The Economy (Subprime Meltdown, other Economic Issues) -- Page 2

BAILOUT: America's Financial Ruin
By Patrick Wood, Editor
October 6, 2008

When push came to shove, Humpty Dumpty discovered the shortest distance to the cobblestones below: straight down.

Being quite dead, Humpty's body is stinking up the whole neighborhood. The eyewitnesses call it murder. The coroner, bypassing the eyewitnesses, rules it an accident. The public clamors for taxpayer funds to clean up the mess. Congress passes a bill for superglue to be liberally applied to the broken pieces of shell. The courts finally rule that the eyewitnesses are guilty of hate-speech. Contractors who administrate the reconstruction project get rich.

And so goes the circle of life. Makes no sense, does it?

The global economy, including its stock markets and banking system, is a decaying, dead corpse in process of a massive credit deflation. Until it hits absolute bottom (wherever and whenever that is), no life-support system will help. No government bailout at taxpayer expense will help. No nationalization of body parts (e.g., Fannie, Freddie, AIG) will help.

Nevertheless, let's analyze the bailout mania that will most certainly one day be declared the largest and most brazen swindle in the history of the world.

In light of and in response to the rapidly decaying banking emergency, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke went hand in hand to Congress to ask for $700 billion to repair the system. Paulson demanded that no strings be attached; no judicial oversight; no accountability. "Trust us," they said.

Their demand was to take rotted assets off the balance sheets of global banks, and sell them to the U.S. government. No problem raising our national debt by another 12%. No problem that the U.S. credit rating is at risk of being downgraded, costing taxpayers hundreds of billions extra in interest charges to service the existing national debt. No problem that foreign banks can line up at the trough alongside American banks. No problem that the toxic-waste assets don't even have to be backed by U.S. mortgages. No problem that these same global bankers are the ones who trashed the credit markets in the first place.

They loved the Privatization of massive profits and executive bonuses for two decades of excessive risk and creative accounting practices. They now love the socialization of their inevitable losses as their house of cards comes crashing down.

The Paulson/Bernanke proposition to Congress was simple: Pay up or the country will collapse.

Is anyone really for this bailout?

On September 29, just before the Senate and House passed similar bailout legislation, Rep. Brad Sherman (D-CA) made a passionate plea to the House to reject Paulson's and Bernanke's demands. Therein he presented a signed petition of no less than 400 economists, including three Nobel Laureates that stated, in part:

"We ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action."

Meanwhile, Senators and Representatives reported that enraged citizens were flooding email servers and switchboards with demands to vote "NO" on bailout legislation -- up to 99 percent of them!

Yet, the Senate and the House passed the legislation anyway, behaving like herds of panicked wildebeests on the savanna in Africa.

If everyone other than our elected officials knows that Treasury Secretary Paulson and Fed Chairman Bernanke are brazenly plundering the United States citizenry, then why did they unanimously pass this bailout legislation?

We've been had, folks

German philosopher Georg Hegel wrote, "We learn from history that we do not learn from history."

Rep. Louis McFadden, who had served as Chairman of the Banking and Currency Committee for over 10 years, was hopping mad about the Federal Reserve and its shameless abuse of the U.S. government and its citizens.

In a speech to the House of Representatives, McFadden stated:

"Mr. Chairman, we have in this Country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the Nation's debt. The depredations and iniquities of the Fed have cost enough money to pay the National debt several times over.

"This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Fed and through the corrupt practices of the moneyed vultures who control it.

"Some people who think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lender. In that dark crew of financial pirates there are those who would cut a man's throat to get a dollar out of his pocket; there are those who send money into states to buy votes to control our legislatures; there are those who maintain International propaganda for the purpose of deceiving us into granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime." [Emphasis added.]

Ouch.

Would you be surprised to learn that McFadden's blistering tirade was not delivered in 2008 but rather in 1934 during the darkest days of the Great Depression?

You see, this isn't the first time in our nation's history that we have been attacked by the "moneyed vultures" who seek to swindle the taxpayer to cover up their own misdeeds.

Read carefully as McFadden continues,

"The United States has been ransacked and pillaged. Our structures have been gutted and only the walls are left standing. While being perpetrated, everything the world would rake up to sell us was brought in here at our expense by the Fed until our markets were swamped with unneeded and unwanted imported goods priced far above their value and make to equal the dollar volume of our honest exports, and to kill or reduce our favorite balance of trade. As Agents of the foreign central banks the Fed try by every means in their power to reduce our favorable balance of trade. They act for their foreign principal and they accept fees from foreigners for acting against the best interests of these United States. Naturally there has been great competition among foreigners for the favors of the Fed.

"What we need to do is to send the reserves of our National Banks home to the people who earned and produced them and who still own them and to the banks which were compelled to surrender them to predatory interests.

"Mr. Chairman, there is nothing like the Fed pool of confiscated bank deposits in the world. It is a public trough of American wealth in which the foreigners claim rights, equal to or greater than Americans. The Fed are the agents of the foreign central banks. They use our bank depositors' money for the benefit of their foreign principals. They barter the public credit of the United States Government and hire it out to foreigners at a profit to themselves.

"All this is done at the expense of the United States Government, and at a sickening loss to the American people. Only our great wealth enabled us to stand the drain of it as long as we did.

"We need to destroy the Fed wherein our national reserves are impounded for the benefit of the foreigners. We need to save America for Americans."

In fact, McFadden did actually bring formal charges against the Board of Governors of the Federal Reserve Bank system, The Comptroller of the Currency and the Secretary of United States Treasury for numerous criminal acts, including conspiracy, fraud, unlawful conversion and treason. Unfortunately, the charges were ultimately ignored, allowing the perpetrators to continue for another season.

[NOTE: To his great discredit, McFadden was openly anti-Semitic and an early supporter of Adolf Hitler during the 1930's because of his policies toward Jews. McFadden blamed Jews, wrongly so, for the financial chicanery he otherwise clearly observed.]

For many decades thereafter, experts, including Nobel Prize-winning economist Milton Friedman, have suggested that the Federal Reserve was directly responsible for the 1929 stock market crash and the subsequent Great Depression.

In 2002, Ben Bernanke (then merely a Fed governor) delivered a speech on the occasion of Friedman's 90th birthday at the University of Chicago, and addressed Friedman's work on the cause of the Great Depression. Bernanke concluded by stating, "You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

All promises aside, guess what? They're baaack!

FBI opens investigation

On September 24, 2008, right before Henry Paulson demanded bailout funds from Congress, the FBI had an announcement of its own. Namely, that it is investigating Lehman Brothers, AIG, Fannie Mae and Freddie Mac for fraud, improper accounting practices, conspiracy, etc.

These four companies are the remaining and principal instigators of the subprime credit fiasco. In the case of Fannie and Freddie, there have been accusations of fraud and corruption for as long as they have existed.

But, Paulson and the Treasury had already nationalized them, and shrewdly so: When wrongdoing is ultimately proven, it will be hard to hold anyone accountable or to punish the companies since the U.S. Treasury owns them.

Conclusion

Don't be fooled into thinking that it's just about money: It's also about power.

The Secretary of the Treasury now has near-dictatorial power over this newly formed socialist financial empire.

Of course, this is consistent with the incredible power consolidation of the Executive Branch of our government under president George Bush during the last 8 years. During this centralization, Congress and the Judiciary have been methodically weakened to the point that some political analysts believe that the President could, if he wished, declare martial law and dictatorship at the same time with little recourse from the other branches of the government.

Robert Pastor (father of the North American Community) said last year that "having a crisis would force decisions that otherwise might not get made."

He was absolutely right. In normal times, the combined Congress would have laughed Paulson and Bernanke right out of town. The current financial crisis has provided cover and every opportunity for the financial cartel to take what little we have left.

Indeed, those who do not learn from history are doomed to repeat it.
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Sowell: Bailout Could Have Ended Free Market
Monday, September 29, 2008 3:47 PM
By: David A. Patten

The $700 billion Wall Street bailout the House rejected Monday could have signaled "the end of the free market" as it is structured in the United States, a financial expert said.

In an exclusive interview with Newsmax before the emergence of the deal's final details, Thomas Sowell said sacrificing America's free markets in order to save Wall Street would be "a tragedy of tremendous magnitude."

Sowell, the respected Hoover Institution economist, columnist, and author strongly disagrees with those who say an unbridled free market is to blame for Wall Street's excesses.

Rather, he attributes the crisis to "very cynical political rules that protected people who went way out on a limb financially, because they knew they had the taxpayer's money to back them up."

Citing the late Nobel prize-winning economist Milton Friedman, Sowell said economic losses are just as important to capitalism as profits, because losses help people learn to make better decisions.

Bailout plans "don't take into account that people learn from paying the price for their mistakes," he said.

Market interventions inevitably result in unintended consequences, said Sowell, author of "Economic Facts and Fallacies."

"The smallest change in a market has reverberations throughout," he said. "There is no way to predict how the plan will ultimately impact the U.S. economy."

A bailout would encourage an entitlement mentality in which people seek to earn profits while being protected from losses. People need to take individual responsibility for their decisions instead of looking for taxpayers to cover the losses, he says.

Sowell cited Americans' migration away from unprofitable farms in the 20th century as an example of how people respond to changing economic circumstances. That workforce later fueled the rise of American manufacturing. "Now, we could have kept all those people on the farms, you know, and the standard of living would be a lot lower than it is right now," he says.

Sowell conceded that not coming to Wall Street's rescue also would be dangerous. The nation's leaders, he said, should try "to restore as much of the free market as possible" and minimize any bailout's reach.

"Go to the American people and tell them, 'There is no Santa Claus folks. If you want to take risks you are going to pay for it,'" Sowell said, adding, "Compassion should extend to taxpayers as well as everybody else."
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U.S. Losing Leadership Status
Monday, October 6, 2008 12:32 PM
By: Arnaud de Borchgrave

It was an era of gargantuan excess not seen since the 1920s, while at the same time the United States is prosecuting two wars that have cost the same amount as the administration's bailout bill, including all the last-minute pork and earmarks, or $200 billion short of $1 trillion. The bailout was not fashioned to make the rich richer, but to make sure the rich don't get poor.

The Russian leadership could barely contain its glee over U.S. discomfiture. U.S. global economic leadership, gloated Soviet leaders, is now at an end. President Dmitry Medvedev blamed selfish "American capitalism" for the Wall Street meltdown. "Casino capitalism" was a little less disreputable than "bandit capitalism," but both were widely used at home and abroad.

European Union countries echoed Moscow's call for multilateralism in financial regulation. The Russian stock market plunged 50 percent during the U.S. financial crisis, which Prime Minister Vladimir Putin said was due to a system the United States claims to lead. For French President Nicolas Sarkozy, "laissez-faire" free-market economies would soon go the way of the dodo. Other powerful European voices said the world will never be the same again.

China, confident of its steady ascendancy to superpowerdom, let it be known through think-tank exchanges that the moment when Beijing could look Washington "straight in the eye as equals" would come a little sooner than anticipated. Say 2025 instead of 2030.

The post-World War II financial and monetary architecture, known as the Bretton Woods accords, has to go back to the drawing board. With the United States now producing 30 percent of the world's manufactured goods, the catbird seat will have to be shared. And what the world observed during America's ongoing crisis was an administration riding to the rescue of financial behemoths and behaving more like a socialist government than a capitalist one.

At the same time, the FBI launched 24 investigations for possible criminal activities in Manhattan's canyons, including four major financial houses.

Since day one of the subprime mortgage fiasco in early 2007, sleights of hand, predatory lending, and insider trading have been normal operating procedures.

Before the government stepped in, almost 1.3 million homes had been repossessed, up 79 percent from 2006, with another million soon to join the collapsing real estate market. Defaults and foreclosures increased exponentially as easy initial terms expired, and home prices didn't go up, but interest rates did.

By last July, major banks and financial institutions had reported losses of half a trillion dollars. The financial bomb that finally exploded in September saw three of the five largest financial institutions on Wall Street collapse in 24 hours.

"We have to be careful about crying 'fire' in a crowded theater," wrote columnist Daniel Gross, "but calling this a meltdown is like crying 'fire' in an inferno." Even America's closest allies were asking whether this is the beginning of the end of U.S. supremacy.

President Bush, in his TV appearances, appeared listless and discouraged. Sen. John McCain was endeavoring to widen the daylight between his campaign and Bush's eight years in the White House.

The financial crisis gave Sen. Barack Obama a widening lead at home -- and louder hosannas abroad. Most commentators abroad see Obama as a leader who would initiate "multipolar multilateralism" and "smart power," with more emphasis on soft power and less on hard -- military -- power.

This still won't put a brake on the pell-mell scramble to join the billionaires club that has gone from 350 to 1,146 members since the beginning of the decade. They now control assets worth twice as much as those held by the world's bottom 2.5 billion, according to David Rothkopf, a visiting scholar at the Carnegie Endowment.

Not one American in 10,000 understands the financial instruments that enable a growing number of billionaires to make their second billion dollars in a year. Derivatives and hedge funds are incomprehensible to most people, yet congressional committees have heard experts testify they are time bombs that could precipitate a repeat of the Great Depression.

To understand how derivatives function, you need a modicum of "differential calculus," which is how some of the best unregulated hedge fund managers have made $300 million in a single year. The Bank for International Settlements estimates over-the-counter derivatives, which include "swaps" and "exotic options," have a "notional amount" of $596 trillion (not billion).

While some 700,000 have lost their jobs in the United States thus far this year, the crash of 2008 is still to reverberate throughout the body politic and its economic system. Osama bin Laden's Sept. 11, 2001, attacks inflicted some $700 billion worth of damage to the U.S. economy.

The government bailout is worth, again thus far, $700 billion. And the cost of the Iraq and Afghan wars, so far, is also $700 billion.

Thus far, however, the megarich have not been unduly perturbed by the maelstrom. The number of "superyachts" (anything over 100 feet, costing $2 million per foot) under construction or on order worldwide climbed to 445 in 2008 vs. 81 a decade ago.

Martin Redmayne, chairman and editor in chief of the Yacht Report, told the Financial Times about 90,000 people in the world can afford to buy what builders call a superyacht today, but only 3,500 actually own one.

Helipads, mini-submarines, and a car garage are among the options for the 250 to 550-footers now under construction for buyers in India, Dubai, Abu Dhabi, Saudi Arabia, Russia, Europe -- and the United States. Charter prices range from $60,000 to $2 million -- per week.
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'Bandit Capitalism' Reigns Over Corporate Scandals
Wednesday, September 17, 2008 9:33 AM
By: Arnaud de Borchgrave

Six years ago, the $40 billion Enron debacle was seen as the tsunami of modern corruption scandals. But that was just a ripple in a sordid line of sleights of hand, insider trading, disinformation, financial losses disguised as profits, and predatory lending, all leading to a steady decline into bandit capitalism.

On the heels of Enron came Tyco International, Adelphia, Peregrine Systems, and WorldCom, which cost investors billions when their share prices collapsed and shook public confidence in securities markets.

Hardly a day goes by without front-page stories about business and financial misfeasance. The avalanche of corporate scandals -- more in five years than during the entire 20th century -- has inflicted more harm to the world's greatest free-enterprise system since 2001 than al-Qaida did on Sept. 11. And that includes the S&L disaster of the late 1980s and early '90s.

More than 1,000 small lending institutions known as "savings and loans," also called "thrifts," had failed. Half of the federally insured thrift institutions in the United States had gone under in less than a decade, and the associated slowdown in new home construction and the financial fallout contributed to the 1990-91 recession.

High, volatile interest rates, reckless lending practices, lax oversight and rapid deregulation paved the way for the greatest banking disaster since the Great Depression. Now 2008 picks up the sleaze baton and is in the lead.

Earlier this year, Kevin Phillips' book "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism" was on the money. Democratic capitalism has been on a glide path to bandit capitalism, rocking from one scandal to the next, oblivious to the harm being done to the superstructure.

The broker is on the phone to a client with his latest recommendations. "Rather than buying individual stocks in corrupt and mismanaged companies, we suggest buying corrupt and mismanaged mutual funds," he says in this classic Peter Steiner cartoon.

After the Enron massacre of thousands of employees' savings, pensions and children's education funds, the U.S. Securities and Exchange Commission determined that at least half of the 88 mutual fund companies controlling 90 percent of the industry's $9 trillion in assets authorized "large" investors to play the fixed roulette wheel of market timing.

The privileged few could buy funds at outdated prices and then unload them the next day.

Primus inter pares (first among equals), venture capitalist Wilbur Ross sees several hundred banks -- out of 8,500 -- tanking in the next year. Wall Street itself seems up for grabs.

Bear Stearns' meltdown pushed it into the junior ranks of JPMorgan Chase & Co. Fannie Mae and Freddie Mac were saved by a government takeover, which insiders knew was coming.

The 158-year-old Lehman Brothers, the country's fourth-largest investment bank, crumpled under the weight of noxious real estate assets spawned by electronic circus barkers and filed for Chapter 11 bankruptcy protection. It had lost 95 percent of its market value this year alone and listed more than $600 billion in liabilities.

Merrill Lynch, No. 3 in the investment bank pecking order with losses and write-downs from subprime mortgages of $52.2 billion, was only too happy to be swept up in the embrace of Bank of America, the biggest retail bank in the United States, for $29 a share, a miraculous $12 higher than where it was at the closing bell Friday. That was still less than half its 52-week high.

Too clever by half, complex debt instruments clogged the engines that produced gargantuan paper profits. The gravy train was running out of gravy.

CEOs of Fannie and Freddie, deposed by the government, said they were due by contract $24 million in severance pay. The government put its foot down. The courts will have to settle it. But the decision reflected growing revulsion around the country at the manners and mores topsides of Fortune 500 corporations.

Golden parachutes, whether CEOs fail or succeed, are a national scandal, but they continue unabated. Stan O'Neal, former chairman and CEO of Merrill Lynch, made a couple of wrong calls and was asked to leave. His parachute was worth $165 million -- on top of the $165 million he had earned over the previous four years.

James Kilts, former Gillette CEO, also received $165 million after orchestrating the sale of Gillette to Procter & Gamble. Galling to his critics was the loss of 6,000 jobs in the combined company. In January 2007, Home Depot CEO Bob Nardelli resigned and landed a severance package worth $210 million, even though the company's stock had dropped slightly.

Average annual compensation for Fortune 500 CEOs is $11.5 million, or 364 times the pay of an average employee. Sixty years ago, when this reporter immigrated to the United States, CEOs made 10 to 30 times what average workers earned.

Today, men and women solicited to take over large corporations argue they should not be treated any differently from Hollywood or sports stars. Apple's Steve Jobs is still the highest-paid CEO in the United States: $650 million. Occidental Petroleum's Ray Irani is a distant second at $322 million, followed by Barry Diller of IAC, a shade less at $300 million.

Both Democrats and Republicans are tiptoeing around the issue. They both need the fat cats to help fund their campaigns. But whether McCain-Palin or Obama-Biden win in November, reform is in the air.
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And Then What?
Laura Hollis
Friday, October 03, 2008

Most people can remember when they read something that was life-changing; an epiphany or "aha!" moment. One such moment for me was the first time I read Thomas Sowell.

Dr. Sowell, who is one of the greatest minds of our time, has written a number of books that are breathtaking in their ability to cut through rhetoric and spin, and clearly explain economic, social, and political realities. All of his books are worth reading (and I'm working on it). But the one that comes to mind right now is Applied Economics. In it, Sowell describes what he calls, "one stage thinking" -- decision-making based on immediate (and often politically-calculated) impulses, but with little or no thought to what will happen thereafter.

I've come to call this the "And then what?" analysis. And I've been asking this question a lot over the past few days, as we have watched the financial meltdown on Wall Street unfold. In all the discussion about the now $800 billion bailout, I have heard virtually no discussion about what decisions will be made, what policies will be adopted (or abandoned) to ensure that this will not happen again.

The current financial crisis reminds me of the heated debate we saw last year over the proper legislative response to illegal immigration. Once it was revealed that the U.S. was home to perhaps 12 million illegal immigrants, some politicians called for immediate deportation. Others protested that that was impossible, discriminatory, or prohibitively expensive. My personal thought was that while we could probably absorb 12 million new citizens, no one was addressing the real question: even if we granted the 12 million who are here amnesty, then what? Conversely, even if we somehow managed to deport all those who are here illegally, then what?

In other words, it doesn't make a damn bit of difference what we do about those individuals who are here now, unless we take steps to ensure that 12 million more -- or 20 million -- or 35 million -- don't descend on our doorstep. Because even if it is true that we can absorb those who are already here, it is also true that we cannot do that indefinitely. But what have we done to remedy the situation? Nothing. And so people pour across our borders.

So it is with the proposed $800 billion bailout plan. It is riddled with uncertainty. It may salvage the economy, or it may not. Perhaps the economy could survive and rebound without it. And perhaps not. What is certain, however, is that we cannot continue to bail out failing institutions. And as Fannie Mae and Freddie Mac have made clear, this is especially true when the institution we are being asked to bail out is our own government. So, let's say we somehow manage to come up with $800 billion. This time. Then what?

The real issue is not how we spend our money today, but what we will allow our government to do tomorrow. Without a change in government's attitude about spending, not only will this situation repeat itself; it will be much, much worse.

For proof, one need only read the report issued by the Government Accountability Office this past June. In it, the GAO states that the federal government is "on an unsustainable long-term fiscal path," driven in part by Social Security, but especially Medicare and Medicaid spending. The report also warns that the federal government "faces increasing pressures" and yet "a shrinking window of opportunity" in which to solve the problem. GAO Acting Comptroller General Gene Dodaro tells Congress what they already know: that the government has been borrowing from the Social Security surplus to pay for these increases, but that that surplus will soon be gone (he estimates by 2017 -- just nine years from now), while the Medicare and Medicaid expenditures will be increasing. The report says, ominously, "…the challenge is to take action before being forced to do so by some sort of crisis."

Sound familiar?

The United States is already borrowing staggering amounts from foreign countries to support our debt. When Social Security, Medicare and Medicaid collapse, they will make last week's bankruptcies of a few investment banks and insurance companies look like a failed bake sale.

This is why it is inscrutable to me when some polls indicate that Democratic presidential nominee Barack Obama is pulling ahead on economic issues. It was a Democratic president (Jimmy Carter) who got the legislation enacted which created the incentive for banks to lower lending standards. It was a Democratic president (Bill Clinton) who sent his Justice Department thugs to threaten lenders with discrimination litigation if they did not increase their number of high-risk loans. And it was the Democratic members of Congress (Barney Frank and Maxine Waters, among others) who dismissed as "alarmist" the warnings of economists and advisors in the early 2000s that allowing Fannie Mae and Freddie Mac to buy and sell these worthless securities would lead to a financial collapse of monumental proportions when the housing bubble burst.

They didn't listen then, and they aren't listening now.

This should be a home run issue for Republicans. They, too, have spent like drunken sailors. But at least Republicans have a wagon to get back on; the Democrats' solution for bloated government and profligate spending is more government and more spending. And Obama would "raise the red standard," as Spender-in-Chief. A Democratic President, aided by a Democrat-controlled Congress, would be a fiscal disaster for the United States of unprecedented proportions.

As Thomas Sowell points out so elegantly, politicians tend to think only of the short term - what will get them through the next election. But the rest of us MUST think about the long term, because we're the ones who are going to be stuck with it. If we allow ourselves to be distracted by yesterday's problem and deluded by today's promises, we will be blindsided by tomorrow's crisis. And tomorrow's crisis will be catastrophic.

This may not be a pleasant message, but it is a simple one to understand. If Republicans can communicate these realities to the voters, they have a decent chance of winning the election. And if they cannot, then what?

God help us.
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Subject: Must See Video: Cindy Sheehan Lambasts The Billionaire's Bailout and Pelosi In New TV Spot
Date: Oct 3, 2008 4:34 AM
Congress Has Betrayed Us Yet AGAIN!!

Hundreds of billions more in the last 2 years for a senseless military occupation, the FISA outrage, paralysis on impeachment or even enforcing subpoenas, and now a total surrender of the future of our treasury in an 850 billion dollar bailout of Wall Street fat cats. Congress has done worse than do nothing, they have done categorically the WRONG thing, and the whole rest of the world knows it, and THAT is why the stock market has been dropping like a rock ever since the Senate stampeded through this bailout monstrosity.

What Are We Going To Do About It?

TV Spot Action Page: http://www.usalone.com/cindy/bankers_bailout.php

By arrogantly ignoring our literally millions of phone calls and emails vehemently opposed to this lunatic policy blunder, Congress has demonstrated that they are for the most part beyond redemption. We have only one practical recourse. Vote the losers out of office as just soon as possible, and replace each and every one of them with strong progressives who WILL be accountable to the people.

We MUST Help Cindy Sheehan defeat Nancy Pelosi

This is our only real chance for the next two years. Nothing would send a stronger message that the voice of the people actually COUNTS for something that a resounding victory for Cindy Sheehan in the Congressional race for the 8th district of California against Nancy Pelosi in just 4 weeks. NOTHING would send a stronger message to the gutless wimps in Congress that their reign of cowardice is over.

What we need is literally a tsunami of donations to put Cindy Sheehan's new TV spot on the air, where she pulls no punches about the abject failure of Pelosi to lead. If you are frustrated, if you are angry, if you can make a donation of any amount, please do so from the page below.

Watch The New TV Spot: http://www.usalone.com/cindy/bankers_bailout.php

And as if all this weren't galling enough. How do you like how Bush came out in the Rose Garden after signing the "Fox In Charge Of The Hen House Bill" to basically say, "Thanks, chumps."?

How dare they call themselves "Representatives"? How dare they! With their phones flooded a hundred to one shouting down this massive theft from the American taxpayer, with such an avalanche of emails coming the House email servers almost crashed, how dare they?! And guess what, the people were right. The hundreds of top economists pleading for sanity and a hearing were right.

Pelosi, the queen of the cave-ins must be defeated. There can be no honor in allowing her to remain in office. Shame on us if we don't do everything we could have done to remove her. Then and only then can all the other things that need to be done to fix this disaster be implemented.

And please, if you are the San Francisco area. Cindy needs an army of volunteers to hit the streets inspiring voters. And even if you are not, you can help make phone calls. There are volunteer links on the same page with the video. You can do something. You must do something. Please help.

And let election day this time be a bright and shining day where we the people actually start to take back control of our own government.

Paid for by Cindy Sheehan for Congress

Donations to Cindy Sheehan for Congress are not tax-deductible

Please take action NOW, so we can win all victories that are supposed to be ours, and forward this alert as widely as possible.

If you would like to get alerts like these, you can do so at http://www.usalone.net/in.htm

Powered by The People's Email Network Copyright 2008, Patent pending, All rights reserved
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The Bailaholics
Chuck Norris
Tuesday, October 07, 2008

Tombstone, Ariz., has nothing on Washington, D.C. Friday's financial OK Corral took place when federal politicians had a standoff over the mother of all bailout bills. Bullets called ballots were fired from both congressional houses and the White House. And when the smoke cleared, the bad guys appeared: Bush, Paulson, Barney Frank, Pelosi, Dodd and most of the other members of the House and the Senate, including Obama and even McCain.

The truth is most members of Congress voted to pass the bill but don't have a clue what is in this 500-plus-page legislation, which was birthed in the White House just two weeks ago as an infant of only three pages. Then it was voted down at the Capitol a week later in its adolescent-sized 100 pages. And of course, in good bureaucratic fashion, it met the criteria to be mature when it was more than five times that size and packed with governmental goodies. And the president signed it just an hour after receiving it from Capitol Hill Friday. I guess that speed-reading course paid off.

In the fine print, inserted between the lines of that 500-plus-page bill, are loads of fiscal additives and more financial toxic relief. H.R. 1424 -- the Emergency Economic Stabilization Act of 2008, which now has been signed into law -- officially includes more than $112 billion in political hors d'oeuvres and pork-barrel teasers and sweeteners that have absolutely no direct relation to the Wall Street bailout but were included to bribe congressional naysayers and others to get on the greed train:

--$6 million in tax breaks for wooden-arrow manufacturers in Oregon.
--$148 million in tax breaks for wool-producing companies.
--$128 million in tax breaks for the manufacturers of car-racing tracks.
--$10 million in tax breaks for small television and film producers.
--$223 million in tax breaks for Alaskan fishermen.
--$33 million in tax breaks for corporations operating in American Samoa.
--$192 million in tax breaks for rum producers in Puerto Rico and the Virgin Islands.

