Revised GDP numbers suggest that going down is exactly what the economy is doing.  The government revised second quarter GDP growth from 2.4% down to 1.6%.  Even Paul Krugman is saying the stimulus didn’t work, but his solution is to drive the country into bankruptcy faster.  Krugman’s complaint was that the stimulus wasn’t big enough.  He also believe we should,” use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families.”  Fannie and Freddie have already sucked $160 billion out of the Treasury and Mr. Krugman wants to back up and re-inflate the housing bubble.  Talk about failed policies of the past, sheesh!

The solution to the jobs issue is private industry.  The problem is that this is the most anti-business government in memory.  Business is the target of the administration’s ire, tax policies, health care policies, cap and trade schemes, repeal of the Bush tax cuts, card check, financial regulation, have I left anything out?  So business is sitting on its hands.  No matter how much cash it may be accumulating it does not want to take any steps, like expanding, until the full weight of all these choking policies are understood and priced out or until the Democrats are run out of the Congress and the anti-business sentiment is lifted there.

So let the Joe Biden show continue.  The man who says he know little about economics and proves it with every speech will go on telling us how the stimulus is working exactly as planned.  President Obama will continue to take a new vacation about every 90 days and we will cross our fingers that there is something left to recover when we recover our government from these inexperienced, clueless dolts.

Steven Slater tells off a plane load of Jet Blue customers, grabs a couple of beers, pulls the emergency chute and dramatically exits the plane, his job, and his career.  He is soon hailed across the Internet as a hero.  People walk away from home equity loans saying, “I’m not going to be a slave to the bank.”  Challenge after challenge to any reference to God in the public square as part of an effort to drive faith underground.  Our is government telling us that the only way we can survive is by a government handout.  We cannot make it on our own.  If you wonder why we are heading in the wrong direction as to 70% of your fellow Americans believe, perhaps we should give morality a closer look.

The story on Mr. Slater is unclear.  He says one thing, witnesses say another.  It will eventually get sorted out, but let’s assume for a moment that Mr. Slater is correct in that a passenger’s behavior set him off.  In a more moral society, Mr. Slater could have done one of two things.  One, he could have taken a deep breath, held his tongue and just written it off to that passenger having a bad day.  He would have won the admiration of those who watched him behave with self-control and dignity.  Or, two, he could have asked the pilot to inform the authorities to meet the plane on the ground because an unruly passenger defied the instructions of the flight crew.  That passenger would have been arrested on the ground and would be facing federal charges.  But instead Mr. Slater took the route of immediate gratification.  He got on the intercom and told off the whole plane, grabbed a couple of beers from the beverage cart, triggered the emergency escape chute and then like a giddy child went down the slide and ran home.  A moment’s thrill of control followed a world of grief.  Was his moral compass broken or pointing in the wrong direction?

Shawn Schlegalis a real estate agent in Arizona.  Since moving there in 2005 he bought several houses with each one financing the next.  He is currently in default for $94,873 and is basically saying tough luck, I’m not paying.  The lender got a court order garnishing his salary, but that was eighteen months ago and he hasn’t heard anything since.  “The case is sitting stagnant,” he said. “Maybe it will just go away.”  While I don’t have a great deal of sympathy for any bank that would approve this chain of financing, I don’t know if the lender was aware of what the home equity loan was for, but it is Mr. Schlegal’s attitude that disturbs me.  He made the decision to do this and he feels it is not his fault.  True he will be impacted if he tries to borrow again in the near future, but he doesn’t seem to care.  This is reinforced by the commercials flooding the airwaves advising consumers how they can walk away from their credit card debt.  How about selling the flat screen TVs and sports cars you purchased on the plastic, and pay it back?  Meanwhile our government continues to use your taxes to help people who are over their head pay their mortgages.  Why do you have to pay your mortgage and theirs?  You were responsible, they were not.  The very concept of such a program would have been baffling to the Founding Fathers.

Our current government reinforces the idea of Americans as imbeciles.  The mortgage companies took advantage of you, they were predatory lenders, while it was government programs that told the predators to get busy.  We have to have more home ownership, we have to help people achieve the American Dream, so Andrew Cuomo at HUD, Barney Frank, Chris Dodd and the good folks at Fannie Mae and Freddie Mac who made millions on pushing these products, all pushed these government programs on more people, encouraging them to buy houses they couldn’t afford and when the bubble burst they pointed the finger at everyone but themselves.  They believe the American people are helpless idiots who cannot fend for themselves and if by some accident someone does succeed, it is the government’s responsibility to take as much of what they earned by the sweat of their brow and give it to the simpletons they claim to be responsible for.  That is a racist, sexist, class warfare point of view that unless our Ivy League educated elites give us our daily instruction, we will shrivel up and die.  It is anything but the American Dream.

