Dr Bernanke keeps us on heroin
(25 March 09) "....The best way to destroy the capitalist system is to debauch the currency," said Lord Keynes. Ben Bernanke disagrees. A student of the Depression, the Fed chair appears far more fearful of deflation – a vicious cycle of falling prices, debt defaults, home foreclosures and rising unemployment. Deflation is what America underwent in the 1930s. A Fed-created bubble burst, causing margin calls to go out to stockholders, who ran to their banks that, besieged, collapsed, wiping out a third of our money..... Is Bernanke fighting the war of 1929 in 2009? Surely, today, with the explosion in M1, the basic money supply, there is no shortage of dollars out there, even if they are not circulating fast enough. To end our recession, Bernanke may be running an even greater risk: hyperinflation. This has destroyed more nations than deflation or even depression..... "The first panacea for a mismanaged nation," said Ernest Hemingway, "is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists." Which brings us to last week's shocker. The Fed will buy up $300 billion in long-term Treasury bonds and spend $750 billion more buying sub-prime mortgages to remove them from the balance sheets of ailing big banks, to get the banks lending again. Bernanke is printing money to buy U.S. bonds.....” Dr Bernanke keeps us on heroin , Patrick J.Buchanan “....Congressional Budget Office estimate that this year's deficit will be $1.85 trillion, 13.1 percent of gross domestic product, more than twice the share of the U.S. economy of the largest previous post-war deficit ..... The Fed seems to have confirmed the fears of Premier Wen Jiabao, who said that China is "definitely a little worried" about the value of the U.S. bonds Beijing has purchased with the dollars piled up from her trade surpluses with the United States. Can one blame the Chinese? They have already been burned on their U.S. investments ....Inflation is theft. It makes liars and cheats of governments. By eroding the value of a currency, inflation punishes savers and creditors and rewards debtors. And what nation is the biggest debtor of them all? The United States of America.....one senses that we are doing again exactly what we have done before in this generation. Rather than endure the pain and accept the sacrifices to cure us of our addiction, we are going back to the heroin. And this time, with Dr. Bernanke handling the needle, we may just overdose.....”
This generation: Unfit to govern
(25 March 09)“.....As the U.S. financial crisis broadens and deepens, wiping out the wealth and savings of tens of millions, destroying hopes and dreams, it is hard not to see in all of this history's verdict upon this generation. We have been weighed in the balance and found wanting.....It all began with the corruption called sub-prime mortgages. The motivation was not wicked. Democrats wanted to raise home ownership among African-Americans from 50 percent to 75 percent of white folks. Rove Republicans wanted to do the same for Hispanics. Banks were morally pressured by politicians into making home loans to folks who could not remotely qualify under standards set by decades of experience with mortgage defaults.....Computer whizzes devised exotic instruments – derivatives, which could soar in value, making instant multimillionaires, but also plummet, based on rises and dips in the underlying value of the paper.... Who kept the game going? The Federal Reserve, by keeping interest rates low and money gushing into the economy, created the bubble that saw housing prices rise annually at 10, 15 and 20 percent.....” This generation: Unfit to govern , Parick J. Buchanan “.....There are the politicians who bullied banks into making loans the banks knew were bad to begin with and would never have made without threats or the promise of political favors. There is that den of thieves at Fannie and Freddie who massaged the politicians with campaign contributions and walked away from the wreckage with tens of millions in salaries and bonuses..... In short, this generation of political and financial elites has proven itself unfit to govern a great nation. What we have is a system failure that is rooted in a societal failure. Behind our disaster lie the greed, stupidity and incompetence of the Does Dr. Obama have the cure for the sickness that ails the republic? He is going to borrow and spend trillions more to bring back the good old days, though it was the good old days that brought us to the edge of the abyss into which we have fallen. Then he is going to spend new trillions to give us benefits we do not now have, though the national debt is surging to 100 percent of the Gross National Product, and may reach there by 2011. Is he willing to say that home ownership is for those with sound credit and solid jobs?
Japan's lost decade is a lesson for us all
(18 March 09) “....Influential books like Herman Kahn's The Emerging Japanese Superstate had forecast Japanese economic dominance. Japanese cars challenged car makers in the US and around the globe. Sony bought out Columbia Pictures prompting fears Japanese interests would take over Hollywood.Then the Japanese property bubble burst. Japanese banks were swamped by bad debts. The value of their securities plummeted. The Japanese government announced a stimulus plan. When it didn't do much good, it concluded that the first plan hadn't been large enough. It announced a second, larger plan. When that failed, a third plan larger again was announced. Over the decade from 1990, Japan had at least 10 stimulus plans which in total amounted to about 30 trillion Yen. There were at least three recessions during the decade - a decade described as a lost decade for Japan. Japan emerged with crippling government debt - greater than the size of its GDP.....” Japan's lost decade is a lesson for us all , Peter Costello Sydney Morning Herald “....No one thinks Japan is the likely global economic super power of tomorrow....Now, the United States has seen a property bubble collapse, its banks are riddled with bad debts and it is in recession. It has reacted with massive stimulus packages. When Japan was receiving this treatment in the 1990s, the Clinton administration was in office. Two of the key figures urging Japan on to large budget stimulus were Larry Summers and Tim Geithner. Now they are key advisers in the Obama Administration..,..When all the stimulus packages are over, the debt is still there. And it has to be borrowed from someone. And when confidence returns to the market, and there are higher competing returns on offer, the interest rate to service that debt will be so much higher....”
