President Obama once again demonstrated his utter lack of understanding of the basic principles of economics during a meeting with his economic advisors on Monday. He chooses to blindly follow the misguided and discredited theories of Lord Keynes, among others, given him by his advisors. It is also most unfortunate for this country that the entire cadre of the presidents economic advisory team seem incapable of objectively analyzing the Keynesian model that they are so attached to, for if they could only extricate themselves from this “third way” paradigm and experience a few moments of economic lucidity, it is highly possible that even they could begin to fully understand just how utterly disastrous Keynesianism has been for the global economy in general, and our economy in particular. Unfortunately, they ignore the continued warning signs that keep popping up and continue to dig the United States ever deeper into this economic black hole that threatens to suck the very life out of what remains of our economy, and will ultimately take what remains of our liberty with it.

Let me be clear: what we are presently witnessing in the ongoing economic crisis is the natural laws of economics giving their referendum on Keynes. The current national unemployment figure of 10.2% simply underscores the point. In short, Keynesian theory suggested what has been called a “third way,” not fully capitalism and not fully socialism. It sought a system where the government, both through the power of the central bank and intervention through regulation, legislation and manipulation would be able to bring about a condition of perpetual prosperity, an end to recessions and economic cycles of boom and bust, and end to the bubble economy. The problem with the theory is that the very controls and manipulations demanded by Keynesians to “grow” and “sustain” the economy are the very things responsible for the creation of the economic bubbles and the business cycle, precisely because these things violate the natural laws of economics. Mises, Rothbard, Hayek and others have proven this time and again. The natural laws of economics correlate with human thought and action, and these things are wholly incompatible with bureaucratized central planning boards and central banks fixing prices, wages and interests rates at values much different than those the free market would deem proper. Attempting to isolate these things from the reality of the marketplace in essence creates the bubbles that are bound to burst at some point because they are at odds with the market, with the decisions and choices producers and consumers make on a daily basis.

Keynesian theory has been the driving force behind the economic policies of the industrialized world since the early twentieth century. Keynes’ model economy was viewed as having evolved beyond capitalism, thus noted above as being a hybrid between capitalism and socialism. It advocates corporatism. It is therefore by its own admission decidedly not capitalism. Those who prefer to cast the blame for the current economic mess on unrestrained capitalism are flat out wrong and woefully uninformed, because there has been no unrestrained capitalism in the United States – ever. Sure, we came fairly close up until 1913; however, once the Federal Reserve Act and Income Tax Acts were passed and the Constitution amended through the ratification of the 16th Amendment, all hopes for true capitalism were indeed dashed.

Mr. Obama and his advisors like to remind us how they inherited this economic crisis from the previous administration. There is nothing untrue in that statement. However, for anyone, especially a well trained and educated economist, to lay the whole blame for this mess at the feet of the Bush Administration without taking into account the overwhelming number of far more important factors that are truly the root cause, is disingenuous, dishonest, and grossly insulting to those of us who have studied anything other than Keynes, as well as an affront to the common sense of anyone who takes the time to question the current scenario and really think it through. Those economists who regurgitate the official government talking points and try to put a positive spin on the current course of action undermine their own legitimacy in doing so. It is simply incredible that so many of these economic advisors are so quick to declare unrestrained laissez-faire capitalism the root cause of this crisis when they know full well that the prevailing Keynesian school of economic thought that has been driving economic policy for the better part of a century is itself specifically defined as being something that is not capitalism. There is far too much at stake to play semantics and talk out of both sides one’s mouth.  (Continued...)

The talking heads are all aflutter with the latest bout of economic news. For a couple of months now several prominent personalities have repeatedly proclaimed the “recession” to be over and that America is well on its way back to prosperity. How they could make such claims while looking at the same data the rest of us see defies both logic and common sense. The problem with the talking heads is that they have now committed themselves to their predictions of recovery while, in fact, we are very far away from seeing any such thing realistically materialize. They are focusing on individual bits of data that seem encouraging and positive, while ignoring warning signs and negative information. They are simply not looking at the bigger economic picture.

While they praise the perceived beneficial effects of the $787 billion stimulus package (less than 20% of which has been spent thus far) for bringing the economy back from the brink of total collapse, they conveniently ignore the fact that this so-called stimulus is only a massive “credit injection” that has been created literally out of thin air, is based on and backed by nothing, and can therefore ultimately produce nothing. It is entirely fictitious.  And, while certain trends may indicate an improvement in economic conditions in the near term, what is certain is that any long term prospects for a real healing of this economic hemorrhaging are equally fictitious for as long as the "recovery" is dependent upon credit created out of thin air, based on nothing, and with no value.

Indeed, essentially every step taken by Congress, the administration (current and previous), the traditional media, and, sadly, many respected economists, to identify, assess and combat this growing financial crisis has also been based in fiction. The very fact that these same people who created the conditions that encouraged and enabled the behaviors that resulted in this crisis is alarming enough. Their elation over the latest housing numbers merely demonstrates the latest stage of denial and their almost universal ignorance of logic and good economic sense.

While celebrating the latest housing sales numbers, up 9.4%, and proclaiming this as the latest indicator that the “recession” is all but over, the talking heads seem to have forgotten about the commercial real estate market that is about to implode and drag many more financial institutions with it, as well as the flash-in-the-pan that was “cash for clunkers.”  (continued...)

The Federal thugocracy that now rules this country by through employing the politics of intimidation and disenfranchisement has now declared war on Central Floridians.

On Monday U.S. Rep. Alan Grayson gave only 24 hours notice for a “town hall” style meeting to be held on August 17 in a union hall that just became available – for free – and “at the last minute.” Constituents were invited to come and told they would be allowed into the meeting, provided they could prove they actually live in Grayson’s district.

On Tuesday U.S. Rep. Suzanne Kosmas gave a 24 hour notice to her district to participate in a town hall meeting via telephone at 6:20 PM on Wednesday evening. Constituents were told to call her office to be vetted by her staff, and they might be invited to ask the Congresswoman a question. 

Now, politicians are doing one of two things during this recess: they are either holding town hall style meetings that they attempt to pack with supporters, or they choose not to hold any meeting, citing the potential violence of the “mobs” of people who oppose being disenfranchised from the system they fund.

Grayson’s meeting at the union hall was predictably packed. A You Tube video sent by a Vietnam Veteran clearly showed constituents being kept out of the meeting, while Organizing for America members who were not constituents were allowed in. My Veteran friend, of course, was not among those allowed in.

I still don’t know how the “tele” town hall went. You see, on Wednesday at 6:20 PM, my phone rang. To my surprise it was a recording of Rep. Kosmas inviting my family to participate in the telephone town hall. To do so, the recording said; just press “1.” I did and she hung up, which, ironically demonstrates exactly what this Congress really thinks of the people who employ them.

Here’s a news-flash you won’t see on CNN, FOX, or any other media outlet of ill repute for that matter: the US Government thinks you are stupid. So do the politicians we continue to elect to “represent” us at the legislative and executive levels. So do the bureaucrats that are appointed and hired by the government. They all think we are stupid, and they might even be right.

Why would I even suggest such a thing, that we the people might just really be as stupid as the politicians assume us to be? Here’s my answer: because we are acting like it. And if we don’t wake up real soon and take some serious action we are going to be jolted awake one morning only discover that we no longer live in a free republic, and all the evidence, coupled with the total economic impact of the events of the last several weeks suggest that we are coming perilously close to that day.

Many, if not most, who are reading this would agree with this assessment, but for the sake of those who haven’t been paying attention to history, have no clue that we have a Constitution that is being knowingly and continually violated with seeming impunity by our elected representatives, bureaucrats and judges, and for those who, being either blissfully ignorant about the truth regarding the economic catastrophe our once-free market has become or who simply nod their heads at the assurance of government that they are working hard to fix the problem and everything is going to be OK, I have some disturbing news for you: the government and the politicians you elected are all lying to you – because they think you are stupid. And if you continue to believe them, then you are stupid.

Here is the ugly truth: In the last month your government has committed to spend approximately $1 trillion to bail out various Wall Street financial institutions, along with Freddie Mac and Fannie Mae. That brings the officially acknowledged federal deficit to roughly $10 trillion. And there will most certainly be more regardless who wins the election: more spending, more promises of programs to help homeowners in over their heads, more debt. The Treasury will have to continue bailing out the FDIC as it (the FDIC) has already paid out the $45 billion fiscal insurance policy it holds to the many banks that have already failed. Amid all this chaos the government officials and elected representatives and candidates for office step up and promise they’ll fix it. One of these reprehensible bulwarks of all that is wrong in the world, Rep. Barney Frank – a man who is at the very least (along with his many Democrat and Republican comrades) complicit if not guilty of gross negligence in facilitating this mess has promised to do “major surgery” on the nation’s financial system. 

If Frank and his compatriots in the Congress hold true to their promise you can bet there will be more bank failures and this current recession will likely devolved into a long depression. Why? Because the whole reason the world’s financial system is on the verge of total collapse is because of government meddling in the economy by trying to manipulate and perpetuate artificial conditions of a growing economy. This is called central economic planning, a long discredited manipulative policy that has been proven unsustainable over time, as we are currently witnessing. You will never hear your Congressman or Presidential candidates speak of this, for to do so would betray the truth, and the truth would set us free, so to speak. 

Speaking this truth would be the equivalent of admitting that our planned and over-manipulated economy is no more a true free market system than was the Soviet economy that imploded in 1991 – and as this ugly truth stares us in face all we hear from politicians and bureaucrats is that “greedy Wall Street CEOs” are the ones to blame. In fact, some in Congress are already holding hearings featuring testimony from CEOs of several of the companies recently bailed out or that have failed. The Congress has the sheer audacity to lay 100% of the blame at the feet of these CEOs, who certainly deserve their share of the blame to whatever degree they jumped on the high-risk bundle bandwagon, while conveniently overlooking their own actions that directly contributed the creation of an environment where such catastrophically stupid business practices were not merely possible but were strongly encouraged. One party accuses the other of deregulating the finance industry as if that were the cause while the other accuses the first party of enacting senseless regulations as if those were the cause – and to an extent, both are correct. What was had prior to deregulation was a lot of bad regulation that was replaced by nothing that would solve the problems the bad regulation created, and most would agree that this is so.

However, while enacting laws for the purpose of regulation of commerce is a legitimate function of the Congress, enabling the Federal Reserve to secretly enact policy of its own, and for which it is unaccountable and un-auditable, specifically designed and intended to manipulate the money supply and interest rates to create and perpetuate a false prosperity nicely contained in a bubble that is an anomaly of free market operation, is not. In fact not only does the existence of a central bank go against the advice of the Founding Fathers of our country, it essentially violates all of the core principles upon which the Constitution is founded.