What the &$=/?! And that's just a drop in the bailout bucket. And we the taxpayers are just supposed to sit back and take it in the arrears?

Shockingly -- or maybe not so -- both Democratic and Republican nominees for president, self-professed agents of reform, followed the cattle call to back the bailout. Sen. Obama, who claims to be the messiah of change, sure is showing his true colors in two huge decisions: his appointment of politics-as-usual Joe Biden and his vote to pass this economic bailout bill and drive us deeper into debt. And quite frankly, Sen. McCain also is disappointing me at this point. At the Republican convention, John talked about bringing the power back to the people. So he chose Sarah Palin and finally gained my respect and vote by picking this Washington outsider. But when he had the perfect opportunity to side with the majority of Americans, who didn't want to incur a trillion dollars more in debt, he voted for not only the bilking bailout but also the earmarks and pork-barrel projects packed inside.

John, you gained my vote with your conservative choice in Gov. Palin; don't lose my vote (and others' votes) by your return to politics as usual. For many of us, you have one last chance in the debates. You must choose radical reformation. This is a time for maverette Sarah to stand up to maverick McCain and say, "Enough is enough!" Speak up, Gov. Palin. Please speak up!

All is not lost yet. We still have a voice in this bailout; it's at the ballot box in November's elections. The remedy for our country is clear. Congress doesn't need another bailout but a roundhouse kick right out the door. I plead with you to join me and millions of others in a voter revolution to oust political and congressional corruption and stalemate. If the members of Congress from your states or districts voted to pass this bailout bill and gamble nearly $1 trillion of our children's and grandchildren's money -- in addition to showing the reckless fiscal behavior of stuffing such a bill with perks and pork -- you must not re-elect them. If your representatives voted for this economically rotten (not rescue) bill, vote them out in November by voting for new blood that has a track record of fiscal prudence and consistently will vote for constitutional limitations of government, reductions of big government (deficits, budgets, spending and taxes), reformation of the tax code (by providing a "fair tax" or its equivalent) and a constitutional amendment for a mandated balanced federal budget.

Despite the heartbreaking passage of this bill, thank God 161 representatives and 25 senators opposed it and weren't enticed by the pseudo-urgent Wall Street panic, their own re-election pressures, or the Senate's pork-barrel schmoozing. For example, I commend Rep. Don Young, R-Alaska, who voted "no" for the emergency economic bill despite the fact that the tax break for Alaskan fishermen was inserted to sway him to bite at the bailout. Rep. Young is correct in a letter to his constituents: "This bill is nothing more than a slippery slope to socialism."

One thing is apparent: Alaska can produce some great Americans.
---

Bailout Boondoggle
Craig Shirley
Thursday, September 25, 2008

In the early days of the first Reagan Administration, an issue before the Cabinet was a financial crisis at the International Monetary Fund. They had come to Washington, hat in hand, asking for $4 billion dollars to replace that which had been lost due to fraud, incompetence and downright theft. President Reagan quite properly opposed the bailout, until heavily pressured by Treasury Secretary Don Regan and OMB Director David Stockman, he reluctantly gave in.

A conservative in attendance watched and later shook his head sadly, saying Reagan would have been better served if he just governed from inside a White House closet, away from the pressures of those advocating the status quo of K Street and Wall Street. Reagan was of course correct about the IMF bailout. The American tax dollars Don Regan argued for were promptly lost, once again, because of dishonesty and malfeasance.

Fortunately for America and conservatism, Reagan most often followed his own instincts and intellect and most believe we are better off for it.

Now is the time to confront the brutal truth of what is wrong with the Republican Party. Or as Reagan said of Jimmy Carter in 1980, "A man who tells you he enjoys a cold shower in the morning will lie about anything."

There is no such thing as "Big Government Conservatism." It was always an attempt to justify the GOP doing un-conservative things. There does exist, however, "Big Government Republicanism." Big Government Republicanism, hand in hand with Neo-conservatism, has brought us welfare for pharmaceutical companies, McCain-Feingold, the Patriot Act and the notion that we can impose our will on all the nations of the world.

And now, Big Government Republicanism has brought us the most massive bailout in American history, rewarding those who created this mess with a "Country Club Safety Net." The great longshoreman-philosopher Eric Hoffer once said what starts out as a movement eventually becomes a business and then descends into a racket. The Republican Party at present is little more than a racket.

For many years, the conservative movement and the GOP operated as separate and apart from each other. Only after the collapse of the GOP after the corruption and betrayal of conservatism by Richard Nixon did conservatives take over the GOP and transform it from a Tory-style party in which power moves downward the status quo is always defended into an America-style populist movement in which power flows upward and the status quo is always challenged.

The organizing principle of "Freedom" around which the conservative philosophy was organized has been discarded by the GOP over the past eight years only to be replaced by the concept of "Security." This did not begin on September 12, 2001as the Bush Administration was already on a path to reject Reaganism. September 11th only served as a catalyst and justification for the most massive growth of government --- accompanied by an expanded police state --- in the history of the Republic.

By definition, freedom requires a set of laws, restrained government, a supervised and heavily controlled police force and intelligent courts. Security requires a big Government. Freedom requires the ability to fail.

The argument confronting the great middle class of America---who only stand to go into greater debt if this bailout is passed---is that yes, you have behaved responsibly, paid your mortgages on time. But unless you fork over $10,000 per household to those who should have never given 1.9 percent mortgages and those who should never have been granted 1.9 mortgages, we cannot guarantee you financial security. For most Americans, this bailout is little more than extortion, a 21st century "corrupt bargain."

The security philosophy of the GOP now extends to Wall Street, whose argument is simply to ask the taxpayers to help Wall Street protect itself from---itself. Republicanism may be beyond ideology as one K Street lobbyist recently argued. But conservatism certainly is not. Russell Kirk said, "From the moment I began to reason and possibly the hour I began to feel, I have been a conservative." True conservatives have reasoned that this bailout is a bad idea.

Some have argued that the GOP needs to move on from Reaganism but this is akin to saying Americans should abandon the ideals of Jefferson and Lincoln, who like Reagan, embraced the expansion of freedom. After all, if Barack Obama can invoke Reagan, surely Republicans still can. American conservatism---Reaganism--- is alive and well, knows what it believes, and stands for. It is not elitist, it is populist; it is moral and not relativistic. It is hopeful, not cynical, egalitarian, and not hierarchical. The two, Republicanism and Conservatism, are now separate and apart, competing philosophies, not complimentary.

The Bush Administration's proposed bailout is good for the elites and the cynical. It is not so good for the productive members of society. Some conservatives in Congress are commendably standing up to the enormous pressure being brought to bear on them they know this is a "Panama Canal" moment for the GOP as it will forever stain those who support this massive expansion of governmental power. Those conservatives with the courage to oppose this will be stamped with honor.

They know this bailout may pass but they also know that any Republican who supports it can never again call himself a conservative.


How We Can Clean Up A Lot of the Economic Problems

Remember Enron, WorldCom, Adelphia, and other companies had artificially put assets on the books? They'd say something was worth $10M when they bought it, but eventually it decreased in value, and they never updated the value in the books. That was part of the fraud. Under current laws at that time, they were all convicted and put in jail for fraud.

Then we got all mad and made all these new laws that are coming out the wazoo called sarbanes oxley. It's a huge, massive law but the idea is that we were going to mandate ethics to corporate America because apparently they didn't have any, according to the Enron failure. It's now a total pain in the butt to execute it in a publicly traded company.

It didn't work because you can't cause ethics to happen. However, it does make each company each day restate what their assets are worth if sold on the market. This accounting procedure is mark to market accounting--you need to remember that. It's a good concept and keeps companies from having loaded balance sheets.

How This Affects Us Today
However, it's part of what's caused this in the news now. Merrill Lynch was sitting with $30 billion tied up in sub-prime loans with houses. Stupid! They get what they deserve for doing that, and I'm with you on that. Those houses didn't become worthless all of a sudden because those people couldn't sell their bonds. Since they couldn't sell them, they basically gave them away for 22 cents on the dollar. Now do you think all those houses lost 80% of their value underneath that deal? No, they didn't, so they gave them away for 22 cents on the dollar (about $6 billion total) because there was no market for them. Nobody wants to buy sub-prime bonds because they suck. They're junk bonds. But at 22 cents on the dollar, it's a bargain because even if you foreclosed on every one of the houses in there, you'd probably get $20 billion back out of $30 billion, and so the company that bought those for $6 billion got a deal! But there's no market for them. That's where these companies are stuck. They can't sell this stuff, but accounting-wise, they've had to mark it down to market and it's frozen the marketplace.

Economist Wesbury is saying that if we change that one rule and don't force them to mark down to market value and just let them hold on to all the stuff, and say just on sub-primes for this period of time you can change that rule -- a temporary change -- that'll free the market up. It's seized right now; it's frozen. This will thaw it out and get it going again. He says that'll solve 60% of the problem ... and I think he's right.

That one accounting rule is what made Merrill Lynch sell out. That one accounting rule is what's driving other ones into the dirt. Would you rather let them change their accounting rule or loan them $700 billion for us to buyout their bad paper?

I'd rather them work their own crap out than change the accounting rule.

I don't like giving them any money or any help with my tax dollars. But I'd rather see that than see the whole thing turn completely upside down in a fruit basket turnover than have a whole meltdown or something and freak out here in the middle of the election season. Why don't we just take the FHA insurance program and extend it across these sub-primes? What that means is that you and I are guaranteeing the lender that they're not going to lose as much or any money on those mortgages. Now I don't like guaranteeing them, but I like it better than buying them. In other words, instead of $700 billion in tax-payer debt going out there to bail out these companies, just extend the insurance out. You could probably do that for less than $40 billion. It's like a 95% savings!

If the government insured those mortgages, they would then be marketable. And could sell them. And the companies would stay afloat. And we, the people, don't have to get into the mortgage business. Now we're going to get in there a little bit because of the insurance on those getting foreclosed on. But foreclosures aren't causing this. This is being caused because these companies are frozen and seized up. We've got to let some of the steam come off and put some oil in there to get this thing moving again. We can do that without going into debt $700 billion.

Here's Your Plan
Call or email your Congressman, Senators and the Senate Committee on Banking, Housing, and Urban Affairs and tell them to change the mark-to-market accounting law and to extend insurance but extend no loans. If they extend loans - if they borrow the money on the national debt in order for us to all go into the mortgage business a trillion dollars - you're going to fire their butts and send them home.

Ask them to please not be pressured by President Bush. Instead of increasing the national debt and burdening the taxpayers with another $1T, please extend the FHA insurance program across these sub-primes, and eliminate the capital gains taxes on these mortagages in default so that investors will be encouraged to buy and hold them until them appreciate in value, knowing that they won't have to pay capital gains taxes on them when they sell them.

Also ask them to eliminate the capital gains taxes on these mortagages in default so that investors will be encouraged to buy and hold them until them appreciate in value, knowing that they won't have to pay capital gains taxes on them when they sell them.

I've talked with several people today, and it's on the tables in Washington, but it's not something you're going to see on TV. If you'll let your Congressmen know you know about this and that you'll vote against them if they don't vote to change the mark-to-market law and you'll contribute your money to make sure they never serve in office again. That's what you need to tell them early and often.

If you're pissed, this is the time to step up and do something about it, America! You can stop this! It's being railroaded down your throat, but you can stop them if you call them in mass starting now. READY ... SET ... GO!

See "Find Your Officials", then "Compose Your Own Message" to send a copy & pasted message to your representative, senators & the president all at once:
http://capwiz.com/atr/home/
And also send your comments to the U_S_ Senate Committee on Banking, Housing, and Urban Affairs: http://banking.senate.gov/public/index.cfm?FuseAction=Contact.Form

Additional information:
http://www.forbes.com/opinions/2008/09/22/treasury-accounting-plan-oped-cx_bw_bs_0923wesburystein.html
http://townhall.com/columnists/WilliamWilson/2008/09/23/rewriting_history_lies_that_hurt_us_all
http://www.daveramsey.com/etc/fed_bailout/economic_cleanup_10887.htmlc
http://www.slate.com/id/2187880/
http://www.newswithviews.com/Devvy/kidd393.htm
---

Bailout Shields Reid's Shale Ban
Amanda Carpenter
Friday, September 26, 2008

Democratic Majority Leader Harry Reid is trying to ban shale oil exploration while most members of Congress are focusing on the $700 billion financial bailout.

Sen. Jim DeMint (R.-S.C.) posted the text of Reid’s proposed ban on shale on his Senate blog Thursday afternoon. "It would be an insult to all Americans if Senate Democrats worked to bailout Wall Street while damaging our future prosperity by banning development of vast energy reserves in oil shale,” a DeMint staffer wrote.

Colorado Sen. Wayne Allard’s (R.) staff also sounded the alarm once they got wind of Reid’s plans. Allard’s state would be directly affected by the shale ban, as most of the nation’s shale depositories are in the Western states.

Approximately 800 billion to 2 trillion barrels of oil are estimated to be located there.

The congressional ban on offshore drilling and shale exploration is set to expire on September 30. Conservative proponents of domestic energy exploration have declared October 1 “Energy Freedom Day” to celebrate the ban’s termination.

The fight over offshore drilling and shale has been explosive over the last few months. House Republicans staged protests in their chamber throughout the August recess calling on House Speaker Nancy Pelosi (D.-Calif.) to hold stand-alone votes on offshore drilling.

Republicans celebrated last week when Democrats signaled they would let the bans naturally expire over recess. The Democrats’ concession came amid concerns their party would be faulted for high gas prices in the November election.

If Reid’s amendment is successfully added to a continuing resolution to keep government functioning while Congress recesses for the November elections, however, the ban would effectively be kept in place.

Like DeMint's office, House Minority Leader John Boenher (R.-Ohio) thought Reid's amendment is "insulting."

“Sen. Reid’s move to reinstate the ban on oil shale energy production is an insult to the American people and yet another example of Democrats acting to make energy more expensive for working families and small businesses," the Republican leader said in a statement. "At a time when our economy is struggling, it’s outrageous that Sen. Reid would attempt to block efforts to open up responsible oil shale development, which would create good-paying jobs and help lower energy costs."


The Ant and The Grasshopper, 2008 Edition
Michelle Malkin
September 26, 2008

With what looks like imminent passage of the Mother of All Bailouts (following on the heels of a year's worth of government-funded rescues of private homeowners, lenders, insurers and automakers), Washington has turned Aesop's famous fable about prudence and hard work on its head. The time is ripe for a revised 2008 edition of "The Ant and the Grasshopper:"

In a meadow on a hot summer's day, a Grasshopper was chirping and carousing his time away. He watched scornfully as an Ant nearby struggled to store up large kernels of food and build a secure nest. The Ant pulled overtime shifts to pay off his loans and accumulate retirement funds for the future.

"Give it a rest," the Grasshopper said. "Why bother saving and slaving and toiling and moiling? Let's party!" The Ant demurred: "I am planning ahead for winter, and you should do the same." The Grasshopper blew off the Ant, squandered his supplies the rest of the season and abandoned his home while on vacation (paid for by tapping every last cent of his home equity gain) instead of holding down a job.

When winter came, the Grasshopper's pantry was empty, and his shelter ruined from neglect. The Ant, weary from planting, harvesting, and stocking up for months, was dining comfortably in his nest.

Cold, hungry, jobless, facing foreclosure and up to his two pairs of eyeballs in debt, the Grasshopper limped to the Association of Community Winged Insects for Rescue Now and demanded recourse. The office was swamped with thousands just like him. ACWIRN immediately put the Grasshopper to work registering dead ants as new voters.

Funded with tax dollars from the rest of the meadow's residents, ACWIRN organized mass protests at the Bank of Antamerica, ambushed its top officials at their private homes, harassed their children and demanded that the meadow's politicians halt all foreclosures ("We must keep Grasshoppers in their houses!") and outlaw discriminatory lending practices against starving, homeless Grasshoppers ("Well-stocked shelters are basic insect rights!")

The banking industry capitulated; the Orthoptera Lobby secured hundreds of millions of dollars in housing earmarks, grants and counseling subsidies to support the Grasshoppers with the shadiest credit and employment histories. Antie Mae, the meadow's government-backed home lending giant, fueled the push for increased insect homeownership in the name of biodiversity. Its executives cooked the books and headed for the hills. Katie Cricket and the Mainstream Meadow Media joined the grievance-for-profit circus, profiling Grasshopper sob stories and drumming up ratings as bewildered Ants wondered who was looking out for them.

The banks drowned in toxic debt. More Grasshoppers fell behind on their mortgage payments. Bailout mania and panic gripped the meadow.

Our little Ant, minding his own business, heard a knock on his door one late winter night a year later. It was his old, sneering Grasshopper neighbor. With ACWIRN's presidential candidate, Barack Cicada, now in office, the Grasshopper had been hired by the meadow as a tax collector.

"I'm here to take your provisions," the Grasshopper cackled.

But it was the Ant who had the last laugh. "I've learned my lesson," he told his shiftless friend. "Why bother saving and slaving and toiling and moiling? I've spent all my savings. I'm walking away from my mortgage. Thrift is for suckers," the Ant said as he headed out the door, leaving the Grasshopper empty-handed.


Solution to the Subprime Mess That Doesn't Tax Americans an Additional $1 Trillion

We, the people are amazed! Our so-called "representatives" are trying to spend our grandchildren's children's money as if it were their own! The government caused this mess and now wants to punish the American people for it. It is necessary FIRST to fix the problem that caused this mess -- stop forcing mortgage companies to give loans to unqualified minorities.

By the time all the pork's added, and everyone else is bailed out, $700 Billion will soon be $1 Trillion, and the return on this so-called "investment" when the government forces the taxpayers to go into the mortgage industry will never find it's way back to the taxpayers.

The only solution the American people want to hear is one where we extend FHA insurance to cover the defaulted mortgages, and make the mortgage companies pay the premiums for the insurance. Additionally, you could eliminate the capital gains taxes on defaulted mortgages to encourage their being bought for investments.

This is a deciding issue for very many of us in the upcoming election -- lawmakers need to continue to block any taxpayer subsidizied bailout! People I've talked to are so angry that they're demanding impeachment -- not just no re-election -- for any Congressman voting to forcibly take another $700 Billion from them at gunpoint. That's outright robbery, and way less than less to the Boston Tea Party!


Flighty Votes from Little ACORNS Grow
September 30, 2008

Writing in today's Washington Times, former Senators Warren Rudman (R-N.H.) John C. Danforth (R-Mo.) call on both campaigns to work together to reduce incidents of fraud this election year. They point out how both campaigns have squads of attorneys for either self-protective or nefarious reasons and that "(b)efore the 2004 presidential election, lawyers filed more than 60 lawsuits concerning voting procedures." Writing elsewhere columnist Mona Charen brings up a glaring example of how wary we need to be about voter fraud this November 4th. Her column exposes the uber-liberal, taxpayer-funded Association of Community Organizations for Reform Now (ACORN). ACORN says it is "the nation's largest grassroots community organization of low- and moderate-income people." However, their two main accomplishments appear to be perpetuating voter fraud and furthering their reliance on the federal trough. ACORN employees are under investigation in a number of places, most of them battleground states. Both candidates need to do everything in their power to ensure that voter fraud does not occur.


ACORN, Obama, and the Mortgage Mess
Mona Charen
Tuesday, September 30, 2008

The financial markets were teetering on the edge of an abyss last week. The secretary of the Treasury was literally on his knees begging the speaker of the House not to sabotage the bailout bill. The crash of falling banks made the earth tremble. The Republican presidential candidate suspended his campaign to deal with the crisis. And amid all this, the Democrats in Congress managed to find time to slip language into the bailout legislation that would provide a dandy little slush fund for ACORN.

ACORN stands for the Association of Community Organizations for Reform Now, a busy hive of left-wing agitation and "direct action" that claims chapters in 50 cities and 100,000 dues-paying members. ACORN is where Sixties leftovers who couldn't get tenure at universities wound up. That the bill-writing Democrats remembered their pet clients during such an emergency speaks volumes. This attempted gift to ACORN (stripped out of the bill after outraged howls from Republicans) demonstrates how little Democrats understand about what caused the mess we're in.

ACORN does many things under the umbrella of "community organizing." They agitate for higher minimum wages, attempt to thwart school reform, try to unionize welfare workers (that is, those welfare recipients who are obliged to work in exchange for benefits) and organize voter registration efforts (always for Democrats, of course). Because they are on the side of righteousness and justice, they aren't especially fastidious about their methods. In 2006, for example, ACORN registered 1,800 new voters in Washington. The only trouble was, with the exception of six, all of the names submitted were fake. The secretary of state called it the "worst case of election fraud in our state's history." As Fox News reported:

"The ACORN workers told state investigators that they went to the Seattle public library, sat at a table and filled out the voter registration forms. They made up names, addresses, and Social Security numbers and in some cases plucked names from the phone book. One worker said it was a lot of hard work making up all those names and another said he would sit at home, smoke marijuana and fill out the forms."

ACORN explained that this was an "isolated" incident, yet similar stories have been reported in Missouri, Michigan, Ohio, and Colorado -- all swing states, by the way. ACORN members have been prosecuted for voter fraud in a number of states. (See www.rottenacorn.com.) Their philosophy seems to be that everyone deserves the right to vote, whether legal or illegal, living or dead.

ACORN recognized very early the opportunity presented by the Community Reinvestment Act (CRA) of 1977. As Stanley Kurtz has reported, ACORN proudly touted "affirmative action" lending and pressured banks to make subprime loans. Madeline Talbott, a Chicago ACORN leader, boasted of "dragging banks kicking and screaming" into dubious loans. And, as Sol Stern reported in City Journal, ACORN also found a remunerative niche as an "advisor" to banks seeking regulatory approval. "Thus we have J.P. Morgan & Co., the legatee of the man who once symbolized for many all that was supposedly evil about American capitalism, suddenly donating hundreds of thousands of dollars to ACORN." Is this a great country or what? As conservative community activist Robert Woodson put it, "The same corporations that pay ransom to Jesse Jackson and Al Sharpton pay ransom to ACORN."

ACORN attracted Barack Obama in his youthful community organizing days. Madeline Talbott hired him to train her staff -- the very people who would later descend on Chicago's banks as CRA shakedown artists. The Democratic nominee later funneled money to the group through the Woods Fund, on whose board he sat, and through the Chicago Annenberg Challenge, ditto. Obama was not just sympathetic -- he was an ACORN fellow traveler.

Now you could make the case that before 2008, well-intentioned people were simply unaware of what their agitation on behalf of non-credit-worthy borrowers could lead to. But now? With the whole financial world and possibly the world economy trembling and cracking like a cement building in an earthquake, Democrats continue to try to fund their friends at ACORN? And, unashamed, they then trot out to the TV cameras to declare "the party is over" for Wall Street (Nancy Pelosi)? The party should be over for the Democrats who brought us to this pass. If Obama wins, it means hiring an arsonist to fight a fire.


Who Predicted U.S. Economic Collapse Years Ago?

Defying President Bush and the leaders of both parties the US House rejected a $700 billion economic rescue plan in a revolt that rocked the US Capitol, sent markets plunging and left top lawmakers groping for a resolution.

So by the time that bell sounded again on the NY Stock Exchange $1.2 trillion had vanished from the United States stock market. The broad market, as measured by the Standard & Poor's 500-stock index, plunged almost 9 percent, its third-biggest decline since World War II. The Dow Jones industrial average fell nearly 778 points, or 7 percent, to 10,365.

However, please recognize that the defeat of this massive bailout is actually something Ron Paul was highly in favor of. If the bill had passed, it would have provided short term relief that would have blown up from $700 billion initially allocated to at least 5 trillion dollars and the further dilution of the dollar could truly have been catastrophic as it would have continued to accelerate the massive decline of the dollar.

So, despite the record stock market losses please understand and realize that this is a GOOD SIGN. Like many medical therapies sometimes you just get worse before you get better and this is a classic example.

The REAL danger here, and believe you me it is a danger, is to become afraid. Once you step into the powerful emotion of fear and you put your intention on what you don't want the consequence is you activate powerful natural forces that tend to provide you with whatever thoughts you are attaching strong emotions to. This is clearly something you want to avoid doing, so stop being afraid of the economy.

If you need more reasons why you should be happy about this just watch Ron Paul's videos and he will give you all the details as why this "bad news" is actually really great news in disguise. See these 3 short Ron Paul videos.

Some other short Ron Paul videos:

Ron Paul on the bailout vote: http://www.campaignforliberty.com/ in middle of page (or: http://www.youtube.com/watch?v=-v6SGLKH1kc)

Congressman Ron Paul Schools Bernanke on the Bailout Plan
http://www.youtube.com/watch?v=dv6rQ0U01Yc&feature=related

BAILOUT: Ron Paul Educates Bernanke...yet again 9/24/2008
http://www.youtube.com/watch?v=Bjpor8iBe58

Ron Paul on the bail outs
http://www.youtube.com/watch?v=1sfUKZOHtRs&feature=related

Ron Paul Fox News 9/17/08 AIG bailout
http://www.youtube.com/watch?v=CcfaORVl0Zg&feature=related

Ron Paul: You don't need a 401k to be injured by the destruction of the Dollar!
http://www.youtube.com/watch?v=WbSRJRxV_WU&feature=related

IT'S LIKE A FIX FOR A JUNKIE! Ron Paul on Economy Meltdown
http://www.youtube.com/watch?v=lQsC-F9YRxk&feature=related

Ron Paul on the Economic Collapse!
http://www.youtube.com/watch?v=MCt2yRqlCcQ&feature=related

Ron Paul - Neil Cavuto - WALLSTREET BAILOUT
http://www.youtube.com/watch?v=-go4YWuXgJY

THE BAILOUT: Rep. Ron Paul - Bailout Bill Will Make Things Much Worse
http://www.youtube.com/watch?v=uDWHnDTDtqQ


Bailout Politics
Thomas Sowell
Tuesday, September 30, 2008

Nothing could more painfully demonstrate what is wrong with Congress than the current financial crisis.

Among the Congressional "leaders" invited to the White House to devise a bailout "solution" are the very people who have for years created the risks that have now come home to roost.

Five years ago, Barney Frank vouched for the "soundness" of Fannie Mae and Freddie Mac, and said "I do not see" any "possibility of serious financial losses to the treasury."

Moreover, he said that the federal government has "probably done too little rather than too much to push them to meet the goals of affordable housing."

Earlier this year, Senator Christopher Dodd praised Fannie Mae and Freddie Mac for "riding to the rescue" when other financial institutions were cutting back on mortgage loans. He too said that they "need to do more" to help subprime borrowers get better loans.

In other words, Congressman Frank and Senator Dodd wanted the government to push financial institutions to lend to people they would not lend to otherwise, because of the risk of default.

The idea that politicians can assess risks better than people who have spent their whole careers assessing risks should have been so obviously absurd that no one would take it seriously.

But the magic words "affordable housing" and the ugly word "redlining" led to politicians directing where loans and investments should go, with such things as the Community Reinvestment Act and various other coercions and threats.

The roots of this problem go back many years, but since the crisis to which all this led happened on George W. Bush's watch, that is enough for those who think in terms of talking points, without wanting to be confused by the facts.

In reality, President Bush tried unsuccessfully, years ago, to get Congress to create some regulatory agency to oversee Fannie Mae and Freddie Mac.

N. Gregory Mankiw, his Chairman of the Council of Economic Advisers, warned in February 2004 that expecting a government bailout if things go wrong "creates an incentive for a company to take on risk and enjoy the associated increase in return."

Since risky investments usually pay more than safer investments, the incentive is for a government-supported enterprise to take bigger risks, since they get more profit if the risks pay off and the taxpayers get stuck with the losses if not.

The government does not guarantee Fannie Mae or Freddie Mac, but the widespread assumption has been that the government would step in with a bailout to prevent chaos in financial markets.

