As the self described “hardest working ever” and consequently the “lowest rated ever” Congress, has passed the Fannie (Federal National Mortgage Assn.) and Freddie (Federal Home Loan Mortgage Corp.) bailout, we need to take a closer look at just exactly what that little piece of hurried legislation has accomplished.

First, it is important to understand that Freddie and Fannie hold the mortgages for about half of all homes in America. Second, they are both private corporations that are traded on the New York Stock Exchange, not government entities; but none the less, are tools of our mathematically challenged government leadership.

Freddie and Fannie take loans off the banks hands in order to pass on the risk and to enable the banks to constantly make more loans and collect more fees without the bothersome issue of collection, which has become a problem of some magnitude.

So why would the public buy stocks in companies such as Freddie and Fannie who I have pointed out for some years to be extremely risky? The answer to that question was always evident; should there ever be a failure, the federal government would reach deep into the taxpayers’ pockets and bail out the stockholders. The proof is in the pudding.

Exactly how bad is our banking and economic system when the feds bailout private corporations to the tune of billions and begin to seize banks on a regular basis? I think that answer is self evident….it’s horrific.

To better understand just how horrific, in that piece of bailout legislation was another provision that raised the ceiling on the National Debt some $800 BILLION!

Let’s also put that last figure into perspective. For the first 204 years of this nation’s existence, until 1980, our total accumulated National Debt was approximately $850 Billion. Last week our Congress raised the ceiling by nearly the total accumulation of the first 204 years.

Make no mistake that Congress is well aware of the coming costs of bailing out our ill conceived failing economy and has simply authorized the funds ahead of time to do so.

As reader and commenter Billy B. has stated many times, “This is a Cinderella year.” Our government on both sides of the aisle is throwing everything including the kitchen sink at this economy to avoid total collapse. After all, we have a Democratic Congress and a Republican President and that makes for strange bedfellows, both being culpable and all.

As we observe our National and private sector debt rise to levels never before seen (in real numbers, but we don’t deal with real numbers we deal with government numbers) it becomes evident that our monetary managers believe that a little hair from the dog that bit us is exactly the remedy needed. Therefore, Doctor Bernanke has prescribed more credit as the answer to too much credit. There are people who have been institutionalized that aren’t that crazy.

On another front, our government has also had a change of heart on the legality of coercion and money laundering. The U.S. Treasury by virtue of our newly passed legislation will heavily suggest that banks discount their bad loans for nice clean money from the taxpayers’ pockets.

The seriousness of our current situation escapes most Americans who believe that things will get better after the election. However, if Billy B. is correct, instead of the Prince showing up, Cinderella will do the pumpkin routine.

Turn her into the wind, drop the mainsail, and batten down the hatches, it’s gonna be a big blow.