The Founders knew all too well the pitfalls of a fiat currency, that is, a currency of paper money that derives its “value” by the arbitrary authority of government declaring it’s worth, as it is in reality not backed up by any tangible assets. During the Revolutionary War, the Continental Congress financed itself partly by its self-produced Continental currency – paper money like we use today – that was not backed up by gold or anything else of any intrinsic value. The people were forced to use it, and the government simply was able to produce more of it by printing it, until they had printed such an overabundance of it that the currency itself became entirely worthless. Unfortunately the geniuses in government and those at the fed have not correctly understood the warnings of the Founders, because we have been doing the same thing since 1971 when Nixon took us of the gold standard. Either that or they know exactly what they are doing, which would be even more disturbing.

The fact of the matter is that those running the Fed are not stupid – everything they do is calculated. So why would they deliberately choose to destroy the dollar, because that is exactly what our government’s economic “rescue plan” or bailout will achieve if it continues the current charted course. They are destroying the dollar because the fundamental element of this “rescue plan” is the infusion of massive amounts of cash into the monetary system. The problem is that the treasury has none, and so it is left to the Fed to print it. With each new dollar that gets printed and injected into the system, the value of all the other dollars out there is diminished so they become worth even less on the market; therefore the buying power of individuals is likewise diminished as the value of the dollar goes down. The more currency produced, the less value it has. 

This is “inflation 101” and everyone on Capitol Hill and in Washington ought to know that. But, then again, these are by and large the same folks who signed on to creating the conditions that ultimately brought about this catastrophe, so it is not entirely surprising that they would sign on to allowing massive amounts of money to be printed and injected into the system. My dark theory on this is that in doing so they are inviting hyperinflation, which is when so much fiat currency is produced that it becomes essentially worthless (take Italy, for example, where you would pay 10,000 Lira for a pack of cigarettes). Perhaps they know this. Perhaps they don’t care. At the very least, they’d tell us, they are working hard and doing something to “fix the problem. 

But that is exactly the root of the problem in the first place, and so here is where the idea of individual responsibility and self-government comes in. The people are running like sheep in whatever direction the government leads – even if it is off a cliff- and unfortunately they have become so conditioned to looking to government to solve their problems that to do otherwise is often not even an afterthought. The people are not asking the right questions either – if they’re asking them at all. But, they are demanding that government “do something.” If they were living up to their civic responsibilities in the first place they would have been paying attention and seen this coming and would have been able to put enormous pressure on their elected representatives to stop the insanity before the crash became inevitable. 

The fact that this is happening in a Presidential election year makes the idea of individual self-government all the more important. The people are panicking as they see a long and deep recession looming, the politicians are panicking because they are afraid they’ll not be re-elected, and no one wants to tell the truth about how we got here in the first place. And now with the totality of the erosions of our Constitutional liberties having been much accelerated in recent years and the government nationalizing massive segments of industry, taking over individual home mortgages to presumably have courts renegotiate rates or perhaps dictate them, a complacent and uninformed electorate is only weeks away from electing a relatively unknown, unprepared, and untested politician who has spend the vast majority of his life immersed in the world of radical socialist ideology while pretending not to be. Our economy, our nation, our republic is being handed to him like John the Baptist’s head on a platter.

The people are crying, “Do something!”   Be careful what you ask for, because now that the government is doing something everything is going to get worse. You don’t believe that? Then name something outside of the realm of military action or law enforcement that the government does well. Incidentally, the national defense and law enforcement are really the only useful Constitutionally mandated obligations of the Federal Government, aside from the construction of roads, and the legitimate regulation of commerce. 

Also of note is Article I, Section 8. Under the title “Power Granted to Congress,” paragraph 5 reads: “To coin money, regulate the value thereof, and of foreign coin and fix the Standard of Weights and measures.” Note that nowhere in this paragraph is there mentioned an entity known as “The Federal Reserve,” nor is the authority to coin money and fix its value given to a single principal in the person of the Chairman of the Federal Reserve. Furthermore, it is important to note that the Constitution as written is binding as the Supreme Law of the Land, except where amended and ratified. No amendment created the Federal Reserve; rather, by the Federal Reserve Act of 1913 did the Congress unconstitutionally give charter to the Federal Reserve and illegally abdicate its obligation to coin money and set its value. Indeed, as if the creation of the Fed as an illicit central bank wasn’t bad enough, think for a moment of the sheer audacity and arrogance in thinking that one person with even the best and brightest minds to assist them, could ever permanently manipulate the forces of the free market to create a condition of permanent prosperity. And that is a major part of the problem.

If the markets were left to themselves there would indeed be periods of growth and periods of correction; however, absent mountains of poorly defined or ill-scoped regulation and meddling politicians abusing their lawful authority to implement self-serving policies pandering to their own constituencies and thereby exerting massive, undue influence and encroachment on the machinations of the free market, those corrections would be comparably mild and sort-lived. Yet those very persons responsible for creating those conditions encouraging greed and corruption are now the same who demand of us still more of our money and our trust. The talking heads on the TV, with few notable exceptions, tell us repeatedly that as unfortunate as it is, we have no other option. 

To those who suggest as much I say this: economic freedom and liberty are inseparable – you cannot have the one without the other. If the market can be so easily manipulated by the arbitrary will of government for the benefit of the few, then the market is not free and neither are those who participate in it. If, on the other hand, the market is allowed to dictate unto itself and to its participants the worth of goods and services and the worthiness of those who seek them, then all are able to prosper to the extent that they wish to share in that prosperity. Such is free-market capitalism is spared undue meddling of government. That is our other option, indeed our only option; for if we do trust these power hungry fools again, the hegemony of the government, then we are exactly as stupid as they think we are, and we deserve the misery that shall most certainly befall us. If not for liberty we would only then have no other option but follow along like sheep and give to government all that it demands. We are now at a crossroad in the history of this nation, and the decisions to be made and the actions to be taken in the immediate future will have a profound and perhaps irreversible impact on our lives and those of our children. 

Let us not fool ourselves: we have been asleep at the wheel for far too long, and if we don’t immediately wake up and grab the wheel we run the very serious risk of driving right off the cliff. If you don’t believe in the possibility of an authoritarian socialist regime in the United States you are either very naïve or ignorant of history, because the possibility is not only very real but is staring us in the face. Right now our system is still the best in the world, albeit imperfect. It would be even better and we would be returned to great prosperity if our representatives and government were actually abiding by the Constitution. They will not do so unless we the people force them too.

It could be argued that we are in the beginning stages of tyranny, of the proverbial “benevolent dictatorship.” The government is moving now, through the Fed, to take over controlling interest in even more of the banks in the US. The government is also planning on purchasing mortgages and will thus become the largest homeowner in the world. As they “loan” billions to the auto industry and then, doubtless, to others they will likewise require oversight, if not “public ownership” in those companies. Does “public ownership” sound familiar?   Once government encroaches on a segment of the private sector it will not extricate itself unless the people force it to do so. Remember, the New Deal was sold to the people on the premise that it was a temporary measure to meet the needs of an extraordinary crisis. This same line is being sold to us today. Don’t believe it.

At a time when government encroachment into the private lives of citizens at the federal and state level is at an unprecedented level, where state executives and legislatures usurp the rights of parents by mandating that children receive certain “vaccines,” where the Federal Government is pursuing a course to take over massive segments of the economy, where private sector jobs are being lost while government jobs are being created, and where the most likely winner of the upcoming Presidential election will seek to force state run health care, “world” taxes payable to the UN, and the elimination of the right of Americans to keep and bear arms, complacency is not an option. We must be organized and united starting today, for we must take back control of our government and make it work for us and not against us. Government encroachment into areas heretofore left to the individual self-government and personal responsibility of each citizen is out of control, and if left unchecked it will consume us. Keep this in mind: our Founding Fathers sacrificed their very lives for the liberty we are letting the government illicitly usurp piece by piece. So, as you witness these current events continue to unfold, keep asking yourself this question each day: “Am I sovereign or a subject?” Wake up, America, before it’s too late.

While Washington DC is certainly no stranger to political dirty tricks and mountains of lies used to bamboozle the American people into thinking that these criminals are actually “working hard” for us and our families, the ramifications of the current smoke and mirrors games being played by House Democrats under the dubious leadership (if it could be termed as such) of Nancy Pelosi and Barney Frank regarding HR 3997 is unprecedented.   It is not so much unprecedented because the methods employed, but because of the seriousness of the blatant unconstitutionality of the issue. Thankfully the measure was defeated. Disturbingly, it came to the floor for a vote in the first place.

True, Congress has been passing overtly unconstitutional legislation for a long, long time now, however the consequences of passing this piece of legislation in terms of what it means for the future of our economy, our political system, our government and out individual lives is not simply your everyday run-of-the-mill unconstitutional piece of legislation. It is treason. And now the traitors, Pelosi, Frank, Rangel and the rest of the Capital Hill Gang are patting themselves on the back, lauding their actions in getting this bill to the floor of the House as heroic. Frank, Rangel and Barbara Lee all made similar comments to the effect that because the American people simply cannot begin to understand the true gravity of the current economic situation and thus are mostly opposed to passage of this bill, we the people will never be able appreciate the actions they are currently taking to save us, our economy, our jobs, and indeed, the world. What a heavy, lonely and thankless burden that must be to bear.

Stunningly, while urging their colleagues to support this unconstitutional monstrosity many of these representatives loudly proclaimed their unwavering support for this bill while literally waving their pocket Constitutions in the air. These were indeed rather puzzling moments. It would have been nice if these bastions of the democratic process had actually read the Constitution at some point in their political careers, because if they had done so perhaps we might not be in quite the dire predicament we are. Perhaps then they would have realized that at least half of the legislation that moves through the House is unconstitutional for many reasons, not the least of which is the tendency of the Congress to enact legislation that reaches beyond its Constitutionally imposed constraints, like chartering government sponsored entities such as Freddie Mac and Fannie Mae or even appropriating $700 billion to bail out the financial sector of the economy.

And, as if the treasonous activity of this Congress were not in and of itself enough, consider the ineptitude of action and leadership that allowed for this situation to arise. As far as accepting the fair share of blame for the current financial crisis, both parties are at the very least complicit, and certain individuals in both parties ought to be investigated and tried for criminal negligence. Consider the fact that repeated warnings from economists, treasury, Fed officials and mortgage industry insiders were consistently ignored by those on committees that should have seen this coming and whose members were raking in PAC and lobbyist money from the very institutions they were charged with overseeing.

Consider the outright corruption and the implied threats of enforcement action against lenders who weren’t as enthusiastic over providing “affordable housing” as the progressives in Congress and the Clinton White House. Consider the outright fraud employed at Freddie and Fannie to boost numbers and activate executive bonuses. Consider the fact that Congress ignored all these things and that a certain Senator from Illinois hired two of these former executives, Franklin Raines and Jim Johnson, as advisors on his Presidential campaign. 