Alan Greenspan, then head of the Federal Reserve System, made the same point in testifying before Congress in February 2004. He said: "The Federal Reserve is concerned" that Fannie Mae and Freddie Mac were using this implicit reliance on a government bailout in a crisis to take more risks, in order to "multiply the profitability of subsidized debt."

Chairman Greenspan added his voice to those urging Congress to create a "regulator with authority on a par with that of banking regulators" to reduce the riskiness of Fannie Mae and Freddie Mac, a riskiness ultimately borne by the taxpayers.

Fannie Mae and Freddie Mac do not deserve to be bailed out, but neither do workers, families and businesses deserve to be put through the economic wringer by a collapse of credit markets, such as occurred during the Great Depression of the 1930s.

Neither do the voters deserve to be deceived on the eve of an election by the notion that this is a failure of free markets that should be replaced by political micro-managing.

If Fannie Mae and Freddie Mac were free market institutions they could not have gotten away with their risky financial practices because no one would have bought their securities without the implicit assumption that the politicians would bail them out.

It would be better if no such government-supported enterprises had been created in the first place and mortgages were in fact left to the free market. This bailout creates the expectation of future bailouts.

Phasing out Fannie Mae and Freddie Mac would make much more sense than letting politicians play politics with them again, with the risk and expense being again loaded onto the taxpayers.


Penny-Wise Politics
Thomas Sowell
Wednesday, October 01, 2008

Congress is never more ridiculous than when it tries to look like it is serious.

In the midst of a major national financial crisis, what was one of the first things Congress zeroed in on? The pay of Chief Executive Officers of financial institutions.

If all those CEOs agreed to work for nothing, that would not be enough to lower the bailout money by one percent. Anyone who was really serious would start with the 99 percent and let the one percent come later, if at all.

But however insignificant the pay of CEOs is economically, it is big stuff politically. Whatever the shortcomings of the Democrats, they are consistent in their message, and class envy is a great part of that message.

People who say that they cannot understand how CEOs in general get so many millions of dollars seem not to realize what a trivial thing they are saying. Most people do not understand most things. But that is no reason to have national policy guided by their ignorance.

I do not understand one percent of what there is to understand about the very computer on which these words are being written-- nor about the Internet on which these words will be transmitted to the syndicate that distributes this column. I don't have a clue about how a syndicate is run, much less how much someone should be paid for running it.

What really sets some people off is the fact that a CEO who has mismanaged some corporation into losing billions of dollars is rewarded with a severance package worth millions.

Think about it. If the CEO's decisions are costing the company billions, it is a bargain to get him out the door immediately for millions, rather than having his departure delayed by either internal struggles or battles in the courts.

It is the same principle if you are married to someone who is impossible to live with. The divorce may cost far more than the marriage-- and still be worth every cent of it.

But what about the "social justice" of it all?

Such questions seem to carry great weight with people who act as if they are God on Judgment Day. But one of the little overlooked differences between themselves and God on Judgment Day is that God does not have to worry about what is going to happen the day after Judgment Day.

Rewarding someone for being impossible to live with may offend our feelings, just as rewarding someone for mismanaging a company does. But the real question is-- what is the alternative and how will that alternative affect the future?

Politically imposed limits on the pay of CEOs is one of the most penny-wise and pound-foolish things that can be done. The difference between a top-notch CEO and a second-rate CEO can be billions of dollars on the bottom line.

That is what drives up the pay of CEOs. If you want someone who will be top-notch in running organizations as huge and complex as Fannie Mae or Freddie Mac, there is no point offering $5 million a year if similar enterprises elsewhere are paying $20 million for people with the kind of ability required.

Who is going to take a $15 million pay cut to go run these enterprises, in addition to having to put up with politicians?

The money that can be saved by limiting CEO pay is chump change compared to the money that can be lost because you cannot attract top-notch talent.

Congress itself is a classic example of what can happen when penny-wise policies restrict the caliber of people who can be attracted.

No top-level doctor, lawyer, economist, engineer or CEO can become a member of Congress without taking a big pay cut, perhaps costing that person's family millions of dollars over a lifetime.

On the other hand, if you paid every member of Congress a million dollars a year, it would cost less than the cost of even a small government boondoggle, much less a whole agency.

It is not that the turkeys in Congress today deserve a raise. They don't even deserve their current pay. But that is the very reason for attracting different people. Cheap politicians are actually very expensive and the same principle applies to CEOs.


Paulson/Bernanke plan

Congress needs to reject the Paulson/Bernanke plan for bailing out and propping up reckless banks at taxpayer expense. This is madness to ask us, the taxpayers, to cover the liabilities of Wall Street. We are tired of being fleeced. We want real solutions.

It is time for Congress to:

1.) End the Bailouts - Congress must revoke the Federal Reserve's authority to bail out failed businesses at your expense.

2.) Cut Taxes and Curb Regulation - If we really want to stimulate businesses and revive the market, we need to cut corporate and capital gains taxes, spurring investors to come back to the market and making it easier to attract new workers and clients. It is also time to end failed legislation like Sarbanes-Oxley, which has crippled capital markets, diminished our competitiveness, and greatly harmed small businesses.

3.) Reduce Spending - We must freeze all non-entitlement spending by the federal government at current levels and eliminate wasteful spending both domestically and in our trillion-dollar overseas budget. Our debt has to come down, and it won't until we start living within our means.

4.) Reform the Monetary System - If we are to have long-term economic progress, we must end the system of printing money out of thin air. The current laws limiting the circulation of gold and silver-backed currency must be overturned. We can no longer base our money on the empty promises of bureaucrats that it is sound.

I was outraged to hear a clip of Pelosi saying that they were going to burden the taxpayers with $1 Trillion in additional taxes to bailout loans that Clinton forced mortgage companies to make to unqualified minorities just so he could say that he put more minorities in houses than any other president!

There is a good solution that several economists have mentioned of simply extending FHA insurance to cover the bad mortgages and having the mortgage companies pay the premiums on the insurance. Additionally, they could eliminate the capital gains taxes on any bad mortgages that investors would buy, so they would be more likely to buy them.

We need to change the mark-to-market accounting law and to extend insurance but extend no loans. If they extend loans - if they borrow the money on the national debt in order for us to all go into the mortgage business a trillion dollars - we're going to fire you and send you home.

Politicians should not be adding another $1 Trillion to the national debt and further burdening us and our future generations with the countless years it will take us to pay for the problems caused by the government's forcing lenders to give mortgages to targeted groups of people who could not afford them.

What needs to be done first is to fix the system by not allowing mortgages to people who cannot afford them.

Instead of increasing the national debt and burdening the taxpayers with another $1T, please extend the FHA insurance program across these sub-primes, and eliminate the capital gains taxes on these mortagages in default so that investors will be encouraged to buy and hold them until them appreciate in value, knowing that they won't have to pay capital gains taxes on them when they sell them.

Below is some information about what caused the current subprime mortgage mess and what could be done to prevent taxpayers from being saddled with another $1 Trillion (which will cost every man, woman and child in America $2,333, plus interest) by the government.


My Answer to the President
Ron Paul
Sep 25, 2008

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

In liberty,

Ron Paul


All Hail the Pompous Ass Lord Gary Miller of CA.... Miller's office responds by directing calls to Ron Paul's office! Posted September 30th, 2008 by aVoiceof Reason.

"If you just solely rely on the phone calls we're getting from home, listening to people who don't understand the complexities of our marketplace and what we're dealing with here, the easiest vote for you to make would be a no vote today. You have to go beyond that." - Rep Gary Miller R-CA Dist. 42

Obviously any legislator who would listen to the cries of the serfs over Lord Miller's superior knowledge and commitment to our nation is a fool. Please let his Lordship know about your knowledge of "the complexities of the marketplace" by giving him a call at (202) 225-3201 in DC and (714) 257-1142 in CA.

C4L Update: I just received word that Miller's staff is pleading for us to stop. When you call, please let them know that we will leave him alone as soon as he comes out publicly in opposition to the bailout/theft.

Miller contact info: DC (202) 225-3201
CA (714) 257-1142
Email: gary.miller@mail.house.gov
FAX: (202) 226-6962

He also needs to publicly apologize to the American people. Don't let up or give up.


http://www.campaignforliberty.com/contactcongress.php

Use this information to contact your Congressmen. Contact information is below. For best results, contact your Representative at his local office address, rather than the D.C. office.

Copy this text below by highlighting it with the mouse and choosing "Copy" from the "edit" menu, then "paste" into the senators' contact forms (on the webpage above).

Dear Representative/Senator:

I urge you to oppose Treasury Secretary Henry Paulson's $700 billion bailout of Wall Street.

The bailout:

- violates the Constitution by authorizing the Treasury to purchase bad mortgage-related assets.
- greatly enlarges our national debt and further erodes the value of our dollar.
- bails out Wall Street at the expense of Main Street by putting taxpayer funds at risk while freeing up banks to continue making bad loans.

Already, hundreds of billions of dollars have been spent bailing out Freddie Mac, Fannie Mae, and AIG, and the final price tag for those moves could result in trillions of dollars being added to our national debt.

The bailout plan ignores the fundamental reason why our economy is in such crisis: the Federal Reserve and the federal government's interference in the market and manipulation of the money supply spurred major banks and other corporations to back bad mortgages.

Adopting this proposal will only continue the same flawed practices and greatly worsen the long-term effects.

The way out of this current economic crisis is to return to the principles that made this nation great: constitutionally-limited government, personal freedom, low taxes, and a belief in sound money.

I am asking that you strengthen our economy by taking action to:

1.) End the Bailouts - The Federal Reserve's authority to use taxpayer money to bail out Wall Street must be revoked and the Fed must be held accountable.

2.) Cut Taxes and Curb Regulation - If we really want to stimulate businesses and revive the market, we need to cut corporate and capital gains taxes, spurring investors to come back to the market and making it easier to attract new workers and clients. It is also time to repeal failed legislation like Sarbanes-Oxley, which has crippled capital markets, diminished our competitiveness, and greatly harmed small businesses.

3.) Reduce Spending - We must freeze all non-entitlement spending by the federal government at current levels and eliminate wasteful spending both domestically and in our trillion-dollar overseas budget. Our debt has to come down, and it won't until we start living within our means. Reducing spending and cutting the debt will strengthen our dollar and reduce our cost of living.

4.) Reform the Monetary System - If we are to have long-term economic progress, we must end the system of printing money out of thin air. The current laws limiting the circulation of gold and silver-backed currency must be overturned.

Thank you for your attention in regard to this matter. I will be closely watching as events unfold over the next several days. A vote to approve the bailout plan will cost you my vote for your next reelection bid.

Sincerely,

[Your name]


What Happened to Market Discipline?
John Stossel
Wednesday, September 24, 2008

Barack Obama says, "[Today's economic problems are] a stark reminder of the failures of ... an economic philosophy that sees any regulation at all as unwise and unnecessary" ().

What? Does that mean that until last week the Bush administration embraced the free market? Nonsense. Governments at all levels have regulated and subsidized the housing and financial industries for years. Nothing changed under President Bush.

The government-backed Fannie Mae and Freddie Mac were created precisely to interfere with the housing and mortgage markets. In effect, Freddie and Fannie diverted money to people who wouldn't have qualified for mortgages in a real private market.

Had actual private companies performed these activities, they would have been subject to market checks. But they were not. The results were predictable.

Now that it's all tumbling down, the politicians and pundits blame the free market.

It's not simply misunderstanding. It's demagoguery by people who will never admit that their "progressive" social policies have spawned a taxpayer bill that boggles the mind.

This is a story not of private enterprise but of cynical political opportunism. Moral hazard -- the poisonous mix of private profits and taxpayer-covered losses -- is what you get when politicians indulge their hubris to redesign society. The bailout of those companies holding bad mortgages -- big-business socialism -- sets us up for the next crisis.

Maybe the Republican presidential candidate will dissent? Not a chance:

John McCain says, "We are going to fight the greed and irresponsibility on Wall Street. These actions [leading to crisis] stem from failed regulation, reckless management and a casino culture on Wall Street. ... We need strong and effective regulation ... " ().

He proposes a new bureaucracy, the Mortgage and Financial Institutions Trust (MFI), which he says will "provide troubled institutions with an orderly process to identify bad loans, provide funding and eventually sell them at a profit. ... The MFI will supervise the sale of loan assets at market prices and purchase them as necessary" (emphasis added).

A government agency is going buy bad loans and make a profit selling them. Give me a break!

Irresponsibility induced by government-created perverse incentives is the culprit. For decades politicians of both parties have relieved big companies of the responsibility that market discipline would have imposed. The promise -- explicit or implicit -- to bail out companies "too big to fail" weakens market discipline. That invites recklessness.

What if the government cut Freddie, Fannie, Bear, AIG and the others loose and let them do what other businesses do on hard times: renegotiate with creditors and revalue assets? Would there be another Great Depression? Not likely. What turned a recession into the Great Depression was the Federal Reserve's contraction of the money supply. I doubt they'd make that mistake twice.

Public officials say the big companies must be saved to prevent a devastating credit "lock." Really? Without a federal bailout, lending wouldn't have resumed? The market wouldn't have sorted it out? Prices wouldn't have found a more solid floor? We'll never know.

We do know that the taxpayer will buy -- Probably for too much money, because the private sellers will fool the government managers -- at least $700 billion in "illiquid" assets. Where will this money come from: taxation, borrowing or the printing press? What will that do to our economic well-being?

Crisis is the friend of the State. The politicians are desperate to be seen as "showing leadership," so we're surely in for a new round of government interventions. Watch for the equivalent of the Sarbanes-Oxley Act. There'll be much posturing about how the new regulations "will keep this from ever happening again," but that's more nonsense because the root problem is not lack of regulation. It's government social engineering of the housing market, which will be unchanged.

This is the path to stagnation and poverty. As Nobel Laureate F.A. Hayek taught, markets are too complicated for planners to know enough to plan them. The relevant information, scattered unspoken among billions of market participants, is beyond the bureaucrats' reach.

We do need protection from reckless businessmen. But there is only one way to provide that: market discipline. That means: no privileges, and no bailouts.


Like Lemmings Toward a Cliff
George Will
Wednesday, September 24, 2008

WASHINGTON -- Members of Congress are being exhorted to stampede, like lemmings in reverse, away from a postulated cliff. But some of the economic geographers who say they know that the cliff is there, and that the economy will plunge over it if Congress stops to think before empowering the secretary of the Treasury to control the flow of capital through the veins of American capitalism, are some of those experts who said in March that prophylactic federal intervention in the matter of Bear Stearns was necessary to contain the crisis.

Everything that has been done for the last six months has been done to cope with what previous actions were supposed to prevent. A perhaps pertinent axiom: There is no education in the second kick of a mule.

The essence of this crisis is lack of knowledge, including the inability to know who owes what to whom, and where risk resides. In such a moment, government's speed should not vary inversely with its information. With government's prestige, measured by approval ratings of the president and Congress, at a historic low, government is taking on unprecedented responsibilities. Henry Paulson, aka The Fourth Branch of Government, is intelligent and indefatigable and has as much pertinent experience as could be hoped for. But no one has ever had much experience that is pertinent to the tasks that would be assigned to him by the three-page legislation that would give him almost complete discretion over at least $700 billion.

Before Congress codifies this, it should consult Article I, Section 1 of the Constitution: "All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives." But since the federal government was transformed into a regulatory state in the 20th century, Congress has routinely delegated essentially legislative powers to the executive branch and independent agencies. This is one reason conservatives regret the growth of government: It entails supplanting the rule of law -- laws written by elected representatives -- by the rule of rules written in the executive branch.

Rep. Barney Frank, who chairs the House Financial Services Committee, says: "No one in a democracy, unelected, should have $800 billion to spend as he sees fit. ... That's not the way to run a democracy." Frank is properly punctilious about a fundamental principle of American governance -- legislative control of public funds. But a fundamental principle of American political economy is that no elected person should exercise virtually unfettered discretion with such sums of taxpayers' money.

In 1922, Lenin, attacked from the left because he was allowing some small-scale private enterprise and agriculture, promised that the state would control the Soviet economy's "commanding heights." In 1945, Britain's Labour Party explained its nationalization policies by saying that socialism should include government "control of the commanding heights of the economy."

In 1945 Britain, this meant the stuff of industrialism -- iron, steel, coal, railroads, etc. In 1945, Aneurin Bevan, a leading Labour politician, said: "Britain is an island bedded on coal and surrounded by fish; only an organizing genius could produce a coal shortage and a fish shortage simultaneously." Socialism soon produced that.

Today, the commanding heights of America's economy are financial services, and regarding them the line between the public and private sectors is being blurred to indistinctness. What is the American equivalent of coal and fish? We might find out.

An enormous range of complex judgments will have to be made about who will decide -- and by what criteria -- to whom money will be directed, and how to value and price the financial instruments, and the assets behind them, that the government might soon own. But these micro problems, although quite huge, pale next to the macro problem, which is:

This crisis has arrived during the ninth month of a vast demographic deluge -- the retirement of 78 million baby boomers. As the population ages, the welfare state -- primarily, a transfer-payments pump providing pensions and medical care for the elderly -- requires more rapid economic growth to generate increasing revenues. To the extent that today's crisis results in large amounts of capital being allocated by considerations other than those of economic efficiency, the nation will be consigned to less-than-optimal economic growth.

The next administration, but especially an Obama administration, will chafe under severely narrowed economic restrictions. But subsequent generations will pay the radiating costs of the rising role of the state in allocating financial resources.


Is Capitalism on the Ropes?
Larry Elder
Thursday, September 25, 2008

An indictment of greed! A case for more government intervention! Worst financial crisis since the Great Depression! Failure of capitalism! This list includes the "lessons" of the recent turmoil in the financial markets. Nonsense.

Down with greed!

Someone please produce the gun held to the temples of borrowers who put little or no money down, took out "teaser" rates, and then pleaded ignorance or victimhood when the lender -- as stipulated in the contract -- jacked up the rate. Lenders and borrowers expected government/taxpayers to somehow, someway, step in and shield them from the consequences of their decisions. This creates "moral hazard" -- behavior based upon the knowledge of protection from the bad consequences of reckless or irresponsible behavior. Decisions entail risk, whether personal or financial ones.

We need more regulation!

We have it -- lots of it. Ever hear of the Office of Federal Housing Enterprise Oversight (OFHEO)? This agency, which employs 200 people, exists for one thing and one thing only -- to "oversee" Freddie Mac and Fannie Mae, the "government-sponsored entities" that own or guarantee 40 percent of the nation's residential mortgages. Mere months before Freddie and Fannie's collapse and subsequent government takeover, OFHEO issued a report that saw only clean sailing. The Community Reinvestment Act, passed in 1977, mandated that lenders lend to high-risk borrowers -- or else. The government actually held up prudent bank mergers if one or both sides did not sufficiently "lend" to borrowers who, under normal circumstances, failed to qualify. Why is the federal government in the housing business in the first place? We need less government, not more regulation.

We are experiencing "the greatest financial crisis since the Great Depression"!

Even if this were true, we aren't even close to that catastrophic event. At the Great Depression's nadir, 25 percent of adults were unemployed, including nearly 50 percent of urban black adults. Economist David Wheelock, of the Federal Reserve Bank of St. Louis, says that by the dawn of 1934, nearly half the urban homes with mortgages were in default, and 7.3 percent of housing structures had been foreclosed. Today 6.4 percent of mortgages are delinquent, 2.75 percent are in the foreclosure process, and 0.6 percent of all housing units are bank-owned.

But what about since the Great Depression? Take the recession of 1980-81. In 1980, inflation averaged 13.58 percent, unemployment increased from 6.3 to 8.5 percent, and the prime loan rate reached an astonishing 21.5 percent. According to the Mortgage Bankers Association, today's delinquency rate is only a little higher than in 1985. And in 1999, the foreclosure rate set records.

According to the FDIC, in the almost two-year period of 2007 and 2008, 15 banks failed. Similarly, during Clinton's last two years in office, 1999 and 2000, 15 banks also failed. In the recession-free years of 1988 and 1989, there were 1,004 bank failures. And since the Great Depression, the average number of yearly bank failures has been 94.

This exposes the failure of capitalism!

What do you say we actually try capitalism, where private actors reap rewards and assume the risk? "Capitalism," says Kenneth Minogue, professor emeritus at the London School of Economics, "is what people do if you leave them alone." People want "hands off" until, that is, they want "hands on." People want homes, many preferring that option even when renting may be more prudent. Many want rent control to shield them from leasing at fair market rates. Democratic presidential candidate Barack Obama promises "world-class" education -- with taxpayers paying for it. And the federal government, in dramatic contradiction with the limited-government intention of the Constitution, involves itself in health care, guaranteeing private-sector retirement accounts, disaster relief, welfare, unemployment compensation benefits, retirement benefits, etc.

The Federal Reserve Bank, in effect, prints money to pay for things that voters demand -- but their taxes cannot cover. The proposed bailout of financial institutions enables the Fed to create hundreds of billions of dollars out of thin air. The cost is greater inflation -- a stealth tax on us all.

Government, meanwhile, grows and grows.

In 1930, before Franklin Delano Roosevelt's New Deal, taxpayers paid about 12 percent of their income to all three levels of government -- state, local and federal. Today we pay approximately 40 percent -- even more if you attach a value to unfunded mandates, such as those issued by agencies such as OSHA.

So, yes, our recent financial turmoil does suggest failure -- a failure to truly practice capitalism and a failure to accept and believe in the value, appropriateness and morality of a limited government and maximum personal responsibility.


Mortgaging our children's future
Star Parker
Monday, August 04, 2008

A key feature of the housing bill that President Bush just signed into law was the federal bailout of Fannie Mae and Freddie Mac.

These are the two taxpayer backed "Government Sponsored Enterprises" that own or guarantee almost half of all mortgages in the country.

Of the many words written about this bailout, those in a New York Times op-ed by William Poole, former head of the Federal Reserve Bank of Saint Louis, contain one of the most relevant and powerful messages:

"Critics of the congressional housing package complain that we are now committing taxpayers to huge new outlays to rescue Fannie Mae and Freddie Mac. That view is wrong: Congressional inaction over the past 15 years had already committed taxpayers to the bailout."

Paul Gigot of the Wall Street Journal reviewed in his paper the coverage that it had been giving since 2001 to the rot inside these two entities.

Gigot also points out that, despite the rationale that we allegedly need these taxpayer-backed enterprises in order for those of modest incomes to get mortgages, in 2002, Fannie Mae "was able to pay no fewer than 21 of its executives a million dollars," and in 2003, its CEO, Franklin Raines, who was ousted for financial shenanigans at the firm, was paid $20 million. And, he left with a $25 million retirement package.

Consider, for starters, what all this tells us today about the man who promises to clean up Washington, Sen. "Change We Can Believe In" Barack Obama.

Raines is reported to be currently serving as an informal adviser to the Obama campaign on housing and mortgage issues.

Raines' predecessor, James Johnson, also the beneficiary of tens of millions in compensation running this sweet deal, where company executives share the risks with taxpayers but not the profits, was Obama's choice to head his vice president vetting team. After howling from the press, Johnson stepped aside.

During the time when the Wall Street Journal, among others, was writing about the improprieties at Fannie Mae and Freddie Mac, both entities paid out a reported $170 million to lobbyists to keep Congress disinterested. And they succeeded.

None of this seems to present a problem for Obama. The man who campaigned through the primaries about slaying lobbyist dragons in Washington appears quite at home with those who benefited from these lobbying efforts.

Now he has given the Full Monty embrace to bailing out Fannie Mae and Freddie Mac and keeping them propped up forever by us taxpayers. And, even making them more influential by raising the size of the mortgages they can guarantee.

Say what you wish about John McCain, but he's said and written that Fannie and Freddie should be sliced, diced, and privatized. This is a position held by many respected economists, including Poole, who writes in a New York Times op-ed that what they claim to need government guarantees to do, the private market can handle quite well, thank you.

Beyond the presidential campaign, consider why barely 10 percent of Americans express confidence in Congress.

Congress ignored for years the festering problems at Fannie and Freddie, despite lights shined on these problems. Now we taxpayers (you and me) are exposed to some $5 trillion of their debt.

Unfortunately, this political irresponsibility is the rule rather than the exception.

This is the same Congress that woke up one night to discover 12 million illegal immigrants in our country.

And the same Congress that continues to ignore the $50 trillion or so (whose counting?) in unfunded liabilities of Social Security and Medicare.

The pathetic dynamics are quite clear. Being honest about problems means taking responsibility and making hard decisions. Why do that when you can ignore them, let them fester and grow, and pawn them off on the next generation when you will be long gone?

Government -- federal, state, and local -- now takes about one of every three of the dollars we produce. Estimates are that by mid-century it will be more than one of every two.

Are we going to be in rocking chairs telling our grandchildren how we remember when America was a great country?



Taxpayer funded government bailouts of fat-cat corporations and more government intervention are not the solutions to our financial crisis. In fact, the American people know and understand that many of our elected officials bear their share of responsibility for this financial crisis.

Former Arkansas Governor Mike Huckabee said in reference to Congress; "They all lived off big campaign contributions and the swill of the lobbyists who strong armed them into permission to steal." Chuck Colson echoed those sentiments when he said; "the people who are going to steer this plan through Congress are the very characters who brought us this crisis. And they are already looking for political and financial goodies they can hang on to the plan."

The American people simply don't have faith that government intervention, coupled with a huge corporate welfare-check, is the solution. Quite frankly, too many of our elected officials have had what Colson calls, "the near-incestuous relationship between politicians and big-time government-supported financial institutions." The bottom line is that we simply don't trust many of you!

Conservative legislators are proposing some common-sense free market solutions; including, but not limited to, suspending Capital Gains and "Market to Market" accounting. These proposals should be given ample consideration before rushing off to write a check to corporate fat-cats who have filled the campaign coffers of too many of our elected leaders!


They Gave Your Mortgage to a Less Qualified Minority
by Ann Coulter
09/24/2008
http://www.humanevents.com/article.php?id=28714

On MSNBC this week, Newsweek's Jonathan Alter tried to connect John McCain to the current financial disaster, saying: "If you remember the Keating Five scandal that (McCain) was a part of. ... He's really getting a free ride on the fact that he was in the middle of the last great financial scandal in our country."

McCain was "in the middle of" the Keating Five case in the sense that he was "exonerated." The lawyer for the Senate Ethics Committee wanted McCain removed from the investigation altogether, but, as The New York Times reported: "Sen. McCain was the only Republican embroiled in the affair, and Democrats on the panel would not release him."

So John McCain has been held hostage by both the Viet Cong and the Democrats.

Alter couldn't be expected to know that: As usual, he was lifting material directly from Kausfiles. What is unusual was that he was stealing a random thought sent in by Kausfiles' mother, who, the day before, had e-mailed: "It's time to bring up the Keating Five. Let McCain explain that scandal away."

The Senate Ethics Committee lawyer who investigated McCain already had explained that scandal away -- repeatedly. It was celebrated lawyer Robert Bennett, most famous for defending a certain horny hick president a few years ago.

In February this year, on Fox News' "Hannity and Colmes," Bennett said, for the eight billionth time:

"First, I should tell your listeners I'm a registered Democrat, so I'm not on (McCain's) side of a lot of issues. But I investigated John McCain for a year and a half, at least, when I was special counsel to the Senate Ethics Committee in the Keating Five. ... And if there is one thing I am absolutely confident of, it is John McCain is an honest man. I recommended to the Senate Ethics Committee that he be cut out of the case, that there was no evidence against him."

It's bad enough for Alter to be constantly ripping off Kausfiles. Now he's so devoid of his own ideas, he's ripping off the idle musings of Kausfiles' mother.

Even if McCain had been implicated in the Keating Five scandal -- and he wasn't -- that would still have absolutely nothing to do with the subprime mortgage crisis currently roiling the financial markets. This crisis was caused by political correctness being forced on the mortgage lending industry in the Clinton era.

Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."

Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.

Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee."

Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.

When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.

In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."

Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.

A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.

In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.

Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.

Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients.

Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.


You've got to read this from September 1999 NY Times. Then YOU decide if USA taxpayers should bailout Fannie May or Freddie Mac or investment banks or re-elect any federal official who is not on record opposing a bailout package to support all of the profiteers in the subprime mortgage industry. Note what Peter Wallison, an economist, warned way back in 1999: 'From the perspective of many people, including me, this is another thrift industry growing up around us. If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

'Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. 'Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.'