Inner cities a snap shot of America's Future
Please see Star Parker's book Uncle Sam's Plantation, on Jim Ball's recommended reading list
(17 March 09) “......Blacks are not given enough credit for being trendsetters in America. Blacks started playing the blues, jazz, and R&B, then the rest of America started playing them. Blacks discovered the politics of victimhood, then the rest of America started catching on. Black women got into having babies without marriage. Then white women started getting into it and the incidence of white out-of-wedlock births today -- almost 30 percent -- is higher than the black rate in the 1960's..... Blacks bought into dependency and the welfare state. Now the rest of America has bought in. Blacks for years elected politicians championing public policy that destroyed their own communities. Now the rest of America has installed a new political leadership with the perfect formula -- run roughshod over private ownership, disdain traditional values, substitute political power for personal responsibility -- for destroying our country. We can expect the rest of America to reap the same benefits that blacks have enjoyed from this lunacy. In the late 1960's, when President Lyndon B. Johnson announced his war on poverty and seeded welfare-state culture in our inner cities, the majority of black families had married parents living at home......” Inner cities a snap shot of America's Future , Star Parker “...... By 1995 only 1 in 3 black homes had married parents..... Not surprisingly, the black poverty rate, almost a quarter of the black population, has remained frozen at twice the national average since the late 1960's..... Why, then, when poor immigrant families readily move in one generation into the middle class, does one fourth of black America remain poor, generation after generation? Racism? I don't think so. Black poverty is overwhelmingly a phenomenon of single mother homes. The incidence of poverty in black homes with married parents is around 10 percent, well below the national average. It's what happens when lives get politicized and people are instructed to be helpless. In the case of blacks, it's being taught that America is inherently racist and that their only hope is political protection from white exploitation. Our politicians tell us now that we need to turn the whole country over to them because capitalism has supposedly failed and we need protection from exploitation by the wealthy.... Anyone who is curious where the current left-wing takeover of our economy will lead, with government soon taking 40 cents out of every dollar we produce, should tour through any of America's inner cities.....”
(5March09) “......The American economy has gone away. It is not coming back until free trade myths are buried 6 feet under. America's 20th century economic success was based on two things. Free trade was not one of them. America's economic success was based on protectionism, which was ensured by the union victory in the Civil War, and on British indebtedness, which destroyed the British pound as world reserve currency. Following World War II, the U.S. dollar took the role as reserve currency, a privilege that allows the United States to pay its international bills in its own currency...... The ascendant position of the U.S. economy caused the U.S. government to be relaxed about giving away American industries, such as textiles, as bribes to other countries for cooperating with America's Cold War and foreign policies...... In contrast, countries such as Japan and Germany used industrial policy to plot their comebacks. By the late 1970s, Japanese automakers had the once dominant American auto industry on the ropes. The first economic act of the "free market" Reagan administration in 1981 was to put quotas on the import of Japanese cars in order to protect Detroit and the United Auto Workers..... Free market economists" covered up the damage done to the U.S. economy by preaching a New Economy based on services and innovation. But it wasn't long before corporations discovered that the high-speed Internet let them offshore a wide range of professional service jobs. In America, the hardest hit have been software engineers and information technology (IT) workers. The American corporations quickly learned that by declaring "shortages" of skilled Americans, they could get from Congress H-1b work visas for lower-paid foreigners with whom to replace their American workforce. Many U.S. corporations are known for forcing their U.S. employees to train their foreign replacements in exchange for severance pay.....” How the Economy Was Lost , Paul Craig Roberts “.....As the American economy eroded away bit by bit, "free market" ideologues produced endless reassurances that America had pulled a fast one on China, sending China dirty and grimy manufacturing jobs. Free of these "old economy" jobs, Americans were lulled with promises of riches. In place of dirty fingernails, American efforts would flow into innovation and entrepreneurship. In the meantime, the "service economy" of software and communications would provide a leg up for the workforce..... The "free market" economists, who provided the propaganda and disinformation to hide the act of destroying the U.S. economy, were well paid..... The demise of America's productive economy left the U.S. economy dependent on finance, in which the United States remained dominant because the dollar is the reserve currency. With the departure of factories, finance went in new directions. Mortgages, which were once held in the portfolios of the issuer, were securitized. Individual mortgage debts were combined into a "security." The next step was to strip out the interest payments to the mortgages and sell them as derivatives, thus creating a third debt instrument based on the original mortgages. In pursuit of ever more profits, financial institutions began betting on the success and failure of various debt instruments and, by implication, on firms.....This was the most shameful and most mindless form of speculation. Gamblers were betting hands that they could not cover. The U.S. regulators had abandoned their posts. The American financial institutions abandoned all integrity. As a consequence, American financial institutions and rating agencies are trusted nowhere on earth.... Taxpayers, equity owners and the credit standing of the U.S government are being ruined by financial shysters who are manipulating to their own advantage the government's commitment to mark-to-market and to the "sanctity of contracts." Multi-trillion dollar "bailouts" and bank nationalization are the result of the government's inability to respond intelligently.....To keep the economy going, consumers have gone deeper into debt, maxing out their credit cards and refinancing their homes and spending the equity. Consumers are now so indebted that they cannot increase their spending by taking on more debt. Thus, whether or not the banks resume lending is beside the point....”