Consider the outright lies told to the American People by the Democrat Leadership late last week and throughout the weekend. How many times did that call a press conference to inform America that they had a deal when nothing could have been farther from the truth? How many times did they appear on national television blaming the House GOP for holding out and obstructing progress? The very idea that such was the case is one big obscene in-your-face lie told to the people, because the Democrats needed the GOP to be on board with the bill so that they could save face. And what, exactly, did the House Republicans reject en-masse? For starters, how about 20% of that $700 billion being appropriated to ACORN? Remember that group? They’re the ones facing legal action throughout the country for engaging in voter fraud on a massive scale. 

Consider also the voluminous amount of information gleaned by one committee in one hearing by two witnesses, Paulson and Bernanke, who basically told them all that they had better appropriate $700 billion to the exclusive authority and oversight of the Secretary of the Treasury or the entire economy would collapse. One would think that given the enormity of the issue and the amount of the request that more hearings would be warranted and sought. Perhaps they may want to interview one of the 200 economists and three Nobel Laureates who adamantly opposed such draconian government intervention advocating instead the position that such measures may be attractive as a false and temporary fix, but will do far more harm than good in the end. In part, these economists argue the following:

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

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

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

Incredibly, wholly omitted from the debate of this proposed monstrosity is the fact that this bill itself wholly, incontrovertibly and undeniably unconstitutional.   There is little mention of the fact that it would be green light for a de facto implementation of socialism by a legislature that has no such authority to give to a Treasury that is likewise restricted from so engaging in the private market.

The only sensible solution to this problem to do what the government has been trying to avoid for the last several years though use of Fed over-manipulation of interests rates and printing too much money to inject into the national monetary system. That sensible solution is to simply let the market heal itself. It will be painful, but not nearly as painful as taking such deliberate steps toward socialism and pretending that the government is going to make money on the deal and be able to privatize those companies again. Seizing banks and financial institutions and then brokering off their assets to the stronger banks is a temporary quick-fix that will have to be dealt with at some point, and the best way to deal with what is fast becoming the new landscape on Wall Street is to break up some of these banks. If having seven or eight big banks holding trillions in bad debt, how is it better when the number of banks is artificially reduced to three, J.P. Morgan Chase, Bank of America, and Citigroup, with the Fed promising to print billions of more dollars to flood the system with liquid cash and further hurt the dollar?

Liquidation hurts and people and institutions will suffer, but the alternative is far more dangerous in both the short and long term. For the White House and leaders on Capitol Hill to continue to panic the people and the market with alarmist rhetoric that, unless they act quickly, a global economic catastrophe is imminent when they do not know that this is truly the case is inherently dishonest. But what is worse, for them to have the audacity to wave the Constitution in their hands and proclaim that they are defending both it and our liberty by subverting the founding document of this nation and illegally usurping what of right belongs to the people is more than dishonest, it is treason.

Thanks be to God! The House of Representatives just killed HR 3997, defeating the bill 226 Nays to 207 in favor. Democrats voted 141 in favor and 9 opposed, while Republicans voted 65 in favor and 133 opposed. Members debated the merits and consequences of the bill all morning before taking a final vote around 1:30. A simple majority of 218 was needed to either pass or kill the bill. It is unknown at this time when further talks about a government bailout will resume.

Though the votes were not strictly along party lines, many of the floor speeches were. Rep Ron Paul spoke out passionately against the bill, reasserting the points he has been making for the last several years regarding the Fed over-manipulating the economy and creating artificial conditions that were unsustainable and damaging to the dollar, concluding that passage of this bill will do far worse damage in the long term. Rep. John Boehner (R-OH) earlier referred to the bill as a “crap sandwich” but implored his colleagues to vote in favor.

Maxine Waters rambled on about Martin Luther King and poor disadvantaged inner city folks, and George Bush and Republicans. Waters also loudly proclaimed her unwavering support for this bill while waving her pocket Constitution in the air. Someone should reminder her and her colleagues to actually READ that Constitution sometime. Someone should also remind Ms. Waters that she forgot to mention Dick Cheney and Halliburton – we all know they are the ones responsible for this debacle. They were probably the ones who really killed all those “deals” Dodd and Pelosi kept announcing over the weekend. Perhaps Ms. Waters could hold hearings on the matter? 

Rep. Barney Frank (D-MA) had a bunch of things to say, but no one could understand him.

My favorite remarks came from Charlie Rangel (D-NY) blamed Bush and lamented over the poor who will not be able to buy a house. Then he asked, “Where are all the small –government conservatives today?” Well Congressman, apparently 227 of them were present.

It is somewhat comforting when conservatives find their backbone and stave off the advent of socialism in the United States for another day. Thanks be to God.

Congress to debate passage of $700 billion “Taxpayer Bailout Economic Stimulus Act of 2008.” OK, maybe that’s not entirely true, but they should consider it. After all, it certainly can’t be worse than what is already being proposed, right? Just consider that with the unprecedented government intervention and unlawful appropriations of the public monies we have endured over the last couple of weeks to bailout several private financial institutions and lenders that failed because of poor, if not corrupt business practices and an overabundance of government meddling in the private sector, the best idea our friends in Washington DC can come up with to solve this ever-growing financial crisis is a $700 billion bailout package to save the companies that screwed us over in the first place. 

If nothing else, this just goes to show how really out of touch with reality the Washington elite are. And it is why I am proposing an alternative to this $700 billion monstrosity, one that will actually prove a benefit to the economy and the taxpayer.

So, what is this solution to calm the perfect storm presently ravaging our economy? It is a “bailout” for the taxpayers to the tune of $700 billion.   The original “plan” really wasn’t my idea. I first saw it posted on a fellow Townhall blogger’s site, which he titled “A Tongue in Cheek Plan for Fixing the Economy.” He gave the credit to a “Mr. T. J. Birkenmeier, A Creative Guy & Citizen of the Republic.” I liked it and thought about it and felt there was room for improvement. I asked the blogger if I could repost this and he said yes. But, after thinking about this proposal and doing a bit of research I have come up with a slightly different version of this plan. I will keep it simple, because there is no need to complicate it.

According to the IRS 138,893,908 individual tax returns were filed for FY 2007, but for the sake of simplicity lets round that up to 140 million.

The “Taxpayer Bailout Economic Stimulus Act of 2008” will would consist of a one-time $700 billion refund being sent in equal amounts back to all eligible citizens. Period. No fancy formulas or breakdowns of this tax rate or that tax rate - everyone who gets a check gets the same amount, plain and simple. So, what that essentially means is that every person who filed a 2007 individual tax return (form 1040) will receive a one-time lump-sum payout of $5,000 to do with what they please. That’s it. Easy, right?

There would be one catch. Before getting their checks all eligible recipients would have to read the Constitution of the United States, Milton Friedman’s “Capitalism and Freedom,” as well as “Economic Freedom and Interventionism” and “Liberalism: A Socio-Economic Exposition” by Ludwig von Mises. For those who are unfamiliar and bristled at the title of the last book by Mises, it refers to the Classic or Traditional Liberalism of the kind espoused by the Founding fathers of our nation. The bill would mandate the reading and testing of these works in the public school systems at least twice between beginning middle school and graduating high school. It would eliminate federal withholding for “income” tax purposes and all capital gains for a minimum of two years. It would also require that the Fed seek approval from Congress prior to printing any money, and that it report to Congress on a bi-monthly basis the estimated amount of liquid cash in the national monetary system.

Eligible recipients would then log on to a special and secure government website and, after creating their account by entering their unique taxpayer ID and coded password, take one online test each on the Constitution as well as on each book, and a final cumulative test on the general economic principles espoused within these great works as well as a comprehensive analysis on the Constitutional limitations on government. Immediately upon passing all the tests the recipient’s check would be mailed or electronically deposited, if so desired. This would ensure that all recipients had a solid foundation for understanding at the very least, the basic principles of liberty, free market economics, fiscal responsibility of the individual and government, that the proper respective roles of government and individual citizens in a free republic.

Such a proposal would be far more beneficial to the economy and to the republic than would the current government plan, if for no other reason than that the $700 billion government plan is far too expensive for its intended purpose and is also very, very stupid. But, given how we ended up in this mess, what should we expect from a government conceived and managed “solution” except incompetence, criminal behavior, and unadulterated stupidity? The “Taxpayer Bailout Economic Stimulus Act of 2008” is a far superior solution because, simply put, it is not stupid. It makes perfect sense for a number of reasons: 

First, this proposal is not a bailout. It is either a refund or an inheritance, depending upon how you look at it (just think about the amount of money the IRS confiscated from your families since the Federal Income Tax Act of 1913. 

Second, if you want to pass an economic stimulus package that will actually help the overall economy, said package ought to enable the recipient to do something significant. The recent stimulus check I received, while appreciated didn’t go nearly as far as is needed for its intended purposes. A substantial amount of monies returned to the people would have created the desired effect, but $1,200 when gas is at $4.00 a gallon… well, you get the idea.

Third, given the current situation it makes far more sense to stabilize the economy from the bottom up and not from the top down. Gove the money to the people who will decide where their confidence is in the general market and invest or purchase commodities and goods accordingly. For example, the primary thrust of Secretary Paulson’s argument for a top-down bailout of banks and financial institutions is that under the heavy burden of such vast amounts of bad debt, as the crisis is prolonged the fears of customers and traders will manifest themselves in runs on the banks and financial institutions and will ultimately result in crashing of the collective value of all of these companies, and hence the entire financial system will collapse completely in an economic domino effect. This argument is nothing more than fear-mongering, because it overlooks the simple fact that money in a free market system is equivalent to security, an so if given the money the people who pay that money in the first place will feel more secure (as in they will know they will not be going hungry and will be able to get to work…). When they feel financially secure, they will spend money, either on consumer goods or investing in stocks and commodities, and right now there are many bargains to be had on Wall Street. 

Large numbers of people buying stocks in troubled institutions actually does make sense. Why? Because you generally want to buy something like stock when it is cheap and hold it as it accrues value. T be sure, people would be buying that financial stock up immediately – as they are even now because they know that instinctively buying such stock now is a good bet to make more money later. With waves of people purchasing and therefore by default showing confidence in the overall soundness of the economy and the free market, Wall Street would rally and the value of all companies, public and privately traded would increase, the economy would expand, job would be created due to the affordability of innovation and we would soon find ourselves once again in cyclical upswing, and all without unnecessary government intervention and unlawful nationalization of sectors of the economy or unconstitutional bailouts of private companies. 