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

'From the perspective of many people, including me, this is another thrift industry growing up around us,' said Peter Wallison a resident fellow at the American Enterprise Institute. 'If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.


Bankruptcy is also a good solution. Another is to simply extend FHA insurance to cover the bad mortgages and have the mortgage companies pay the premiums on the insurance. Additionally, they could eliminate the capital gains taxes on any bad mortgages that investors would buy, so they would be more likely to buy them. Any of these methods can save the taxpayers $1 Trillion!

Bankruptcy, not bailout, is the right answer
By Jeffrey A. Miron
Special to CNN

CAMBRIDGE, Massachusetts (CNN) -- Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown.

This bailout was a terrible idea. Here's why.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.

Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.

So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.


TO ALL MY FRIENDS....LIBERAL OR CONSERVATIVE........FYI only.

George Bush has been in office for 7 1/2 years. The first six the economy was fine.
A little over one year ago:
1) Consumer confidence stood at a 2 1/2 year high;
2) Regular gasoline sold for $2.19 a gallon;
3) the unemployment rate was 4.5%
4) the DOW JONES hit a record high--14,000 +
5) American's were buying new cars, taking cruises, vacations overseas, living large!...

But American's wanted 'CHANGE'! So, in 2006 they voted in a Democratic Congress and yes--we got 'CHANGE' all right. In the PAST YEAR:
1) Consumer confidence has plummeted ;
2) Gasoline is now over $4 a gallon & climbing;
3) Unemployment is up to 5.5% (a 10% increase);
4) Americans have seen their home equity drop by $12 TRILLION DOLLARS and prices still dropping;
5) 1% of American homes ar e in foreclosure.
6) as I write, THE DOW is probing another low -- $2.5 TRILLION DOLLARS HAS EVAPORATED FROM THEIR STOCKS, BONDS & MUTUAL FUNDS INVESTMENT PORTFOLIOS!

Yes, In 2006 America Voted For Change...And We Sure Got It! ... Remember The President Has No Control Over Any Of These Issues, Only Congress. And What Has Congress Done In The Last Two Years, Absolutely Nothing. Now The Democratic Candidate For President Claims He Is Going To Really Give Us Change Along With A Dem Ocratic Congress!!!!

JUST HOW MUCH MORE 'CHANGE' DO YOU THINK YOU CAN STAND?

'Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased -- not a reduced -- flow of revenues to the federal government.' Several days later, JFK sent another message to Congress: 'Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort -- thereby aborting our recoveries and stifling our national growth rate.' - - John F. Kennedy, 1963 address to Congress.


McCain's Brilliant Bailout Strategy
Friday, September 26, 2008 4:34 PM
By: Dick Morris & Eileen McGann

McCain has transformed a minority in both houses of Congress and a losing position in the polls into the key role in the bailout package, the main man around whom the final package will take shape.

He arrived in Washington to find the Democrats working with the Bush administration to pass an unpopular $700 billion bailout. The Democrats had already cut their deal with Bush. They agreed to the price tag while Bush agreed to special aid to families facing foreclosure, equity for the taxpayers, and limits on executive compensation. But no sooner had McCain arrived than he derailed the deal.

Knowing how unpopular the bailout is with the American people, the Democrats are not about to pass anything without broad Republican support even though their majorities permit them to act alone. Instead of signing on with the Democratic/Bush package, the House Republicans are insisting on replacing the purchase of corporate debt with loans to companies and insurance paid for by the companies, not by the taxpayers.

That, of course, is a popular position. McCain would be comfortable to debate this issue division all day. And, if the Democrats don't cave in to the Republican position, that's probably exactly what he'll do on Friday night's scheduled debate in Mississippi.

But the Democrats are not about to be stubborn. They know their package is a lemon and need the political cover of Republican support. So the Republicans can write their own ticket -- and they will. John McCain will be at the center of the emerging compromise while Obama is out on the campaign trail kissing babies.

If the deal is cut before Friday's debate, my bet is that McCain shows up in triumph. If it isn't, he shows up anyway and flagellates Obama over the differences between the Democratic package and McCain's.

By Monday, at the latest, the Democrats have to cave in and pass the Republican version. They don't dare pass their own without GOP support, so they will have to acquiesce to the Republican version.

Then McCain comes out of the process as the hero who made it happen when the president couldn't and Obama wouldn't. He becomes the bailout expert. And, of course, the bailout will work.

With the feds standing behind the bad debt, whether by purchase or loans and insurance, Wall Street will breathe a sigh of relief. Bears won't dare bet against the economy with the entire weight of the federal government on the other side. They may be bears but they are not rabid.

Finally, McCain, as the reigning expert on bailouts, then can take the tax issue to Obama, saying that a tax increase, such as the Democrat is pushing, would destroy the bailout, ruin the economy, and trigger a collapse.

This bold move by McCain is about to work. Big time.


McCain Should Not Support Bailout
Monday, September 29, 2008 10:05 AM
By: Dick Morris & Eileen McGann

During Friday's debate, John McCain assiduously and inexplicably avoided using the issue that might have won him the debate and the presidency: opposition to a taxpayer-funded bailout of the financial crisis.

Congress is about to pass, and the president is about to sign, a bill that the American people detest by 2-to-1 margins. When Americans realize that there is, indeed, an alternative to handing over $700 billion to financial institutions as a reward for their failure, opposition to the idea will swell even further.

The bailout ideas proposed by the House Republicans and trumpeted by former Speaker Newt Gingrich make eminent sense. Indeed, they make so much sense that it is as if the roles of the parties have been reversed.

It is the Republicans who are demanding that the banks and financial institutions pay for their own bailout, granting them only a mixture of loans and premium-paid insurance, while the Democrats want to pass the hat among the taxpayers to buy their dirty paper.

In an unusual act of political foresight and skill, the normally dead-headed House Republican leadership has crafted a platform that can carry the party to victory in November. All that remains is for the party's candidate, and perhaps even its president and Treasury secretary, to get on board.

McCain can recover at the negotiating table the economy issue he lost in Friday's debate. He needs to have the courage of his convictions and insist on a bailout without requiring taxpayer-funded purchase of defunct mortgages from failing institutions.

The difference in the bailout plans is, of course, largely cosmetic. Dead paper is dead paper whether it is on the books of the government, purchased from banks, or on the books of the banks, insured by the government. The game is the same: Loans or grants fund the deficient debt service on the defaulted mortgages until homes can recover their value in the cyclical real estate market.

But it makes all the difference in the world politically if this task is accomplished by buying bad debt or by lending the bankers the money to cover their current losses while they keep their bad debts on their books and by insuring them against future losses.

Loans are politically viable. Purchase of bad debt with tax money is not.

The Democrats and our politically-challenged president have failed to appreciate the difference between spending and lending. Treasury Secretary Paulson can be excused for not realizing it. Politics is not his thing.

But John McCain must realize the crucial distinction and must use his leverage to stop a taxpayer-funded bailout, insisting instead on loans and insurance.

If McCain stands firm, the Democrats will either have to pass the bailout package on their own, without Republican votes, and rely on Bush's signature on the bill to provide a fig leaf of bipartisanship, or they will have to cave in and pass the Republican package.

Either way, McCain comes out ahead.

If he gets his way, he gets credit for the bailout. If he doesn't, he can spend the campaign attacking Obama and the Democrats for spending $700 billion of taxpayer money.

If the Democrats don't adopt either course and play a game of chicken with the Republicans, their congressional status as the majority party dooms them to taking the blame for any ensuing collapse.

Voters can count.

They know that Reid and Pelosi are Democrats and that they control Congress. With this power comes responsibility.

And if the Democrats do nothing -- that is, if they fail to use their majorities to pass a bailout or to cooperate with the Republicans in adopting the GOP version of the package -- it is they who will get the blame for the catastrophe which will follow.

The Democrats don't dare take that chance.

The cards are dealt for John McCain. All he has to do is have the guts to do what he didn't have the courage to do in the debate: Play the hand.


Before Congress does anything else they must take the time to hear from some real economists, like Nobel Prize winner Joseph E. Stiglitz, who offers real wisdom in this article from the Nation. Here are some excerpts:

"With lack of oversight and transparency the cause of the current problem, how could they make a proposal so short in both? If a quick consensus is required, why not include provisions to stop the source of bleeding, to aid the millions of Americans that are losing their homes? Why not spend as much on them as on Wall Street? Do they still believe in trickle-down economics, when for the past eight years money has been trickling up to the wizards of Wall Street? Why not enact bankruptcy reform, to help Americans write down the value of the mortgage on their overvalued home? No one benefits from these costly foreclosures.

The Scandinavian countries showed the way, almost two decades ago. By issuing preferred shares with warrants (options), one reduces the public's downside risk and insures that they participate in some of the upside potential. This approach is not only proven, it provides both incentives and wherewithal to resume lending. It furthermore avoids the hopeless task of trying to value millions of complex mortgages and even more complex products in which they are embedded, and it deals with the "lemons" problem - the government getting stuck with the worst or most overpriced assets.

Finally, we need to impose a special financial sector tax to pay for the bailouts conducted so far. We also need to create a reserve fund so that poor taxpayers won't have to be called upon again to finance Wall Street's foolishness.

We need open, public and transparent hearings so the American people can hear proposals from REAL experts like Nobel Prize winner Joseph E. Stiglitz, and decide in the clear light of day what is to done with OUR economic destiny, and not in secret back rooms like it's been done so far where they confiscate all the Blackberrys to keep us all in the dark.

A Better Bailout
by: Joseph E. Stiglitz, The Nation
Friday 26 September 2008

Joseph E. Stiglitz is a renowned American economist and the winner of the Nobel Prize in economics.

The champagne bottle corks were popping as Treasury Secretary Henry Paulson announced his trillion-dollar bailout for the banks, buying up their toxic mortgages. To a skeptic, Paulson's proposal looks like another of those shell games that Wall Street has honed to a fine art. Wall Street has always made money by slicing, dicing and recombining risk. This "cure" is another one of these rearrangements: somehow, by stripping out the bad assets from the banks and paying fair market value for them, the value of the banks will soar.

There is, however, an alternative explanation for Wall Street's celebration: the banks realized that they were about to get a free ride at taxpayers' expense. No private firm was willing to buy these toxic mortgages at what the seller thought was a reasonable price; they finally had found a sucker who would take them off their hands - called the American taxpayer.

The administration attempts to assure us that they will protect the American people by insisting on buying the mortgages at the lowest price at auction. Evidently, Paulson didn't learn the lessons of the information asymmetry that played such a large role in getting us into this mess. The banks will pass on their lousiest mortgages. Paulson may try to assure us that we will hire the best and brightest of Wall Street to make sure that this doesn't happen. (Wall Street firms are already licking their lips at the prospect of a new source of revenues: fees from the US Treasury.) But even Wall Street's best and brightest do not exactly have a credible record in asset valuation; if they had done better, we wouldn't be where we are. And that assumes that they are really working for the American people, not their long-term employers in financial markets. Even if they do use some fancy mathematical model to value different mortgages, those in Wall Street have long made money by gaming against these models. We will then wind up not with the absolutely lousiest mortgages, but with those in which Treasury's models most underpriced risk. Either way, we the taxpayers lose, and Wall Street gains.

And for what? In the S&L bailout, taxpayers were already on the hook, with their deposit guarantee. Part of the question then was how to minimize taxpayers' exposure. But not so this time. The objective of the bailout should not be to protect the banks' shareholders, or even their creditors, who facilitated this bad lending. The objective should be to maintain the flow of credit, especially to mortgages. But wasn't that what the Fannie Mae/Freddie Mac bailout was supposed to assure us?

There are four fundamental problems with our financial system, and the Paulson proposal addresses only one. The first is that the financial institutions have all these toxic products - which they created - and since no one trusts anyone about their value, no one is willing to lend to anyone else. The Paulson approach solves this by passing the risk to us, the taxpayer - and for no return. The second problem is that there is a big and increasing hole in bank balance sheets - banks lent money to people beyond their ability to repay - and no financial alchemy will fix that. If, as Paulson claims, banks get paid fairly for their lousy mortgages and the complex products in which they are embedded, the hole in their balance sheet will remain. What is needed is a transparent equity injection, not the non-transparent ruse that the administration is proposing.

The third problem is that our economy has been supercharged by a housing bubble which has now burst. The best experts believe that prices still have a way to fall before the return to normal, and that means there will be more foreclosures. No amount of talking up the market is going to change that. The hidden agenda here may be taking large amounts of real estate off the market - and letting it deteriorate at taxpayers' expense.

The fourth problem is a lack of trust, a credibility gap. Regrettably, the way the entire financial crisis has been handled has only made that gap larger.

Paulson and others in Wall Street are claiming that the bailout is necessary and that we are in deep trouble. Not long ago, they were telling us that we had turned a corner. The administration even turned down an effective stimulus package last February - one that would have included increased unemployment benefits and aid to states and localities - and they still say we don't need another stimulus. To be frank, the administration has a credibility and trust gap as big as that of Wall Street. If the crisis was as severe as they claim, why didn't they propose a more credible plan? With lack of oversight and transparency the cause of the current problem, how could they make a proposal so short in both? If a quick consensus is required, why not include provisions to stop the source of bleeding, to aid the millions of Americans that are losing their homes? Why not spend as much on them as on Wall Street? Do they still believe in trickle-down economics, when for the past eight years money has been trickling up to the wizards of Wall Street? Why not enact bankruptcy reform, to help Americans write down the value of the mortgage on their overvalued home? No one benefits from these costly foreclosures.

The administration is once again holding a gun at our head, saying, "My way or the highway." We have been bamboozled before by this tactic. We should not let it happen to us again. There are alternatives. Warren Buffet showed the way, in providing equity to Goldman Sachs. The Scandinavian countries showed the way, almost two decades ago. By issuing preferred shares with warrants (options), one reduces the public's downside risk and insures that they participate in some of the upside potential. This approach is not only proven, it provides both incentives and wherewithal to resume lending. It furthermore avoids the hopeless task of trying to value millions of complex mortgages and even more complex products in which they are embedded, and it deals with the "lemons" problem - the government getting stuck with the worst or most overpriced assets.

Finally, we need to impose a special financial sector tax to pay for the bailouts conducted so far. We also need to create a reserve fund so that poor taxpayers won't have to be called upon again to finance Wall Street's foolishness.

If we design the right bailout, it won't lead to an increase in our long-term debt - we might even make a profit. But if we implement the wrong strategy, there is a serious risk that our national debt - already overburdened from a failed war and eight years of fiscal profligacy - will soar, and future living standards will be compromised. The president seemed to think that his new shell game will arrest the decline in house prices, and we won't be faced holding a lot of bad mortgages. I hope he's right, but I wouldn't count on it: it's not what most housing experts say. The president's economic credentials are hardly stellar. Our national debt has already climbed from $5.7 trillion to over $9 trillion in eight years, and the deficits for 2008 and 2009 - not including the bailouts - are expected to reach new heights. There is no such thing as a free war - and no such thing as a free bailout. The bill will be paid, in one way or another.

Perhaps by the time this article is published, the administration and Congress will have reached an agreement. No politician wants to be accused of being responsible for the next Great Depression by blocking key legislation. By all accounts, the compromise will be far better than the bill originally proposed by Paulson but still far short of what I have outlined should be done. No one expects them to address the underlying causes of the problem: the spirit of excessive deregulation that the Bush Administration so promoted. Almost surely, there will be plenty of work to be done by the next president and the next Congress. It would be better if we got it right the first time, but that is expecting too much of this president and his administration.

Joseph E. Stiglitz is University Professor at Columbia University. He received the Nobel Prize in Economics in 2001 for research on the economics of information. Most recently, he is the co-author, with Linda Bilmes, of The Three Trillion Dollar War: The True Costs of the Iraq Conflict. more...<http://www.thenation.com/directory/bios/joseph_e_stiglitz>


How We Can Clean Up A Lot of the Economic Problems

Remember Enron, WorldCom, Adelphia, and other companies had artificially put assets on the books? They'd say something was worth $10M when they bought it, but eventually it decreased in value, and they never updated the value in the books. That was part of the fraud. Under current laws at that time, they were all convicted and put in jail for fraud.

Then we got all mad and made all these new laws that are coming out the wazoo called sarbanes oxley. It's a huge, massive law but the idea is that we were going to mandate ethics to corporate America because apparently they didn't have any, according to the Enron failure. It's now a total pain in the butt to execute it in a publicly traded company.

It didn't work because you can't cause ethics to happen. However, it does make each company each day restate what their assets are worth if sold on the market. This accounting procedure is mark to market accounting--you need to remember that. It's a good concept and keeps companies from having loaded balance sheets.

How This Affects Us Today However, it's part of what's caused this in the news now. Merrill Lynch was sitting with $30 billion tied up in sub-prime loans with houses. Stupid! They get what they deserve for doing that, and I'm with you on that. Those houses didn't become worthless all of a sudden because those people couldn't sell their bonds. Since they couldn't sell them, they basically gave them away for 22 cents on the dollar. Now do you think all those houses lost 80% of their value underneath that deal? No, they didn't, so they gave them away for 22 cents on the dollar (about $6 billion total) because there was no market for them. Nobody wants to buy sub-prime bonds because they suck. They're junk bonds. But at 22 cents on the dollar, it's a bargain because even if you foreclosed on every one of the houses in there, you'd probably get $20 billion back out of $30 billion, and so the company that bought those for $6 billion got a deal! But there's no market for them. That's where these companies are stuck. They can't sell this stuff, but accounting-wise, they've had to mark it down to market and it's frozen the marketplace.

Economist Wesbury is saying that if we change that one rule and don't force them to mark down to market value and just let them hold on to all the stuff, and say just on sub-primes for this period of time you can change that rule -- a temporary change -- that'll free the market up. It's seized right now; it's frozen. This will thaw it out and get it going again. He says that'll solve 60% of the problem ... and I think he's right.

That one accounting rule is what made Merrill Lynch sell out. That one accounting rule is what's driving other ones into the dirt. Would you rather let them change their accounting rule or loan them $700 billion for us to buyout their bad paper?

I'd rather them work their own crap out than change the accounting rule.

I don't like giving them any money or any help with my tax dollars. But I'd rather see that than see the whole thing turn completely upside down in a fruit basket turnover than have a whole meltdown or something and freak out here in the middle of the election season. Why don't we just take the FHA insurance program and extend it across these sub-primes? What that means is that you and I are guaranteeing the lender that they're not going to lose as much or any money on those mortgages. Now I don't like guaranteeing them, but I like it better than buying them. In other words, instead of $700 billion in tax-payer debt going out there to bail out these companies, just extend the insurance out. You could probably do that for less than $40 billion. It's like a 95% savings!

If the government insured those mortgages, they would then be marketable. And could sell them. And the companies would stay afloat. And we, the people, don't have to get into the mortgage business. Now we're going to get in there a little bit because of the insurance on those getting foreclosed on. But foreclosures aren't causing this. This is being caused because these companies are frozen and seized up. We've got to let some of the steam come off and put some oil in there to get this thing moving again. We can do that without going into debt $700 billion.

It is true that home foreclosures have risen, but a vast majority of mortgages are still being paid on time. As a result, the market prices of subprime loan pools today have absolutely no relationship to the actual performance of the bonds. If every subprime loan went bad, and banks recovered just 40 cents on the dollar, the bonds would still be worth 40 cents. But the market has pushed bonds well below that level, taking down venerable firms and causing the government to consider draconian solutions.

In other words, mark-to-market accounting--not the reality of the economy or the actual credits--has created much of the financial turmoil that has shaken the world. Imagine if you had a $200,000 mortgage on a $300,000 house that you planned on living in for 20 years. But a neighbor, because of very special circumstances, had to sell his house for $150,000. Then, imagine if your banker said you had to mark to this "new market" and give the bank $80,000 in cash immediately (so you would have 20% down) or lose your home. Would this reflect reality? Not at all. Would this create chaos? Absolutely.

And it is happening all over Wall Street. Merrill Lynch (nyse: MER - news - people ) was forced to sell $30.6 billion of illiquid mortgage securities to Lone Star Funds for just $6.7 billion, or 22 cents on the dollar. If it did not sell, these bonds might have fallen to 18 cents and further eroded its capital on a mark-to-market basis. It couldn't take the chance.

But what if Merrill was allowed to hold those securities on its books, without marking them to an illiquid market? The company would not have had to take a $24 billion loss. And maybe investors in Merrill Lynch would not have had to settle for a $29/share buyout from Bank of America (nyse: BAC - news - people ), a 60% markdown from the share price less than a year ago.

After all, everyone knows those loans were worth more than 22 cents. The actual performance of the bonds was much better than the price, and Lone Star was able to take advantage of the fact that Merrill was over the proverbial knee of accounting rules.

All of this could be avoided if a system were put into place that allowed private companies to hold these distressed assets. Rather than a centralized holding place, why not use a decentralized one? Why not allow financial firms with structured (Tier 3) assets issued between December 2003 and August 2007 to suspend mark-to-market accounting for those assets, and receive government insurance as a backstop?

This would be a temporary solution--one that doesn't require any ultimate change in the Sarbanes-Oxley Act or mark-to-market accounting rules--and the government could even make money by selling insurance with less risk to the taxpayer than buying it outright.

In essence, a firm could sequester, or firewall off, these specific assets from the rest of its balance sheet. It could either finance this itself or bring in outside financing. The firm would promise to hold the securities to maturity or until government insurance was no longer needed when it liquidated the assets. All of these deals could be settled in the private sector, in multiple locations, with the government looking over the shoulder of each deal.

If the rules had been relaxed a little bit for these specific assets, Merrill Lynch could have created its own private equity investment fund inside its corporate structure instead of selling at a huge loss to Lone Star, which created its own holding vehicle.

This plan would leave mark-to-market accounting regulations intact. It would be a temporary change in the rules. Its most important attribute is that it leaves taxpayer powder dry for another day. It also allows the private sector to price assets in an environment that is not contrived and will help avoid the loss of--or government takeover of--more private firms.

Even if the Treasury initiates a Resolution Trust Corporation-type vehicle, the slight changes in the accounting rules for these specific assets should still be made. If a firm does not want to accept the government bid for its distressed assets, it would have an alternative. It would also create a level playing field because the Treasury does not have to mark to market. A competitive marketplace for these securities would ensure the current holders get a price that is not based on a fire sale.

The point of this piece was not that M2M is a bad idea, but that in this case we are seeing massive growth in government interference to offset the damage done to companies that have to mark to illiquid markets.

Marking to false prices is not marking to market, it is marking to make believe. It tells us nothing about the true value of the underlying credits.

They once marked up these assets, which helped create a bigger problem.

Here's Your Plan Call or email your Congressman, Senators and the Senate Committee on Banking, Housing, and Urban Affairs and tell them to change the mark-to-market accounting law and to extend insurance but extend no loans. If they extend loans - if they borrow the money on the national debt in order for us to all go into the mortgage business a trillion dollars - you're going to fire their butts and send them home.

Ask them to please not be pressured by President Bush into adding another $1 Trillion to the national debt and further burdening us and our future generations with the countless years it will take us to pay for the problems caused by the government's forcing lenders to give mortgages to targeted groups of people who could not afford them.

This plan stops the mark-to-market meltdown without undoing the good that mark-to-market accounting has done, protects the taxpayer, stops the losses at financial firms at a crucial time and, therefore, helps end the shorting of stocks and bonds that has kept the financial system on the rocks without making it illegal. Best of all, it keeps the government from taking a massive and draconian step toward financial socialism.

The point of this piece was not that M2M is a bad idea, but that in this case we are seeing massive growth in government interference to offset the damage done to companies that have to mark to illiquid markets.

Marking to false prices is not marking to market, it is marking to make believe. It tells us nothing about the true value of the underlying credits.

They once marked up these assets, which helped create a bigger problem.

What needs to be done first is to fix the system by not allowing mortgages to people who cannot afford them.

Instead of increasing the national debt and burdening the taxpayers with another $1T, please extend the FHA insurance program across these sub-primes, and eliminate the capital gains taxes on these mortagages in default so that investors will be encouraged to buy and hold them until them appreciate in value, knowing that they won't have to pay capital gains taxes on them when they sell them.

Also ask them to eliminate the capital gains taxes on these mortagages in default so that investors will be encouraged to buy and hold them until them appreciate in value, knowing that they won't have to pay capital gains taxes on them when they sell them.

I've talked with several people today, and it's on the tables in Washington, but it's not something you're going to see on TV. If you'll let your Congressmen know you know about this and that you'll vote against them if they don't vote to change the mark-to-market law and you'll contribute your money to make sure they never serve in office again. That's what you need to tell them early and often.

If you're pissed, this is the time to step up and do something about it, America! You can stop this! It's being railroaded down your throat, but you can stop them if you call them in mass starting now. READY ... SET ... GO!

See "Find Your Officials", then "Compose Your Own Message" to send a copy & pasted message to your representative, senators & the president all at once. http://capwiz.com/atr/home/

Also send your comments to the U_S_ Senate Committee on Banking, Housing, and Urban
Affairs:
http://banking.senate.gov/public/index.cfm?FuseAction=Contact.Form

Additional information:
http://www.forbes.com/opinions/2008/09/22/treasury-accounting-plan-oped-cx_bw_bs_0923wesburystein.html
http://townhall.com/columnists/WilliamWilson/2008/09/23/rewriting_history_lies_that_hurt_us_all
http://www.daveramsey.com/etc/fed_bailout/economic_cleanup_10887.htmlc
http://www.slate.com/id/2187880/
http://www.newswithviews.com/Devvy/kidd393.htm


Solution to $700 Billion Bail Out Plan

It seems that everyone is voicing an opinion on the Fed's bailout of AIG banks, so I thought I'd share my view, as well.

It goes something like this: If our life experience has taught us anything, it is that there seems to be no truer indicator of failure than the US government's willingness to wage war. This week, a war is being waged to save USA financial institutions from bankruptcy.

Keep in mind that these are the same banksters who have profited handsomely from all sorts of creative financing arrangements while under the watchful eyes of the Clinton and Bush Administrations, but now want to shift hundreds of billions of dollars in risky loans to American taxpayers through a federal bailout plan.

US Treasury Secretary Paulson's $700 billion dollar "emergency bailout plan" (which will cost every man, woman and child in America $2,333, plus interest) is being considered the financial equivalent of a declaration of war. As such, we can bet the outcome will be similar to those of the War on Poverty, War on Drugs, War on Aids, War on Illiteracy, War on Immigration and War on Terror.

The results will no doubt prove to be predictable in that the very people the US Government pretends to protect, the "free citizens" of the Imperialistic Empire, will be hoodwinked once again.

Rather than getting an honest explanation about what has just occurred, the American people are now being sold a frivolous story manufactured by US Government Officials and the Fed Chairman, who are collectively acting in irresponsible behavior. So the open question is this: Are we Americans gullible enough to be tricked for the umpteenth time into paying for another false promise? I fear the answer is YES!

What we are hearing is the same tiring message - just with a different twist. Remember these myths?

For the good of all Americans - we MUST pass the Patriot Act NOW.

Saddam absolutely has weapons of mass destruction -- we've seen them and we MUST protect America from his terrorist attacks NOW.

US financial markets are failing -- Monday is the deadline - we MUST act NOW to save American taxpayers.

Hogwash!

Now, I ask you? How many of these BS scares will it take for state citizens to realize that politicians (who are mostly lawyers) are blowing smoke again?

CNBC reported today, on September 24, 2008, that inbound calls to the US Congress were 300-1 against US Treasury Secretary Paulson's $700 billion bailout plan, yet President Bush, including both presidential candidates and both houses of congress remain hell-bent on going forward with the bailout package.

So I encourage you to call your US Representative and two US Senators immediately and ask them two questions:

Q-1 Sir or Madam, will you guarantee to the American people that the $700 billion bailout package will solve the banking crisis? (Of course, the answer will be NO because they have no idea!) Then ask a follow up question:

Q-2 Then, Sir or Madam, why not allow AIG and the few greedy investment banks to fail and stimulate the economy by distributing $700 billion 'tax free' directly to the people you are pretending to help? (Again, this equates to $2,333 per man, woman and child. For a family of four that's nearly $10,000 and would greatly stimulate the US economy.)