We see efforts to ban the Pledge of Allegiance because it contains the phrase “under God”; to ban the display of the Ten Commandments in court houses; the ban of religious displays on publicly owned land; and to ban prayer in any form at school graduations, football games or other gatherings.  While atheists, a small percentage of the population, do not believe in God, why is another person who believes in God so offensive to them that they can’t bear hearing it?  But as faith is driven further and further from the public square, boorish behavior becomes more and more acceptable.  There is something to be said about eternal damnation curbing one’s baser appetites than responding to the statement, “You want me to stop it?  Make me.”  There is something to be said for fulfilling one’s obligations because it is the right thing to do, but the right thing to do does not come from living in the here and now.  That is self-gratification.  Doing the right thing comes from a set of morals that say, “Character is what we do when no one is watching.”  Those who believe in a God believe someone is always watching.  Perhaps John Adams said it best:

“We have no government armed with power capable of contending with human passions unbridled by morality and religion.  Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net.  Our Constitution was made for a moral and religious people.  It is wholly inadequate to the government of any other.”

The Dodd-Frank Act that in a mere 2,000 pages sought to put the control back in financial regulation skipped right over Fannie Mae and Freddie Mac the Government Sponsored Enterprises that were at the heart of the fiscal crisis and are bleeding red ink.  Focusing instead on those evil bankers on Wall Street the Dodd-Frank Act really put those guys in a box, until Goldman Sachs slipped its fetters faster than Houdini.  So who’s buried under the pile of rubble that is the latest masterpiece of our massive government, Betsy Jensen.  Who is Betsy Jensen?

Betsy Jensen is a farmer in southwest Minnesota.  She and her family grow wheat and soy beans.  She doesn’t have a mortgage, so she didn’t cause the housing bubble.  But she does use derivatives to control the risk in farm prices which can be rather volatile.  For example, a bushel of wheat went for $18.69 in February of 2008 whereas it was selling for $3.49 in July of 2010.  A farmer has to buy their seed and fertilizer at the beginning of the growing season and they don’t sell their product until the harvest.  If prices fluctuate wildly during that interval, it isn’t hard to imagine what that can do to your business, let alone your sleep patterns.

So where do derivatives come in?  Farmers like Betsy can negotiate a guaranteed price for their grain with their customers.  Betsy risks missing out on some profits if the prices go up as they have recently (45%) due to fires in the wheat producing region of Russia, but she also is protected against a price drop, for similar reasons beyond her control.  She recently negotiated a price of $7.15 per bushel and with that knowledge, she can manage her farm business and sleep a little more peacefully.  For her purchases she can also use derivatives to buy fuel and fertilizer, where the latter has seen price fluctuations of $435 to $685 per ton.  Then along come Barney Frank and Chris Dodd, a couple of career politicians who never worked in the private sector.

The Dodd-Frank Act says it is unlawful to enter into swaps (derivatives) “in excess of such amount as shall be fixed from time to time” by the Commodities Futures Trading Corporation (CFTC).  That doesn’t sound like a free market to me.  What if, in Betsy’s example, the CFTC didn’t get around to raising the amount on wheat above $5 per bushel?  Betsy couldn’t arrange to sell it for $7.15.  What if the grain elevator couldn’t turn around and sell Betsy’s wheat for the 45% increase in price due to the Russian fires?  Do you think with a cap on the upside they might not be willing to pay as much for Betsy’s wheat?

From Dodd-Frank to Bill O’Reilly we hear about the evils of speculators.  O’Reilly used to rail against the speculators when gas prices were rising toward $5 per gallon.  The evil, greedy speculators were driving up the price of gas!  But little mention was made of speculators when the price of gasoline fell back down?  Did the speculators retire?  Go on vacation?  The reality is that speculators don’t care if the price goes up or down, they only care it moves in the same direction on which they are betting.  They can drive the price down just as fast as they can drive it up.  But they are useful, not evil.

Speculators bring liquidity, that is, money to the market.  Betsy Jensen estimates that about one-third of the purchasers of wheat contracts are traders who never take physical control of the product.  But by adding their view and their money to the market they keep prices from fluctuating wildly.  If these traders are banned then, as she put it, one-third of her customers would disappear.  With one-third fewer customers the price swings will increase rather than decrease.  Remember, a trader who does not take delivery of the wheat can make money on small swings in the price and is likely to get in or get out on smaller moves and thus change the market price accordingly.  If only those who take physical possession of the product are in the market, then other factors such as transport, storage, spoilage, must be factored into each transaction and the price swings will be wider and wilder.