Fourth, sending large amounts of money directly to the people instead of to the failing banks and financial businesses is entirely Constitutional and sensible and has a far greater probability of succeeding. Why? Because, in essence, you and I are the economy (read the books…). Such action would truly be supportive of free market capitalism by empowering the consumer and letting the market dictate from there without unlawful manipulation by quasi-government agencies (cough! The Fed) to create artificial conditions conducive to the instability and collapses we are now witnessing because the government wants to perpetuate the upswing cycle and wholly avoid the downswing cycle. Such efforts to force markets and economies to do things and perform in ways that against they nature will never succeed and will only make the eventual downside more severe. Talk to the former Soviet planners about that.

Finally, such an action would boost confidence not only in the economy but also in government for finally realizing that it was the primary reason things are so messed up and for having the sense to trust the people and do the right thing. Bailing out massive corporations that are possibly going to be unresponsive to the injection of cash is just plain stupid. There is no reason whatsoever to appropriate hundreds of billions of dollars for the government to buy bad debt when at the same time there is plenty of reason to spend one-seventh of the current proposed amount and enable those individuals who are struggling to pay off those debts, and by solving their individual financial crises solve by default the collective crises of the larger economy by bringing the debt ratios of the various financial institutions into proper alignment and thereby allowing for the market to do what it alone does best – correct itself.

So, if you are a person who thinks they could use a spare $5,000 maybe you ought to copy this proposal and send it to your representatives in Washington DC before they give a whole lot more of your money to the wrong people and make things even worse.

You may want to read Part I , Part II , and Part III prior to reading this, as this is a multipart series.

Part IV

A Government Sponsored Culture of Corruption

Freddie and Fannie took on increasing amounts of high-risk debt because they could do it with impunity: they are backed up with an implied guarantee from the government, so for them high-risk is really no risk at all – even if the loans go into default, Fred and Fan will be OK because they know the government will throw lots of money at them. Why? Because they own more than one half of the mortgage debt in the US. So they, and the government, encourage privately owned financial institutions to get on board the high-risk-high-profit gravy train and they also begin assuming high-risk debt. Banks and holding companies begin to consolidate and merge – money is flowing all around, the economy is humming right along and the Dow hits record highs. Unfortunately for the rest of us, many of those companies and individuals who were raking in the money were doing so because of what would otherwise have been considered unethical business practices had government not been promoting it.   An atmosphere of corruption facilitated and even encouraged by the government is only going to breed more corruption. 

Housing was more in demand than ever, so… the price of housing goes up, and up, and up. The demand is still there, so when the opportunity presents itself to make even more money, people and institutions will do it. Given the fact that the government was at least tacitly blessing these questionable activities, if not outright threatening regulatory enforcement if companies refused to participate, many people were taken advantage of by such relatively new inventions as so-called Ninja loans (No Income, No Job and no Assets) where said loans were made when there was really no probability that it would ever be paid back. Granted, one would think that when pursuing a loan for a home that one would have adequately assessed one’s financial standing and come up with a line in the sand that was an absolute limit, knowing they could afford nothing more. You can’t argue with ignorance or sheer stupidity. 

If people are too stupid to understand what they can or cannot afford, there’s not much one can do to help. A substantial part of the problem here, and certainly a part that only served to feed the beast and make matters even worse is the “credit culture” that practically puts having as many credit cards as you want in the Bill of Rights and very bad regulations that allow banks and financial institutions to give credit cards to an unemployed homeless guy with leprosy and dementia, and then encourage him to seek even more credit. 

Credit cards are great, right? You only have to make the minimum payment each month and you can spend as much as you want – and, the more you spend the bigger your credit line seems to get. Let the reader understand that I am not making excuses, but simply relating a contributing factor. When you go into a broker and sit down to get pre-approved to buy a home and you have determined that your absolute maximum price you can afford is $200,000 you have given this a fair amount of thought. Then the broker sifting through your paperwork tells you that your assets show that you can really afford a $285,000 home. And then you start thinking about the one you saw last week that you thought was out of your price range and reconsider – and buy it. Eventually you realize too late that the broker was wrong and you were right in the first place. You default, the bank takes the house and turns around and sells it and continues to make money – that is until people stop buying houses. Then the whole bubble bursts and the ugly truth rears its head. And that is what happened leading up to the collapse of Freddie Mac and Fannie Mae.

Let me reiterate once more: I am not advocating excuses for any people who knowingly overextended themselves and ended up in foreclosure sitting under mounds of debt that they could not pay off. Fiscal responsibility is an individual responsibility, and most of us understand and adhere to it. Unfortunately there has been a general attitude of entitlement in this country for a long enough period of time that many people simply think that having credit so they can get stuff they know they cannot afford is a Constitutional right. And, it doesn’t help matters when the government steps in and acts as if this were so, creating a regulatory structure that not only encourages but forces banks and financial institutions to make loans to people it otherwise wouldn’t because of quotas and threats of enforcement of anti-discrimination statues, etc.

The people on Wall Street and those who administer the financial markets of this country are not stupid. If someone with no job, no assets, no income, and no way of ever paying off a loan can to them and asked for a loan to buy a nice house in the suburbs, under normal circumstances the banks would have turned them down flat. But the government stepped in and said, in effect, “you have to give them a loan because they deserve a home and a line of credit, and if you refuse we will have to audit your business practices.” In the beginning, the banks weren’t given a choice. In the end, they succumbed to greed as they apparently could no longer resist the temptation to get themselves in deeper and deeper, issuing more bogus loans and justifying it by the “collateral” supposedly backing up those loans. But, the wealth of the companies was measured in terms of the “pledged collateral” and assets backing up those loans, so on paper they were rolling in money. In reality they were being bled dry.

To say that the bursting of the mortgage bubble caught some off-guard is completely and utterly moronic, because common sense ought to dictate that when you make a loan to someone with no assets, job, or income, you will not be getting that money back anytime soon. The people who were making the decisions at these institutions are not by any means stupid: they knew full well what they were dealing with and what they were doing. They knew exactly the risks they were taking, and believed the potential for profit was worth the risk. And they were wrong. And they were warned many, many times.

Some people, however, apparently did see the eventual bursting of the bubble. In fact, the Bush Administration proposed some sweeping overhauls back in 2003. In a New York Times article dated Sept. 11, 2003 the Times reported that, “Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.” This was seen as “is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken.”

Furthermore, then Treasury Secretary Snow said that “Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.”

However, “The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.”

So, even though people in the know were openly acknowledging a very major problem and preparing somewhat for the inevitable downturn that they had to know would lead to a financial collapse, there was still little incentive to alter the prevailing practice of the day when both companies were exempted from antifraud provisions of federal securities laws. The result? No changes, just more debt. Freddie and Fannie continued to accrue debt and sell it to other firms, all of which were now totally on board the high-risk mortgage gravy train.

Not everyone saw a problem with this, however: “’These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,’ said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ‘The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.’'' You see, to some politicians, most of them progressive Democrats, pandering to a voting bloc is more important than the financial stability of the nation.

So for the far-left progressives who are in denial that their precious pandering policies are about to ruin the nation financially, and continue to blast the current President and any conservative thinker who would dare to question the validity of the standard progressive, or for that matter Congressional, solution of throwing as much money as possible at problems, might I inquire as to who you think will be paying for this? The progressive left blames the free market, but the real problem is that the market is not free and hasn’t been for decades due to government meddling in things it has no business meddling in. And now it owns businesses – and a ton of debt. That means YOU own a ton of debt, and you and your posterity will be responsible for paying it off because, despite its assertions to the contrary amidst the clatter printing presses running overtime in the basement of the Fed, you know and understand if you have read some of my previous articles on the subject of the government and its debt, that the Federal Government is flat broke. It has no money, and only keeps running because the Treasury auctions off that debt to the entity – or country – bidding to charge us the lowest interest rate.

This brings me to a final point. Remember that $2.3 trillion dollar figure we were discussing a while back?   Well, that seems to have changed too. Recently the Fed printed out another $180 billion to pool with other central banks from around the world and pump into the global economy. Congress will likely will approve the recommendations of Fed chief Bernanke and Treasury Secretary Paulson and authorize close to $1 trillion for a new government agency and program to by up all the bad debt in the country. It’s amazing how fast things can happen in Washington when those responsible for it realize that the proverbial you-know-what has hit the fan and splatter all over their vile and corrupt faces. You may also factor in the very real possibility of Congress approving even more that the $1 trillion figure requested so it can bail out homeowners. There will also be more industry bailouts, because now that the government kitty has been tapped, there will be no end to the number of industries holding out their hands for money.

Finally, as if the news could not get any worse, consider that a certain far-left progressive who would be President will tack on an additional 800 billion to 1 trillion dollars to these figures with new government programs. 

It is time to act sensibly here and do something about this mess before we totally implode. 

What can we do about it? For starters bombard your representatives with angry email. Flood their accounts. Flood their phone banks. If you scare them they will react, because for the most part, they are cowards. Then in early November ask yourself this question before you go to the polls: “If two quasi-government agencies and a bunch of corrupt, rotten and unaccountable politicians got us into this mess, how will the same people and more government get us out?” Then vote.

You may want to read Part I and Part II prior to reading this, as this is a multipart series.

Part III

An Economic Bermuda Triangle

Those who are to blame for this crisis are the ones who engaged in predatory lending practices and those who enabled them to do so. Who would that be? Let’s start at Freddie Mac and Fannie Mae and then skip on over the Capitol Hill and the White House.

Who’s been working over at Freddie and Fannie? Funny you should ask that. According to the Investors Business Daily, when “Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud. Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million. Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses. In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.” Hey – isn’t that the same Jaime Gorelick who was on the 9/11 Commission? And isn’t that Franklin Raines the same guy who was Director of the U.S. Office of Management and Budget under Clinton? Coincidence, or...?

Below is a list obtained from OpenSecrets.org: 

Top 12 Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008

Name                             Office State Party     Grand Total    Total  PACs   Total Individuals 

1. Dodd, Christopher J     S         CT        D          $165,400      $48,500           $116,900

2. Obama, Barack            S          IL         D          $126,349      $6,000            $120,349

3. Kerry, John                  S          MA      D          $111,000      $2,000             $109,000

4. Bennett, Robert F         S         UT       R           $107,999      $71,499            $36,500

5. Bachus, Spencer           H         AL       R            $103,300      $70,500          $32,800

6. Blunt, Roy                   H         MO      R            $96,950       $78,500             $18,450

7. Kanjorski, Paul E        H          PA      D            $96,000        $57,500            $38,500

8. Bond, Christopher S    S          MO     R            $95,400        $64,000            $31,400

9. Shelby, Richard C       S          AL       R           $80,000        $23,000             $57,000

10. Reed, Jack                  S          RI        D           $78,250        $43,500           $34,750

11. Reid, Harry                S          NV       D           $77,000        $60,500           $16,500

12. Clinton, Hillary          S          NY       D           $76,050        $8,000              $68,050

Nancy Pelosi is number 17 on the list. The full list names just about everybody in both houses of Congress. Get the picture? 

