make.  In 2007, there were approximately 400,000 home foreclosures.  This year, we're on track for 1.4 million.  For 2009, I estimate 8 million foreclosed homes because of this and future bailouts.  Additionally, home values are likely to keep falling, and they won't stop until they've reached 1996 values (if you purchased your home before 1996, you might have some equity remaining when all is said and done).

Our government has sold us out, and there will be no easy solution.  The only way to solve this is for the government to keep their hands out, let the economy reset, and come out stronger on the other side.  Insolvent companies need to go bankrupt and liquidate their assets.  Given the federal government's track record, this isn't likely to happen.  Instead, they'll continue to try and prop up a failing economy, and they may hold off disaster for a few months or even a couple of years, but continued intervention is only going to worsen the inevitable.