This would be one logical solution because we Americans are proud of the fact we live in a "free market society" where corporations, partnerships and mom and pop operations are allow to succeed or fail for the good of all Americans.

So let the mismanaged (profiteering) financial institutions fail and allow their assets to be bought up by more ethical competitors. This would be the 'free market' law of logical consequences to solve this problem, and at the same time help the federal government save face since it has screwed up every war it declared both at home and abroad since WWII.

Note: Congress Plans To Pass Secretary Paulson'S $700 Billion Bailout Package By This Weekend. Contact Your U.S. Congressman And Two U.S. Senators By Friday Night To Defeat This Bill. Otherwise, $2,333 Of This Unnecessary Federal Bailout Package Will Be Transferred To You And Your Spouse And Your Children And Grandchildren -- Plus Interest.


McCain Should Not Support Bailout September 29, 2008
By: Dick Morris & Eileen McGann

During Friday's debate, John McCain assiduously and inexplicably avoided using the issue that might have won him the debate and the presidency: opposition to a taxpayer-funded bailout of the financial crisis.

Congress is about to pass, and the president is about to sign, a bill that the American people detest by 2-to-1 margins. When Americans realize that there is, indeed, an alternative to handing over $700 billion to financial institutions as a reward for their failure, opposition to the idea will swell even further.

The bailout ideas proposed by the House Republicans and trumpeted by former Speaker Newt Gingrich make eminent sense. Indeed, they make so much sense that it is as if the roles of the parties have been reversed.

It is the Republicans who are demanding that the banks and financial institutions pay for their own bailout, granting them only a mixture of loans and premium-paid insurance, while the Democrats want to pass the hat among the taxpayers to buy their dirty paper.

In an unusual act of political foresight and skill, the normally dead-headed House Republican leadership has crafted a platform that can carry the party to victory in November. All that remains is for the party's candidate, and perhaps even its president and Treasury secretary, to get on board.

McCain can recover at the negotiating table the economy issue he lost in Friday's debate. He needs to have the courage of his convictions and insist on a bailout without requiring taxpayer-funded purchase of defunct mortgages from failing institutions.

The difference in the bailout plans is, of course, largely cosmetic. Dead paper is dead paper whether it is on the books of the government, purchased from banks, or on the books of the banks, insured by the government. The game is the same: Loans or grants fund the deficient debt service on the defaulted mortgages until homes can recover their value in the cyclical real estate market.

But it makes all the difference in the world politically if this task is accomplished by buying bad debt or by lending the bankers the money to cover their current losses while they keep their bad debts on their books and by insuring them against future losses.

Loans are politically viable. Purchase of bad debt with tax money is not.

The Democrats and our politically-challenged president have failed to appreciate the difference between spending and lending. Treasury Secretary Paulson can be excused for not realizing it. Politics is not his thing.

But John McCain must realize the crucial distinction and must use his leverage to stop a taxpayer-funded bailout, insisting instead on loans and insurance.

If McCain stands firm, the Democrats will either have to pass the bailout package on their own, without Republican votes, and rely on Bush's signature on the bill to provide a fig leaf of bipartisanship, or they will have to cave in and pass the Republican package.

Either way, McCain comes out ahead.

If he gets his way, he gets credit for the bailout. If he doesn't, he can spend the campaign attacking Obama and the Democrats for spending $700 billion of taxpayer money.

If the Democrats don't adopt either course and play a game of chicken with the Republicans, their congressional status as the majority party dooms them to taking the blame for any ensuing collapse.

Voters can count.

They know that Reid and Pelosi are Democrats and that they control Congress. With this power comes responsibility.

And if the Democrats do nothing -- that is, if they fail to use their majorities to pass a bailout or to cooperate with the Republicans in adopting the GOP version of the package -- it is they who will get the blame for the catastrophe which will follow.

The Democrats don't dare take that chance.

The cards are dealt for John McCain. All he has to do is have the guts to do what he didn't have the courage to do in the debate: Play the hand.


Some background on what caused the meltdown:

Rewriting History: Lies that Hurt Us All
William Wilson
Tuesday, September 23, 2008

As Congress and the Administration work to prevent the crisis in the financial sector from spilling over into the larger economy, the vultures are swarming. In an Associated Press article yesterday, the following quote is made by Barney Frank, ultra-liberal Democrat of Massachusetts:

"The private sector got us into this mess…The government has to get us out of it. We do want to do it carefully."

This is obscene. This "mess", as Congressman Frank so eloquently put it, is the fault of government pure and simple. And, it is the personal fault of Barney Frank. For him to now hide his near-criminal behavior by pointing a finger at the entire private sector is the height of arrogance.

Consider the facts.

Under rules implemented by the Clinton Administration in 1995, banks and mortgage companies were required to give loans to people who could not afford them. This scheme was welfare pure and simple -- hand over money to people everyone knew would not be able to pay it back. The banks and mortgage companies did as required. Otherwise they would face stiff penalties and possibly lose their license to operate. So, they gave out the money to put people in homes they could not afford.

But the banks had to get the money from somewhere. They got it from Fannie Mae and Freddie Mac, the two failed quasi-government organizations. Fannie and Freddie urged, encouraged and bullied banks to give out more and more high-risk loans. They then bought these bogus mortgages and sold them to investors, again with the implied backing of the U.S. Government.

So, why wouldn't an investment firm not buy these securities? After all, they were marketed as having the backing of the U.S. taxpayers.

The Wall Street Journal detailed Barney Frank's sorted history of defending the scammers:

• In 2000, then-Rep. Richard Baker proposed a bill to reform Fannie and Freddie's oversight. Mr. Frank dismissed the idea, saying concerns about the two were "overblown" and that there was "no federal liability there whatsoever."

• Two years later, Mr. Frank was at it again. "I do not regard Fannie Mae and Freddie Mac as problems," he said in response to another reform push. And then: "I regard them as great assets."

• Again in June 2003, the favorite of the Beltway press corps assured the public that "there is no federal guarantee" of Fan and Fred obligations.

• A month later, Freddie Mac's multibillion-dollar accounting scandal broke into the open. But Mr. Frank was sanguine. "I do not think we are facing any kind of a crisis," he said at the time.

Three months later he repeated the claim that Fannie and Freddie posed no "threat to the Treasury." Even suggesting that heresy, he added, could become "a self-fulfilling prophecy."

• In April 2004, Fannie announced a multibillion-dollar financial "misstatement" of its own. Mr. Frank was back for the defense. Fannie and Freddie posed no risk to taxpayers, he said, adding that "I think Wall Street will get over it" if the two collapsed.

Pretty clear. It was not the "private sector" failing as Congressman Frank declared. It was government that failed. Specifically, it was people like Barney Frank that failed the American people. Moreover, he committed these acts for a pure ideological reason -- to advance his warped left-wing vision.

But it goes deeper still. By attacking the entire "private sector", Frank is declaring his opposition to small business and to tens of millions of people who labor for the betterment of their families by saving and investing.

The central issue of the proposed bailout proposed by the Bush Administration -- the issue that prompted Barney Frank's childish and insulting remark -- is how to get billions of dollars securities based on the mortgages held by people who cannot afford them out of the system. You can argue over whether to do it or how to do it -- but that is the aim of the proposal.

And what does Comrade Frank now insist is a deal-breaker? More money has to be made available to keep these people in the homes they couldn't afford in the first place! Oh, and of course, many on his side are demanding that state and local governments who have been spending at double-digit increases every year for a decade be bailed out as well. No, they shouldn't have to cut the feather-bedding or cut back on the silly-expensive union contracts. Barney Frank wants the American taxpayers to bail them out too.

Taking the global view, here is what happened and this is where we are. Knowing the American people were sick and tired of the welfare handouts, the liberals devised a backdoor way to funnel billions of dollars to their welfare clients. It was based on a Ponzi scheme that finally went broke. A lot of people made money along the way but the central rationale was always to transfer hundreds of billions of dollars in welfare to low income citizens.

And now that the game is exposed, the first thing these thieves do is blame the "private sector." They are using the destruction they have caused to justify giving them more power to do even more damage.

That is what is at stake. Will we hand our country over to a group of devious, venal socialists who hate private enterprise, individual responsibility and personal freedom? Or, will we step back from the abyss, clean up the mess and set our house in order?

If he has done nothing else, Barney Frank has at least clarified the issues and made the choice clear for all willing to observe the facts. As valuable a service as this is, it should not be enough to keep him out of a well-deserved jail cell.

Some other facts: Obama hired former Fannie Mae Chairman Jim Johnson, and the biggest beneficiaries the Fannie May situation are Chris Dodd, John Kerry and Barack Obama.


Excerpt from "NATIONAL ID & THE CONUNDRUM OF ENFORCEMENT"
By: Devvy
September 18, 2008
http://www.newswithviews.com/Devvy/kidd393.htm
(See also: REAL ID: CONNECTING THE DOTS TO AN INTERNATIONAL ID by Representative
Sam E. Rohrer, August 24, 2008, http://www.newswithviews.com/guest_opinion/guest128.htm)

While the incompetent Nancy Pelosi sputters the Democrats had nothing to do with this current crisis, [3] she left out:

"The current mortgage crisis came about in large part because of Clinton-era government pressure on lenders to make risky loans in order to "make home ownership more affordable for lower-income Americans and those with a poor credit history," the DC Examiner notes today. "Those steps encouraged riskier mortgage lending by minimizing the role of credit histories in lending decisions, loosening required debt-to-equity ratios to allow borrowers to make small or even no down payments at all, and encouraging lenders the use of floating or adjustable interest-rate mortgages, including those with low 'teasers.'

"The liberal Village Voice previously chronicled how Clinton Administration housing secretary Andrew Cuomo helped spawn the mortgage crisis through his pressure on lenders to promote affordable housing and diversity. "Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that -- in combination with many other factors -- helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments.

"He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded 'kickbacks' to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why." (See Wayne Barrett, "Andrew Cuomo and Fannie and Freddie: How the Youngest Housing and Urban Development Secretary in History Gave Birth to the Mortgage Crisis," Village Voice, August 5, 2008)." [4]


Clinton Pressure to Promote Affordable Housing Led to Mortgage Meltdown
Posted By Hans Bader On September 16, 2008

The current mortgage crisis came about in large part because of Clinton-era government pressure on lenders to make risky loans in order to "[1] make homeownership more affordable for lower-income Americans and those with a poor credit history," the DC Examiner notes today. "Those steps [1] encouraged riskier mortgage lending by minimizing the role of credit histories in lending decisions, loosening required debt-to-equity ratios to allow borrowers to make small or even no down payments at all, and encouraging lenders the use of floating or adjustable interest-rate mortgages, including those with low 'teasers.'"

The [2] liberal Village Voice previously chronicled how [3] Clinton Administration housing secretary Andrew Cuomo helped spawn the mortgage crisis through his pressure on lenders to promote affordable housing and diversity. "Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that -- in combination with many other factors -- helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments.

[2] He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded 'kickbacks' to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why." (See Wayne Barrett, "Andrew Cuomo and Fannie and Freddie: How the Youngest Housing and Urban Development Secretary in History Gave Birth to the Mortgage Crisis," Village Voice, [2] August 5, 2008).

Investors Business Daily had an editorial yesterday about how another federal "[4] law designed to encourage minority homeownership" also contributed to the mortgage crisis by pressuring lenders to make risky loans.

The Bush Administration also deserves criticism: although some Bush Administration officials "[1] meekly advocated reforms" of the risky practices engaged in by the government-backed mortgage giants (the "[5] Government-Sponsored Enterprises" Fannie Mae & Freddie Mac, which [5] received $10 billion annually in taxpayer subsidies even before their current bailout), Fannie's well-paid lobbyists easily [6] defeated those reform proposals by [7] paying off liberal lawmakers and [8] bullying critics. And the Administration did nothing to end [9] federal obsessions with "affordable housing" and "diversity" that encouraged lenders to make risky loans to borrowers with little savings.


Scaring Us to Death
Walter E. Williams
Wednesday, September 24, 2008

There is a H.L. Mencken quotation that captures the essence of this year's politics: "The whole aim of practical politics is to keep the populace alarmed, and hence clamorous to be led to safety, by menacing it with an endless series of hobgoblins, all of them imaginary." The media, economic "experts" and both presidential candidates are making bad-talking our economy key features of their campaign messages. For politicians and their hangers-on, keeping the populace alarmed is a strategy to seize more control over our lives. It's so important that Senator John McCain took his economic adviser, former Senator Phil Gramm, to the woodshed for saying that America had "become a nation of whiners" and described the current slowdown as a "mental recession." Had Senator Gramm added that economically today's Americans are better off than at any time in our history, he might have lost his job altogether. Let's look at it.

Dr. W. Michael Cox and Richard Alm, of the Federal Reserve Bank of Dallas, in the July/August 2008 edition of The American, have an article titled "How Are We Doing?". Wages and income are frequently used to measure progress but Cox and Alm say that a better measure is consumption. For example, while gasoline prices have skyrocketed, the average worker has to work about two hours to earn enough to purchase 10 gallons. In 1935, it was six hours and in 1950, over two hours. A basket of groceries that took four hours of work in 1950 to purchase now takes 1.7 hours. Annual hours of work have fallen from 1,903 in 1950 to 1,531 today. Real total compensation -- wages plus fringe benefits, both adjusted for inflation -- have been rising steadily for several generations. Fringe benefits have become a greater share of our earnings, thus dampening statistics on wage increases.

Today's Americans are healthier than ever. In 1950, life expectancy was 67 compared with today's 78. Death rates from diseases, once considered a death sentence, are in steep decline. With advances in medicine and medical technology we're receiving much better health care. The increase in quality explains part of the higher health care costs. But health care costs would be dramatically reduced if there were more competition and less government intervention and third-party payers. Cox and Alm say that competition works but because of third-party payers, consumers have little incentive to shop around. They point out that prices for Lasik eye surgery, a procedure rarely covered by insurance programs, have fallen in the past decade because consumers shop around and take their business to surgeons who offer the highest quality service at the cheapest price.

Recall that during President Carter's last year in office in 1980 what was called the "misery index", which was defined as the sum of the inflation and unemployment rates, was about 22 percent: inflation averaged 14 percent; unemployment was 7.5 percent. Today's inflation just became 5 percent, having been between 1 and 3 percent for a decade, and unemployment is 6.1. Cox and Alm say that today's problems "will turn out to be mere footnotes in a longer-term march of progress." They add that, "Since 1982, the United States has been in recession for a mere 16 months, the present slowdown notwithstanding. Over that period, the country more than doubled its inflation-adjusted output of goods and services and created jobs for an additional 50 million workers."

Things are not nearly as gloomy as the pundits say. Most of today's economic problems, whether it's energy, health care costs, financial problems, budget deficits or national debt, are caused by policies pursued by the White House and Congress. As my colleague Dr. Thomas Sowell suggested in a recent column, we don't look to arsonists to put out fires that they've created; neither should we look to Congress to solve the problems they've created.


Illegal Immigration and the Mortgage Mess
Michelle Malkin
Wednesday, September 24, 2008

The Mother of All Bailouts has many fathers. As panicked politicians prepare to fork over $1 trillion in taxpayer funding to rescue the financial industry, they've fingered regulation, deregulation, Fannie Mae and Freddie Mac, the Community Reinvestment Act, Jimmy Carter, Bill Clinton, both Bushes, greedy banks, greedy borrowers, greedy short-sellers and minority home ownership mau-mauers (can't call 'em greedy, that would be racist) for blame.

But there's one giant paternal elephant in the room that has slipped notice: how illegal immigration, crime-enabling banks and open-borders Bush policies fueled the mortgage crisis.

It's no coincidence that most of the areas hardest hit by the foreclosure wave -- Loudoun County, Va., California's Inland Empire, Stockton and San Joaquin Valley, and Las Vegas and Phoenix, for starters -- also happen to be some of the nation's largest illegal alien sanctuaries. Half of the mortgages to Hispanics are subprime (the accursed species of loan to borrowers with the shadiest credit histories). A quarter of all those subprime loans are in default and foreclosure.

Regional reports across the country have decried the subprime meltdown's impact on illegal immigrant "victims." A July report showed that in seven of the 10 metro areas with the highest foreclosure rates, Hispanics represented at least one-third of the population; in two of those areas -- Merced and Salinas-Monterey, Calif. -- Hispanics comprised half the population. The amnesty-promoting National Council of La Raza and its Development Fund have received millions in federal funds to "counsel" their constituents on obtaining mortgages with little to no money down; the group almost succeeded in attaching a $10-million earmark for itself in one of the housing bills past this spring.

For the last five years, I've reported on the rapidly expanding illegal alien home loan racket. The top banks clamoring for their handouts as their profits plummet, led by Wachovia and Bank of America, launched aggressive campaigns to woo illegal alien homebuyers. The quasi-governmental Wisconsin Housing and Economic Development Authority jumped in to guarantee home loans to illegal immigrants. The Washington Post noted, almost as an afterthought in a 2005 report: "Hispanics, the nation's fastest-growing major ethnic or racial group, have been courted aggressively by real estate agents, mortgage brokers and programs for first-time buyers that offer help with closing costs. Ads proclaim: "Sin verificacion de ingresos! Sin verificacion de documento!" -- which loosely translates as, 'Income tax forms are not required, nor are immigration papers.'"

In addition, fraudsters have engaged in massive house-flipping rings using illegal aliens as straw buyers. Among many examples cited by the FBI: a conspiracy in Las Vegas involving a former Nevada First Residential Mortgage Company branch manager who directed loan officers and processors in the origination of 233 fraudulent Federal Housing Authority loans valued at over $25 million. The defrauders manufactured and submitted false employment and income documentation for borrowers; most were illegal immigrants from Mexico. To date, the FBI reported, "Fifty-eight loans with a total value of $6.2 million have gone into default, with a loss to the Housing and Urban Development Department of over $1.9 million."

It's the tip of the iceberg. Thanks to lax Bush administration-approved policies allowing illegal aliens to use "matricula consular cards" and taxpayer identification numbers to open bank accounts, more forms of mortgage fraud have burgeoned. Moneylenders still have no access to a verification system to check Social Security numbers before approving loans.

In an interview about rampant illegal alien home loan fraud, a spokeswoman for the U.S. General Accounting Office told me five years ago: "[C]onsidering the size of Los Angeles, New York, Chicago, Houston and other large cities throughout the United States known to be inundated with illegal aliens, I don't think the federal government is willing to expose this problem for financial reasons as well as for fear of political repercussions."

The chickens are coming home to roost. And law-abiding, responsible taxpayers are going to pay for it.


Day of Reckoning
by Patrick J. Buchanan
09/26/2008

How did the United States of America, the richest nation on earth, whose economy represents 30 percent of the Global Economy, arrive at the precipice of a financial panic and collapse?

The answer lies in the abject failure of both America's financial elite and the political elite of both parties -- the same elites now working together to determine how much of our wealth will be needed to bail the nation out of the crisis of their own creation.

Big Government is riding to the rescue -- saddlebags full of our tax dollars -- to save us from the consequences of the stupidity and folly of Big Government. New York and Washington, the twin cities responsible for the crisis, are now being hailed by the media as the 7th Cavalry, coming to rescue a beleaguered nation.

Had there not been a steady and constant infusion of easy money and credit into the U.S. economy by the Fed, for years on end, a housing bubble of the magnitude of the one that has just exploded could never have been created.

Had the politicians of both parties not coerced and pressured banks, S&Ls, Fannie Mae and Freddie Mac to make all those sub-prime mortgages, then to tie this rotten paper to good paper, convert it into securities and sell to banks all over the world, there would have been no global financial crisis.

Had they seen this coming and acted sooner, the Federal Reserve and U.S. Treasury would not today, like Henny Penny, be crying, "The sky is falling!" and the end times are at hand, unless we give them 5 percent of our gross domestic product to buy up suspect securities backed by sub-prime mortgages.

Consider what the "Paulson Plan" of Treasury Secretary Hank Paulson, against which Sen. Richard Shelby and the House Republicans rebelled, entails.

Since Americans save nothing and have to borrow from abroad to finance our trade and budget deficits, wars and foreign aid, what the secretary proposes is this: that Congress authorize the Treasury to spend $700 billion to buy up the toxic paper on the books not only of U.S. banks, but of foreign banks operating in the United States. According to The Washington Times, the Treasury would also be authorized to buy up securities backed by rotten auto loans, student loans and credit card debts.

Thus America would be borrowing from China, Japan and the Middle East to tidy up the balance sheets of the banks of China, Japan and the Middle East. And all the rotten paper will be offloaded onto U.S. taxpayers, who hopefully will be able to recoup some of their losses, because some of the paper will be good.

Why should we do this? Because otherwise there will be a financial panic, followed by a market collapse, wiping out pensions, 401Ks, portfolios and defined benefit plans of Middle America, forcing millions into bankruptcy and millions more to put off retirement and continue working until they drop.

In a democracy, it is said, you get the kind of government you deserve. But what did the American people do to deserve this? What did they do to deserve the quality of financial, corporate and political leadership that marched them into this mess -- and that today postures as their rescuers?

Consider what this mess has already cost taxpayers: $29 billion to buy the rotten paper of Bear Stearns so J.P. Morgan would buy the investment bank; $85 billion for 80 percent of AIG to nationalize it; $150 billion in a stimulus package to flood the nation with cash; perhaps $300 billion to bail out Fannie Mae and Freddie Mac; and now $700 billion to begin taking the toxic paper off the hands of America's big banks.

And even if this is passed, say Paulson and Fed Chairman Ben Bernanke, there is no guarantee this will resolve the crisis. If the $700 billion is not provided and the toxic paper is not pulled off the books of the world's banks by U.S. taxpayers, however, we face an almost certain collapse, surging bankruptcies, rising unemployment, a shrinkage of GDP and a recession, if not worse.

Yet, the fellows who tell us we face a financial mushroom cloud over every American city if we do not act at once to provide the $700 billion did not see this coming and can make no guarantee that this will succeed and end the crisis.

Nevertheless, it must be done, and done now, as collapse is imminent.

Looking at all the money being ladled out by the U.S. government to prevent a collapse, and the diminished revenue coming in, it is hard to see how America avoids future deficits that reach $1 trillion a year. These will imperil both the dollar itself and the ability of the United States, which saves nothing, to borrow from the rest of the world. The downsizing of America is at hand.

Yes, indeed, we have arrived at the Day of Reckoning for Uncle Sam.


Bernanke: Federal Reserve caused Great Depression
Fed chief says, 'We did it. ... very sorry, won't do it again'
Wednesday, October 01, 2008
WorldNetDaily Exclusive
By David Kupelian

Despite the varied theories espoused by many establishment economists, it was none other than the Federal Reserve that caused the Great Depression and the horrific suffering, deprivation and dislocation America and the world experienced in its wake. At least, that's the clearly stated view of current Fed Chairman Ben Bernanke.

The worldwide economic downturn called the Great Depression, which persisted from 1929 until about 1939, was the longest and worst depression ever experienced by the industrialized Western world. While originating in the U.S., it ended up causing drastic declines in output, severe unemployment, and acute deflation in virtually every country on earth. According to the Encyclopedia Britannica, "the Great Depression ranks second only to the Civil War as the gravest crisis in American history."

What exactly caused this economic tsunami that devastated the U.S. and much of the world?

In "A Monetary History of the United States," Nobel Prize-winning economist Milton Friedman along with coauthor Anna J. Schwartz lay the mega-catastrophe of the Great Depression squarely at the feet of the Federal Reserve.

Here's how Friedman summed up his views on the Fed and the Depression in an Oct. 1, 2000, interview with PBS:

PBS: You've written that what really caused the Depression was mistakes by the government. Looking back now, what in your view was the actual cause?
Friedman: Well, we have to distinguish between the recession of 1929, the early stages, and the conversion of that recession into a major catastrophe.

The recession was an ordinary business cycle. We had repeated recessions over hundreds of years, but what converted [this one] into a major depression was bad monetary policy.

The Federal Reserve System had been established to prevent what actually happened. It was set up to avoid a situation in which you would have to close down banks, in which you would have a banking crisis. And yet, under the Federal Reserve System, you had the worst banking crisis in the history of the United States. There's no other example I can think of, of a government measure which produced so clearly the opposite of the results that were intended.

And what happened is that [the Federal Reserve] followed policies which led to a decline in the quantity of money by a third. For every $100 in paper money, in deposits, in cash, in currency, in existence in 1929, by the time you got to 1933 there was only about $65, $66 left. And that extraordinary collapse in the banking system, with about a third of the banks failing from beginning to end, with millions of people having their savings essentially washed out, that decline was utterly unnecessary.

At all times, the Federal Reserve had the power and the knowledge to have stopped that. And there were people at the time who were all the time urging them to do that. So it was, in my opinion, clearly a mistake of policy that led to the Great Depression.

Although economists have pontificated over the decades about this or that cause of the Great Depression, even the current Fed chairman Ben S. Bernanke, agrees with Friedman's assessment that the Fed caused the Great Depression.

At a Nov. 8, 2002, conference to honor Friedman's 90th birthday, Bernanke, then a Federal Reserve governor, gave a speech at Friedman's old home base, the University of Chicago. Here's a bit of what Bernanke, the man who now runs the Fed -- and thus, one of the most powerful people in the world -- had to say that day:

I can think of no greater honor than being invited to speak on the occasion of Milton Friedman's ninetieth birthday. Among economic scholars, Friedman has no peer. …
Today I'd like to honor Milton Friedman by talking about one of his greatest contributions to economics, made in close collaboration with his distinguished coauthor, Anna J. Schwartz. This achievement is nothing less than to provide what has become the leading and most persuasive explanation of the worst economic disaster in American history, the onset of the Great Depression -- or, as Friedman and Schwartz dubbed it, the Great Contraction of 1929-33.

… As everyone here knows, in their "Monetary History" Friedman and Schwartz made the case that the economic collapse of 1929-33 was the product of the nation's monetary mechanism gone wrong. Contradicting the received wisdom at the time that they wrote, which held that money was a passive player in the events of the 1930s, Friedman and Schwartz argued that "the contraction is in fact a tragic testimonial to the importance of monetary forces."

After citing how Friedman and Schwartz documented the Fed's continual contraction of the money supply during the Depression and its aftermath -- and the subsequent abandonment of the gold standard by many nations in order to stop the devastating monetary contraction -- Bernanke adds:

… Before the creation of the Federal Reserve, Friedman and Schwartz noted, bank panics were typically handled by banks themselves -- for example, through urban consortiums of private banks called clearinghouses. If a run on one or more banks in a city began, the clearinghouse might declare a suspension of payments, meaning that, temporarily, deposits would not be convertible into cash. Larger, stronger banks would then take the lead, first, in determining that the banks under attack were in fact fundamentally solvent, and second, in lending cash to those banks that needed to meet withdrawals. Though not an entirely satisfactory solution -- the suspension of payments for several weeks was a significant hardship for the public -- the system of suspension of payments usually prevented local banking panics from spreading or persisting. Large, solvent banks had an incentive to participate in curing panics because they knew that an unchecked panic might ultimately threaten their own deposits.
It was in large part to improve the management of banking panics that the Federal Reserve was created in 1913. However, as Friedman and Schwartz discuss in some detail, in the early 1930s the Federal Reserve did not serve that function. The problem within the Fed was largely doctrinal: Fed officials appeared to subscribe to Treasury Secretary Andrew Mellon's infamous 'liquidationist' thesis, that weeding out "weak" banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were small banks (as opposed to what we would now call money-center banks) and not members of the Federal Reserve System. Thus the Fed saw no particular need to try to stem the panics. At the same time, the large banks -- which would have intervened before the founding of the Fed -- felt that protecting their smaller brethren was no longer their responsibility. Indeed, since the large banks felt confident that the Fed would protect them if necessary, the weeding out of small competitors was a positive good, from their point of view.

In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn. …

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

Best wishes for your next ninety years.

Today, the entire Western financial world holds its breath every time the Fed chairman speaks, so influential are the central bank's decisions on markets, interest rates and the economy in general. Yet the Fed, supposedly created to smooth out business cycles and prevent disruptive economic downswings like the Great Depression, has actually done the opposite.