At the very least since the Clinton Administration took power, and likely long before – like circa 1970 – there has been a financial Bermuda triangle between the White House, Congress and Freddie and Fannie. Money and power and influence and corruption swirl round and round, yet the data, evidence and memories of those involved in government sanctioned corruption seems to just disappear into thin air – especially when the good times go bad and someone else has to be blamed. It seems that it is always the same people involved in making your money disappear – and right into their own bank accounts in one way or another. Ah, the revolving doors of Washington DC!

When you look at this list of politicians who took Freddie Mac and Fannie Mae contributions over the last twelve years and read their names and party affiliations, one quickly realizes that the spirit of bipartisanship is indeed alive and well, at least when it comes to taking campaign contributions from quasi-government agencies chartered by Congress, certainly with that potentiality in mind.  

The whole list it is very incriminating to politicians of both parties. It is interesting to note, however, that most of the high dollar recipients were Democrats. This by no means absolves the Republicans - in fact it damns them. Not the number one recipient of these contributions, Senator Chris Dodd, Chairman of the Senate Banking Committee. This Senator also received a sweetheart deal on a loan, as it turns out. Surprised? You needn’t be, because he is not alone. 

According to Portfolio.com, “Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, refinanced properties through Countrywide’s “V.I.P.” program in 2003 and 2004, according to company documents.”

Here’s something else that won’t surprise you, because the MSM and the Democrat Party don’t want you to know about it, lest your feathers get a bit ruffled. “Other participants in the V.I.P. program included former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke. Jackson was deputy H.U.D. secretary in the Bush administration when he received the loans in 2003. Shalala, who received two loans in 2002, had by then left the Clinton administration for her current position as president of the University of Miami. She is scheduled to receive a Presidential Medal of Freedom on June 19.”

Have you noticed anything that these folks, I mean crooks, have in common. They all worked… for a certain guy… at a particular address on Pennsylvania Avenue… Have you figured out the connection yet? Here’s one more clue just to help you out: “James Johnson, who had been advising presidential candidate Barack Obama on the selection of a running mate, resigned from the Obama campaign after the Wall Street Journal reported that he received Countrywide loans at below-market rates.”

There are many, many more. All of these former high ranking government officials who worked for a particular Democrat who served two terms between 1992 and 2000, and who received VIP treatment were referred to in Countrywide company emails and documents as “FOA”s, or Friends of Angelo – Countrywide CEO Angelo Mozilo. 

It appears, again according to Portfolio, that Angelo had many, many friends in very high places. “Henry Cisneros, who served as secretary of Housing and Urban Development in the Clinton administration; former White House staffer Paul Begala, now a commentator on CNN; and Postmaster General John Potter. Countrywide also offered special discounts to Congressional staffers involved in housing issues.”

Angelo’s tentacles were far reaching: Countrywide spent over $1.5 lobbying Capitol Hill in 2005. Here’s an interesting anecdote. “Jimmie Williams, a Countrywide lobbyist in Washington, was remarkably candid in emails about the purpose of V.I.P. loans. In November 2002, for instance, Williams urged Feinberg’s boss, Doug Perry, to give “specialized handling” to an application from a staff lawyer for the House subcommittee that monitors the Department of Housing and Urban Development. HUD regulates real estate settlements and closing costs and runs the Federal Housing Administration, the agency that guarantees mortgages. Williams pointed out that Clinton Jones III, senior counsel of the House Financial Services Subcommittee on Housing and Community Opportunity, was “also an adviser to ranking Republican members of Congress responsible for legislation of interest to the financial services industry and of importance to Countrywide.” Jones borrowed $101,800. So what. Who is this Clinton Jones, anyway?

Clinton Jones III is now vice president for industry relations at Fannie Mae. The lobbyist, Williams, is currently state director for federal residential-mortgage bundler Freddie Mac – you know, the guys who bundles up all this bad debt and sells it to firms on Wall Street. Also worthy of note is the fact that depending on the year, Fannie Mae bought anywhere from 10 to 30 percent of its loans from Countrywide, which they would bundle with other bad loans and then sell again. Are you holding your nose yet? Wait – there’s still more! 

Many current and former Freddie Mac and Fannie Mae executives received VIP loans from Countrywide. Former Fannie Mae C.E.O. James Johnson was given home loans at relatively low interest rates, and Countrywide waived points for him. In fact, company documents show that after leaving Fannie Mae, Johnson received more than $7 million in VIP loans. Just in case you forgot, that’s the same James Johnson who Senator Barack Obama appointed to vet his potential VP candidates. I think you get the point.

These were the just some of the players involved in the high-risk mortgage game. Granted, many of these people just named would have no problems paying back the loans, but when one is given such VIP treatments and so many of these types of VIP loans are made that may preclude a company such as Countrywide from adequately covering its costs, who do you think that cost gets passed on to. Did your Countrywide mortgage rate increase over the last couple of years? Mine did. Gee, I wonder why?

So, you had at least one major mortgage company giving away sweetheart deals to those who wield political power and leaving the rest of us to make up the difference coupled with pressure from the Clinton Administration to approve loans to millions of people who couldn’t afford them and shouldn’t have been given loans and lines of credit in the first place. What, then, do you have? According to the left you have a conspiracy theory, for it is understood in official circles that there were no Democrats involved. That means the MSM doesn’t tell you about it – so you have to hunt around to find the information, even though everyone in Washington knows who did what.

According to Politico, Nancy Pelosi had this to say “Eight years of weakened regulation of our nation’s financial system — including a failure to regulate risky, and often predatory, lending practices — by the Bush administration and Republicans in Congress have led us to this point, and could further erode our nation’s economic health.”

Doesn’t seem to jive, now does it? Remember too that Pelosi has a vested interest in NOT being found complicit I this scandal – she’s Speaker of the House and number 17 on the recipients list for Freddie and Fannie. Funny how these things always seem to triangulate in Washington, isn’t it? 

Obviously, if you’re thinking that there might be some hearings on this little matter of our entire financial sector imploding, you can forget it. The left will blame Bush and McCain and the MSM will ignore the inconvenient fact that Obama is up to his ears in this mess – if for nothing else than really, really bad judgment in appointing or having anything whatsoever to do with a miscreant like Johnson. If everyone is making some money, then all is well among the corrupted elite; no harm, no foul, right? That is at least if you’re the DC insiders making the money, cutting the deals, brokering power and influence, and covering your tracks – or at least trying to.

So, as the financial feeding frenzy really ramped up, Freddie, Fannie and the bulk of the remaining major lenders began delving into the high-risk loan market and issuing lines of credit and approving loans for more and more people who shouldn’t have had them while jumping in bed with Congress and the apparently the whole former Clinton White House. They just couldn’t control themselves, I guess, with the potential sitting there for such huge, monetary gains and political favors waiting to be granted. 

The problem was that eventually the odds against making the money back have to become overwhelming because economies and markets, be they housing markets, credit markets, securities markets or what have you, are also cyclical: where there is boom there will eventually be bust, because the thing cannot continue to grow to infinity. As these high-risk loans were being blessed - if not pushed - by the government the conditions became more and more friendly for predators and for corruption system-wide across all strata of the financial industry. And where those in government and in management are overtly corrupt or sanctioning corrupt business practices, one must understand that corruption begets more corruption and this is a cycle that will continue until it is either too late to stop or it crashes. Why? Because when people are buying homes out the wazoo, spending on all sorts of stuff, taking out lines of credit and the economy is humming along nicely with barely a noticeable hiccup, no one cares about corruption. And even when red flags are raised, no one is going to listen – except those kooky conspiracy theorists like us (and Ron Paul).

You may want to read Part I prior to reading this, as this is a multipart series.

Part II

Here’s the Deal-eo

Before I get into the down-and-dirty politically-incorrect reality of what is presently transpiring in the national cesspool known to most people as Washington DC, let me first provide the reader with a breakdown of where we are so far. The government has thus far exceeded its Constitutional authority in bailing out the following companies and financial institutions: Bear Stearns $29 billion; Freddie Mac and Fannie Mae $200 billion initially (with a potential ceiling of $1.5 trillion, yes, trillion, due to the debt they carry); AIG 85 billion; the “officially” acknowledged version of the federal deficit $400 billion; loans floated to various other smaller banks and institutions, plus FDIC replenishment $109.6 billion. Put this all together and as of today we’ve just tacked another $1.2 trillion onto the taxpayer’s bill. 

But it gets better, as we may as well just factor in the actual debt that Fannie and Freddie have accrued, $1.5 trillion, because you and I both know the bottom line is that when the government steps in to pay for something, they pay the full asking price. So the real number up to $2.3 trillion. But we’re not done yet. Far from it. You know that “official” deficit figure of $400 billion? Well, that does not include the obligatory welfare/nanny-state social and financial programs such as Social Security, Medicare and Medicaid, federal education loans, grants and the like. Oh, and don’t forget the trade deficit where we lose big to foreign tariffs and, of course, the interest we will ultimately have to pay to all those other corporations and foreign central banks who are buying up US debt auctioned off by the Treasury like candy. So just keep that little $2.3 trillion kiss-in-the-mail in the back of your mind and understand that the actual figure is far, far higher. 

On September 15 the Investors Business Daily published an Op-Ed piece called, “The Real Culprits In This Meltdown.” This piece sums up the current financial crisis nicely and places the proper blame exactly where it ought to be placed – on those people who were responsible and complicit in the criminal activity that resulted in the unprecedented action of the US Government nationalizing industry. 

First off, let us understand exactly what was the catalyst of this mess. Subprime lending is a high-stakes financial game played by massive financial institutions, most notably Freddie and Fannie, where loans are made with the higher expectation of risk and are therefore made with a higher interest rate than normal. This means loans are made to people or entities that the lender understands may not be able to pay back, and so a higher interest rate is the price of the loans. If the loan is paid back the lender wins big. But if the loan is defaulted upon, the lender loses all.

The notion of subprime lending generally refers to those types of loans in categories apart from those specified in loan guidelines established by Freddie Mac and Fannie Mae, which is a bit of irony seeing as the whole problem snowballed from these two institutions. Loans would be considered subprime due to several factors including, but not limited to, income, income and job history, and the credit status of the borrower. “Subprime” also denotes bank loans taken on property that cannot be sold on the primary market and such lending encompasses a variety of credit instruments, including mortgages, car loans, and, of course, the all-American staple that those with no money just can’t do without, credit cards.

Now that we understand what we are talking about, let us move on.