But Betsy said it best, “I may not be able to manage Mother Nature, but I can manage my risk with derivatives.”  If only our government would get out of her way and let her do so.

Republicans have to learn to stop fighting by the Marquis of Queensbury rules, while Democrats, bite, kick, pull hair, scratch and hit below the belt.  Yes, Christ told us to turn the other cheek, but he also overturned tables, formed a whip out of cords and drove the money changers from the temple.  In other words, sometimes you have the hit the bully hard between the eyes before he learns to stop being a bully.

So if the Republicans regain control of Congress in November, they should open the new Congress in January with detailed hearings on what happened to Fannie Mae and Freddie Mac and don’t pull any punches.  By that I mean if they need to put Andrew Cuomo in the witness chair, even if he is the governor of New York, which he probably will be, then they should do so.  It’s time to stop playing patty-cake.

For all the hoopla of the Dodd-Frank Act, Fannie Mae and Freddie Mac were left out of the new regulations.  Oh, we’ll get to those later.  Okay, let’s get to them with the Republicans in charge.  Let’s expose how it was our government that got us into the housing mess and let’s do this before the Democrats re-write history and paper over their culpability in the greatest financial crisis since the Great Depression.  It’s time to put the big lie to “it’s all Bush’s fault and Republican policies.”

The papering over has already started by none other than Franklin Raines the former head of Fannie Mae who received bonuses of over $90 million while at the helm of Fannie Mae and was also charged with cooking the books that helped him receive those bonuses.  He reached a settlement with the SEC and gave back about $1.8 million from the profits in the sale of Fannie Mae stock and gave up $5.3 million in future benefits related to his pension.  But he essentially kept the rest, what the Wall Street Journal called a “paltry settlement.” 

Mr. Raines claims the demise of Fannie Mae and Freddie Mac, to which taxpayers have already coughed up $145 billion, was due to bad credit decisions made after he left the firm.  To put it in his own words:

 “The Journal had been warning for years that the on-balance sheet portfolios of Fannie and Freddie would lead to their demise. Mr. Carney suggests that excessive leverage was the culprit. Unfortunately, neither of these were involved. Nope. Just bad credit judgments. Decisions made, by the way, while operating under close regulatory scrutiny.”

According to the Wall Street Journal “What he doesn’t say is that Fan and Fred had a political and legal mandate to support low-income housing.”  To meet this mandate which had increasing goals each year, Fannie and Freddie had to cast a wider net to find these borrowers and the wider they cast the net the lower their standards had to be.  Thus more creative types of mortgages were created to lower the bar such as, interest only loans.  This scheme would continue to work as long as housing prices kept rising but that could not go on forever.  When the music stopped a lot of people were left standing without chairs and we all lost.  People’s credit ratings were destroyed, mortgage securities were worth far less than face value, people walked away from houses, and taxpayers were forced to pick up another “too big to fail” enterprise.  By the way, where in the Constitution does it authorize the federal government to get involved in helping people buy houses?

The secret veil put in place by the main stream media has been lifted.  With the Internet and the bloggers and cable television and talk radio, the main stream media can no longer keep information that does not comport with their agenda hidden from the American people.  The American people are energized and informed but that may not last long after the election, if we don’t continue to engage them.  Uncovering the true “swamp” that is our federal government and draining it should begin by letting the sun shine in.  So let’s do away with the good ol’ boy politics of not rocking the boat when you gain control so that they won’t rock the boat when they get it back.  If we don’t have a new class of non-incumbents who are willing to go to Washington and clean it up, really clean it up, we need to get rid of them and put new people in their place.  If that means replacing Republicans with better Republicans or Democrat incumbents with better Democrats, so be it.  We have to end the process of only being able to choose between two pathetic life time politicians who have never lived in the real world.

The Sherrod incident is the latest in a long line of shoot from the lip misfires from the Obama administration, from the president on down.  Here is a review of some of the more egregious of them:

• President Obama, without waiting for the facts says the Cambridge, Massachusetts police department “acted stupidly,” in an incident involving African American  professor Henry Louis Gates.  A picture from the “beer summit” shows the president confidently striding toward the cameras while in the background Sergeant Crowley takes Professor Gates arm to help him negotiate the stairs, as Professor Gates walks with a cane.  Racist?
• With 13 dead Americans at the hands of terrorist Nidal Hasan, Janet Napolitano comes out and claims, “The system has worked really very, very smoothly over the course of the past several days.”  A few days later she would eat those ridiculous words.
• Not to be outdone by herself, after another terrorist attempt on our soil in Times Square, Secretary Napolitano quickly came out to label the attempt a “one-off” and the suspect a lone wolf.  As the investigation picked up steam there were all sorts links to terror groups in the Middle East.
• When the president of Honduras tried to override term limits and become the next Hugo Chavez, the Honduran government enforced its laws against the changes that its president was trying to illegally implement.  The Obama administration immediately labeled the legitimate actions of the democratically elected Honduran government a coup.  Hillary Clinton’s State department cancelled the visas of all members of the Honduran Supreme Court.  Not to be intimidated by Chavez, Castro, or Obama, Honduras stood its ground.  The Congressional Research Service looked at the Honduran Constitution and the actions of its government and found that the government acted properly and within the law.
• When Arizona reached the end of its rope and could not get the Obama administration to enforce the law on the border, they passed a law to give their police greater flexibility to determine the legal status of people stopped for another police matter.  The Obama administration immediately called the law unconstitutional.  When asked if they read the massive 10 page law, that’s right 10 pages, both Attorney General Eric Holder and Secretary Janet Napolitano (yes, her again) both said they hadn’t read it before declaring it unconstitutional.  This administration pushes through legislation running thousands of pages each and they can’t find time to read a ten page law before condemning it.
• Department of Agriculture employee Shirley Sherrod gave a speech to the NAACP where she spoke about her transformation from having a racial bias in a decision she made 24 years ago, to today where she tries to treat all individuals regardless of race.  Only the first part of the story was headed toward the airwaves, the part about her past discrimination, and before the news hit the air she was fired by the Obama administration.  Had they watched the whole tape before acting, they wouldn’t be swimming in apologies right now.

Is this just the lack of experience or does the Obama administration need adult supervision?  They jump to these wild conclusions and then end up backtracking days later.  After eighteen months in office you would think they would have learned by now how to govern.

Another case without as quick a trigger is the passage of the Dodd-Frank financial reform bill.  After taking office President Obama appointed a commission, the Financial Crisis Inquiry Commission to investigate the root causes of the crisis.  A prudent person might say, let’s hear what the commission finds out and then write legislation to address those root causes.  With months more to go before that commission’s work will be done, we have another 2,000+ page bill coming out of Congress and signed by the president to put new regulations in place on the financial services industry.  Why the rush?  Wouldn’t it be better to fix the real problems rather than what Chris Dodd and Barney Frank think are the problems and let them paper over their own culpability in the creating the crisis?  Why were Fannie Mae and Freddie Mac excluded?  In one of the hearings before the commission an argument was made that AIG did not have to be bailed out, that there were measures in place to ride out the crisis and that in the long run their policies would be fine.  Whether that is true or not, will have to wait for the final report, but the “just don’t stand there, do something,” mentality is disconcerting.  I certainly hope we are never faced with another Cuban Missile Crisis with this team in place.

As written about extensively here, government regulators have failed us in so many ways that to continue the practice of putting more control in the hands of government is lunacy.  To wit:

• The financial crisis, although typically blamed on Wall Street greed, was due in large part to government agencies and programs (Fannie Mae, Freddie Mac, HUD, Community Reinvestment Act, National Homeownership Strategy) that opened the door through which Wall Street followed.
• The oil spill in the Gulf happened after regulators either signed off on waiver applications from BP or just didn’t enforce the regulations on the books
• Anywhere from $60 billion to $100 billion is stolen from Medicare/Medicaid every year and our government can’t seem to stop it
• First time homebuyer tax credit was claimed, to the tune of $9 million, by incarcerated felons.

But the current administration insists that government must get bigger to tackle our nation’s problems and must tax us more to do so.

Senator Chris Dodd and Representative Barney Frank were at the heart of the financial debacle, claiming that Fannie Mae and Freddie Mac were in sound financial shape.  Meanwhile Senator Dodd was getting a sweetheart mortgage from Countrywide as a “Friend of Angelo” Mozillo, the CEO of Countrywide.  Now we are to believe that Senator Dodd and Representative Frank have ridden to the rescue and have crafted the solution we have all been waiting for, just don’t ask about Fannie and Freddie, they aren’t included in this master work.

The Federal Reserve will now have more power to regulate banks, after failing to monitor what was going on at Citibank and having the government step in because they were “too big to fail.”  The Treasury stepped into to bail out some banks and let other financial firms like Lehman Brothers to go under, will now have more power to determine which financial institutions are sound and which ones are not and step in to take control without allowing the bankruptcy courts to get involved.  The SEC which was asleep at the switch, or too busy watching porn on taxpayer purchased computers,  when the Bernie Madoff scam was delivered to them wrapped in a bow, will now have more power to decide how easy it will be to allow union pension funds to place their candidates on boards of directors.