Your scorecard for understanding mortgage scandal
Find out who's who in the 'Rogues Gallery' of economic crisis

Wednesday, October 01, 2008
By Chelsea Schilling
WorldNetDaily Exclusive

As Congress works on a $700 billion bailout plan for the U.S. financial system, the FBI has extended fraud investigations to 26 companies involved in mortgage lending. Authorities are attempting to determine whether any of the firms have participated in accounting fraud, insider trading or inflating values of mortgage-related assets. The FBI has not disclosed a list of companies under investigation, but the following are just a few firms in distress and executives under scrutiny.

Freddie Mac

Mortgage-related losses forced the U.S. Treasury to take over the quasi-governmental mortgage giants Freddie Mac and Fannie Mae, the nation's largest financers of home mortgages.

Last year, federal regulators charged Freddie Mac with negligent conduct for its role in a four-year securities fraud accounting scandal, MSNBC reported. Former president and chief operating officer David Glenn, former chief financial officer Vaughn Clarke and former senior vice presidents Robert Dean and Nazir Dossani agreed to pay civil fines totaling $515,000 and restitution payments amounting to $275,548.

Former Freddie Mac Chairman and Chief Executive Officer Richard Syron told MSNBC last year, "We take these charges seriously, and that's why the Freddie Mac of today is a very different company than the Freddie Mac of the past."

Richard Syron

The company promised to no longer violate securities laws, according to the Associated Press. News of a 2003 scandal revealed Freddie Mac had misreported earnings by $5 billion since 2000.

Freddie Mac's high-level executives were removed from their positions, and the company was forced to pay a $125 million civil fine in a settlement with the Office of Federal Housing Enterprise Oversight.

In a federal lawsuit, the U.S. Securities and Exchange Commission said Freddie Mac "engaged in a fraudulent scheme that deceived investors about its true performance, profitability and growth trends."

However, the scandals were far from over. In July, the New York Times reported Freddie Mac's chief risk officer gave Syron a memo in 2004, warning him that the company was granting problematic loans that could endanger the firm. Two dozen high-level executives confirmed that Syron had ignored the advice.

Freddie Mac former chief risk officer, David A. Andrukonis, told the Times Syron would not listen when told the company would become exposed to losses.

"He said we couldn't afford to say no to anyone," Andrukonis said.

Freddie Mac would continue to buy riskier loans for the next three years.

Syron has received compensation of more than $38 million since 2003. Meanwhile, stock prices plummeted, and more than $80 billion of shareholder value vanished.

Now, the FBI is investigating both Freddie Mac and Fannie Mae for coprorate fraud. It will determine whether the companies intentionally misled the stock market by claiming the businesses were faring better than they actually were.

Fannie Mae

In 2006, the Office of Federal Housing Enterprise Oversight accused former Fannie Mae Chief Executive Franklin D. Raines and two other executives of manipulating earnings from 1998 to 2004 so they would receive bonuses totaling $115 million.

Civil charges were filed against Raines, who is also a former budget director for President Bill Clinton; J. Timothy Howard, former chief financial officer; and Leanne G. Spencer, former Fannie Mae controller. Raines is paying a $24.7 million settlement, an additional $2 million fine and he was forced to forfeit $15.6 million in stock options. Howard agreed to pay $6.4 million, and Spencer agreed to pay $275,000. Fannie Mae has agreed to pay a $400 million civil settlement to the OFHEO and the Securities and Exchange Commission.

Franklin D. Raines

According to the Wall Street Journal, Freddie and Fannie own or guarantee about $5.2 trillion worth of mortgages. The riskiest loans held by Freddie and Fannie are known as "Alt-A" and subprime mortgages, worth about $780 billion, or about 15 percent of the total portfolio. The recent federal government takeover of Freddie and Fannie passes to U.S. taxpayers the contingent liability for failures in the entire $5.2 trillion loan portfolio held by the two mortgage giants.

Both Sens. John McCain and Barack Obama have come under fire for allegedly having donors and campaign advisers tied to Fannie Mae and Freddie Mac, the New York Times reported. The companies are said to have contributed money to protect them from stricter regulations while purchasing risky mortgages.

Sen. Christopher Dodd, D-Conn.

McCain's campaign manager, Rick Davis, was reportedly paid a total of $35,000 a month from 2000 to 2002 by Freddie Mac and Fannie Mae. McCain told the Times Davis no longer works for the mortgage giants and has had "nothing to do with it" since he left the payrolls. However, another New York Times report alleges Freddie Mac paid Davis $15,000 each month from 2005 through August 2008. The McCain campaign responded to the Times article, saying Davis separated from his consulting firm in 2006 and has never been a paid lobbyist for Fannie Mae or Freddie Mac.

Democrats received the largest political contributions from the companies. As WND reported, Obama in his three complete years in the Senate is the second largest recipient of Freddie Mac and Fannie Mae campaign contributions, behind only Sen. Christopher Dodd, D-Conn., the powerful chairman of the Senate banking committee.

According to OpenSecrets.com, from 1989 to 2008, Dodd received $165,400 in Fannie Mae and Freddie Mac campaign contributions, including gifts from PACs and individuals. He is followed by Obama, who received $126,349 in such contributions since being elected to the Senate in 2004.

In 2005, McCain warned of the coming mortgage crisis and pressed for regulatory reform of Fannie Mae and Freddie Mac.

Countrywide Financial

Angelo Mozilo

In addition to being the former Fannie Mae chief executive, Franklin Raines is also one of several "friends of Angelo," or FOAs. These VIPs accepted loans at below-market rates with preferential terms from Countrywide Financial, a now bankrupt loan originator in the subprime mortgage debacle. Only prominent people were allowed to participate in the low-key program, named for former Countrywide Chief Executive Angelo Mozilo, that did away with points, fees and borrowing rules.

A Washington Post profile published July 17 said Raines was then playing a role advising the Obama presidential campaign on mortgage and housing policy. As WND reported, he also received $90 million in his five years as Fannie Mae CEO, from 1999 to 2004. He was forced to retire when reports surfaced that the company had hidden profit fluctuations. Fannie Mae was the biggest buyer of Countrywide mortgages.

James Johnson

Another former CEO of Fannie Mae and former adviser to Sen. Barack Obama's presidential campaign, James Johnson, is reported to have accepted more than $7 million in FOAs from Countrywide. Johnson was appointed to head Obama's vice-presidential selection committee, but he was forced to step down when the Countrywide controversy surfaced in June. As WND reported, Johnson earned $21 million in just his last year at Fannie Mae.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, also received an FOA from Countrywide Financial. At the same time, he recently proposed the federal government bail out failing mortgage lenders, including Countrywide. According to Condé Nast Portfolio, Dodd also received $21,000 in campaign donations from the company since 1997. From 1989 to 2008, Dodd also received $165,400 in Fannie Mae and Freddie Mac campaign contributions, including contributions from PACs and individuals, followed by Obama, who received $126,349 in such contributions since being elected to the Senate in 2004.

Sen. Kent Conrad, D-N.D.

Sen. Kent Conrad, D-N.D., also accepted a $1.07 million FOA from Countrywide, as did former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala and former U.N. ambassador and assistant Secretary of State Richard Holbrooke, according to a report by Condé Nast Portfolio.

Jackson received his loans in 2003 when he was deputy H.U.D. secretary under President Bush. Sahalala served under the Clinton administration and became president of the University of Miami before receiving two Countrywide FOA loans in 2002. Holbrooke, former adviser to the Hillary Clinton presidential campaign, received one of the VIP loans in 2001.

Condé Nast Portfolio reveals the Countrywide code of ethics bans executives and employees from "improperly influencing the decisions of government employees or contractors by offering or promising to give money, gifts, loans, rewards, favors, or anything else of value." Likewise, federal officials are not allowed to accept gifts, such as loans not available to the general public.

Countrywide also has a registered lobbyist, and strict rules ban senators from accepting gifts worth more than $100 in a single year. According to reports, it has granted hundreds of millions of dollars in special FOA loans every year to politicians, officials, executives, celebrities and other VIP borrowers.

Bank of America penned a deal to aquire the company in early 2008 after its shares plummeted from $45 to less than $5 in one year. Countrywide is now said to be under FBI investigation for securities fraud.

Indymac Bank

IndyMac Bancorp Inc. was sent into freefall after Sen. Chuck Schumer, D-N.Y, escalated the crisis by publicly leaking his June 26 letter to the Office of Thrift Supervision and the Federal Deposit Insurance Corp. He warned that the bank was on the brink of collapse.

Schumer said he was "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers and that the regulatory community may not be prepared to take measures that would help prevent the collapse of IndyMac," according to the Wall Street Journal.

Sen. Chuck Schumer, D-N.Y.

Schumer's letter sent IndyMac customers into widespread panic, and they quickly withdrew their money from the bank -- to the tune of $1.3 billion.

OTS Director John Reich told the Journal Schumer's letter gave the bank "a heart attack." However, Schumer has not expressed remorse for the letter. He says he was simply doing his job when he cautioned regulators about an impending collapse.

"It's what legislators are supposed to do," Schumer told the Journal. He said faulting him is like blaming "the fire on the guy who called 9-1-1."

While the bank had experienced some mortgage portfolio losses prior to the incident, OTS has directly attributed IndyMac's closing to Schumer's letter.

A government takeover of IndyMac Bank is estimated to have cost the FDIC between $4 billion and $8 billion. According to the Associated Press, the FBI is currently investigating IndyMac for fraud and providing home loans to risky borrowers.

Lehman Brothers

Richard Fuld (ThisisMoney.co.uk)

Lehman Brothers CEO Richard Fuld was awarded a $22 million bonus in 2007 after the bank's net profit was reported to have risen by 5 percent to a record $4.2 billion, according to Reuters. Now the company, formerly known as Wall Street's fourth largest investment bank, has filed one of the largest bankruptcies in U.S. history.

According to Reuters, Fuld "played a game of brinksmanship, refusing to accept offers that could have rescued the firm because they didn't reflect the value he saw in the bank."

Fuld could have sold a 25 percent stake in the company to Korea Development Bank for $4 billion to $6 billion before the collapse. But according to Wall Street Journal reports, Fuld claimed the offer was too low.

Lehman Brothers filed for Chapter 11 bankruptcy protection on Sept. 11. Now, the company is under investigation by the FBI to determine whether the company misled investors about its assets and pushed agencies to inflate its ratings.

Washington Mutual

Kerry Killinger

After Washington Mutual lost more than 70 percent of its market value this year following mortgage-related losses, the Seattle-based bank has been seized by the Federal Deposit Insurance Corporation. The FDIC sold its banking assets to JPMorgan Chase for $1.9 billion.

Washington Mutual is expected to have between $19 billion and $28 billion in total losses following risky lending practices under its former chief executive, Kerry Killinger.

The bank financed at least 43 mortgages worth $24.5 million for one family of home flippers who had a history of fraud, the Orange County Register reported. Washington Mutual, like many banks, did not conduct criminal background checks on its borrowers and liberally granted loans. Vijay and Supriti Soni of Corona del Mar had numerous felony convictions for real estate fraud schemes. They received the Washington Mutual loans last year and are now foreclosing on six properties.

Some say Washington Mutual provided adjustable-rate and subprime mortgages without cautious discrimination. The bank began to suffer when borrowers could not repay the loans.

In 2007, Killinger claimed the company changed its policy to tighten lending standards to protect it from the worsening market. Killinger was stripped of his chairman title, and the board of directors removed him from his CEO position in September. The bank reported $10.9 billion in losses over the last three quarters. It is the largest bank to fail in U.S. history.

American International Group, Inc (AIG)

Former American International Group CEO Maurice Greenberg stepped down from the company in 2005 amid allegations of an accounting scandal. Martin Sullivan succeeded him as AIG CEO and was ousted in June. He was given $19 million in termination pay, including a $15 million severance package and a bonus of $4 million, according to a July AIG 8-K form report.

Meanwhile, the federal government bailed out American International Group Inc. by granting it an $85 billion Federal Reserve loan in exchange for 80 percent of its equity. AIG CEO Edward Liddy said it made an "exhaustive effort" to borrow money in the private market, but it failed, the Associated Press reported.

The company insured risky debt and bonds against default, and some investors claim it overvalued its Alt-A and subprime mortgage-backed securities. Now the FBI is investigating the nation's largest insurer and its executives for fraud.

Bear Stearns

Matthew Tannin and Ralph Cioffi

The New York City-based Bear Stearns Companies, Inc., a large global investment bank, collapsed after it was dicovered the bank had illiquid and nearly worthless subprime hedge funds. Investors filed claims against Bear Stearns in 2007, stating they were misled about the value of the hedge funds.

Bear Stearns Chief Executive James E. Cayne reportedly spent 10 of 21 work days playing golf and competing in a bridge tournament while executives frantically worked to prevent collapse of the funds.

Two fund managers, Ralph Cioffi and Matthew Tannin, surrendered to federal authorities in June. They were charged with nine counts of securities, mail and wire fraud to hide mounting losses from investors. Cioffi was also charged with insider trading

In the days before the firm was sold to JPMorgan Chase & Co. for only $2 a share in March 2008, Bear Stearns' new chief executive, Alan Schwartz, assured investors the company had sufficient liquidity.

The investment bank, having survived the Great Depression and several recessions, was purchased for less than one-tenth its market price.

Fed Reserve Chairman Ben Bernanke, President Bush, Treasury Secretary Hank Paulson and SEC Chairman Chris Cox

Following an onslaught of rumors about losses and liquidity issues, investors began withdrawing their money. Bear Stearns was forced to sell to its rival, JPMorgan Chase. In what was considered an unprecedented move at the time, the Fed extended a $30 billion credit line to finance the transaction.

Now, while the FBI investigates 26 firms for fraud and 10 percent of the nation's $11 million in mortgages are in default or foreclosure, Congress works to approve a $700 billion bail out plan to buy troubled investments and save financial institutions from their mounting debts. The president is also asking Congress to increase the limit on the nation's debt from $10.6 trillion to $11.3 trillion -- a move that could raise interest rates and weaken the dollar. Many say the bailout will reward irresponsible financial institutions and greedy executives, burdening taxpayers with the consequences in the midst of an already troubled economy.


165 economists rip bailout plan
Contend administration proposal has 3 pitfalls

October 01, 2008
WorldNetDaily

Treasury Secretary Henry Paulson
At least 165 economists have signed a letter to Congress members warning of three pitfalls in the Bush administration's $700 billion proposal to deal with the Wall Street crisis.

The economists say they are well aware of the current financial situation and agree there's a need for bold action but ask Congress "not to rush."

They urge lawmakers to hold appropriate hearings and "to carefully consider the right course of action."

The three problems with the plan proposed by Treasury Secretary Henry Paulson, the economists say, are its fairness, ambiguity and long-term effects.

President Bush was joined today by presidential candidates John McCain and Barack Obama at an emergency White House meeting on the plan. Key members of Congress said this morning they had struck a deal in principle, but the outcome of the proposal is unclear. Participants in the White House meeting called it extremely contentious.

The proposal allows the government to buy the faulty mortgage-based assets of severely weakened financial institutions to prevent them from collapsing and setting off a chain of events that would affect citizens, including depletion of retirement accounts, rising home foreclosures, bankrupt businesses and lost jobs.

(This letter was sent to Congress on Wed Sept 24 2008 regarding the Treasury plan as outlined on that date. It does not reflect all signatories views on subesquent plans or modifications of the bill)

To the Speaker of the House of Representatives and the President pro tempore of the Senate:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers' expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

The signatories as of this morning were:

Acemoglu Daron (Massachussets Institute of Technology)
Adler Michael (Columbia University)
Admati Anat R. (Stanford University)
Alvarez Fernando (University of Chicago)
Andersen Torben (Northwestern University)
Barankay Iwan (University of Pennsylvania)
Barry Brian (University of Chicago)
Beim David (Columbia University)
Berk Jonathan (Stanford University)
Bisin Alberto (New York University)
Bittlingmayer George (University of Kansas)
Boldrin Michele (Washington University)
Brooks Taggert J. (University of Wisconsin)
Brynjolfsson Erik (Massachusetts Institute of Technology)
Buera Francisco J.(UCLA)
Carroll Christopher (Johns Hopkins University)
Cassar Gavin (University of Pennsylvania)
Chaney Thomas (University of Chicago)
Chari Varadarajan V. (University of Minnesota)
Chauvin Keith W. (University of Kansas)
Chintagunta Pradeep K. (University of Chicago)
Christiano Lawrence J. (Northwestern University)
Cochrane John (University of Chicago)
Coleman John (Duke University)
Constantinides George M. (University of Chicago)
Crain Robert (UC Berkeley)
Culp Christopher (University of Chicago)
De Marzo Peter (Stanford University)
Dubé Jean-Pierre H. (University of Chicago)
Edlin Aaron (UC Berkeley)
Eichenbaum Martin (Northwestern University)
Ely Jeffrey (Northwestern University)
Eraslan Hülya K. K.(Johns Hopkins University)
Faulhaber Gerald (University of Pennsylvania)
Feldmann Sven (University of Melbourne)
Fernandez-Villaverde Jesus (University of Pennsylvania)
Fox Jeremy T. (University of Chicago)
Frank Murray Z.(University of Minnesota)
Fuchs William (University of Chicago)
Fudenberg Drew (Harvard University)
Gabaix Xavier (New York University)
Gao Paul (Notre Dame University)
Garicano Luis (University of Chicago)
Gerakos Joseph J. (University of Chicago)
Gibbs Michael (University of Chicago)
Goettler Ron (University of Chicago)
Goldin Claudia (Harvard University)
Gordon Robert J. (Northwestern University)
Guadalupe Maria (Columbia University)
Hagerty Kathleen (Northwestern University)
Hamada Robert S. (University of Chicago)
Hansen Lars (University of Chicago)
Harris Milton (University of Chicago)
Hart Oliver (Harvard University)
Hazlett Thomas W. (George Mason University)
Heaton John (University of Chicago)
Heckman James (University of Chicago - Nobel Laureate)
Henderson David R. (Hoover Institution)
Henisz, Witold (University of Pennsylvania)
Hertzberg Andrew (Columbia University)
Hite Gailen (Columbia University)
Hitsch Günter J. (University of Chicago)
Hodrick Robert J. (Columbia University)
Hopenhayn Hugo (UCLA)
Hurst Erik (University of Chicago)
Imrohoroglu Ayse (University of Southern California)
Israel Ronen (London Business School)
Jaffee Dwight M. (UC Berkeley)
Jagannathan Ravi (Northwestern University)
Jenter Dirk (Stanford University)
Jones Charles M. (Columbia Business School)
Kaboski Joseph P. (Ohio State University)
Kaplan Ethan (Stockholm University)
Karolyi, Andrew (Ohio State University)
Kashyap Anil (University of Chicago)
Keim Donald B (University of Pennsylvania)
Ketkar Suhas L (Vanderbilt University)
Kiesling Lynne (Northwestern University)
Klenow Pete (Stanford University)
Koch Paul (University of Kansas)
Kocherlakota Narayana (University of Minnesota)
Koijen Ralph S.J. (University of Chicago)
Kondo Jiro (Northwestern University)
Korteweg Arthur (Stanford University)
Kortum Samuel (University of Chicago)
Krueger Dirk (University of Pennsylvania)
Ledesma Patricia (Northwestern University)
Lee Lung-fei (Ohio State University)
Leuz Christian (University of Chicago)
Levine David I.(UC Berkeley)
Levine David K.(Washington University)
Linnainmaa Juhani (University of Chicago)
Lucas Robert (University of Chicago - Nobel Laureate)
Luttmer Erzo G.J. (University of Minnesota)
Manski Charles F. (Northwestern University)
Martin Ian (Stanford University)
Mayer Christopher (Columbia University)
Mazzeo Michael (Northwestern University)
McDonald Robert (Northwestern University)
Meadow Scott F. (University of Chicago)
Mehra Rajnish (UC Santa Barbara)
Mian Atif (University of Chicago)
Middlebrook Art (University of Chicago)
Miguel Edward (UC Berkeley)
Miravete Eugenio J. (University of Texas at Austin)
Miron Jeffrey (Harvard University)
Moretti Enrico (UC Berkeley)
Moriguchi Chiaki (Northwestern University)
Moro Andrea (Vanderbilt University)
Morse Adair (University of Chicago)
Mortensen Dale T. (Northwestern University)
Mortimer Julie Holland (Harvard University)
Muralidharan Karthik (UC San Diego)
Nevo Aviv (Northwestern University)
Ohanian Lee (UCLA)
Pagliari Joseph (University of Chicago)
Papanikolaou Dimitris (Northwestern University)
Paul Evans (Ohio State University)
Peltzman Sam (University of Chicago)
Perri Fabrizio (University of Minnesota)
Phelan Christopher (University of Minnesota)
Piazzesi Monika (Stanford University)
Piskorski Tomasz (Columbia University)
Rampini Adriano (Duke University)
Reagan Patricia (Ohio State University)
Reich Michael (UC Berkeley)
Reuben Ernesto (Northwestern University)
Roberts Michael (University of Pennsylvania)
Rogers Michele (Northwestern University)
Rotella Elyce (Indiana University)
Ruud Paul (Vassar College)
Safford Sean (University of Chicago)
Sandbu Martin E. (University of Pennsylvania)
Sapienza Paola (Northwestern University)
Savor Pavel (University of Pennsylvania)
Scharfstein David (Harvard University)
Seim Katja (University of Pennsylvania)
Shang-Jin Wei (Columbia University)
Shimer Robert (University of Chicago)
Shore Stephen H. (Johns Hopkins University)
Siegel Ron (Northwestern University)
Smith David C. (University of Virginia)
Smith Vernon L.(Chapman University- Nobel Laureate)
Sorensen Morten (Columbia University)
Spiegel Matthew (Yale University)
Stevenson Betsey (University of Pennsylvania)
Stokey Nancy (University of Chicago)
Strahan Philip (Boston College)
Strebulaev Ilya (Stanford University)
Sufi Amir (University of Chicago)
Tabarrok Alex (George Mason University)
Taylor Alan M. (UC Davis)
Thompson Tim (Northwestern University)
Tschoegl Adrian E. (University of Pennsylvania)
Uhlig Harald (University of Chicago)
Ulrich, Maxim (Columbia University)
Van Buskirk Andrew (University of Chicago)
Veronesi Pietro (University of Chicago)
Vissing-Jorgensen Annette (Northwestern University)
Wacziarg Romain (UCLA)
Weill Pierre-Olivier (UCLA)
Williamson Samuel H. (Miami University)
Witte Mark (Northwestern University)
Wolfers Justin (University of Pennsylvania)
Woutersen Tiemen (Johns Hopkins University)
Zingales Luigi (University of Chicago)


IT'S YOUR MONEY
U.S. government should bail out of bailouts
Exclusive: Craig R. Smith says accountability required NOW

Wednesday, October 01, 2008
WorldNetDaily Exclusive

The last thing government officials should do is try to bail us out of the economic crisis they are responsible for creating in the first place.

The lack of oversight provided by Chris Dodd and Barney Frank of the Banking and Financial Services subcommittee is unprecedented and should require the immediate dismissal of both men. Their decisions, which have in large part brought about the current market crisis, make the decisions made during Hurricane Katrina look like sheer genius.

Campaign contributions have a miraculous way of clouding any career politician's ability to make intelligent choices that would directly benefit the American public. They know those choices will greatly disappoint their 'masters' who run Wall Street and thus slow the flow of campaign money for re-election.

Dodd and Frank had the direct responsibility, in congressional oversight, to protect the American public against abuses of the system. They did not!

I would love to see the campaign contribution records of Dodd and Frank from the banks and financial services companies now at the trough looking for taxpayer money to save them from the very folly that lined their pocket with billions.

Or maybe we should take a closer look at Clinton appointees like Jamie Gorelick and Franklin Raines who were paid a combined salary of $125 million from Fannie Mae and Freddie Mac. How about the contributions from Bears Stearns, JP Morgan, AIG, and Merrill Lynch to both political parties who allowed the shenanigans to continue unabated while many watched the problems grow worse by the day?

The fact is this whole crisis was avoidable. As far back as 1987 there were calls in Congress for oversight in Freddie Mac and Fannie Mae. Yet the Clinton administration had no interest. Instead the "more is better," "chicken in every pot" mentality in America forced officials like Barney Frank to allow lenders' greed and Wall Street's hunger for huge fees to create a culture of corruption never before seen in American history.

Democrats, at the time, ignored the fact that many loans were being made to completely unqualified borrowers to buy homes they clearly could not afford. Overnight, home ownership in America became a birthright under the Democrats. Discussions with the Congressional Black Caucus and housing executives from Fannie and Freddie were just one example of how the Democratic Party encouraged irresponsible borrowing behavior.

So what do we do now? We must suffer the pain and do the hard yet necessary things to return to reality or we had better get prepared for a whole lot more pain. These problems did not happen overnight and the solutions will not come overnight. But the longer we fool ourselves with feel-good government bailouts, the longer the problem will remain.

Why are we turning to the very perpetrators for the answers to the problems they caused in the first place? Are we crazy? Go back to the same folks who broke it for a fix?

Free markets works when they are operated under accountability. The only effective help the government can offer would be to immediate halt wasteful spending and begin to reduce the national debt. Fiscal responsibility at the government level would do more to instill confidence than any bailout a bureaucrat can offer. Bureaucrat bailouts are designed to bring new contributions into their campaigns. That is a huge part of the problem. Bailouts do not work unless they are accompanied with accountability.

It would be easy enough to kid ourselves and allow the government to throw huge amounts of taxpayer dollars at the problems and pass it all on to future generations. But that would be like putting a band-aid on a gaping wound. The patient will still bleed to death, just at a slower pace.

Accountability, not blame, is required NOW. Sacrifice, not politics, is the necessary cure. I know it isn't a popular message but it is reality. Americans are willing to do what it takes to strengthen the country if they know they will not be burned once again by politicians who are more interested in power and position than they are about what is best for America.

It is time for the speaker of the House to drop her blame game and do what is best for America. It is nauseating to listen to the speaker lay blame at the feet of the current administration when she knows all too well that her democratically controlled Congress blocked all attempts to regulate the industry. Why can't both sides stop the attacks and start with the bipartisan cooperation they allegedly desire?

Our best years are ahead if we learn from the mistakes that have been made and not look to government for the answers to our problems. Government is not the solution to the problem; government is the problem. We must work together. We must allow free markets to punish those who did wrong, weed out the weak borrowers and reward those who borrowed honestly. If we don't, we are headed for even more difficult times.

We can avoid those difficult times if we believe in less government, more personal responsibility and accountability from leaders in both the private and public sectors.


McCain Must Make His Move
Wednesday, October 1, 2008 3:09 PM
By: Dick Morris & Eileen McGann

Trailing six points in Rasmussen's poll, having fallen four points since he suspended his campaign last week, the question for John McCain is, Haven't you learned anything?

His failure to do much of anything in Washington, after teasing the whole country and riveting its attention on him by suspending his campaign, has let the voters down -- and they are turning away from McCain.

But there is still time for him to make his move. The House Republicans bought McCain another shot by turning down the $700 billion bailout package on Monday. With no House vote scheduled until Thursday, McCain still has time to do the right thing.

He should publicly announce his support for the House Republican alternative package of insurance, loans and tax changes to deal with the financial crisis. He should attack Barack Obama and the Democrats for supporting the use of tax money for a massive bailout when the same purpose can be accomplished by other, cheaper means.

McCain should draw a line in the sand and take a firm position.

The Democrats are not prepared to pass their bailout proposal by themselves. If they were, they would have done so on Monday.

Instead, they withheld the votes of their most vulnerable congressmen and let the package fail. If the Republican Party poses a united front in the House, with McCain's leadership, the Democrats will have to fall in line. They cannot not do anything. By taking a firm line, McCain can turn the whole process around to his, and his country's, advantage.

Who would have imagined that John McCain would lose the election because he had a failure of courage at the last minute? Who would have guessed that he would fail to stand on principle for fear of being criticized and would fail as a result? If John McCain is to lose this election, let it at least be fighting for principle, as he has done throughout his storied career.