Let’s jump back in time to the late 1970s for a moment. You remember it, don’t you? The booming economy, massive economic development, national pride abounding, and all under the leadership of the best President that the United States that has ever had: Jimmy Carter! You remember that little gem he got Congress to pass called the Community Redevelopment Act that was meant to promote minority home ownership? Well, that particular piece of legislation was employee by the Clinton Administration fro the first days he was in office to ensure that he could declare how he was the champion of the poor and of minorities and how it was he who was able to provide them with “affordable housing.” Do you know what “affordable housing” is? “Affordable housing” is when people who can’t afford it buy a house and you and I pay for it. 

So, Clinton used this legislation to pander to minorities and the poor. In doing so, he also put the full weight of the Federal Government behind it so as to “encourage” lenders to “help” the “less fortunate” to obtain “affordable housing.”   What that really means is that Clinton resurrected the Community Redevelopment Act and to make good on his campaign promise to provide said “affordable housing,” it quickly became well understood that every lender had to make “affordable loans” “available” to basically anyone who was not of white Anglo decent who wanted one. Of you were a lender, you did not want to turn anyone down, because then you were subjecting yourself to bearing the full brunt of the US Government penal code as enforced by the relevant agencies. You could be investigated for anything from “unfair” loan practices to racism and discrimination, and as we all remember after Waco and Elian Gonzales, Janet Reno was more that anxious to wield her power.

Caught up in the hysteria of the typical liberal obsessions of enforcing multiculturalism and pandering to the poor, the Administration was more than willing to levy hefty fines and other penalties on those who did not share the Administration’s enthusiasm for such high risk lending. Any anyone who does not think that such conditions not only enable but strongly encourage predatory lending practices – that is lending to people that you know will never be able to pay it back – needs to pull their head out of their hind-side and get with the reality of the actual situation as it was and as it presently is.

“Now wait a minute,” you might say to yourself. “Is he saying what I think he’s saying?” Well, yes and no. Let me be unequivocally clear here: the poor and minorities are not the ones to blame here – they are as much victims as you and I, and probably even more so, as far too many of them are being or have been foreclosed upon. They are victims because the environment in which they purchased homes was artificial if it was the case, as it was with so many, that lenders knowingly convinced them that they could take out a loan worth far more than they could pay in reality.

Part I

Here We Go Again…

OK. By now you’ve probably heard that the US government has seized control of yet another failing company, AIG and the Federal Reserve is going float them a sustenance loan to the tune of $85 billion. The government will have 79.9% control of the company and the loan must be will be repaid in 24 months, at an interest rate of 11.56%.

When the Fed and the Treasury and the President’s “economic working-group” decided on this course of action, they did not call Congress for approval. This is a big deal, and just in case you don’t know, Congress and Congress alone holds the purse strings of this nation’s government. Per the Constitution, no monies in the Federal treasury can be appropriated without the approval of the Congress. Not only did the Fed in it’s infinite wisdom opt not to contact the Congress and even inform it that they had decided upon another multi-billion dollar bailout for AIG, they also talked with a bunch of central banks from around the world and decided to inject $180 billion into the global monetary system.

But don’t worry, because according to the government they didn’t really need to get approval from Congress to do this because they were not going to spend money we already had, they just printed more! Get the picture?

Did You Know…

Let me put this as clearly and succinctly as I can: there is nothing Federal about the Federal Reserve. It is not a branch of the US Government. It is a bank. It is a central bank of the exact type that our Founding Fathers warned not to create. It is an entity that operates entirely outside of the constraints and limitations of the Constitution because it is entirely unconstitutional. It is completely and utterly unconstitutional, yet is the de facto controlling agency of the US Government. Congress is supposed to hold the purse strings, yet it is the fed that routinely dictates to the Congress what it intends to do, and then summarily receives a blessing to do so. It operates with impunity, and you and I pay the price it’s activity incurs.

An article entitled U.S. to Take Over AIG notes that: “It puts the government in control of a private insurer - a historic development, particularly considering that AIG isn't directly regulated by the federal government. The Fed took the highly unusual step using legal authority granted in the Federal Reserve Act, which allows it to lend to nonbanks under ‘unusual and exigent’ circumstances, something it invoked when Bear Stearns Cos. was rescued in March.”

Some economic analysts and talking heads are speculating that this could be a good thing – that when the loan is repaid, the government will actually make money on the deal because of the steep interest rate. They must be assuming that the loan will actually be repaid. And you know what happens when you assume, right? They think this is a good thing because they have totally lost sight of the fact that the US Government has absolutely no Constitutional authority whatsoever to seize control of a privately owned business and bail it out with taxpayer money.  

What is going on here is sheer, unadulterated, unconstitutional, government-run-amok madness, and its high time we took the gloves off and stopped dancing around the issue of why we are here in the first place, and start naming it for what it is. And naming names. We may as well do that here in the blogosphere, because you sure as hell know that these subjects and names of the people responsible for this mess will never, ever, come before Congress. I don’t think I need to tell you why.

Have you seen the news? Have you been watching the financial sector self-destruct? Did you hear about the latest $85 billion bailout of AIG? Did you hear Dana Perino’s briefing from the White House today? Here’s a little exchange that caught my attention:

Begin transcript

“Q And to the people who say, you know what, AIG should have failed so that you clean out the system and you don't delay whatever recovery -- you have a bottom and you start to move up. What do you say to that?

MS. PERINO: Well, we remain concerned about other companies, and that's why the Secretary of the Treasury continues to work with the team to see if we can stem any other losses.

But they're -- as I said, they're taking this on a case-by-case basis, and we will have to continue to do so; at the same time, looking at what we do to make sure that the taxpayers, to the greatest extent possible, are protected. But the considered judgment here was that if you don't take the recommendations of the senior economic advisors, who are very experienced and have decided on decisive action that can help stem the tide of broader economic damage, that that's the best thing that we can do to try to help protect all taxpayers in the long run.

[W]e are dealing with very challenging times and Secretary Paulson -- I'm sorry, the Fed Chairman, Ben Bernanke, and the President's economic advisors had determined that there were some -- some of these companies were so big that to allow them to fail would have caused even greater harm and damage to the economy.

So the goal has been to take action where necessary to promote stability and strength in the marketplace, so that we can prevent or limit more damage to the broader economy. In all cases, the President has wanted to make sure that the taxpayers are kept foremost in mind. In these agreements, if you look back, the shareholders have been wiped out. A lot of employees have lost their jobs. Management has been replaced. And the taxpayers will be paid back first.

While no one would have liked to have ended up in this situation, you have a government that is willing to lead, act where appropriate, and govern, to make sure that we limit broader financial harm to the economy.

Q You say taxpayers will be paid back first. They may not be paid back at all.

MS. PERINO: Well, that is true. And that is why we take great care in making sure that President has asked a lot of questions, to make sure that his economic advisors have thought things through, have made the best determination and have moved forward. But I think the tax -- I think the argument is that the taxpayers might be harmed even worse if the economy was -- if we allowed it to just have a lot broader damage.

And we think that the actions that have been taken were appropriate ones. I believe that Treasury thinks that they will be able to pay the taxpayers back. But it's just going to take us some time to work through this crisis.

Q Where does it stop? (The Bailouts)

MS. PERINO: You know, I would be misleading you if I knew. What we are doing is taking this on a case-by-case basis, evaluating each one carefully.

Then there was this exchange that really caught my attention:

Q Dana, what do you say to Americans who are looking at the AIG deal and saying, we don't have a free market economy; how can you call this a free market economy?

MS. PERINO: We do have a free market -- the free market is alive and well, and we have systems in place here in our country to be able to deal with shocks to the system like this. And Secretary Paulson and the Fed Chairman have taken action where they think necessary in order to prevent broader shocks to the economy.

Look, the market has had a lot of information to digest over the past several days, and it's going to take a little bit of time for us to see where this goes. But I think the considered judgment -- the collective judgment of most people today is that the action they took last night on AIG was the right move.

Q And to the people who say, you know what, AIG should have failed so that you clean out the system and you don't delay whatever recovery -- you have a bottom and you start to move up. What do you say to that?

MS. PERINO: Well, we remain concerned about other companies, and that's why the Secretary of the Treasury continues to work with the team to see if we can stem any other losses.”

End Transcript

Is it just me, or is everyone in Washington kind of sticking their collective heads in the sand and pretending that waving the flag around and pontificating on what little they know of the Constitution and the actual limits and constraints upon governmental authority relative to the economy, they will be able once again to bamboozle the people into thinking that big-daddy Uncle Sam will make everything OK?

It is disgusting, it is unconstitutional and it is very, very disturbing. And I am one very, very pissed off American today. I don’t usually use such language on this blog, but I just don’t know any other words to describe how I feel – OK I do, but if I use them they’ll throw me out of here.

I am pissed off that everybody in DC says they didn’t see this coming, but the evidence shows otherwise.

I am pissed off that every branch of the government is deliberately exceeding its Constitutional authority and doing whatever it feels like with impunity, because they think that the people are so apathetic that if they just throw us a bone here and there we’ll simply ignore their gross transgressions.

I am pissed off that these politicians and bureaucrats pretend like there is nothing wrong with calling our system a "free market" economy while at the same time they are messing with it from the Fed and thereby making it anything but free.  The fundamentals of a strong economy are indeed ther, and it would work if only government would let it instead of trying to constantly manipulate it.

I am most pissed off that no one will speak the truth in DC! How stupid do they think we are? Am I the only one who feels insulted? 

When you look at the players in this meltdown and trace the money and people, you get back to Clinton’s pandering to minorities and the poor and pushing that multiculturalism nonsense that the progressives love so much. You also inevitably get back to Freddie Mac and Fannie Mae – two unconstitutional quasi-government agencies that cost taxpayers a bundle and make rich bankers richer and hook up members of Congress with a money machine that is akin to an ATM, so that these behemoths will never die, cause no one wants to turn off the money spigot.

I have no problem whatsoever with people getting rich, but not on my dime - not at the public trough.  And, I want to know why the former executives of Freddie and Fannie are still getting paid to stay on for the "transition."  Only in Washington DC can you ruin the financial sustem of the nation and get rewarded for it.  Freddie Mac’s Richard Syron and Fannie Mae's, Daniel Mudd are still getting paid, even though they knew what was going on.  You and I both know that if they worked for a true privately held firm, they'd be persona-non-grata and awaiting indictment and trial.  But there will be no trial.  Probably no hearings either.  nancy Pelosi is a big fan and recipient of Fred and Fan's lobbying money.  Imagine that!

You also have career political hacks that would sell their souls for money, dark amoral people who can smile and put on a look of concern and lie right to your face and mean it at that moment. People like Bill Clinton, Nancy Pelosi, Jamie Gorelick, Franklin Raines, et al.

You have people who do not give a crap about people like you and me because they are better than us – they work in DC. They are members of Congress. They are bureaucrats.

They are all liars!