The new legislation, which does nothing really new, runs to 2,000 pages (did you expect something less?) and leaves much of the details to the regulatory agencies themselves to fill in the blanks.  And never to miss an opportunity to slip a new tax into the mix there are $19 billion in new taxes to pay for this new regulatory oversight.

So when regulators fail, the government’s response is not to look at government’s role in creating the original problem, but to blame any private interests and add more regulations that will increase the scope and power of the government, take away your liberties, and do nothing to fix the original problem.  When the next crash comes, and it will, these same folks will say, “oh, dear, how did this happen?”  They will blame any private interests that are anywhere near the problem, absolve government agencies of all blame, and layer on more regulations.

The only way to fix this problem is to make sure these same folks are not around in the future and to cut the government down to size.

Although it is getting very tiresome and it is losing it’s bite, Democrats still are desperately clinging to “we inherited eight years of Bush policies, yada, yada, yada.”  Was it eight years?  If so, how did he get re-elected in 2004?  I will be among the first to say that Bush wandered off the conservative reservation with his spending, but Bush didn’t create Fannie Mae and Freddie Mac either.

What Have We Inherited?

Let’s take a look at everything else we have inherited.  Why stop at Bush?

• With 20% of the federal budget locked in to Social Security and this also being essentially a very large ponzi scheme for which we have enormous unfunded liabilities, who did we inherit this from?  Franklin Delano Roosevelt – Democrat. 
•  What about that other ticking time bomb, Medicare and Medicaid?  Thank you Lyndon Baines Johnson – Democrat.
• Fannie Mae — Need I say more?  Franklin Delano Roosevelt – Democrat
• Department of Agriculture – elevated to Cabinet level at a time when agricultural employment in this country was 70%-80% of the population.  In 2008 agricultural employment was about 2%-3% of the population.  Why do we still need it?  Thank you Grover Cleveland – Democrat
• Department of Education – has spent $1 trillion since its founding and we all know how much it has improved education in this country.  Thank you Jimmy Carter – Democrat
• Department of Energy – Remember the Synfuels project where we were going to convert coal to oil after the first Arab Oil Embargo?  It was a great idea as long as oil stayed above $40 per barrel at the time. Thank you Jimmy Carter – Democrat
• Department of Housing and Urban Development (HUD) – think of all the wildly successful urban development projects over the years, warehousing our poor in drug infested, dangerous housing projects.  Let’s not forget HUD’s contribution to the current financial meltdown where they aggressively pushed greater lending for homes in poor rural and urban areas.  Thank you Lyndon Baines Johnson – Democrat
• Community Reinvestment Act — another key to the housing bubble, Thank you Jimmy Carter – Democrat:

 “Urged on by ACORN, congressional Democrats and the Clinton administration helped push tolerance for high-risk loans through every sector of the banking system — far beyond the sort of banks originally subject to the CRA. So it was the efforts of ACORN and its Democratic allies that first spread the subprime virus from the CRA to Fannie and Freddie and thence to the entire financial system. Soon, Democratic politicians and regulators actually began to take pride in lowered credit standards as a sign of ‘fairness’ — and the contagion spread.”

• Department of Transportation – used to be part of the Department of Commerce. Split off to create another bureaucracy.  Thank you Lyndon Baines Johnson – Democrat

Gee, all of this we inherited from the pantheon of Democratic gods. It makes Bush sound like a piker. 

Will We Never Learn?

When this country was founded Congress created three departments:  Department of War, the Department of State, and the Department of the Treasury.  That pretty much fits what the founders intended.  A limited federal government that would deal with external issues and defend us from our enemies.  There are now fifteen federal cabinet level agencies.  Why is it that Democrats feel this need to create massive new bureaucracies?  Why don’t they ever go away when they have achieved their mission?  We are now facing crushing deficits brought about by decades of government growth brought about by the Democrats. 

It’s time to stop blaming Bush.  Mr. Obama, you wanted this job.  You won this job.  Now, do this job and stop bitching about what you inherited.  If anyone has something to bitch about it is we Americans, because you and your fellow travelers have built this house of cards and you think the only solution is to build it bigger, faster.  If the load is too heavy to carry, we don’t need vitamins (VAT tax) to get stronger, we need to lighten the load.  We have to shrink this beast down to a manageable size, NOW.

It was like the movie Rocky the Democrats (Rocky) were getting pounded left and right over their heavy handed tactics.  They crammed through a health care bill that an overwhelming majority of the country opposed.  They moved on to financial reform and they still couldn’t get any traction.  Their poll numbers continued to drop and it was looking like a dismal election coming up in the fall. 

