Republican Rep. Ron Paul of Texas warned about America’s looming financial crisis while he was in the spotlight of the presidential debates, as the mainstream media was marginalizing Paul’s platform of government adherence to the Constitution. Now, many of the media’s economic analysts are recognizing that Paul was correct in his monetary analysis and predictions of a financial disaster.

Paul had warned, in a Sept. 10, 2003, speech before the House Financial Services Committee, about the dangers of granting special privileges to government sponsored enterprises such as Fannie Mae and Freddie Mac. Trying to halt what Paul saw as a future mortgage crisis, Paul drafted the Free Housing Market Enhancement Act, which would have repealed the “explicit grant of legal authority given to the Federal Reserve to Purchase GSE debt.”

From Paul’s 2003 speech: “Ironically, by transferring the risk of widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions.”

On Sept. 24, 2008, Paul e-mailed a letter to his supporters, myself included. From his e-mail: “The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder.” In his letter, Paul concurred with financial analyst Jim Rogers, who said “the bailout of Fannie Mae and Freddie Mac made America more communist than China! This is welfare for the rich, this is socialism for the rich. It’s bailing out financiers, the banks, the Wall Streeters.”

Paul went further: “The claim that the market caused all of this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences — predictable, that is, to those who understand sound, Austrian economics — are being left off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!”

On Sept. 29, 2008, Rep. Mike Thompson voted against the first bailout plan, stating in an e-mailed letter that day: “While the bill we voted on was a vast improvement from the plan originally proposed by President Bush, it did not include enough reforms, nor strong enough protections for the taxpayer.” On Oct. 2, Thompson and 56 members of Congress who voted against the first bailout plan voted for the second “recovery” plan. In an Oct. 3 speech in the House of Representatives, Paul said that this plan was “demonstrably worse than its predecessor — a monstrosity of a bill, loaded up with even more pork — the entire burden will be borne by the taxpayers. We ought to be ashamed.” One can only wonder what economic analysts Thompson is listening to, as his vote demonstrates his limited understanding of the financial crisis befalling this country.

Rep. Ron Paul has made valid claims that government bureaucracy and Fed actions, not the market that has been reacting to government and Fed actions, are responsible for our mortgage and financial crisis. With this bailout legislation, government creates a more powerful bureaucracy to solve the problem that a government bureaucracy created in the first place. As Sen. Borah stated in 1934, regarding bureaucracy: “It is that form of government which steals away man’s rights in the name of the public interests and taxes him to death in the name of recovery.”

According to Paul, under this bailout legislation, financial institutions are “designated as financial agents of the government,” and the actions of the Secretary of Treasury Henry Paulson are “non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” As Paul said: “This is the New Deal to end all New Deals.”

Asked by CNN what Congress should have done in regards to the bailout, Paul said that we would have been better off if government had done nothing, and rather than the federal government placing financial institutions under more regulations, Congress should be “regulating the Fed, the Exchange Stabilization Fund, and the President’s Group on Financial Markets because they’re working behind the scenes all the time to satisfy and take care of their friends and buddies.”

We have a choice in the coming election, as Thompson’s rival, Republican candidate for Congress, Zane Starkewolf, is a Ron Paul supporter who was very much opposed to this plan, describing the bailout as “devastating for America.”

(Eggers lives in Napa.)