You have a guy like Obama who’s bemoaning greed and avarice on Wall Street, and talking nonsense like this: “’Since this turmoil began over a year ago," the Illinois senator said, "the housing market has all but collapsed. Fannie Mae and Freddie Mac had to be effectively taken over by the government. Three of America's five largest investment banks failed or have been sold off in distress. Yesterday, Wall Street suffered its worst losses since just after 9/11.’ He said McCain and President Bush subscribe to the same approach: ‘support ideological policies that made the crisis more likely, do nothing as the crisis hits and then scramble as the whole thing collapses.’”

Wow! Suddenly he’s outraged about Freddie and Fannie. Gee, he didn’t seem too upset over the fact that he has accepted $126,349 in lobbying money from Freddie and Fannie since 2004. In fact he’s the Number Two recipient of money from those two abominations. And let me put it in the proper context for you: the list at opensecrets.org was compiled from 1989 to 2008. Obama is second on the list. Chris Dodd is Number One, having received $165,400 since 1989. Obama received $126,349 in just four years, and half of that time he’s been running for President.

Why the hell isn’t anyone except those of us on the blogs talking about it? Why won’t McCain bring it up? I don’t know – maybe he has, but I haven’t heard about it.

This stuff isn’t secret – it’s all public information.

And now McCain goes and disappoints me terribly by flip-flopping on the bailouts in just 24 hours. Yesterday at this time he was against them. Today he says it was the right decision. Helloooooo! How the hell is tacking $85 billion onto the taxpayer’s tab to bail out foreign interests the right decision? Oh, you didn’t know that? Yeah, AIG is a multinational corporation whose holding company, which was the entity bailed out, is backed 85% by foreign central banks. Where is the outrage? Where does it stop?

It’s wrong and it’s unconstitutional! McCain ought to know better!

Where does it stop? It won’t unless the people make them.

This has prompted me to do something different: I am writing several articles in various parts not only about this financial meltdown, but also on my take on our economy and the Constitution. I’ll be posting them in several parts, each with a disclaimer, because it is possible that without first reading the preceding parts, a current post may not make much sense. 

To my readers, I thank you for reading and I apologize for my ranting format – and language. I would also ask that, if you can, to please let me know when I post these multi-part articles if they flow and work for you – if they are coherent and lucid, so to speak. 

Until tomorrow, I’ll be pissed off and writing…

McCAIN AND OBAMA CAMPAIGNS

With the expected news of a poll-bounce for the GOP in the wake of the Republican National Convention comes the unexpected, albeit much welcomed news for conservatives that the McCain-Palin ticket has pulled ahead of Obama-Biden. Real Clear Politics averaged the major poll results and came out with McCain at 48.0% and Obama at 45.6%, a 2.8% lead for McCain. The pollsters from whom these averaged results were taken ranged from CNN/Opinion Research and Rasmussen Tracking polls showing the two candidates tied at 48%, to a USA Today/Gallup poll showing McCain ahead by ten points at 54% to Obama’s 44%.

Clearly the McCain-Palin ticket has succeeded in stealing Obama’s thunder, but a 2.8% lead is still a statistical dead-heat, and although the GOP ought well to take a measure of pride in surpassing Obama in the polls for the time being, gloating and/or complacency could prove fatal.   Momentum has shifted, but the deal is far from sealed. So how does the McCain-Palin ticket seal the deal? This is a difficult question with many potential answers.

First, it is noteworthy that in the weeks prior to the Republican National Convention Obama was generally the frontrunner. The week just after to the Democrat convention in Denver saw Obama ahead by as many as 8 percentage points (Gallup). The week prior to the DNC event in Denver revealed a general trend of an Obama lead, but that lead only ranged between 1 and 4 percentage points. This is significant, because in the weeks beginning 01 July and ending 25 August, Obama was up as high as 9 percentage points the week of 13 July, but averaged only a 4 to 5 percentage point lead until the week of the Democrat convention. In the days immediately following the Democrat convention Gallup Tracking and CBS had Obama with an 8 percentage point lead over McCain, while Hotline/FD gave him a 9 percentage point lead. On the low end, a CNN poll result showed Obama with only a 1 percentage point lead that week.

PRESIDENTIAL APPROVAL

Why is this significant? It is significant because at no point in the several weeks leading up to the Democrat National Convention was Obama leaving McCain in the dust, which is what one would expect if things in this country were perceived as being really as bad as Obama campaigns on. Indeed, there is real discontent with President Bush as he currently has a 32.8% approval rating with 64.0% of voters polled indicating disapproval of his administration. With a disapproval rating twice that of the incumbent Republican’s approval rating, one would rightly assume that voters should be flocking to Obama in droves. Despite the messianic coverage of Obama by the mainstream media, this is apparently not the case; and, this is a very interesting thing, because in general, one can view approval ratings and disapproval ratings of the incumbent President as a referendum on the party as a whole during a combined general and presidential election year. 

This next set of numbers, however, is very telling about the current electoral climate when looked at in context with numbers cited above.

CONGRESS AND GENERAL ELECTION PREDICTIONS

First is the Real Clear Politics Congressional Job Approval average of four polls over the period from 12 to 31 August. The RCP average gives Congress a meager 17.8% approval rating and a staggering 73.8 disapproval rating. The approval ratings for Congress were as follows: Quinnipiac from 08/12 to 08/17 16%; LA Times/Bloomberg from 08/15 to 08/18 17%; Hotline/FD from 08/29 to 08/31 at 18%; and FOX News from 08/19 to 08/20 at 20%. The disapproval ratings show FOX News and LA Times/Bloomberg at 73%, Quinnipiac at 74%, and Hotline/FD at 75%. 

This next set of numbers is very telling, again when taken in context with the previous results. 

The polls for use in predicting the emerging trends for the general Congressional electoral results for November averaged by Real Clear Politics from 15 August through 07 September give Democrats a 5.4 point advantage with 45.8% of the vote over the Republicans an average of 40.4%. The two extremes were the NBC News/Wall St. Journal poll conducted between 08/15 and 08/18 that show Democrats likely gaining 47% which is 11 percentage points above the Republicans 36%. The other extreme was the USA Today/Gallup poll conducted between 09/05 and 09/07 showing the Republicans up 5 percentage points likely gaining 50% of the vote to the Democrats 45%. It is noteworthy that the remaining three polls in the RCP average, Democracy Corps, Hotline/FD, and FOX News showed marked advantage for the Democrats, with that party polling ahead 5, 7, and 9 percentage points, respectively. 

SUMMARY

1. Emerging trends for the General Election: Beginning with the last batch of numbers, these clearly show that the Democrat Party has the overall advantage going into the November general Congressional election with the combined RCP average showing them up 5.4 percentage points over Republicans. Clearly the result demonstrates a widespread dissatisfaction with both Congress and the Republican Party. This is interesting because it is indicative of a distorted perception that the Democrats in Congress are doing a better job that the Republicans, when this is clearly not the case as evidenced by the Congressional approval ratings.

2. Congressional Job Approval: The interesting factor here is that the Democrat Party is the majority party in Congress that the polls show overwhelming dissatisfaction with. Congress gets a 73.8% overall disapproval rating and is ruled by the Democrat Party, yet the emerging trends above show this same party with a 5.4 percentage point advantage over Republicans going into the general election.

3. Presidential Approval: President Bush and his Republican Administration are disapproved of by voters by a margin of 2 to1, or 64.0% overall disapproval to 32.8% overall approval.

4. Presidential Campaigns: On 7/01 Obama had a 5.9 percentage point lead over McCain. His lead decreased to 2.3% on 8/04, and then climbing back to 4.8% on 8/12, dipping to 1.2% on 8/20 the week prior to the Democratic convention and then climbing to 6.4% on 9/02. Immediately upon entering into the Republican convention, and following the significant development of McCain announcing Gov. Sarah Palin as his running mate, Obama’s numbers began to fall off from a 6.4% lead on 9/02 and continued to drop as momentum appears, at least for now, to have shifted to the McCain camp with a 2.4% lead as of 9/08.

CONCLUSIONS

Clearly this is as tight a race as has been in recent history, with the poll results showing mostly a statistical dead heat once these polls are averaged together. What is certain is that the announcement of Sarah Palin’s addition to the Republican ticket served to give the GOP a definitive boost in the numbers, and once both candidates’ acceptance speeches were delivered at the GOP convention, erased Obama’s lead and put the McCain camp ahead. This is largely due to the fact that Palin is viewed by the conservative base of associated with the Republican Party as a solid conservative, fiscally and socially, and is also seen as a true reformer with a proven record.

That notwithstanding, the McCain ticket is clearly hurt to some degree to whatever extend the Obama-Biden camp can sell the argument that McCain is the equivalent of President Bush, a fellow Republican with a 64.0% disapproval rating. This is where things get as interesting as they do confusing. While the high rate of dissatisfaction with President Bush and his administration can be understood as a referendum on the entire Republican Party, and so while it is no surprise that the polling for emerging trends and predictions for the general Congressional elections gives the advantage to the Democrats, the advantage is not as large as one would think, a mere 5.4 percentage points. What is truly interesting here is the fact that Congressional disapproval ratings are averaged at 73.8%, down only slightly from a high of 77% in July. 

What this data show is that the country is still sharply divided politically. But what is more surprising is that given the increasing overall dissatisfaction with President Bush, the numbers have not swung more steeply in favor of Democrats. The data suggest a strong distrust of both parties as evidenced by the President’s disapproval rating, but no solid referendum for a different direction even while the RCP average taken between 08/19 and 09/07 that only 20.0% approve of the direction the nation is going in, with 75.7% disapproving.

For McCain, this is all good news and for Obama it is worthy of concern. For both campaigns it is worthy of very careful attention and much reflection. Obama, a highly charismatic person and eloquent speaker, has yet to complete the sale to the American voters. Given the state of dissatisfaction with government in general, Obama ought to be clobbering McCain, and yet he has barely pulled out a lead better than a statistical dead heat when all the poll results are averaged together.

McCain has seen momentum shift in his favor, and this is largely due to his choice of Sarah Palin as his running mate, he acceptance speech, and his follow up acceptance speech which reassured the conservative base by telling them what they needed to hear to get behind the ticket, and making an appeal to undecided voters. What is certain is that prior to the GOP convention, most conservatives were very leery about McCain and if even inclined to support his candidacy did so only grudgingly and as an affront to Obama. 

What is equally certain is that by choosing a staunch conservative reformer who is solid on social and fiscal issues of concern to the conservative base, who is relatively unknown and who is a woman has undeniably galvanized and energized that same base and thereby the whole of Republican Party. McCain drastically increases his chances at victory if he stays to the right, and in picking Palin he has signaled his intent to do exactly that. What the campaign needs to do next is to take the message to the people that the Democrats are the majority party in the Congress they so disdain and hammer the point home with voters to disassociate the Republicans from the failures of a Democrat controlled Congress.