 And then, just like in the movie Rocky swings from his heels and connects knocking the champ to the canvas.  In this case it was the SEC charging Goldman Sachs with fraud.  Now they could fire a full fusillade of class warfare at the Republicans and either get Republicans to help pass the financial reform bill or be tarred as the party of the evil bankers and greedy Wall Street robber barons.  But unlike the movie, right after knocking the opponent down, when the referee sends Rocky back to a neutral corner he slips in his own sweat, flips on his back and knocks himself out.  By that I mean the news came out that employees of the SEC spent an inordinate amount of their time watching porn instead of the financial markets.  How do you expand the role of government on the heels of that disclosure?

 Trying to Make Up for Bernie Madoff?

When Bernie Madoff’s ponzi scheme was in full swing, Harry Markopolos brought the scam to the SEC practically tied in a bow.  The SEC did not respond.  Perhaps they were too busy…, well never mind.

With the Democrats trusty weapon, class warfare, holstered it’s time to delve more deeply into this financial reform legislation.

In a letter to Senate majority leader Harry Reid and minority leader Mitch McConnell, luminaries including former SEC Chief Accountant Lynn Turner, former Labor Secretary Robert Reich, hedge fund owner Jim Chanos, former Lehman Brothers Vice Chair Peter Solomon, former S&L investigator Bill Black, former Senate Banking Committee Chief Economist Rob Johnson, economists Dean Baker, Barry Eichengreen and others pointed out that Dodd’s proposed financial reform legislation wouldn’t have prevented the current crisis … and won’t prevent the next crisis.

So tell me again why we are doing this?  It’s all about more government control and more power in Washington, not about fixing any real problem.  Where are Fannie Mae and Freddie Mac in this bill?  They were at the very core of the financial meltdown.  In other words it’s all politics and it’s all straight out of the Saul Alinsky tome Rules for Radicals:

 Rule No. 13. Pick the target, freeze it, personalize it, and polarize it.  In conflict tactics there are certain rules that [should be regarded] as universalities. One is that the opposition must be singled out as the target and ‘frozen.’…

     “…any target can always say, ‘Why do you center on me when there are others to blame as well?’ When your ‘freeze the target,’ you disregard these [rational but distracting] arguments…. Then, as you zero in and freeze your target and carry out your attack, all the ‘others’ come out of the woodwork very soon. They become visible by their support of the target…’

     “One acts decisively only in the conviction that all the angels are on one side and all the devils on the other.” (pps.127-134)

The target in this case, is Wall Street and the Banks.  Demonize them.  When the “others”, meaning the Republicans, come out to challenge the ineffectiveness of the bill, then they can be attacked as being for the fat cats and against the little guys; class warfare at its ugliest.

 Follow the Money

But who is really in bed with the fat cats?  The Political Action Committees (PACs), employees, families of employees and other associates of Goldman Sachs gave almost $1 million in campaign contributions to Obama.  In this legislation, the concept of too big to fail remains untouched.  There will be a $50 billion fund created with money from the top banks to standby if needed for a bailout, but this also gives the impression that the largest banks are now safer because of this fund and therefore can get a lower interest rate on their borrowings compared to smaller banks.

 Democratic Congressman Brad Sherman said:

 “The Dodd bill has unlimited executive bailout authority. That’s something Wall Street desperately wants but doesn’t dare ask for. The bill contains permanent, unlimited bailout authority.”

 Why ask for it when the Obama administration will give it to you.  All you have to do is let them smack you around a bit to prime the class warfare pump, and you’re all set.

If you are backstopped by unlimited executive bailout, go ahead, take bigger and bigger risks.  The government will step in if you fail.  So here we have yet another fat cat (Wall Street/Big Banks) wolf dressed in sheep’s clothing (the little guy; Main Street). 

 If you want real financial reform, then in the name of capitalism, the big banks and Wall Street have to learn to play with their own money. If they hit a home run, good for them.  If they strikeout, they should lose their own money and if they don’t have enough to cover their losses, goodbye.   They should not be allowed to take huge risks and if they pay off, everybody there gets a new mansion in the Hamptons, but if they go bust, hand the bill to us.  Fannie Mae and Freddie Mac, we were told were private entities, not part of the government, but wink, wink, nudge, nudge, everyone knew the federal government was standing behind them and would not let them go bust.  So they too, got the kind of interest rates, half a point lower than their competitors, based on this implied backing not based on the strength of their balance sheet.

We have to fight this one too.  This is just more smoke and mirrors from the Obama administration.  Another power grab without any substantive benefit to the American people.

