The Finance committee will be meeting tomorrow night at about 6:00 and the 3rd agenda item is the forcast for the coming year.  In short, I expect it to be unpleasant.  The trends of the larger economy effect us right here in river city.  I’d look for a lot of turmoil at City hall shortly and a nearly flat budget in the coming year but all of that is subject to change depending on how dire the situation gets.  I would like to maintain everything we have going but I’m terribly worried about this year and next so we will see what happens….

If you want to stop by, we’d be happy to see you on the 2nd floor of City hall tomorrow night.  

The continuing and historic string of bail-outs (and they are just that) continue.  First it was an investment bank and now the cornerstones of the American mortgage market.  As a small government guy I chafe under the continuing government involvement but I agree with the actions so far: these institutions have to be unwound gradually and not with a bang.  The future for both Fannie and Freddie should involve a tombstone.  The time for centralized market makers in the mortgage industry is long since passed.  These institutions need to be broken up and sold off.  It cannot happen immediately but within the next several years as it is imperative that the government get out of that business. 

Of course, the real bums who are largely responsible for this entire mess are the regulators who should have had an eye on the throttle and the banks who made such insane loans in the first place.  I’m not a banking genius but it was becoming clear about 3-4 years ago that lending standards were falling precipitously and it was a question of when, not if, the problems would start.  I remember being bewildered when a lady I know well enough to know she couldn’t afford it bought her second $500k house.  This was so different from my experience buying my house 15 years ago that I knew it wasn’t good. 

So, the real question is how much public money goes to offset losses incurred by reckless gambling with the mortgage market in order to preserve the orderly unwinding of that mess?  I don’t know what that number is but I do know that it is near at hand.  Capitalism has a downside and those that take stupid risks must feel the sting of the downside by losing it all.