Cardinal Cormac Murphy-O'Connor: recession may be jolt that selfish Britain needs
(16Feb09) “…..Pride, avarice, lust, anger, gluttony, envy and sloth: sometimes it feels as if Britain is in the grip of the seven deadly sins. There are arrogant politicians, greedy bankers, lecherous television presenters, furious trade unionists, obese children, competitive shoppers and an underclass of people who do not work. To the doom-mongers, British society is not broken, it is shattered…. Cardinal Cormac Murphy-O'Connor said. “This particular recession is a moment - a kairos - when we have to reflect as a country on what are the things that nourish the values, the virtues, we want to have….. I think people did lose their way a bit. It has been difficult to bring up children with the kind of values we want. Let's face it, we now have a ‘me, me' society, a more consumerist society, a utilitarian society, and our values and virtues have become diminished….” Cardinal Cormac Murphy-O'Connor: recession may be jolt that selfish Britain needs The Times “….. Everyone was cashing in. People kept borrowing as well as bankers lending. People kept shopping. I think shopping fills a void. If you have one car, you need two. Everyone wants the latest trainers and clothes. It is awful to go to a house and see in a corner hundreds of unused toys. It's so profligate. What children need is security and love, not huge amounts of money. The benefits system, he said, undermined the family. “Clearly you have an obligation to look after people, whether one-parent families or broken families, but if all resources are put on them, it isn't right. Every social policy should have, at its heart, benefit to the family.” He said that much of the benefits system “obviously doesn't benefit people. The tax system must benefit the family. The greatest evil in this society is the breakdown of the family.” There was a danger that politics was losing touch with faith. “Fifty years ago there was an underlying Christian ethic that was held by most MPs. That is not true anymore. There's a tendency to utilitarianism, a rationalism that is not underpinned by anything,…”
(26Jan09) “....Now that the US election is out of the way and Barack Obama has been elected and inaugurated, and now that the effects of the economic meltdown are beginning to wash up on to every international shore , perhaps people may be more inclined to have a second look as to the cause, the politics and the personalities involved. It's difficult not to be drawn to the conclusion that in a national endeavour in the US to vote for the soaring and lofty rhetoric, the tip instead of the iceberg, the arsonists have been voted in as firemen....” Global Economic Crisis “....If this were only a United States problem that would be fair enough !!!! But it's not. Everyone's superannuation, property values and jobs have been put at risk and possibly sacrificed on the altar of United States “affirmative action” housing loans. The cut & pastes and links are from earlier postings but it's interesting to note that the first in the series, “Trillion Dollar Shakedown” is an observation from as far back as 2000....”
A Second Mortgage Disaster On The Horizon?
(13Jan09) “.....As it turns out the abyss is deeper than most people think because there is a second mortgage shock heading for the economy. In the executive suites of Wall Street and Washington, you're beginning to hear alarm about a new wave of mortgages with strange names that are about to become all too familiar. If you thought sub-primes were insanely reckless wait until you hear what's coming......The trouble now is that the insanity didn't end with sub-primes. There were two other kinds of exotic mortgages that became popular, called " Alt-A " and " option ARMs ” A Second Mortgage Disaster On The Horizon? “....The option ARMs, in particular, lured borrowers in with low initial interest rates - so-called teaser rates - sometimes as low as one percent. But after two, three or five years those rates "reset." They went up. And so did the monthly payment. A mortgage of $800 dollars a month could easily jump to $1,500. Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default....”
(6 Nov 08) “.....More than the economy has melted down. What remains of big media credibility has also liquefied and won't recover anytime soon, if it ever does. Don't take my word for it. The ombudsman for The Washington Post acknowledges that conservatives have a point when they claim an imbalance in coverage of Barack Obama and John McCain.... Editors have their reasons for this, but conservatives are right that they often don't see their views reflected enough in the news pages." What might be "their reasons"? There is only one answer: Too many journalists have been in the tank for Obama and wanted to see him elected president..... Journalism is the only profession I know that ignores the wishes of its consumers....Washington Post Columnist, DeborahHowell calls this arrogance, "a disease easily caught by journalists, who can overlook its symptoms." One sees this on cable TV. Larry King will assemble a "panel" of journalists to answer the question "Are the media biased? Media Meltdown , by Cal Thomas “....A s Howell writes, "We believe that we have a collective 'nose for news' and the judgment to know best what readers need to know and how to present it. We believe in our own wisdom and experience and in the purity that keeps us out of politics and special-interest groups. We have our own rules and we don't change them.... Re-read the sentence, "We have our own rules and we don't change them." That is what's wrong with modern media.... They remain locked in a '60s liberalism and a supreme self-assurance that only they know what's best for the country. When information options were fewer, they could get away with it. No more. News consumers now have many choices..... The media now own Barack Obama. Let's see how long they take to turn on him once he starts making mistakes. The public has already turned on big media, but big media is too into denial to notice. People are no longer buying their product; newsrooms are being downsized. "Journalists" are now left to wonder what happened to their once-great profession, as they pick up their final paychecks.....”
Would the Last Honest Reporter Please Turn On the Lights
Editor's note: Orson Scott Card is a Democrat and a newspaper columnist, and in this opinion piece he takes on both while lamenting the current state of journalism.
(6 Nov 08) An open letter to the local daily paper -- almost every local daily paper in America : I remember reading All the President's Men and thinking: That's journalism. You do what it takes to get the truth and you lay it before the public, because the public has a right to know. This housing crisis didn't come out of nowhere. It was not a vague emanation of the evil Bush administration....It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people....They get into a house, yes, but when they can't make the payments, they lose the house -- along with their credit rating. They end up worse off than before.... Isn't there a story here? Doesn't journalism require that you who produce our daily paper tell the truth about who brought us to a position where the only way to keep confidence in our economy was a $700 billion bailout? Aren't you supposed to follow the money and see which politicians were benefitting personally from the deregulation of mortgage lending?.. I have no doubt that if these facts had pointed to the Republican Party or to John McCain as the guilty parties, you would be treating it as a vast scandal. "Housing-gate," no doubt. Or "Fannie-gate." Instead, it was Senator Christopher Dodd and Congressman Barney Frank, both Democrats, who denied that there were any problems, who refused Bush administration requests to set up a regulatory agency to watch over Fannie Mae and Freddie Mac, and who were still pushing for these agencies to go even further in promoting subprime mortgage loans almost up to the minute they failed....” Would the Last Honest Reporter Please Turn On the Lights , Orson Scott Card “.....As Thomas Sowell points out in a TownHall.com essay entitled Do Facts Matter? "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." These are facts. This financial crisis was completely preventable. The party that blocked any attempt to prevent it was ... the Democratic Party. The party that tried to prevent it was ... the Republican Party. Yet when Nancy Pelosi accused the Bush administration and Republican deregulation of causing the crisis, you in the press did not hold her to account for her lie. Instead, you criticized Republicans who took offense at this lie and refused to vote for the bailout! What? It's not the liar, but the victims of the lie who are to blame? Now let's follow the money ... right to the presidential candidate who is the number-two recipient of campaign contributions from Fannie Mae. And after Franklin Raines, the CEO of Fannie Mae who made $90 million while running it into the ground, was fired for his incompetence, one presidential candidate's campaign actually consulted him for advice on housing. If that presidential candidate had been John McCain, you would have called it a major scandal and we would be getting stories in your paper every day about how incompetent and corrupt he was. But instead, that candidate was Barack Obama, and so you have buried this story....”
