Monday, April 18, 2011
Three Words You Never Hear in a Barack Obama Speech
John Allison, former CEO of BB&T Corporation, has observed that “Freddie Mac and Fannie Mae would never have existed in the free market. They existed because their debts were guaranteed by the U. S. Government. Even before they went broke, they were leveraged 1000 to 1. That means they had $1000 of debt for every dollar in equity.” So much for the wisdom of government-sponsored enterprises.
What is the lesson we should be learning? That government action may not be the solution to economic problems. Therefore, since government action triggered the current recession, we should rely on lower tax rates and more free markets to get us out. Let’s cut the corporate tax, cut the capital gains tax, and watch the recovery.