By James Donahue

The nation’s financial mess is a complex problem that appears to stem from a few years of stupidity on the part of bank and lending institutions involving low-interest balloon mortgage loans to low-income families.

Balloon mortgages are called that because after a designated period of time, the balloon breaks and the home buyer is suddenly faced with higher and often adjustable interest rates based on whatever the market is bearing. 

Now that the periods of low-interest payments have started to expire, these people are are going into default because they can’t keep up with the high interest mortgage payments. This problem is hitting them at the same time families are struggling with rising costs of food, fuel and providing for family needs.

Many people have lost their jobs. For those still working, their income is failing to meet the demands of the family budget. More and more home buyers are thus defaulting on their mortgages. This has set off a chain reaction of empty homes, dropping property values, and tight money supply so loans for people who still might wish to buy homes are difficult, if not impossible to get.

This crisis is growing as more and more of those balloons keep popping.

The problem has been so acute it is affecting the big spenders who set up this deal in the first place, and now the Bush Administration wants the taxpayers . . . the people who got ripped-off by the banks in the first place . . . to dump $700 billion into the federal reserve to keep the bankers solvent.

This writer is not an expert when it comes to high finance, but from where we sit, there is something very wrong with this picture.

It seems to us that the logical, and fair thing to do with that bail-out money, if it has to be spent at all, would be to provide government-backed low or even no-interest loans to the mortgage holders so they can keep their homes, make their payments, and thus keep the banks and mortgage holders solvent. The money also could be made available to new home buyers interested in acquiring some of the rash of empty bank-owned homes now peppering the landscape.

The other logical thing to do would be to support Senator Barack Obama's plan to raise the minimum wage, build up the strength of organized labor, give tax incentives to encourage new industrial growth in America to create new and better-paying jobs, and thus give workers the means to keep up with the high cost of buying homes, cars, food and all the other things we need to keep everybody happy.

The worst thing our legislators could do is panic because the Bush Administration says we are in a financial crisis, and dump all that money back into the hands of the crooks who created this mess in the first place.

As one news pundit put it following Bush’s talk to the nation on Tuesday, they used fear to get us into a fake war in Iraq and they used fear to get the Patriot Act passed. What makes them think anybody is going to believe this story?

Well, the Washington sheep bought the war story and accepted the Patriot Act without even bothering to read it, They allowed Bush and Vice-President Dick Cheney to run rough-shod over the laws of the land for eight long years. The bums in Washington have nearly bankrupted the nation’s coffers. It is just possible the sheep will get in line once again and accept this final act of total stupidity by this lame-duck administration.