By backing an alternative, McCain forces Obama to defend the Democratic/Bush package. He can tie Obama to Bush and to the Washington insider/Wall Street crowd. He can give his populism a programmatic reality and a topical relevance. Obama would have to spend the rest of the election defending the $700 billion turkey the length and breadth of the country.

America detests the bailout package. Polls show better than 2-to-1 opposition. Were McCain and the Republicans able to project that there is another alternative that works, the opposition would swell to even greater proportions.

Obama and the Democrats could cite the views of Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke, and Wall Street executives that the Republican relief package would be too little, too late. But voters can be pardoned for skepticism. Paulson, a few years removed from Wall Street, and Democrats, in hock to the street for campaign contributions, are naturally eager to get their hands on $700 billion. If Obama lends himself to that cause, it could cost him the election.

McCain needs to have the courage to free himself from the web of Washington deals and take a principled stand for the right side and stay there. Then the inevitable dynamics of the process will bring the country around to him.

Otherwise, his campaign will have missed the opportunity to draw the kind of clear issue that would have gotten him elected president.

It is admirable to see a candidate of principle and conviction lose an election by standing on his beliefs. It is sickening to see one lose by abandoning them.


Should Fannie Mae and Freddie Mac Be Saved?
by Darrell Castle
Constitution Party 2008 Vice Presidential Candidate

Should Fannie Mae and Freddie Mac be allowed to fail? That is the question that the United States Government (USG) faces today along with the consequences of failure or the consequences of takeover which is essentially nationalization.

These two private companies guarantee $5.3 trillion of the $12 trillion US mortgage market. They are privately owned and disclaim government backing, but they are called government sponsored enterprises (GSEs). They have always been considered safe investments almost as if the USG does guarantee their safety. Since May, their common and preferred shares have each lost more than half their value which is a big problem for many banks which are heavily invested in their common shares. The decline sinks the banks' capital base and restricts, even more, the credit once available to the American consumer. The credit market is already restricted to the point that the producing economy is grinding to a halt. This is happening because banks have restricted credit so that they will have money available to cover mortgage losses lest they be nationalized by the USG. In other words, the financial economy which has carried the American economy since the Reagan era is now destroying the consumer economy upon which our entire economic system is based. We all remember President Bush's advice after 9-11 to "go shopping".

The problem is that shopping is becoming impossible for most people without incurring new debt and sources of credit are drying up. The M1 figures which is all the money held in the American economy such as savings accounts, checking accounts, etc. with which American consumers can purchase without additional debt is about $1.3 trillion. This isn't nearly enough to purchase the American production (GDP) of $13.8 trillion based on 2007 numbers. The American people fall further and further behind. Their wages are stagnant but inflation is not stagnant which constantly erodes their standard of living. They have the appearance of wealth, but it is all an illusion.

What would be the consequences of the USG's proposed takeover of Fannie and Freddie? Will the already strapped American taxpayers have to absorb the $5.3 trillion of their debt thus almost doubling the public debt? Probably not, because not all of the Fannie and Freddie mortgages are junk. Those that are junk will have to be separated and dealt with. The common stockholders will probably take a bath but the preferred stockholders such as China with almost $400 billion and Russia with almost $100 billion can remain dirty. The companies can be run by a conservator such as that appointed in Chapter 11 bankruptcy cases to run failing companies and recover them while writing down the necessary amount of debt within classes. This Nationalization or takeover could save Fannie and Freddie and with them the entire system for a period of time, but a day of reckoning is coming and coming soon. This will add at least $10s of billions of debt to the American taxpayer each year for many years and cause even more inflation and a lower standard of living.

What would be the consequences of allowing Fannie and Freddie to fail? More than likely the consequences would involve a world wide catastrophic collapse of the international financial system. This would mean the end of our debt based economy because no foreign government would buy our debt. Foreign trade based on a trade deficit would dry up and the United States would enter a time of economic depression which would probably be worse than 1929 at least for a short time.

What then should we as a nation do in response to the decision that lies before us? The first order of business is to elect wise, honest, and ethical leaders to lead us through the crises and to make sure the American Republic as originally founded emerges on the other side. I have no doubt that Chuck Baldwin is such a leader, but I have grave doubts about Senators McCain and Obama. If we had a leader such as Chuck Baldwin, I would advise letting the system fail and dealing with the consequences. This is a chance to purge the system of debt which can never be paid, and thus remove the yoke of debt from the necks of the American people. It is a chance to return to a sound money system based on gold and silver as originally proposed. It is a chance to be free of the Federal Reserve and of the income tax. In short, we could restore our system to what it was designed to be and the American people could live in peace, prosperity, and liberty.

The collapse of the current debt pyramid system is inevitable. The USG and even the Federal Reserve cannot repeal the laws of economics no matter how much they want to. The question before us is will we choose to continue the present course which will lead to a hyperinflationary event such as what happened in Weimar Germany in 1933 and led to the rise of Hitler and WWII, or will we suffer a depression which could prove to be worse and of longer duration than the great depression of 1929. It is incumbent, therefore, upon this generation which has enjoyed the false benefits of this system for so long and which has been so profligate in its ways, to bare this hardship so that future generations, yet unborn, will not have to bare them. If we act quickly, we have the ability to control events and make our own decisions, but soon someone or some event will make the decision for us. This is the system that has been bequeathed to us.


The financial bailout scheme brewing in America has suddenly become a financial blowout! Billions of dollars worth of pork are being slapped onto the bill, giving huge gifts to NASCAR racetrack owners, rum makers, wool researchers, Hollywood film companies and even huge corporations like Microsoft and GE. There's nothing like an overstuffed pork sandwich to get lawmakers lining up in a competition to see who can make the nation go broke more quickly...

Bailout, or Blowout? Financial "Rescue" Plan Turns into Mad Spending Spree
by Mike Adams
http://www.naturalnews.com/024390.html

(NaturalNews) As the United States of America stands on the verge of irrecoverable bankruptcy, U.S. Senators have decided to orchestrate a final "blowout" spending spree by dressing up the financial bailout plan with so much bloated pork that no lawmaker can resist its lure. The so-called "rescue plan" (renamed from "bailout plan" by Washington language police) has now ballooned into a 450-page overstuffed pork sandwich, featuring layer upon layer of outlandish expenditures tied to the bill like too must ballast on a sinking ship:

• Tax breaks for NASCAR race tracks
• Big handouts to Virgin Island rum makers
• Yet more tax breaks for Hollywood film producers
• Gifts to companies researching wool
• Huge tax breaks for companies like Microsoft and GE

... and many other handouts yet to be discovered in its 450 pages of pork.

What began as a financial bailout bill to save the future of America's economy has become a free-for-all financial blowout that will only accelerate its demise. What's astonishing here is that even on the verge of financial collapse, Washington lawmakers are incapable of coming to their senses. They offer the same solution to every problem: Spend more!

"This is how Washington works,'' said Keith Ashdown, chief investigator at Taxpayers for Common Sense. "A big pot of pork is their recipe for final passage."

A big pot of pork
A big pot of pork, unfortunately, is exactly what Washington doesn't need right now. With the jackals of hyperinflation already nipping at their heels, Washington policymakers need to be slashing spending with great expediency. To restore confidence to the U.S. dollar and prevent a cascading sell-off of U.S. debt by foreign nations (which would lead to the abrupt ruin of the U.S. government), lawmakers need to be reeling in wasteful spending, balancing their books and opposing the kind of free-for-all blowout spending practices that got us into this position in the first place.

Wasn't it a Bohemian financial policy of unbridled spending and endless debt that brought us to the precipice of global financial collapse in the first place? And yet, standing right on the edge of the cliff, with nothing but nothing but disaster beneath them and the sand eroding from under their feet, all these Senators can think of is how to spend more money!

It's like a heroin addict who decides to get clean, and then suggests the best way to accomplish that is to start shooting up. "I'll get clean," he promises you, "right after this next hit."

An Empire of Debt: $488 billion more for war
U.S. lawmakers are addicted to spending in the worst way. Just like heroin addicts, they will get their fix at all costs, regardless of the harm caused to their family, friends or countrymen. They will spend away all the money in the world, mindlessly, recklessly, without a second thought, as long as it keeps them in office for just one more term. Just one more hit...

Last night, the U.S. Senate quietly passed a $600+ billion spending bill, which earmarked $448 billion in Pentagon funds (war money). This was all done under the cover of the much larger $700 billion financial bailout bill, which managed to keep people distracted from the $448 military spending bill.

Earlier this week, the Federal Reserve quietly, and without any vote, magically created another $620 billion in money and flooded it into the banking system. There was no debate. No vote. No public announcement at all. Just endless, silent money creation at every turn, seemingly conducted without any awareness or concern of the consequences.

And there was certainly no warning of how this would erode the savings accounts and retirement funds of taxpayers. In fact, nothing resembling the truth ever makes it out of Washington these days. This $700 billion pork-barreled bailout scheme is being sold to the American people as a taxpayer benefit! The government is doing us all a favor, didn't you know? And we should feel so fortunate that they're doing it with our money, too.

The Government vs. the People
It's often said that the first casualty of war is the truth. Right now, the U.S. Government is in a financial war, and amid all the propaganda, deception and manipulations of the mainstream media, there's simply no room for something as big as "the truth."

But what is the truth, really?

The truth is that you're watching the boldest, most outrageous swindle that's ever been conducted in the history of the world.

The truth is that you're a witness to the last, sad chapter of a military empire that's fast headed towards financial self-destruction.

The truth is that U.S. debt spending has now entered an escalating geometric progression from which no nation has ever returned in one piece.

Two weeks ago, it was a few hundred billion dollars in fake money and debt spending. This week, it's been nearly a trillion dollars already. Next week, it may be another trillion. With each passing week, the crooks in Washington will tack on another trillion dollars (or more) to the national debt, like heaving two-ton cars onto the back of a cripple who can barely walk to begin with.

It took the United States of America 230 years to accumulate roughly $5 trillion in debt. Washington has now doubled that in less than 30 days. We now stand at $9.8 trillion in national debt.

With the passage of this financial bailout bill, we will be facing -- at minimum -- $10.5 trillion in debt. And just to make sure we're properly drowned in it, Senators are throwing out tens of billions of dollars more to companies that made really bad financial decisions, like Ford Motors, which is one of the recipients in a $25 billion automaker bailout just announced yesterday.

And don't forget this juicy fact: These financial bailouts aren't limited to U.S. companies, either! If the bailout bill passed, Treasury Secretary Paulson will have full authority to dish out hundreds of billions of dollars to bail out FOREIGN banks, too!

$10 trillion in debt quickly becomes $12 trillion. Then $15 trillion, then $25 trillion. At some point, it all becomes too absurd to track, because there is no nation in the world that will keep pumping useless dollars down the U.S. government financial tar pit. And that means the U.S. will soon run out of willing lenders, just like the heroin addict who can't get any more "emergency" loans to go out and buy more drugs.

Even though I know most consumers simply cannot fathom what's about to happen to them (and their money), I cannot overemphasize this point: The United States government is now on a track to financial annihilation. You are witnessing its suicide march into debtors' demise. Sure, it may be able to string itself along for a while longer, perhaps by terrorizing other nations and extorting money from them to prop up the empire (read the history of the Roman Empire, folks), but in the end, there is no way out of $10 trillion in debt other than to either declare bankruptcy (at which point nobody will loan you money anymore) or hyperinflate the currency to bail yourself out (at which point the currency becomes worthless and the taxpayers are wiped out).

Take a guess which one your esteemed leaders in Washington are pushing for? It's the hyperinflation, of course. Because in the end, they'd much rather lose YOUR money than THEIR power.

I think even the Senators secretly realize this now. Behind closed doors, they know the game's up. This blowout spending spree is their last, desperate chance to bring home a few hundred million dollars to their home states before the federal government becomes completely insolvent. It's really a financial looting of Washington, and the vultures have moved in now in an attempt to scurry away with all the scraps of U.S. dollars they can carry.

Either way, the U.S. dollar is headed towards rapid devaluation. International investors are either laughing their heads off or shaking them in disbelief, wondering what kind of madness has gripped U.S. lawmakers today, and whether their own nations will be safe from the aftershocks of U.S. fiscal failures.

What to expect in the days ahead
The financial bailout bill will be approved by Congress, then signed by the President. For the subsequent 24 hours or so, the stock market will surge upwards as part of a false rally based on the passage of the bailout bill. During this surge, gold will plummet in value, along with gold mining stocks and other precious metals companies.

After the false high in the markets, investors will come to their senses, and we'll see the beginning of a long, slow decline in the value of stocks, coupled with an accelerating inflation of the U.S. dollar (which will sap spending power from those holding dollars in savings or retirement accounts). The price inflation of real goods (food, fuel, etc.) will rise at an alarming pace over the next two years, dampening economic activity.

The early months of 2009 will see a wave of post-Christmas bankruptcies by retailers who suffered a terrible Christmas season. (When consumers can't take unlimited cash out of their homes like they were ATM machines, they tend to spend less on Christmas gifts.)

In any case, the economic outlook of the United States of America won't be pretty. Burdened with endless debt, unbridled spending and a cascading implosion of financial institutions, the U.S. is almost certain to endure, at the very least, many hard years of a bona-fide economic depression coupled with runaway currency inflation. That's actually a best-case scenario. I won't describe the worst-case scenario because it makes people uncomfortable to even fathom such possibilities.

This is what the banking bailout measure will deliver: A decade (or more) of economic struggle, an erosion of the value of the U.S. dollar, and the decline of America as an economic superpower in the world.

The beginning of the end of the American Empire is now upon us. From here, it's simply a matter of how long its demise can be stalled, and how broke the People will end up before Washington legislators spend every last dollar they can scrounge up and ferret away.

When the music stops, don't be the one left holding U.S. dollars.


Word Games: "Bail Out" Magically Transforms Into "Rescue" Overnight as MSM Follows Language Police
by Mike Adams
http://www.naturalnews.com/024381.html

(NaturalNews) Welcome to the Orewellian world of Newspeak, where words are used to control thoughts. Yesterday, at the bidding of the White House, mainstream news sources across the world magically replaced the term "bail out" with the much more palatable word "rescue." The Washington Post jumped on board, then Reuters, the Associated Press and Bloomberg all fell into step within minutes, magically replacing "bail out" with "rescue" across all their articles.

It's as if "bail out" never even existed. This is eerily identical to the world in George Orwell's 1984 novel, where history is constantly being re-written to conform to the political lies of the present. There is no such thing as a bail out, we're now being told. Nobody is getting bailed out. We're all being rescued!

How convenient.

Rescued from what, you might ask? Rescued from the really bad investment decisions of greedy, careless bankers. And HOW are we all being rescued? By giving them more money, of course.

But don't think it's simply about rescuing them. No, of course not, you simple fools: It's about rescuing YOU! Yes, that's right: this is all being done for the good of the People, because everybody knows that sending $700 billion to pay off the debts of the wealthy elite is the very best way to uplift the economic status of the working poor.

It makes such perfect sense, I don't know why we didn't think of it sooner. I mean, why did we have to wait for a crisis to unleash this brilliant rescue plan? Why not simply hand over hundreds of billions of dollars to failing banks and financial institutions every week? If this is so good for the people, we should have been doing this all along, right?

Of course, it's very, very important to make sure we all use approved words when describing all this. Because the very term "bail out" implies that somebody is abandoning responsibility for a mess they've created. It's very important that all Americans understand nobody is abandoning any responsibility. In fact, the wealthy elite bankers and financial crooks are taking full responsibility for this mess, and they're doing it by forcing the taxpayers to clean it up. That's how seriously they take this situation: They're so deeply committed to solving the problems they've created that they'll even reach right into YOUR wallet to make it happen!

After all, you didn't think rescuing all you people would be free, did you? You need rescuing, and there's a rescue fee required. It's sort of like what you might pay to be air-lifted by helicopter after breaking your ankle hiking down the Grand Canyon. If you want to be rescued, you gotta pay up.

The same thing's true with the economy. You want to be rescued? You'll have to pay.

And why, you might ask, shouldn't the people who created the mess be required to pay? Well duh... it's because they're too busy directing the rescue. Somebody's gotta be in charge of the rescue, right? And who better qualified to solve this financial mess than the very people who caused it? Do YOU know how to make a trillion dollars vanish into thin air? I doubt it. But these jokers can make that happen before lunch! They know this stuff! That's why it makes such perfect sense to put them in charge of the rescue plan...

So don't question any of this. You wouldn't understand all the brilliant, highly-complex aspects of this rescue package anyway. Just trust your government. Stop asking questions. Hand over a blank check and don't use the phrase "bail out." It's not a bail out, it's a rescue. Shut up and pay your taxes. And read the Washington Post to stay informed.

And don't buy gold. You won't need it. This rescue plan is going to be so incredibly successful that we'll all be rich. The taxpayers are even going to make money on this rescue! Yes, you heard that right: It's not even really a rescue, it's actually just an investment!

Yes, an investment. Your government is now your stock broker. Except you don't really have a choice in this investment. It's mandatory. But don't worry, your mandatory "investment" is going to make you money. Lots of it! And when all these banking assets turn around and become more valuable in the future, we'll find some way to return all this money to you, the taxpayers. Because you know, your government is fiscally responsible.

Pay no attention to our national debt. Debt doesn't matter anymore. It's all about the cash flow, and right now, cash is flowing like a tidal wave into the hands of one person... one person who now controls more than half the entire U.S. economy: Treasury Secretary Henry Paulson.

But don't worry. Paulson is a great guy! He'll give you ALL your money back someday, with interest, guaranteed! So technically, it's not a bail out, or a rescue or even an investment. It's really just a LOAN to Uncle Sam.

Yep, that's right: Uncle Sam needs your money for the big "rescue." But it's all being done for YOU, of course. And the more you loan Uncle Sam, the more patriotic you are.

You're a patriot, aren't you? If you're a patriot, then you'll join us in supporting the "rescue" plan, which really isn't a rescue, but more like a friendly loan to Uncle Sam. We just need a bit of cash right now, just to make it through to the next loan from China, and to sell off all these worthless bank assets that we're buying with your money. But just as soon as all that's taken care of, we'll give you all your money back.

We promise. In fact, we promise with the full faith and credit of the U.S. Government.


Article from Investors Business Daily

Do not brush this off as just some anti Obama rant -- it is very revealing on where we may very well be headed. Some may be fine with this. If you are, just make sure you are an informed voter.

No matter whether you consider your personal political brand as liberal, moderate or conservative you probably won't want to hear what this article has to say, but you need to. It's from Investors Business Daily, not some right wing publication or McCain's political camp, and it is a very revealing view of Democrat presidential candidate, Obama.

Barack Obama's Stealth Socialism
July 29, 2008

Election '08: Before friendly audiences, Barack Obama speaks passionately about something called "economic justice." He uses the term obliquely, though, speaking in code -- socialist code.

IBD Series: The Audacity Of Socialism

During his NAACP speech earlier this month, Sen. Obama repeated the term at least four times. "I've been working my entire adult life to help build an America where economic justice is being served," he said at the group's 99th annual convention in Cincinnati.

And as president, "we'll ensure that economic justice is served," he asserted. "That's what this election is about." Obama never spelled out the meaning of the term, but he didn't have to. His audience knew what he meant, judging from its thumping approval.

It's the rest of the public that remains in the dark, which is why we're launching this special educational series.

"Economic justice" simply means punishing the successful and redistributing their wealth by government fiat. It's a euphemism for socialism.

In the past, such rhetoric was just that -- rhetoric. But Obama's positioning himself with alarming stealth to put that rhetoric into action on a scale not seen since the birth of the welfare state.

In his latest memoir he shares that he'd like to "recast" the welfare net that FDR and LBJ cast while rolling back what he derisively calls the "winner-take-all" market economy that Ronald Reagan reignited (with record gains in living standards for all).

Obama also talks about "restoring fairness to the economy," code for soaking the "rich" -- a segment of society he fails to understand that includes mom-and-pop businesses filing individual tax returns.

It's clear from a close reading of his two books that he's a firm believer in class envy. He assumes the economy is a fixed pie, whereby the successful only get rich at the expense of the poor.

Following this discredited Marxist model, he believes government must step in and redistribute pieces of the pie. That requires massive transfers of wealth through government taxing and spending, a return to the entitlement days of old.

Of course, Obama is too smart to try to smuggle such hoary collectivist garbage through the front door. He's disguising the wealth transfers as "investments" -- "to make America more competitive," he says, or "that give us a fighting chance," whatever that means.

Among his proposed "investments":

• "Universal," "guaranteed" health care.

• "Free" college tuition.

• "Universal national service" (a la Havana).

• "Universal 401(k)s" (in which the government would match contributions made by "low- and moderate-income families").

• "Free" job training (even for criminals).

• "Wage insurance" (to supplement dislocated union workers' old income levels).

• "Free" child care and "universal" preschool.

• More subsidized public housing.

• A fatter earned income tax credit for "working poor."

• And even a Global Poverty Act that amounts to a Marshall Plan for the Third World, first and foremost Africa.

His new New Deal also guarantees a "living wage," with a $10 minimum wage indexed to inflation; and "fair trade" and "fair labor practices," with breaks for "patriot employers" who cow-tow to unions, and sticks for "nonpatriot" companies that don't.

That's just for starters -- first-term stuff.

Obama doesn't stop with socialized health care. He wants to socialize your entire human resources department -- from payrolls to pensions. His social-microengineering even extends to mandating all employers provide seven paid sick days per year to salary and hourly workers alike.

You can see why Obama was ranked, hands-down, the most liberal member of the Senate by the National Journal. Some, including colleague and presidential challenger John McCain, think he's the most liberal member in Congress.

But could he really be "more left," as McCain recently remarked, than self-described socialist Sen. Bernie Sanders (for whom Obama has openly campaigned, even making a special trip to Vermont to rally voters)?

Obama's voting record, going back to his days in the Illinois statehouse, says yes. His career path -- and those who guided it -- leads to the same unsettling conclusion.

The seeds of his far-left ideology were planted in his formative years as a teenager in Hawaii -- and they were far more radical than any biography or profile in the media has portrayed.

A careful reading of Obama's first memoir, "Dreams From My Father," reveals that his childhood mentor up to age 18 -- a man he cryptically refers to as "Frank" -- was none other than the late communist Frank Marshall Davis, who fled Chicago after the FBI and Congress opened investigations into his "subversive," "un-American activities."

As Obama was preparing to head off to college, he sat at Davis' feet in his Waikiki bungalow for nightly bull sessions. Davis plied his impressionable guest with liberal doses of whiskey and advice, including: Never trust the white establishment.

"They'll train you so good," he said, "you'll start believing what they tell you about equal opportunity and the American way and all that sh**."

After college, where he palled around with Marxist professors and took in socialist conferences "for inspiration," Obama followed in Davis' footsteps, becoming a "community organizer" in Chicago.

His boss there was Gerald Kellman, whose identity Obama also tries to hide in his book. Turns out Kellman's a disciple of the late Saul "The Red" Alinsky, a hard-boiled Chicago socialist who wrote the "Rules for Radicals" and agitated for social revolution in America.

The Chicago-based Woods Fund provided Kellman with his original $25,000 to hire Obama. In turn, Obama would later serve on the Woods board with terrorist Bill Ayers of the Weather Underground. Ayers was one of Obama's early political supporters.

After three years agitating with marginal success for more welfare programs in South Side Chicago, Obama decided he would need to study law to "bring about real change" -- on a large scale.

While at Harvard Law School, he still found time to hone his organizing skills. For example, he spent eight days in Los Angeles taking a national training course taught by Alinsky's Industrial Areas Foundation. With his newly minted law degree, he returned to Chicago to reapply -- as well as teach -- Alinsky's "agitation" tactics.

(A video-streamed bio on Obama's Web site includes a photo of him teaching in a University of Chicago classroom. If you freeze the frame and look closely at the blackboard Obama is writing on, you can make out the words "Power Analysis" and "Relationships Built on Self Interest" -- terms right out of Alinsky's rule book.)

Amid all this, Obama reunited with his late father's communist tribe in Kenya, the Luo, during trips to Africa.

As a Nairobi bureaucrat, Barack Hussein Obama Sr., a Harvard-educated economist, grew to challenge the ruling pro-Western government for not being socialist enough. In an eight-page scholarly paper published in 1965, he argued for eliminating private farming and nationalizing businesses "owned by Asians and Europeans."

His ideas for communist-style expropriation didn't stop there. He also proposed massive taxes on the rich to "redistribute our economic gains to the benefit of all."

"Theoretically, there is nothing that can stop the government from taxing 100% of income so long as the people get benefits from the government commensurate with their income which is taxed," Obama Sr. wrote. "I do not see why the government cannot tax those who have more and syphon some of these revenues into savings which can be utilized in investment for future development."

Taxes and "investment" . . . the fruit truly does not fall far from the vine.

(Voters might also be interested to know that Obama, the supposed straight shooter, does not once mention his father's communist leanings in an entire book dedicated to his memory.)

In Kenya's recent civil unrest, Obama privately phoned the leader of the opposition Luo tribe, Raila Odinga, to voice his support. Odinga is so committed to communism he named his oldest son after Fidel Castro.

With his African identity sewn up, Obama returned to Chicago and fell under the spell of an Afrocentric pastor. It was a natural attraction. The Rev. Jeremiah Wright preaches a Marxist version of Christianity called "black liberation theology" and has supported the communists in Cuba, Nicaragua and elsewhere.

Obama joined Wright's militant church, pledging allegiance to a system of "black values" that demonizes white "middle classness" and other mainstream pursuits.

(Obama in his first book, published in 1995, calls such values "sensible." There's no mention of them in his new book.)

With the large church behind him, Obama decided to run for political office, where he could organize for "change" more effectively. "As an elected official," he said, "I could bring church and community leaders together easier than I could as a community organizer or lawyer."

He could also exercise real, top-down power, the kind that grass-roots activists lack. Alinsky would be proud.

Throughout his career, Obama has worked closely with a network of stone-cold socialists and full-blown communists striving for "economic justice."

He's been traveling in an orbit of collectivism that runs from Nairobi to Honolulu, and on through Chicago to Washington.

Yet a recent AP poll found that only 6% of Americans would describe Obama as "liberal," let alone socialist.

Public opinion polls usually reflect media opinion, and the media by and large have portrayed Obama as a moderate "outsider" (the No. 1 term survey respondents associate him with) who will bring a "breath of fresh air" to Washington.

The few who have drilled down on his radical roots have tended to downplay or pooh-pooh them. Even skeptics have failed to connect the dots for fear of being called the dreaded "r" word.

But too much is at stake in this election to continue mincing words.

Both a historic banking crisis and 1970s-style stagflation loom over the economy. Democrats, who already control Congress, now threaten to filibuster-proof the Senate in what could be a watershed election for them -- at both ends of Pennsylvania Avenue.

A perfect storm of statism is forming, and our economic freedoms are at serious risk.

Those who care less about looking politically correct than preserving the free-market individualism that's made this country great have to start calling things by their proper name to avert long-term disaster.


The Bogus Bailout is getting worse

The version passed by the Senate is still based on the $700 billion plan that gives government bureaucrats more control over the economy than perhaps at any time in our history.

But now, the Senate has added billions of dollars of pork (see below) and thinly-veiled tax bribes to the bailout in hopes that the House will be forced to swallow hard and accept it. Some examples of the pork:

-- millions of pork for Hollywood producers
-- millions more for stockcar race track owners
-- more than $192 million for Caribbean rum producers
-- over $200 million for Alaskan fisherman

Once again, Congress and the President are doing everything in their power to IGNORE the will of the American people.

But they cannot ignore us if the faxes and phones are shut down with angry citizens who not only object to the Bogus Bailout but are offended that Congress has added pork and political bribes just to get it passed!


Dear Congress: Put the Gun Down
Michelle Malkin
Friday, October 03, 2008

Will 2008 be the year of the Chicken Little Congress? Or can the House of Representatives show the panic-driven Senate what it really means to be a deliberative body?

On Sept. 19, Treasury Secretary Hank Paulson put a gun to America's head: Pass his $700 billion bailout of the banking industry and give him unfettered new powers to buy up an ocean of privately held toxic assets, or all hell would break loose. Treasury officials warned that the market would lose a third of its value if the bill were not passed immediately.