You don’t have to go too far to find a story about people suffering in these tough economic times, and your heart goes out to them.  Some have lost houses, are living in cars, really tough stuff.  But there is another story under the surface that reflects common attitudes developed growing up in the nanny state kicked into high gear by Franklin Delano Roosevelt.

In the midst of these tough economic times, instead of getting out of the way by cutting taxes and red tape, the Obama administration is focused on piling on more government programs.  Worthless stimulus packages, health care reform, and efforts to push cap and trade have not moved the unemployment needle a whit.  They extend unemployment benefits and keep whistling past the graveyard hoping they won’t get swallowed up.

Personal Responsibility

Since the Great Depression and the growth of the nanny state, more and more people have bought into the myth that the government can provide all, and our responsibility is to enjoy the ride.  An article in today’s New York Times writes about people benefitting from a government program to keep them in their houses if they face becoming homeless.  But there are some subtleties in the hard luck stories that give me pause.

There is the case of Antonio Moore who lost his job as a mortgage consultant that paid him $75,000 per year.  He lost his 3-bedroom house with a Jacuzzi and his Lexus sedan.  He is now faced with eviction from his apartment.  The article doesn’t go into details, but in most cases you don’t lose your house and car if they are all paid for.  Again, it doesn’t say if Mr. Moore bought his car new or used, but when I think of a car like a Lexus I usually don’t think that fitting in the budget of someone making $75,000 living in the San Francisco Bay area.  Had Mr. Moore purchased a Toyota Corolla instead of the Lexus would he be in better shape?  Again, I don’t know the details.  I am just wondering.

Then there is the case of Dawn Martin.

Ms. Martin is mortified to be asking for help. She grew up wealthy, with vacations spent on Caribbean cruises. “I had everything I ever wanted,” she says.

She and her husband have a painting business that until 2008 was grossing $100,000 per year, but in this tough economy it dropped to $38,000.  That’s hard.  But then here is the between the lines story:

Her father has money to help if it really comes down to it, she acknowledges.

“I don’t see him letting his grandkids land on the street,” she says, “but he’d hold it over our heads for a long time. That would lower me to a level that I wouldn’t want to go.”

So she is here, at Samaritan House, filling out the paperwork for the homeless prevention program.

So because of her pride, she turns to your family and mine, through higher taxes to fund a government program, to help her through her rough spot before she will turn to her own family.  But don’t worry.  When our money is gone, she will turn to Dad.  The painting business is picking up so Ms. Martin is confident they will be able to sustain themselves.  She is able to take our money to tide her over and still maintain her pride. 

But what did Ms. Martin learn about money when “growing up wealthy”?  Is Dad responsible for not teaching her or was she a rebellious child who ignored him and perhaps that is why he would hold it over her head for a long time.  Will she do something different this time around or hope for another government program?

Perhaps I was a little torqued before reading this story by another in the Wall Street Journal that wrote about the homes underlying the Goldman Sachs fraud case.  This article talks about a Ms. Onyeukwu, a 43-year old nursing home assistant with pre-tax income of $9,000 per month.  She is having trouble paying her $688,000 mortgage at $5,000 per month which is 56% of her pre-tax income.  Her solution?  Refinance it with a $786,250 mortgage.  But hey, the interest rate is lower so her payments of $5,000 per month will stay the same.  What is she thinking?  I could be way off base here but I’ll bet she could get a nice apartment for significantly less than $5,000 per month.  Sell the house, live within your means.

Government as Savior or Government as Pusher?

This is a tale of two government programs and personal responsibility.  We had or still have a massive government program that uses threats, goals, and sleight of hand to help millions achieve the American dream of home ownership.  This is not through thrift, like our parents did it, but by the government threatening banks with charges of racism (there’s the race card again) if the banks didn’t lower their lending standards.  As the housing market took off, the feeding frenzy intensified and everyone was trying to buy houses or finance them with less and less money down.  The Community Reinvestment Act, HUD, Fannie Mae, Freddie Mac were all players in this debacle, but don’t expect our elected officials to wade into that swamp to see what happened.  No, they will pile the blame on the banks and Wall Street, while they take Wall Street’s massive donations and do nothing but pass meaningless “reform legislation”.  Now we need new government programs to keep these people hanging on.  How similar is this to the drug pusher who gives you your first hit for free to get you hooked and dependent on them forever.

What About Personal Responsibility?

Unlike the people in the articles, I believe I have responsibility first and foremost for my actions.  If I need help beyond myself I turn to my family and then the charity of my church.  I believe many conservatives share my views, which is why on average conservatives give 30% more to charities than liberals.  It is why I gave the moniker “Buck a Day Biden” to Vice President Joe Biden because in his financial disclosure forms he reported give only about $300 a year to charity.  Here is a man who has been drawing six figure salaries from the taxpayers for years, is a millionaire, but will not reach very deep into his own pocket to help his fellow man, but has no problem reaching into your pocket and mine to create some government program to give your tax dollars to someone else.