I've seen the ticking time bomb
(18 Oct 08) “...Financial institutions are at the confessional once again. They have made unprecedented provisions and write-downs against the toxic debt on their balance sheets. Our banks have assured us, hands on hearts, that their houses are now in order. But a further and critical time bomb exists within our financial system. To date it is largely unreported and unknown. When this bomb explodes, the mushroom cloud will be of a magnitude that dwarfs the current crisis and will change the world forever. This bomb is the over-the-counter derivatives market.... the global OTC derivative market is entirely unregulated. These instruments are not listed on any exchange and their prices cannot be seen in any newspaper. They typically do not appear on any external balance sheet. Should we taxpayers be concerned that governments have agreed to pledge sovereign wealth -- our national inheritance -- to support institutions with black hole exposures that cannot be quantified? Absolutely.....” I've seen the ticking time bomb, Andrew Baggio, The Australian “...Financial engineering is a fascinating subject -- perhaps though, like genetic engineering, it is best left alone. Financial alchemists can slice and dice any form of property, package it, market it and sell it in a form that bears no semblance to its individual parts. This can be repeated any number of times. In many cases it is not clear whether the ultimate commodity is an asset, a liability or something else. When orthodox assumptions break down, as they have at present, these instruments and the financial exposures inherent in them are impossible to value and quantify -- even by their own engineers. And our Government in its wisdom has agreed that we will guarantee the obligations of our financial institutions with these hidden time bombs....”
To read more on this see Bomb ticking for off-balance banks , Adele Ferguson, The Australian Feb 18 2008 and Economies count the cost of derivatives, Adele Ferguson, The Australian Oct 18 2008
Given the international dimension and magnitude, and the international ramifications of this economic tsunami, and the associated trashing of share markets, and super and pension funds and the damage to just about every economy on the planet costing hundreds of billions of dollars, it is beyond comprehension that specific individuals can't be brought to account. It's even more difficult to believe that Obama looks like a very big chance for the Whitehouse.
(15 Oct 08) “....As evidenced by Barack Obama 's rise in the polls immediately following the financial collapse of mortgage giants Fannie Mae and Freddie Mac, few Americans understand that for many years Fannie and Freddie have been, first and foremost, tools of Democratic politicians, funders of the Democratic Party, and, in the words of a former Fannie CEO, the intimate “friends” and “family” of the Democratic Party's left wing. Nor are most Americans aware that Fannie and Freddie, through their eponymous grant-making foundations, have funneled literally hundreds of millions of dollars in recent years to a host of leftist groups and causes that work to promote Democratic agendas, causes, and policies. To set the record straight, it is worthwhile to examine the connections between Fannie, Freddie, and the Democratic Party.... A full account of the recent financial collapse of Fannie Mae and Freddie Mac must consider the role of the Clinton administration... Now that the crisis has arrived, Democratic finger-pointing has become the order of the day. Leading the charge, Barack Obama not only blames Republicans, but tacitly blames capitalism as a whole, referencing it by the pejorative code name of “trickle-down” economics . Yet, Obama makes no mention of the fact that the Bush administration exhorted Congress for years to set up an agency to regulate lending institutions like Fannie Mae and Freddie Mac.....” Fannie, Freddie and the Left , John Perazzo, FrontPageMagazine “.....Nor does he mention that John McCain demanded similar oversight, only to be rebuffed by Democrats like House Financial Services Committee Chairman Barney Frank, who continued to favor the issuance of the subprime loans that have now caused the mortgage market to collapse....Since the 1990s, indeed, Fannie Mae and Freddie Mac have been in the Democratic Party's hip pocket. From 1991 to 1998 , for example, Fannie Mae was headed by James Johnson, a longtime aide to former Democratic vice president Walter Mondale.... To gain a fuller appreciation for just how closely the mortgage companies were allied with the Democratic Party and its surrogates, one might look at the grant-making arms of Fannie and Freddie — specifically, the Fannie Mae Foundation and the Freddie Mac Foundation. The former was established in 1968, the latter in 1991. Together, they hold combined assets exceeding $285 million, and each year they give tens of millions of dollars (nearly $89 million in 2006 alone) in grants to predominantly leftwing organizations that promote a host of pro-Democrat agendas....”
A damning chronology of warnings and alarm bells going back as far as April 2001 – and it seems that we now have the Democrats as the arsonists now turning up to play the firemen.