"We could see falls of 3,000 or 4,000 points on the Dow," a Republican official heaved. "We may not have another day," Democratic Senate Majority Leader Harry Reid hyperventilated. "We can't afford to do nothing," echoed all the other Democratic Henny Pennys and Republican Goosey Looseys in Paulson's sway. It's a "crap sandwich," House GOP leader John Boehner sighed, but the costs of inaction would be worse.

On Sept. 29, the House refused to bite. The Dow dropped nearly 7 percent -- a "record fall" in points (778), but nowhere near the apocalyptic levels predicted by Paulson's fear-mongers. Half of that drop occurred before the bailout rejection. The skies, however gray, did not fall. The world did not end. The dire predictions of Paulson and company did not come to pass. The next day, stocks (their barometer, mind you, not necessarily mine) rebounded. We're about where we were in 2006. Stock market Armageddon? I think not.

Paulson's monumental misjudgment is no surprise to those who have paid attention to him over the last year. This is the man who proclaimed the subprime crisis "largely contained" in April 2007; "near the bottom" in May 2007; and "largely contained" again in August 2007. This is the man who pledged that he had "no interest in bailing out lenders or property speculators" in October 2007 and couldn't "think of any situation where the backdrop of the global economy was as healthy as it is today."

This is the man who patted himself on the back for refusing to "put taxpayer money on the line" to rescue Lehman Brothers on Sept. 15 -- and then turned around the next day and engineered the $85 billion taxpayer-funded bailout of AIG. This is the man who vowed he had "no plans to insert money" into Fannie Mae and Freddie Mac -- and then turned around and committed $200 billion in capital and credit lines to those corrupt, bloated, crumbling institutions.

This is the man who declared that "the worst is likely to be behind us" in May 2008 -- and then got down on his knees in front of Nancy Pelosi to pass a Mother of All Bailouts plan whose dollar figure was plucked from thin air. ("It's not based on any particular data point," a Treasury spokeswoman told Forbes.com. "We just wanted to choose a really large number.")

This is a man, in other words, whose crap sandwich should be taken with a huge grain of salt.

On Oct. 1, at the behest of Paulson, the Senate scurried to put Mother of All Bailouts 2.0 on the table. All but 25 members swallowed. The "world's greatest deliberative body" had no time to hold hearings, consider alternatives or study the history of similar failed bailouts around the world. The Do Something Now Or Else mob did, however, have time to quadruple the volume of pages and stuff the urgent emergency package with business-as-usual earmarks, goodies and sweeteners.

John McCain and Barack Obama both cited credit squeeze scare stories to rationalize the rush. McCain decried: "When small businesses and big businesses like Sonic [Drive-In burger] franchisees can't borrow … [i]t hurts the entire community." The rest of the story? Sonic clarified that "during the past year GE Capital provided less than 10 percent of the lending to its franchisees … in fact, many franchisees maintain access to other diversified sources of financing. Furthermore, Sonic has not received any notification from GE Capital, either directly or indirectly, that it will stop financing new loans to Sonic franchisees."

Lost in all the End is Nigh frenzy were dozens of local and regional headlines across the country reporting that, in fact, the end is not nigh: "Wall Street Credit Crisis Rings Hollow on Main Street"; "No credit freeze on Kern's Main Street"; "Community banks aren't yet feeling pinch of Wall Street meltdown"; "Farmers still able to get banks' loans"; "Small town Main Street doing better than Wall Street."

Instead, The New York Times obsessed about the drop in auto loan approvals over the last year -- from 83 percent in 2007 down to 63 percent. Catastrophe? No. If lenders are finally realizing they shouldn't give money to bad risks, why is that a bad thing?

Getting credit is not a constitutional right. Preserving home ownership should not be a government imperative to be pursued at all costs. The House faces a choice: Put the gun down and give our economic problems the time they deserve to get fixed -- or fork over untold billions to a thoroughly debunked Foxy Loxy and his den of wolves.


Only Ourselves to Blame
Linda Chavez
Friday, October 03, 2008

No one wants to talk about who is most to blame for the financial crisis that now threatens the U.S. economy, though there is plenty of blame to go around. It is far easier to blame other people -- greedy Wall Street executives, predatory lenders, President Bush, federal regulators, members of Congress --than it is to look at ourselves.

For too long, Americans have been living on borrowed money they could never pay back. We've bought houses we couldn't afford and taken out loans on home equity that didn't materialize, assuming housing values would continually move upward. We've paid for every new gadget Madison Avenue hawked with credit cards whose principal we never paid down. We sent our children to college on loans, saddling them with debts that crush their futures. And all the while, we've kidded ourselves into believing the bill wouldn't come due. Now it has -- and all of us, responsible and irresponsible alike, will foot the cost.

But you will never hear this explanation from politicians who are scrambling to resolve the credit crisis. It is far easier to talk about the evil of CEO "golden parachutes" or the dangers of mortgage-backed securities and sub-prime loans. Don't get me wrong. It is obscene that executives who mismanaged their companies leave with millions of dollars in ill-gotten gains while shareholders see their investments plummet and employees lose their jobs. But until we recognize the culpability for the giant Ponzi scheme that was the housing bubble goes beyond Wall Street to Main Street, we won't really fix the problem.

The average American now owes more than $16,635 in consumer debt, excluding mortgages, according to U.S. News. A 2004 Federal Reserve Board survey found that a majority of credit card holders, 58 percent, do not pay their card balances every month. Nearly 10 percent of households owe balances of $9,000 or more on their credit cards. And young Americans are especially dependent on credit cards to finance their lifestyles. Some 76 percent of undergraduate college students have credit cards, and the average undergrad has $2,200 in credit card debt, and overall will amass nearly $20,000 in student debt during their college years, according to a 2004 study by Nellie Mae.

We've simply become accustomed to buying what we want, when we want it, regardless of whether or not we can really afford it. Consumerism has been driving our economy for years. And politicians have encouraged it, including President Bush, who told us all to go shopping to bring us out of recession after the terrorist attacks on Sept. 11, 2001. Again this year, politicians urged us to spend the tax rebates that Congress passed as part of the stimulus package. I can't recall a single political leader that suggested we should pay down our debts with those rebate checks.

As a result, our individual debt continues to grow and our savings to shrink. The Bureau of Economic Analysis reports that for August 2008, the personal savings rate as a percentage of disposable income was 1 percent, but that "saving from current income may be near zero or negative when outlays are financed by borrowing (including borrowing financed through credit cards or home equity loans), by selling investments or other assets, or by using savings from previous periods." Baby boomers have little prospect of retiring on their savings, especially given the current declines in the stock market.

We have become a nation of debtors, and our only solution seems to be to turn to the government to bail us out. And it's not just Wall Street firms looking to be rescued. Politicians are fearful of passing a financial package that does not include some relief for borrowers as well. Certainly it is worth doing something to prevent lenders from making bad loans to individuals without the credit or down payment to ensure likely repayment. But automatically bailing out borrowers who weren't credit worthy in the first place is no solution.

Ultimately, all of us have got to rid ourselves of the addiction to spending money we don't have. Instead of pointing fingers, we'd better start looking in the mirror if we want to understand who's really to blame.


Offshore Drilling Ban
Paul Weyrich
Friday, October 03, 2008

An important event occurred this week, though it went largely unnoticed because of the economic turmoil on Wall Street. On September 30 Congress allowed the 27-year-old ban on offshore oil drilling to expire. This is very good news for Americans and for our energy independence. Conversely, it should be bad news for the world's tyrants who profit enormously from our dependence upon their vast oil resources. One can hope that the expiration of this ban permanently ends the unnecessary and impractical Congressional regulation of our natural resources under the disingenuous guise of environmental protection.

I should note here that we will not see an immediate benefit from the expiration of the ban. It will take many years to develop our oil and natural gas reserves off the continental U.S. According to FORBES, "the Interior Department, which oversees the leasing of areas for oil and gas development, is not expected to begin selling leases in areas where drilling is currently restricted until 2010." Oil companies then will have to analyze current data to determine in which places they may be interested in investing. FORBES noted that government energy officials say it would take five to ten years before any oil supplies produced from opening restricted offshore areas would be available in the market.

It is estimated that Federal lands off the U.S. coasts could produce 18 billion barrels of oil and 76 trillion cubic feet of natural gas, though some believe that these are conservative estimates because new technologies will allow us to find and extract much more. Once these resources reach American consumers, the price of oil and energy likely will drop significantly, as will our dependence on foreign tyrants who spew hatred against us.

Of course, it is plausible that the next Congress will try to re-impose the ban, which is one reason oil companies may wait until next year to begin planning the development of these reserves. It is also possible that environmental groups will sue in an attempt to use the courts to stop drilling for oil or natural gas. Should either of these happen, however, I foresee a tremendous popular backlash against Congress or the courts, as Americans are tired of paying high prices for oil and energy when we have so many undeveloped resources of our own.

The good news is that the ban on offshore oil drilling has expired. But the American people must remain vigilant to ensure that Congress does not try to enact a similar ban in the future.


JONES STATEMENT ON FINANCIAL BAILOUT LEGISLATION
Rep. Walter B. Jones
Date: Oct 3, 2008 2:09 PM

WASHINGTON, D.C. -- In a House vote today, Third District Representative Walter B. Jones (R-NC) voted against H.R. 1424, the Emergency Economic Stabilization Act of 2008. The $700 billion financial bailout legislation passed the House by a vote of 263 to 171 and now goes to the President for signature into law. Congressman Jones' statement on the bill follows below.

"Over the past two weeks, hundreds of phone calls and e-mails have poured into my office from Eastern North Carolina residents who have shared their concerns about today's current economic situation. Without a doubt, most Americans agree that our credit market situation is serious and something must be done to address the problem. Unfortunately, today's hasty passage of a $700 billion bailout is not the proper solution."

"This legislation is a vast expansion of the federal government at the expense of the American taxpayer and the free enterprise system. High-flying Wall Street firms created this problem and got rich in the process. Taxpayers should not have to pick up the tab for their poor business decisions. With each citizen's share of the national debt at $33,000 before this bailout, the American people do not need to be saddled with even more federal debt. They also don't need to be saddled with the billions of dollars of pork in this bill for things like wooden arrow makers and Caribbean rum producers."

"Following the House's defeat of similar bailout legislation on Monday, I was hopeful that Congress would immediately reconvene and seek the counsel of outside experts on alternative courses of action. Yet the Congressional leadership continued to craft this bailout behind closed doors, without input from those with alternatives that would be more effective and cost the taxpayers less. Furthermore, the financial experts who have contacted me in the past several days -- including three Nobel Prize-winning economists and the heads of successful financial institutions like BB&T and First Citizens Bank -- have told me there is little reason to believe this bailout package will work."

"One credible alternative to the $700 billion bailout proposal was a bipartisan bill I cosponsored this week, the No BAILOUTS Act, which would correct the capital shortfalls experienced by many financial institutions and help protect the integrity and quality of the securities market -- without costing American taxpayers billions of dollars. By addressing the current credit crisis with a regulatory-based proposal, this alternative plan could have been quickly implemented without burdening taxpayers. Passing this $700 billion bailout was not the only available option."


Do Facts Matter?
Thomas Sowell
Friday, October 03, 2008

Abraham Lincoln said, "You can fool all the people some of the time and some of the people all the time, but you can't fool all the people all the time."

Unfortunately, the future of this country, as well as the fate of the Western world, depends on how many people can be fooled on election day, just a few weeks from now.

Right now, the polls indicate that a whole lot of the people are being fooled a whole lot of the time.

The current financial bailout crisis has propelled Barack Obama back into a substantial lead over John McCain-- which is astonishing in view of which man and which party has had the most to do with bringing on this crisis.

It raises the question: Do facts matter? Or is Obama's rhetoric and the media's spin enough to make facts irrelevant?

Fact Number One: It was liberal Democrats, led by Senator Christopher Dodd and Congressman Barney Frank, who for years-- including the present year-- denied that Fannie Mae and Freddie Mac were taking big risks that could lead to a financial crisis.

It was Senator Dodd, Congressman Frank and other liberal Democrats who for years refused requests from the Bush administration to set up an agency to regulate Fannie Mae and Freddie Mac.

It was liberal Democrats, again led by Dodd and Frank, who for years pushed for Fannie Mae and Freddie Mac to go even further in promoting subprime mortgage loans, which are at the heart of today's financial crisis.

Alan Greenspan warned them four years ago. So did the Chairman of the Council of Economic Advisers to the President. So did Bush's Secretary of the Treasury, five years ago.

Yet, today, what are we hearing? That it was the Bush administration "right-wing ideology" of "de-regulation" that set the stage for the financial crisis. Do facts matter?

We also hear that it is the free market that is to blame. But the facts show that it was the government that pressured financial institutions in general to lend to subprime borrowers, with such things as the Community Reinvestment Act and, later, threats of legal action by then Attorney General Janet Reno if the feds did not like the statistics on who was getting loans and who wasn't.

Is that the free market? Or do facts not matter?

Then there is the question of being against the "greed" of CEOs and for "the people." Franklin Raines made $90 million while he was head of Fannie Mae and mismanaging that institution into crisis.

Who in Congress defended Franklin Raines? Liberal Democrats, including Maxine Waters and the Congressional Black Caucus, at least one of whom referred to the "lynching" of Raines, as if it was racist to hold him to the same standard as white CEOs.

Even after he was deposed as head of Fannie Mae, Franklin Raines was consulted this year by the Obama campaign for his advice on housing!

The Washington Post criticized the McCain campaign for calling Raines an adviser to Obama, even though that fact was reported in the Washington Post itself on July 16th. The technicality and the spin here is that Raines is not officially listed as an adviser. But someone who advises is an adviser, whether or not his name appears on a letterhead.

The tie between Barack Obama and Franklin Raines is not all one-way. Obama has been the second-largest recipient of Fannie Mae's financial contributions, right after Senator Christopher Dodd.

But ties between Obama and Raines? Not if you read the mainstream media.

Facts don't matter much politically if they are not reported.

The media alone are not alone in keeping the facts from the public. Republicans, for reasons unknown, don't seem to know what it is to counter-attack. They deserve to lose.

But the country does not deserve to be put in the hands of a glib and cocky know-it-all, who has accomplished absolutely nothing beyond the advancement of his own career with rhetoric, and who has for years allied himself with a succession of people who have openly expressed their hatred of America.
---

Do You Know the Real Barack Obama?
Carol Platt Liebau
Monday, October 06, 2008

As the 2008 presidential campaign hurtles into its final days, John McCain confronts a choice: He can either start telling the public about the real Barack Obama, or he can lose.

For much of his career, McCain has been a media darling. He could count on the press to carry his water as long as he was a “maverick” Republican, driving more conservative members of his party crazy. But as he surely knows by now, when it comes to Barack Obama and the press, all bets are off. In covering Obama, the press has adopted a “don’t ask/don’t tell” policy designed to boost the least-vetted, least-known candidate ever to seek the presidency. It isn’t by accident that the media has denied all less-than-glowing stories about Obama the kind of consistent, sustained coverage that allows them to penetrate public consciousness.

If McCain is going to have a chance at winning, he must make sure that the public becomes thoroughly acquainted with the real Barack Obama – the most radical presidential nominee ever. And because the press evidently intends to abdicate its responsibility to acquaint voters with the less-popular parts of Obama’s record, he’ll have to rely on paid advertising to do it.

For starters, McCain should consider running a series of “Did You Know” ads about Barack Obama. He should ask voters, “Did you know that:

Barack Obama has multiple ties to those responsible for the present economic crisis?:

Franklin Raines, the immediate past CEO of Fannie Mae – who has collected a $90 million golden parachute while driving Fannie into the ground – has advised Obama on housing issues.

Jim Johnson, yet another former Fannie Mae CEO, resigned from Obama’s vice presidential search team when it was revealed he had received a sweetheart home mortgage deal.

Despite serving in the Senate for only four years, Obama himself has been the second-largest recipient of Fannie Mae and Freddie Mac largesse in the entire Congress, ahead even of former presidential candidate John Kerry, who’s spent two decades in the Senate?

Obama’s long-time political ally, radical group ACORN, played a key role in pressuring banks to offer loans to those who were unlikely to be able to pay them back. ACORN has taken credit for pressuring banks to accept undocumented income as a basis for offering loans, for offering loans without using credit scores, and for making 100% financed loans available to low-income people.

There is more, of course. Do voters know:

That, in apparent defiance of federal election law, the Obama campaign refuses to identify individual donors who have provided almost half the funds for his campaign, including obvious fakes like “Mr. Good Will” and “Mr. Doodad Pro”? And that 11,500 donations to his campaign – totaling almost $34 million – may have come from overseas? Or that two Palestinians living in a Hamas-controlled refugee camp spent $31,300 in Obama’s online store? Who are all these people, and why won’t the Obama campaign obey the law and identify them?

That Jeremiah Wright wasn’t Obama’s first radical mentor? As a young man in Hawaii, Obama had a quasi-filial relationship with radical Frank Marshall Davis – an avowed member of the Communist Party of the USA. In fact, in his memoirs, Obama concedes that he attended “socialist conferences” and encountered Marxist literature. (Now imagine the outcry if a Republican presidential candidate had such ties to a Nazi).

That the People's Weekly World – the official newspaper of the Communist Party of the USA – has rhapsodized about Obama’s presidential campaign, calling it a "transformative candidacy that would advance progressive politics for the long term"? (Think about how the press would react if a fascist newspaper heaped such praise on McCain.)

That Obama has routinely tried to intimidate his critics into silence? His political organization spearheaded a massive campaign against a Chicago radio show that invited one of his critics to appear – even after being asked (and refusing) to send a representative to balance the program, hosted by a non-partisan University of Chicago psychology professor. Worse, his campaign sought to chill free speech by establishing a “truth squad” of Missouri prosecutors and sheriffs, which threatened a “vigorous response” to any ad presenting information about Obama that they deemed to be “inaccurate.” And there are other examples.

That even as America struggles to “bail out” our own struggling economy, Obama backs a global bailout? His Global Poverty Initiative would assess $2500 per taxpayer, according to Investor’s Business Daily, to fund a global war on poverty administered by the UN and its agencies.

That despite touting his academic credentials as a rationale for initiating a campaign for president just two years after leaving the Illinois state legislature, Obama refuses to release either his college or his law school transcripts – just as he sought to keep records of his working relationship with former terrorist Bill Ayers on The Annenberg Challenge (a left-wing educational foundation) safely under wraps? What is it that he doesn’t want voters to know?

Repeatedly, we’ve heard the media denounce the “rumors” about Barack Obama that are, supposedly, circulated on the internet exclusively by the bigoted and the ignorant. But Americans sense that there is more to Barack Obama than they’ve been told. Having witnessed the media’s own bias and favoritism, they’ve come to suspect – reasonably – that even if any of the rumors were true, the press might choose to conceal them until the election is safely over. What’s more, they wonder: What else is the press not telling us?

Certainly, it would be terribly wrong for John McCain to traffic in rumors. But he doesn’t need to. The truth is more than enough. There are facts that the American people deserve to know – and which the press isn’t telling them. By filling in the gaps that the media has left unmentioned, John McCain isn’t just doing himself a service. He’s doing journalists’ job for them, and allowing Americans to make an informed decision when they head to the polls next month.
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Welfare state failures are at bottom of the crisis
Star Parker
Monday, October 06, 2008

As our financial markets totter, as homes go into foreclosure, as Wall Street executives lose millions, as Americans have more and more difficulty getting loans, can anyone be happy?

Certainly. Those on the left who now, with unbounded glee, pen obituaries for the free market.

One can sense their joy as they have, they think, the last laugh.

Bernie Sanders, the far left senator from Vermont, was almost giddy on Larry Kudlow's TV show recently to hear free-marketer Kudlow endorse the bailout and tell Kudlow that he is glad to see he has become a socialist.

The Washington Post's Harold Meyerson writes, "The old order -- the Reagan-age institutions built on the premise that the market can do no wrong and the government no right -- is dying."

And, of course, there's the thrill in seeing greedy Wall Street capitalists laid bare for the heartless, exploitive monsters they are and see justice done as they fall by the free market sword by which they lived!

But, in fact, what we are watching is not a failure of markets, but the latest failure of the welfare state. The sad part is how few who wield political power seem to understand, or want to understand, that this is what's happened.

As the details behind the current debacle are unraveled, we see how government created one more entitlement -- the right to own a house -- and then devised an array of programs to subsidize in various ways "affordable housing." Like all welfare programs, the subsidies succeeded in influencing behavior, but the wrong behavior.

The greedy part, or, if one wishes to be forgiving, the confused part, of the Wall Street guys is their willingness to play ball with politicians over these years in turning our free country into a welfare state. Wall Street has regularly been a generous contributor to politicians who love to grow government and use it as a tool for social policy.

These smart investment bankers, commercial bankers, and traders could have gotten plenty rich, and stayed that way, by encouraging solid institutions to build our country properly. If anyone should appreciate the power of freedom and markets and want to encourage the proper role of government, the integrity of private property, and the care and nurturing of American families, you'd think it would be our financiers.

But instead of recognizing basics -- the principles of limited government and traditional values -- and fighting political pressures to undermine these basics, our financiers were happy to support the welfare state model.

They should have appreciated, as we must appreciate today, that the problem is not a failure of freedom and markets but of eroding the pillars and principles that make them possible and functional.

The best housing program this nation could have is for the government to stay out, let the price of real estate and credit reflect true realities of supply, demand, and risk, and let private people decide for themselves what they need to do and how hard they need to work to acquire what they want.

As the institution of government grows, we sadly watch the collapse of the institutions that really sustain growth of home ownership: American marriage and families.

According to the Census Bureau, the single largest incidence of homeownership, 86.3 percent, is among married-couple families. Yet, traditional families now amount to barely more than a quarter of our households.

And, sadly and ironically, the problem of family structure is most severe in low- income communities where government housing policy has been most targeted.

Social and economic policy are not separate universes but part of one fabric of institutions and laws that sustain freedom and prosperity.

Those who want to use the current crisis as an excuse to expand government and welfare state policies contribute to laying the foundation for our next crisis.
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Obama-ACORN Root Causes of Mortgage Crisis?
FBI Investigates U.S. Financial Crisis - Where Did $1 Trillion Go?

The high-risk subprime mortgage social engineering community service experiment by left-wing ACORN and Obama has created the largest financial crisis since The Great Depression. The full reach of the corruption and scandal may never be known but those who created it must not be rewarded. The architects, primarily left-wing Democrats, created laws, took donations, looked the other way and instead were too busy overseeing donations to their own presidential campaigns and robbing main street blind. Now these same left-wing Democrats blame everyone else and get up on their high horses and say, "we are here to save you" from the crises they created.

Yes, Mr. Obama knows a great deal about the mess. He is a central figure in the left-wing ACORN exploitation of financial institutions and pressuring them to make high risk loans. The very same left-wing ACORN was guilty of voter fraud in the last presidential election.

Now these same Democrats want to do another high risk "community service," social engineering experiment. They want to elect a high-risk, low experience, socialist one of the same community organizers that created the mess to be our next president. We cannot experiment with the office of president and learn as we go. Barack Obama is not qualified and has no history of success as a leader in government or business.

The FBI investigation

An FBI investigation is under way at Lehman Brothers and three other contributors to America's financial crisis to determine whether they put pressure on ratings agencies to award top ratings to securities they issued.

Concerns that Fannie Mae, Freddie Mac, AIG or Lehman may have sought to encourage agencies to inflate their ratings - by offering higher fees or the promise of more work - form part of a broad inquiry by the bureau.

The agencies are widely regarded as having failed debt holders by attributing the top ratings to many securities that turned out to be extremely risky and have lost investors hundreds of billions of dollars.

The FBI, which is also investigating whether any of the four institutions deliberately misled investors about the true health of their assets, is expected to demand that they "hold all papers and e-mails under lock and key" as it sifts through the evidence, a source said.

How did we get here?

FOLLOW THE MONEY AND CORRUPTION! A Lending Policy created by democrats for democrats run by democrats monitored by democrats enforced by community organizer democrats and profited from by democrats.

The following information is condensed from an article by Stanley Kurtz. O's Dangerous Pals.

Fannie and Freddie acted in response to Clinton administration pressure to boost homeownership rates among minorities and the poor. However compassionate the motive, the result of this systematic disregard for normal credit standards has been financial disaster. ONE key pioneer of ACORN's subprime-loan shakedown racket was Madeline Talbott - an activist with extensive ties to Barack Obama. She was also in on the ground floor of the disastrous turn in Fannie Mae's mortgage policies.

Obama Trains ACORN Staff in Shakedown Tactics

It would be tough to find an "on the ground" community organizer more closely tied to the subprime-mortgage fiasco than Madeline Talbott. And no one has been more supportive of Madeline Talbott than Barack Obama.

When Obama was just a budding community organizer in Chicago, Talbott was so impressed that she asked him to train her personal staff.

He returned to Chicago in the early '90s, just as Talbott was starting her pressure campaign on local banks. In those years, he also conducted leadership-training seminars for ACORN's up-and-coming organizers. That is, Obama was training the army of ACORN organizers who participated in Madeline Talbott's drive against Chicago's banks.

Obama Funds ACORN

More than that, Obama was funding them. As he rose to a leadership role at Chicago's Woods Fund, he became the most powerful voice on the foundation's board for supporting ACORN and other community organizers. In 1995, the Woods Fund substantially expanded its funding of community organizers - and Obama chaired the committee that urged and managed the shift.

That committee's report on strategies for funding groups like ACORN features all the key names in Obama's organizer network. The report quotes Talbott more than any other figure; Sandra Maxwell, Talbott's ACORN ally in the bank battle, was also among the organizers consulted.

More, the Obama-supervised Woods Fund report acknowledges the problem of getting donors and foundations to contribute to radical groups like ACORN - whose confrontational tactics often scare off even liberal donors and foundations.

Indeed, the report brags about pulling the wool over the public's eye. The Woods Fund's claim to be "nonideological," it says, has "enabled the Trustees to make grants to organizations that use confrontational tactics against the business and government 'establishments' without undue risk of being criticized for partisanship."

Obama Aware of Intimidation Tactics

The Woods Fund report makes it clear Obama was fully aware of the intimidation tactics used by ACORN's Madeline Talbott in her pioneering efforts to force banks to suspend their usual credit standards. Yet he supported Talbott in every conceivable way. He trained her personal staff and other aspiring ACORN leaders, he consulted with her extensively, and he arranged a major boost in foundation funding for her efforts.

And, as the leader of another charity, the Chicago Annenberg Challenge, Obama channeled more funding Talbott's way - ostensibly for education projects but surely supportive of ACORN's overall efforts.

In return, Talbott proudly announced her support of Obama's first campaign for state Senate, saying, "We accept and respect him as a kindred spirit, a fellow organizer."

In short, to understand the roots of the subprime mortgage crisis, look to ACORN's Madeline Talbott. And to see how Talbott was able to work her mischief, look to Barack Obama.

HUNDREDS OF THOUSANDS of faxes are needed to be delivered to EACH AND EVERY Congressman right away. Be sure to send this Alert to EVERYONE you know who wants to help FORCE our government to STOP the EXCUSES and Save Main Street Not Wall Street!

Tell the Congress to Stop the Wall Street Bailout and Prosecute!

FAX All Congressmen - Tell Them No Bailout - Prosecute Offenders!

Keep calling your Congressmen today, toll free numbers include 1.877.851.6437 and 1.866.220.0044, or call toll 1-202-225-3121

DO NOT BE SILENCED - MAKE YOUR VOICE HEARD!

Together, we can preserve the Constitutional rights our Founding Fathers intended our people to have forever.

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House Roll Call: How They Voted on Bailout Bill
Friday, October 3, 2008

The 263-171 roll call Friday by which the House approved a $700 billion government bailout bill for the battered financial industry.

A "yes" vote is a vote to pass the bill.

Voting yes were 172 Democrats and 91 Republicans.

Voting no were 63 Democrats and 108 Republicans.

X denotes those not voting.

There is 1 vacancy in the 435-member House.

Click here to see how senators & representatives voted, and hold them accountable when you vote.