There is a man named Dave Ramsey, who was a millionaire in his mid-twenties but later lost it all and declared bankruptcy.  He now teaches others how to live without debt and take responsibility for their financial lives.  It is a lesson all of us should learn and if we do, I’ll have to find something else to write about that sets me off.  But in the mean time we have a lot of work to do.  First we have to stop the federal government’s runaway train.  Next, we have to shrink government.  Then we have to go back to being responsible for ourselves and wean ourselves off the government.

“We have to pass the bill so that you can find out what is in it” – Nancy Pelosi 

The White House claimed, incredibly, that most Americans support ObamaCare.

“If you take the last 12 independent polls, and you throw out four by Rasmussen, whose results the White House doesn’t like, and you throw out six others that show a wide margin of opposition, then you have two polls with results consistent with the Washington Post poll showing a fairly small margin of opposition to the Democrats’ national health care plan. And that is Benenson’s case. By the way, the headline of his article? “Most Americans want health care reform.”  – Byron York, National Examiner

Governor Ed Rendell of Pennsylvania, gushed on Fox News last night, about how ObamaCare was good for Pennsylvania.  Why?  Well, he said, today Pennsylvania is only reimbursed 50% for Medicare while under ObamaCare Pennsylvania will be reimbursed 90%.  Very cool.  Er, who’s picking up the tab for that extra 40%?  That question goes to the heart of the Liberal/Progressive movement which is basically you are too damn stupid to recognize a shell game when you see one.

Unless the plan is to have ObamaCare paid for with the profits from GM and Chrysler, the only thing the government does for a profit, it is all a giant shell game.  The giddy governor of Pennsylvania knows that this is a shell game and that extra 40% will either come out of Pennsylvanians federal tax pocket instead of their state tax pocket or it will be subsidized by citizens in other states through their taxes.  Oh wait, no, there is always those evil drug and medical device companies to tax.  But where do they get their money?  That’s right taxes are built into the price of their products, so expect drugs and medical devices to cost more.

The Evil Health Insurance Company Myth

Obama & Co. jumped all over a 39% premium increase by Anthem Blue Cross in California as Exhibit A justifying their takeover of the health care industry.  This is not going to be fixed with ObamaCare but only made worse.  An example is given by a doctor who says for the last seven years he has been reimbursed $50 for an office visit under Medicare.  In that time his expenses have risen 30%. (Quick check — if the good doctor gives his staff a 4% raise each year for 7 years that comes out, compounded, to about 30%).  Under ObamaCare they are proposing a 21% reduction in Medicare reimbursement, so the doctor will now get a $40 reimbursement for an office visit.  The doctor can do one of two things.  He can stop seeing Medicare patients, or he can charge his other patients more to make up the difference.  If he chooses the latter course of action, then private insurance companies, like Anthem, will have to pay for the increase.  How do they recover their costs?  That’s right by increasing premiums.

Just like you never hear statists blaming government polices of HUD, Fannie Mae, and Freddie Mac for the housing bubble that triggered the financial crisis and recession (it was all those greedy, evil bankers), you won’t hear them mention their policies regarding Medicare as triggering the premium increases.  It was all about greed.  So government will need to step in and make sure those greedy insurance companies cannot increase prices like they have.  So expenses rise, premiums are capped, insurance companies fold, and voila you have a public option, which becomes the only option.  Next to keep expenses from rising, health care will have to be rationed because there are no market mechanisms in ObamaCare to actually reduce costs.  No tort reform.  No elimination of 3rd party payers.  No true insurance that protects against catastrophic costs while you pay for the routine, like all other insurance.  Just government fiat.  Obama can no more order health care costs to decline than he can turn off gravity. 

News flash to people around the world living under socialized medicine who travel to the United States for critical care when they need it, that door will soon be closed.

Who Is Really Stupid?

Statists believe the average American is too stupid to make decisions, or should I say the right decisions, about their lives, health, safety, etc.  We need the really, really smart people in government to tell us what is good for us and follow their instructions.  Or…in November we can send them the message that they were really, really stupid to ignore what the American people were screaming at them, STOP!!!! If Jefferson, Madison, Washington, Adams, Hamilton, et al, thought Americans were smart enough to look out for their own best interests, who are Pelosi, Reid, Waxman, Boxer, Rangel, Schumer, Dodd, et al, to say otherwise?