(14 Oct 08) “.....In 1995, President Clinton mandated new regulations that coerced banks to make significantly more subprime loans to inner-city residents previously viewed as unqualified buyers in high-risk areas. Banks were rated on how well they complied and faced big fines if they didn't do what government regulators wanted. The government's worst decision was allowing and encouraging banks, for the first time, to bundle these subprime loans in giant packages with prime loans..... April 2001 : The Bush administration's fiscal budget stated that the size of Fannie and Freddie was "potential problem because financial trouble of a large Government-Sponsored Enterprise could cause repercussions in financial markets, affecting federally insured entities and economic activity." • May 2002 : The Office of Management and Budget wanted disclosure and governance principles in Bush's 10-point plan for corporate responsibility to apply to Fannie and Freddie. • February 2003 : A federal housing oversight report warned that unexpected problems at Fannie Mae could immediately spread into financial sectors.....” America's Second Wake-Up Call , Investor Business Daily, “.... •September 2003 : Treasury Secretary John Snow, in testimony to the House Financial Services Committee, recommended that Congress enact legislation to create new agency to regulate and supervise financial activities of housing-related government entities to set prudent and appropriate minimum capital requirements.Rep. Frank, the committee's ranking member, strongly disagreed, saying: "Fannie Mae and Freddie Mac are not facing any kind of financial crisis . . . . The more people exaggerate these problems, the more pressure there is on these companies, the less we'll see in terms of affordable housing." • February 2004 : The president's new budget again highlighted risks of the explosive growth of these government enterprises and the then-low levels of required capital. It also called for the creation of a world class regulator. The administration determined that housing regulators of government agencies lacked the power and stature to meet their responsibilities and should be replaced with a strong new third regulator . •February 2004 : Greg Mankiw, chairman of Bush's Council of Economic Advisers, cautioned Congress against taking the strength of financial markets for granted. He too called for reducing the risk by ensuring that housing GSEs are overseen by an effective regulator. • April 2004 : Rep. Frank ignored warnings, accusing the administration of creating an "artificial issue." "People pay their mortgages," he told a group of mortgage bankers. "I don't think we are in any remote danger here. This focus on receivership, I think, is intended to create fears that aren't there. • July 2005 : Senate Majority Leader Harry Reid rejected legislation on reforming Fannie and Freddie. "While I favor improving oversight by our federal housing regulators to ensure safety and soundness, we cannot pass legislation that would limit Americans from owning homes and harm our economy in the process," he said • August 2007 : Sen. Dodd, another Democrat, ignored President Bush's emphatic calls for Congress to pass Fannie and Freddie reform legislation and called for him to immediately reconsider his ill-advised position....”
McCain Letter Demanded 2006 Action on Fannie and Freddie by Human Events
In all the blame game and the obscene scrambling for the high moral ground by the Democrats, why aren't the media making more of this...(I know, silly question)
(13 Oct 08) Sen. John McCain's 2006 demand for regulatory action on Fannie Mae and Freddie Mac could have prevented the current financial crisis, as HUMAN EVENTS learned from the letter shown in full text below. McCain's letter -- signed by nineteen other senators -- said that it was "...vitally important that Congress take the necessary steps to ensure that [Fannie Mae and Freddie Mac]...operate in a safe and sound manner.[and]..More importantly, Congress must ensure that the American taxpayer is protected in the event that either should fail." McCain Letter Demanded 2006 Action on Fannie and Freddie by Human Events ......Sen. Obama did not sign the letter, nor did any other Democrat.
There's a Gold Mine In Environmental Guilt
Papal Dispensations by another name
(13 Oct 08) “....This is strange territory. The Dow is down. Wall Street needs a bailout. But in the Washington area and across the country, there is still a bull market in environmental guilt. Sales of carbon offsets -- whose buyers pay hard cash to make amends for their sins against the climate -- are up. Still. In some cases, the prices have actually been climbing. In other words, when nearly everything seems to be selling for less, thousands of individuals and businesses are paying more for nothing, or at least nothing tangible.... "I was feeling really guilty because I was basically traveling to three continents in the last month: 'I've spent basically six days on an airplane. I've got to fix this,' " said Michael Sheets, 27, who lives in the District's Logan Circle neighborhood. So a few days ago, Sheets paid $240 to a Silver Spring-based vendor, Carbonfund.org, choosing its offsets because they were more than $100 cheaper than a comparable package from another offset seller. He got back an e-mail saying that the 52,920 pounds of greenhouse-gas emissions attributable to him for the entire year, including his trips to Trinidad, Thailand and Argentina, had been cancelled out....” There's a Gold Mine In Environmental Guilt , Washington Post “....Some offsets are sold like stocks on the Chicago Climate Exchange. Other groups sell them directly to consumers. One study last year found that offset prices ranged from $1.80 per ton of emissions to $300, with most about $6.10. Watchdog groups say offset vendors sometimes do not deliver what they promise. At the Chicago Climate Exchange, where offsets are sold like pork bellies or stocks, Sept. 23 was the second-busiest trading day in the four-year history of the market....Experts who study offsets say a cultural shift is at work, in which the American public has become accustomed to feeling guilty about climate change, and, instead of writing letters to members of Congress or donating to an environmental group, they have learned to buy their way out....
ACORN is an acronym for Association of Community Organizations for Reform Now
(11 Oct 08) “.....You've got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don't despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness. At the time, however, that 1995 Chicago newspaper article represented something of a triumph for Barack Obama. That same year, as a director at Chicago's Woods Fund, Obama was successfully pushing for a major expansion of assistance to ACORN... ACORN's entirely deserved reputation for militance is balanced by its less-well-known “inside strategy.” ACORN has long employed Washington-based lobbyists who understand very well how the legislative game is played.... Critics of the notion that CRA had a major impact on the subprime crisis ask how a law passed in 1977 could have caused a crisis in 2008? The answer has a lot to do with ACORN — and the critical years of 1990-1995. While the 1977 Community Reinvestment Act did call on banks to increase lending in poor and minority neighborhoods, its exact requirements were vague, and therefore open to a good deal of regulatory interpretation.....” Planting Seeds of Disaster , Stanley Kurtz “.... ACORN's efforts to undermine credit standards in the late 1980s taught it a valuable lesson. However much pressure ACORN put on banks to lower credit standards, tough requirements in the “secondary market” run by Fannie Mae and Freddie Mac served as a barrier to change.... By July of 1991, ACORN's legislative campaign began to bear fruit. As the Chicago Tribune put it, “Housing activists have been pushing hard to improve housing for the poor by extracting greater financial support from the country's two highly profitable secondary mortgage-market companies..... Finally, in June of 1995, President Clinton, Vice President Gore, and Secretary Cisneros announced the administration's comprehensive new strategy for raising home-ownership in America to an all-time high. Representatives from ACORN were guests of honor at the ceremony..... In his remarks, Clinton emphasized that: “Our homeownership strategy will not cost the taxpayers one extra cent.... Up to now, conventional wisdom on the financial meltdown has relegated ACORN and the CRA to bit parts.... ACORN is at the base of the whole mess. ACORN used CRA and Democratic sympathizers to entangle Fannie and Freddie and the entire financial system in a disastrous disregard of the most basic financial standards. And Barack Obama cut his teeth as an organizer and politician backing up ACORN's economic madness every step of the way....”
