The Fannie Mae/Freddie Mac bailout for the Chinese?

Over at Slate, Daniel Gross has an interesting insight onto the Fannie Mae/Freddie Mac debacle: The Fannie Mae/Freddie Mac bailout may help American homeowners a little. It will help the People’s Bank of China a lot.

This is a great example of the kind of economics we can now expect. Because of the appalling fiscal policies in place during the Bush era, and going back to Reagan as well, America now has to take foreign investors into account as part of domestic economic policy. In other words what foreigners think about their investment here is now so significant that it can drive decisions on economic policy within America.

That’s a loss of independence that most Americans don’t see or particularly care about. For the world’s largest economy …. which America is by far … to be managed according to the desires of the Chinese, European or Petro-states central banks is a shocking outcome. It means that there may be occasions in the future, sooner rather than later, when American interest rates are set to accommodate foreign interests rather than cure domestic ills.

That’s what profligacy has wrought. The loss of independence is a major blow to America and will affect us all at some point. The savings rate seems arcane and boring, but it lies at the heart of this issue. Americans rely on foreign money rather than their own savings to maintain their standard of living. Therefore they have to put foreign interests ahead of their own when hard choices are being made.

We mortgaged the future. We just didn’t expect to have to pay back so soon.

Another example of the disaster that is Bush.