McCain must also be careful not to be perceived as being George W. Bush redux, which ought not be too difficult a task; especially in making the case that he and Palin are the candidates of real reform and change, especially on wasteful government spending. If McCain-Palin can accomplish these things, they can easily beat Obama in November. The conservative base is largely on board now, and so the sale needs to be taken to the undecided’s and independents. 

Clearly the Palin pick has put Obama-Biden in a box in a way they never saw coming, and they are still reeling and assessing what is the best move and direction to proceed. McCain put them there and only he can keep them there. Right now it’s his race to lose, though far from over.

Bad things happen. It screws up everything – even the correct understanding of what, exactly, government is supposed to do and, more importantly, what it ought not to do. For those within the government, especially you “progressive” and faux-conservative politicians out there, here’s a little clue: the government has no business messing with the economy. Our government has become so monstrous that the confused masses of America now overwhelmingly look to this Leviathan to cure all that ails our nation. Why? Because they’ve been taught to. They don’t know that government has no such Constitutional authority as helping citizens and funding businesses and fixing the economy. Perhaps they (especially politicians) ought to actually read the document some time – it is very enlightening indeed.

Here’s how bad it is: when most people are asked who is to blame for the economy being screwed up, they tend to answer that the government is responsible. This answer is not at all incorrect. But, here’s the problem: when asked how the woes of the economy ought to be healed, most believe that the government needs to “do something about it.” Then they demand that Congress and the President act now! Seriously – isn’t the government the entity that is responsible for screwing things up in the first place? Now we are demanding that this screwed up government “fix” things? We want to entrust an impotent and self-serving Congress with a 9% approval rating and an Administration with little understanding of Constitutional restraint to “fix” things? The government has no business messing with the economy in the first place because in doing so it just messes things up even more and ends up costing the taxpayers (don’t even get me started).

On Sunday Treasury Secretary Henry Paulson announced that Freddie Mac and Fannie Mae were being placed in a “government conservatorship.” The plan to take control over the companies was approved by Fed Chairman Ben Bernanke. Paulson also affirmed that the Treasury would do “whatever it takes” to keep these two bastions of government excess from failing. Initially the Treasury would receive $1 billion in preferred shares, and then is initially prepared to provide up to $200 billion to help the companies heal from their financial hemorrhaging over excessive risky home loans. Remember that word: initially… you’ll see why in a minute.

The CEOs of both companies were fired – sort of. Freddie Mac’s Richard Syron and Fannie Mae's, Daniel Mudd, were respectively replaced by David Moffett, a former top official at US Bancorp and Herb Allison, formerly with Merrill Lynch. But, Syron and Mudd won’t be leaving immediately – they’ll be sticking around for the transition. If that weren’t enough, The Treasury's plan puts the two companies under a conservatorship, giving management control to their regulator, the Federal Housing Finance Agency.   FHFA was created recently by Congress specifically to oversee Freddie and Fannie. Are you beginning to see the pattern here?   Try Googling FHFA.gov to find its website and you’ll see that there is none. Either the agency is too new, or the government has become so big there’s no more room left in cyberspace for any more.gov websites. I am inclined to believe the latter.

According to the Wall Street Journal, with the government seizure of Freddie and Fanny, “the U.S. mortgage crisis entered a new and uncharted phase, potentially saddling American taxpayers with billions of dollars in losses from home loans made by the private sector. Bush administration officials argued that the cost of doing nothing would be far greater because of the toll on the economy of falling home prices and defaults in the $11 trillion U.S. mortgage market.” Potentially? Are they kidding? The bill is already in the mail.

But, the best is yet to come. Secretary Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors world-wide.

Do you know what that means? Think back to where the Treasury pledged to initially provide up to $200 billion and how Secretary Paulson stressed that the Treasury will do “whatever it takes” to save Freddie and Fanny. Factor that in with the $5 trillion of debt that is owned by foreign central banks and investors and then put Congress into the mix, and guess what you have? A Congressional authorization for our comrades at the Federal Reserve to do “whatever it takes” even to the tune of, oh, say, $5 trillion. After all, it won’t really be “debt,” because said “debt” will just go back to the Treasury to be auctioned off to more foreign central banks and investors. And eventually, our taxes will go up and we’ll pay for foreign bankers to get filthy rich. 

Keep in mind that the whole reason Freddie and Fanny were created by Congress is summed up in the following signature mission statement: “Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac raises capital on Wall Street and throughout the world's capital markets to finance mortgages for families across America.” Translated from Congress-speak this means: all investments through Freddie and Fanny are safe because Uncle Sam guarantees them. 

There is no risk at all to the investor. And that is exactly the problem. That is exactly why government should never, ever be involved in messing around with the economy.

From the Wall Street Journal: “The intervention also marks the failure of the public-private experiment that was created to boost home ownership among Americans. Fannie and Freddie were created by Congress to help prop up the housing market, and investors have long believed the government would bail the companies out in a crisis. But the companies have long been owned by private shareholders seeking to maximize profits.”   And they will. And the people will be angry, but Congress won’t care. You can bet on a new-and-improved “public-private scam that will certainly fleece the taxpayers of even more money. 

One economist from the University of Pennsylvania's Wharton School said, “Without government support for the mortgage market, home prices would fall much further, exposing the country as a whole to greater economic strain.” Any reasonable person who has ever read the Constitution with even a modicum of understanding and who gets the basic principles of supply and demand as the basis of a free market capitalist system of economics would argue the exact opposite. Why? Because of the difference between a supply system vis-à-vis a command system: once the government enters into the business of supporting various sectors of the economy the entire economy becomes de facto an artificial bubble, ever more removed from the reality of the market and prompting more and more government intervention until the government has to take control of or nationalize most of the economy in order to regulate prosperity and production and keep the whole thing from imploding. The problem here is obvious: Freddie and Fanny are the most startling examples of who our Founding Fathers never intended the government to be involved in such things.

Today President Bush had this to say: “Putting these companies on sound financial footing, and reforming their business practices, is critical to the health of our financial system and to making further progress with the housing correction that today is weighing heavily on our economy. Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing." He went on to stress that this is not a government bailout. 

Well, if a pledge of $200 billion for starters with a real possibility of running into the trillions is not a government bailout, I don’t know what it is. Wait a minute - maybe I do. It’s called nationalization. It’s called command economics. It is a deadly endeavor for a free republic. It is the inevitable result in a series of mortal errors that began with the creation of a central bank, the Federal Reserve System, by the Federal Reserve Act enacted December 23, 1913. That Act alone was a treasonous violation of the Constitution that has effectively sealed the ultimate fate of this republic – unless it can someday be repealed. It was shortly followed by another treasonous abomination, the 16^th Amendment ratified 03 February 1913 resulting in the Federal Income Tax Act of 03 October 1913. All must be repealed because all are deadly to a free republic because they by their nature usurp Liberty and encroach upon the rights of the individual. Not surprisingly a progressive income tax and a strong central bank are number 2 and 5, respectively, of Karl Marx’s list of 10 essential measures that must be enacted in order “to centralize all instruments of production in the hands of the State, i.e., of the proletariat organized as the ruling class; and to increase the total productive forces as rapidly as possible.” For those who are interested, this list is located toward the end of Chapter II of the Communist Manifesto. 

Every American should read the Communist Manifesto. They should read it so that they all understand what happens when government gets too big. They should read it all be frightened and angered. They should read it so that they can better understand why our Founding Fathers gave us the Constitution of the United States of America, and why that document was crafted so as to never to be tampered with or reinterpreted, lest we lose our Liberty to government hegemony, for such hegemony against individual Liberty is the only possible result when government grows too big to be stopped. It feeds on Liberty and snuffs out freedom. And this is only the beginning – unless it can be stopped.

The 110^th Congress has hit record low approval ratings according to recent Gallup and Rasmussen polls. Gallup recorded a 19% overall approval rating from its poll conducted 9 through 12 June 2008. The results of the Rasmussen poll show that “Congressional ratings first hit nine percent (9%) back at the beginning of July, marking the lowest ratings recorded by Rasmussen Reports. Ratings hit the same low two weeks later. Congress has not received higher than a 15% approval rating since the beginning of this year.” In fairness, Congress typically has the lowest ratings of the three branches polled.

Broken down by party affiliation, Gallup shows Democrats giving Congress a 23% approval rating, with Independents and Republicans coming in at about 17% and 16%, respectively. The Rasmussen numbers differ some, reporting a mere 13% positive rating among Democrats, with Republicans coming in at 8% and Independents giving only 3% approval to the job the current Congress is doing. Regardless of the difference in the percentage numbers, it would appear as though the 110^th Congress has a mighty PR problem on its hands.

According to Rasmussen, 63% percent of voters identifying themselves as not affiliated with either main political party showed the most discontent with the Congress saying it is doing a poor job. According to the Gallup polls, the general disapproval rating for this Congress is hovering at around 75%. Based on it’s own historical tracking data for Congress, the Gallup report said that these rating are “the worst Gallup has measured since it began tracking Congressional job approval in 1974.”

The Rasmussen report states further that just “12% of voters think Congress has passed any legislation to improve life in this country over the past six months. That number has ranged from 11% to 13% throughout 2008. The majority of voters (62%) say Congress has not passed any legislation to improve life in America.” In fact, the 110^th Congress has passed over 1900 “symbolic resolutions,” such as designating National Watermelon Month and National Funeral Director and Mortician Recognition Day. This Congress has also just recently resolved to issue a formal apology for slavery.

An article published 30 April 2008 in the New York Times stated: “Americans are pumping their paychecks into their gas tanks, and the economy is in a stall. Food scarcities threaten governments overseas and spur hoarding at home. Foreclosures are up, home sales are down. Progress in Iraq and Afghanistan is halting… Frustration is building as lawmakers see a major disconnect between the everyday anxieties of people back home and the Washington agenda.”

Indeed the frustration is real among American voters, as evidenced by the polls. The big question now is, “how will this frustration pan out in November?” Will the growing discontent with the direction of the nation and the seeming ineptitude of Congress translate into any action? If this last session most recently adjourned coupled with Speaker Pelosi [25% overall approval rating] and Congressional leaders on both sides of the aisle’s reluctance to even address those issues voters find important is any indication of what is to come, suffice it to say that November could prove very interesting indeed. One can only hope that Madame Speaker will make good on her promise and motto and, now having proved that the politics as usual attitude has been an abysmal failure, at least try a New Direction.  Perhaps she will.  After all, Madame speaker has already stated her approval for a bailout for the auto industry to the initial tune of $50 billion, and won't rule out Congressional approval for more taxpayer funding for other ailing industries.  So she's really not lying, right?  Because, after all, socialism and nationalization of industry is certainly a New Direction.