The party's over for Iceland, the island that tried to buy the world
(9 Oct 08) “….The bars and restaurants of Iceland's capital are packed, the Range Rovers and BMWs are parked nose to tail all along the streets of the central 101 district, and music is pumping from a black stretch Hummer limousine cruising by….Iceland is on the brink of collapse. Inflation and interest rates are raging upwards. The krona, Iceland's currency, is in freefall and is rated just above those of Zimbabwe and Turkmenistan….International banks won't send any more money and supplies of foreign currency are running out…..on Friday night that they had no means of paying the foreign currency advances needed to import more foodstuffs….This North Atlantic volcanic island, which is the size of Cuba, with a population of 320,000 is an unlikely player on the global financial stage…. But Iceland built its extraordinary wealth on the crest of the worldwide credit boom and now the crunch is sweeping it away, bankrupting a people for whom the past eight years have been, for most of them and by their own admission, one long party….. The nation's celebrated rags-to-riches story began in the Nineties when free market reforms, fish quota cash and a stock market based on stable pension funds allowed Icelandic entrepreneurs to go out and sweep up international credit. Britain and Denmark were favourite shopping haunts, and in 2004 alone Icelanders spent £894m on shares in British companies…..” The party's over for Iceland, the island that tried to buy the world , The Observer “….In just five years, the average Icelandic family saw its wealth increase by 45 per cent…. 'This crisis has been a heavy blow. And many people should have a bad conscience for what has happened. Someone should be prosecuted, they have sucked Iceland dry, taken the money and ran, and left us totally in the shit…..Like many his age, Tomasson has only a vague memory of harder times, before the boom that brought Iceland the highest per capita wealth in the world. Older islanders call them the 'Krutt-kynslotin' - the cuddly generation. Eco-aware, earnest but pampered, they drift from organic café to bar, listening to the music of Björk and Sigur Rós, islanders who have made it big abroad. 'They will have to get their hands dirty now,'… ‘That's good though, they are the I-generation; iPods, iPhones, everything starts with I. Well, we will have to go back to the basics now. Icelanders are risk-takers, but hard working, they will have to downsize. We will have to eat haddock and Icelandic lamb and forget these imports of goose livers and Japanese soy sauce. When everyone was extremely rich in Iceland - you know, last month, it was with money that they never have earned. Now those who were extremely rich are just normally rich, but they think they are poor. They were spoilt, spending billions.'…..”
The Trillion-Dollar Shakedown That Bodes Ill For Cities
The Community Reinvestment Act funnels billions to left-wing activists, while threatening to destabilize lower-middle-class neighborhoods. Winter 2000
(9 Oct 08) “....The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funnelled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being..... As enforced today, though, the law portends just the opposite....CRA decreed that banks have "an affirmative obligation" to meet the credit needs of the communities in which they are chartered, and that federal banking regulators should assess how well they do that when considering their requests to merge or to open branches.....During the seventies and eighties, CRA enforcement was perfunctory. Regulators asked banks to demonstrate that they were trying to reach their entire "assessment area" by advertising in minority-oriented newspapers or by sending their executives to serve on the boards of local community groups. The Clinton administration changed this state of affairs dramatically....” The Trillion-Dollar Shakedown That Bodes Ill For Cities , Howard Husock, City Journal, Winter 2000 “.....By intervening—even just threatening to intervene—in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers.....(Bruce) Marks is unhesitatingly candid about his intent to use NACA to promote an activist, left-wing political agenda. NACA loan applicants must attend a workshop that celebrates—to the accompaniment of gospel music—the protests that have helped the group win its bank lending agreements....The home mortgage business is his tool for political organizing...This policy—"America's best mortgage program for working people," NACA calls it—is an experiment with extraordinarily high risks....Looking into the future gives further cause for concern: "The bulk of these loans," notes a Federal Reserve economist, "have been made during a period in which we have not experienced an economic downturn." The Neighborhood Assistance Corporation of America's own success stories make you wonder how much CRA-related carnage will result when the economy cools....It will take a Republican president to change or abolish CRA, so firmly wedded to it is the Clinton administration and so powerfully does it serve Democratic Party interests.....”
Social engineers are bad bankers
(2 Oct 08) “….In 1772, the collapse of the Ayr Bank led to the Edinburgh banking crisis of that year. Only three of Edinburgh 's 30 private banks survived. Adam Smith commented that "the operations of this bank seem to have produced effects quite opposite from what was intended". The Ayr Bank had been established in 1770 to provide long-term loans and provide credit to people who otherwise found it difficult to borrow, financing a speculative boom in housing, turnpikes and canals, the transport infrastructure of the time….. It borrowed from other banks in London and Edinburgh and, as borrowers began to default, it had to pay off its debts by securing greater loans. Smith's final verdict on its collapse was that it only enabled borrowers "to get much deeper into debt, so that when ruin came, it fell so much the heavier". The British economy struggled to recover until the 1780s….The collapse of the Ayr Bank tells us much about the present crisis…In 1999, then president Bill Clinton instructed the Fannie Mae Corporation to ease credit requirements on loans to ethnic minorities and low-income earners. In this nationwide scheme, the pilot program alone involved 24 banks. This was to include what became known as the sub-prime sector. Fannie Mae's chairman and chief executive in 1999 said that in addition to "reducing down payment requirements" the corporation would underwrite loans in the sub-prime market….The parallels with the Ayr Bank are startling…” Social engineers are bad bankers , John Montgomery, The Australian “…The strategy announced in 1999 was to spur the banks to make more loans to people with poor credit rating, and especially to blacks and Hispanics. This was done by offering mortgages at 1 per cent above the standard variable rate.....Not everyone was convinced this was a good idea. Peter Wallison of the American Enterprise Institute warned: "If they fail, the government will have to step up and bail them out."…The culprits in all of this are the executives and board members of Fannie Mae for buying unsecured and risky loans, the Federal Reserve for putting up interest rates too far and too quickly, and the banks for what almost amounts to pyramid selling of bad debt based on fools' mortgages. Fannie Mae's structural flaws were an accident waiting to happen…But there is another culprit. The Clinton administration, in pressuring Fannie Mae, created the policy of lending initially good and then bad money to people who were themselves bad credit risks. This was done for good political - not to say politically correct - reasons: the targeted extension of home ownership to minority groups. But this social engineering has been achieved at a heavy cost, not least to those who have lost their houses and taxpayers who may now have to pick up the cost of an emergency package. People awarded such loans may well be forgiven for thinking they are now worse off than they were in 1999….”
Burning down the house: What Caused Our Economic Crisis
(1 Oct 08) Burning down the house: What Caused Our Economic Crisis, is an unusual youtube presentation that gets your attention and gets to the guts of the economic calamity on Wall Street. The criminals involved here going back many years are Jimmy Carter, Bill Clinton and Barack Obama. Check it out for yourself. You'll see that both Bush and Mcain identified the problem years ago but were hobbled and hamstrung by the Democrats from doing anything about it. As we know, leftwing social engineering is all about the politics of the Warm Inner Glow except, as usual that feel-good Warm Inner Glow is coming from the house burning down. Literally!!
( 27Sept 08) “....The Crash of 2008, which is now wiping out trillions of dollars of our people's wealth, is, like the Crash of 1929, likely to mark the end of one era and the onset of another. The new era will see a more sober and much diminished America. The “Omnipower” and “Indispensable Nation” we heard about in all the hubris and braggadocio following our Cold War victory is history. Seizing on the crisis, the left says we are witnessing the failure of market economics, a failure of conservatism. This is nonsense. What we are witnessing is the collapse of Gordon Gecko (”Greed Is Good!”) capitalism. What we are witnessing is what happens to a prodigal nation that ignores history, and forgets and abandons the philosophy and principles that made it great. A true conservative cherishes prudence and believes in fiscal responsibility, balanced budgets and a self-reliant republic. He believes in saving for retirement and a rainy day, in deferred gratification, in not buying on credit what you cannot afford, in living within your means.....Our standard of living is inevitably going to fall. For foreigners will not forever buy our bonds or lend us more money if they rightly fear that they will be paid back, if at all, in cheaper dollars. We are going to have to learn to live again without our means. The party's over....” The Party's Over , Patrick J Buchanan “....this generation decided that was yesterday's bromide and we must march bravely forward into a Global Economy, where we all depend on one another. American companies morphed into “global companies” and moved plants and factories to Mexico, Asia, China and India, and we began buying more cheaply from abroad what we used to make at home: shoes, clothes, bikes, cars, radios, TVs, planes, computers. As the trade deficits began inexorably to rise to 6 percent of GDP, we began vast borrowing from abroad to continue buying from abroad...Who are we kidding? What we are witnessing today is how empires end. The Last Superpower is unable to defend its borders, protect its currency, win its wars or balance its budget. Medicare and Social Security are headed for the cliff with unfunded liabilities in the tens of trillions of dollars....An unelected financial elite is now entrusted with the assignment of getting us out of a disaster into which an unelected financial elite plunged the nation. We are just spectators. What the Greatest Generation handed down to us — the richest, most powerful, most self-sufficient republic in history, with the highest standard of living any nation had ever achieved — the baby boomers, oblivious and self-indulgent to the end, have frittered away....”
Paulson Bailout Plan a Historic Swindle
(23Sept 08) “….Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses…. all sugar for the villains, lasting pain and damage for the victims…If this deal succeeds, I predict it will become a transforming event in American politics--exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion. As I have been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice….The scandal is not that government is acting. The scandal is that government is not acting forcefully enough--using its ultimate emergency powers to take full control of the financial system and impose order on banks, firms and markets. Stop the music, so to speak, instead of allowing individual financiers and traders to take opportunistic moves to save themselves at the expense of the system….” Paulson Bailout Plan a Historic Swindle , by William Greider “……A serious intervention in which Washington takes charge would, first, require a new central authority to supervise the financial institutions and compel them to support the government's actions to stabilize the system. Government can apply killer leverage to the financial players: accept our objectives and follow our instructions or you are left on your own--cut off from government lending spigots and ineligible for any direct assistance. If they decline to cooperate, the money guys are stuck with their own mess. If they resist the government's orders to keep lending to the real economy of producers and consumers, banks and brokers will be effectively isolated, therefore doomed……if the taxpayers are compelled to refinance the villains in this drama, then Americans at large are entitled to equivalent treatment in their crisis. That means the suspension of home foreclosures and personal bankruptcies for debt-soaked families during the duration of this crisis. The debtors will not escape injury and loss--their situation is too dire--but they deserve equal protection from government
Financial Crisis: Lehman misses out on carbon credit scam
(22Sept 08) “....What is the connection between the bankrupt Lehman Brothers and the likelihood that in four years' time our electricity bills will jump another 25 per cent (on top of the rises likely from soaring coal and gas prices)? The answer is that, before its collapse, Lehman was pitching to become the leader in the vast trade created by the new worldwide regulatory system to "fight climate change" by curbing emissions of carbon dioxide.... This market, soon to be worth trillions of pounds, was where Lehman hoped to be "the prime brokerage for emissions permits", as it set out in two hefty reports on "The Business of Climate Change".....Advised by some of the world's leading global warming activists, such as Dr James Hansen and Al Gore (a close friend of the firm's erstwhile managing director Theodore Roosevelt IV), Lehman bought their message wholesale. GIM, the company set up by Gore to sell "carbon offsets" in return for planting trees, was a prized Lehman client.... ” Financial Crisis: Lehman misses out on carbon credit scam , Christopher Booker, Daily Telegraph “....The idea is that, to reduce carbon emissions by an eventual 60 per cent, the number of permits auctioned will reduce year by year, leaving an ever larger shortfall which firms will have to account for either by reducing emissions or by buying additional permits - not least from the developing world under the UN's CDM. Everything about this grandiose scheme betokens the economics of the madhouse.... The new costs it will impose are so colossal that whole industries, including aluminium, steel and Germany's chemical companies, threaten to move their operations outside the EU unless they are given free allocations......What is certain is that it will pile astronomic costs onto everyone in the EU, inevitably impacting most severely on poorer householders that will face bills they cannot afford. The only other certainty - perhaps a consolation - is that those sharing in this bonanza will not include Lehman Brothers, now excluded from cashing in on what threatens to become the maddest scam the world has ever seen....”
Apocalypse Now? New world order could have devestating implications for Western nations
(22Sept 08) “....Almost exactly seven years ago Al Qaeda terrorists targeted their hijacked planes into the Twin Towers at the heart of New York's financial centre — and the world was transformed.There were no deaths this week, but the effects of the carnage on the financial markets will be far more profound and destabilising than the 9/11 atrocity....For almost all of us, it will, I predict, be a change for the worse, and for a large minority the consequences will be extremely distressing...The Western world — Britain, Europe and the U.S. — has moved from excess to austerity overnight.....The seismic events which have seen the near-destruction of the investment banking sector and the collapse of insurance giant AIG are on the scale of the Great Crash of 1929. That was such a disaster because it created conditions for the emergence of fascism in continental Europe and then World War II.... Some experts were talking this week as if the financial crisis was nearly over. They could not be more wrong. The downturn has only just begun — and for most citizens uninvolved with finance the consequences have not been felt at all. But they will be felt very soon and very brutally. The British economy is in the same position as the Texan coast earlier this month as Hurricane Ike approached — apparently calm, with life going on as normal, but an almighty storm is raging just over the horizon and heading our way with terrifying speed.....” Apocalypse Now? New world order could have devestating implications for Western nations, Daily Mail “...The International Monetary Fund has already warned Alistair Darling (Chancellor) about his reckless spending. In the months to come, it will demand cuts in government spending, just as it did in the 1970s when the then Labour Chancellor, Denis Healey, had to beg for an IMF loan... the worldwide consequences are just as significant and we can expect the Euro to fail under the strain of economic collapse. The Euro has never been tested by adversity. The single currency's architects made one foolish mistake when they set it up ten years ago: they established monetary union ahead of political union. In long-established democracies such as Britain and the United States, it is natural for one area of the country to help the other in times of difficulty.... The truth is that this week's seismic events will come as a crashing humiliation to the European political class....For the past 25 years we have lived through a glorious party. We have all — governments, companies, banks and, of course, consumers — lived beyond our means and are paying the price. This weekend the hangover begins. It will be prolonged. Life will be much closer to the austerity that followed World War II than the frenzied, debt-fuelled boom of the past two decades. Perhaps our lives will be none the worse for all this. Our values will certainly change — many will say not before time. Material objects should count for much less. Almost overnight we have entered a new world, and we must learn to make the best of it.
From the folks behind the subprime crisis, a sword over NSW's head
(13Sept 08) In light of the recent revelations concerning the state of the NSW budget, there has been a great deal in the media about the credit rating agencies, such as Standard and Poors, Moodys et al and the power and clout they wield and their capacity wreak havoc, chaos and mayhem at the stroke of a pen. Now that general chatter of these agencies has become mainstream I have, below, reposted a series of article (originally posted in November 2004) that lifts the lid on these agencies. Perhaps it's time we started to rate the ratings agencies!!! It's also worth casting an eye over Michael Duffy's column SMH Sept 13, 'From the folks behind the subprime crisis, a sword over NSW's head' to get an understanding as to how these agencies have had a major role to play in the subprime crisis.
REPOSTED Moody's and the International Rating Agencies
(29Nov04) The rating companies give an opinion of the creditworthiness of a company, municipality or nation 'From their Manhattan offices, they can, with the stroke of a pen, effectively add or subtract millions from a company's bottom line, rattle a city budget, shock the stock and bond markets and reroute international investment. Without their ratings, in many cases, factories can't expand, schools can't get built, highways can't be paved. Yet there is no formal structure for overseeing the credit raters, no one designated to take complaints about them, and no regulations about employee qualifications'. The rating companies are free to set their own rules and practices, which sometimes leads to abuse, according to many people inside and outside the industry. At times, credit raters have gone to great lengths to convince a corporation that it needs their ratings - even rating it against its wishes, as in the Hannover case. But is an 'an unsolicited rating a form of coercion to earn fees ' ? Credit Raters' Power Leads to Abuses, Some Borrowers Say appeared in the Washington Post 24th November 2004. In other cases, the credit raters have strong-armed clients by threatening to withdraw their ratings - a move that can raise a borrower's interest payments. In this series of articles in the Washington Post, staff writer Alec Klein exposes the dealings of the allegedly reputable firms and how 'the world's big three credit raters - Moody's Investors Service, Standard & Poor's and Fitch Ratings - have become some of the most important gatekeepers in capitalism without the commensurate oversight or accountability.' Credit Raters Exert International Influence and Smoothing the Way for Debt Markets November 23rd and Borrowers Find System Open to Conflicts, Manipulation November 22th.