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 favorite U.S. financial cocktail of fiat currency, inflationary monetary policy, and massive deficit spending that has been the staple of U.S. economic policy for decades could soon result in a hangover that the dollar might not survive. Already new concerns are being raised as to what might happen is China and Japan refuse to continue buying U.S. debt. Tiger Management founder and chairman Julian Robertson told CNBC: “It's almost Armageddon... (more here...)

In a speech aimed at further demonizing Wall Street by once again failing to accept that government also bears responsibility for the much of the ongoing financial meltdown, President Obama declared, “I have always been a strong believer in the power of the free market. I believe that jobs are best created not by government, but by businesses and entrepreneurs willing to take a risk on a good idea.”

It is one thing to utter such words in a speech, and yet something entirely different to put them into action; and to date, all of Mr. Obama’s actions relative to the economy have been wholly manipulative and hostile to the idea of free market capitalism. To be fair, Mr. Obama is certainly not alone in his hostility toward true free market capitalism, for since the inception of the Federal Reserve in 1913 U.S. economic and monetary policy have been overwhelmingly interventionist and inflationary, building an faux economy with a fragile basis in easy money, easy credit, fiat currency.  (continued... examiner.com)

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.

What is the true cost of the proposed government bailout?  While most of America was enjoying the last weekend of summer and watching football, our unelected and unaccountable bureaucrats at the Treasury Department and the Federal Reserve were busy working on how to “solve” the financial crisis that seems to grow bigger and worse by the day. The “initial” solution that they came up with will cost between $700 billion and $1 trillion. That is the initial estimate of the cost. You can bet it will go much higher.

Wall Street has essentially collapsed and its geography has been forever change due to the deadly combination of greed, ineptitude of oversight, and government interference in the form of too much bad regulation. All this coupled with the Fed eternally manipulating interest rates and printing money in a vain attempt to affect a positive outcome and stave off the looming crisis as it simmered only served to compound the problem, and we are seeing the results. The result is an economic collapse or meltdown.  It is primarily due to government manipulation and meddling in something it has neither the authority nor the tools nor the competence to be meddling with. It is the result of “command economics” and central planning. Central planning is always bad for an economy, and in this case really, really bad planning results in a really, really bad problem

Admittedly, there was a certain degree of satisfaction watching the likes of Nancy Pelosi, Chris Dodd, Harry Reid, Barney Frank and the rest of the criminals on Capitol Hill standing there like deer in the headlights, with the shock and awe clearly displayed on their faces after their conference with Treasury Secretary Paulson and Fed Chairman Bernanke. One has to wonder, though, if the looks of grave concern were precipitated by the fact that they had just been told that the economy would imminently collapse if AIG were allowed to fail, or if it was because they understand that they are complicit in this financial catastrophe and are terrified that they will be found out. 

Sadly they have no real cause for concern, though, because the only pseudo-mainstream publications that actually report the truth of this mater and name who is complicit in creating the conditions and ignoring the signs that allowed this financial meltdown to occur are your usual “right-wing conspiracy” theorists like the editors and reporters at the Wall Street Journal, Portfolio, National Review, Weekly Standard, Investors Business Daily and the like. Guaranteed you won’t hear Katie Couric and Charlie Gibson bringing up names like Donna Shalala, Jamie Gorelick, James Johnson or, heaven help us, William Jefferson Clinton.

A remarkable thing is occurring before our very eyes in Washington, though – Republicans and Democrats seem to be genuinely working together to implement a solution as quickly as possible to calm fears and the markets. Certainly there are many differences being voiced, but in general they are all in agreement and the final product will be a matter of hammering out the minutia, so to speak. This is actually more frightening than the actual financial crisis. Why? Because these are the folks that got us into this mess in the first place due to their own narrow self-serving interests, incompetence and corruption, and purposeful lack of oversight of the Leviathan wherein this meltdown began – Freddie Mac and Fannie Mae.

The solution as it stands would give at present would give Treasury Secretary Henry Paulson extraordinary, unprecedented and essentially dictatorial authority to essentially do what he pleases with $ 1 trillion in taxpayer money. The Wall Street Journal called it for what it is: “Lots of money. Lots of power. Naked, ugly dictatorial power.”

The actual language in the proposed bailout Act as written by Treasury lawyers doesn’t inspire comfort either: “Decisions by the Treasury pursuant to the Authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” This language is self-explanatory. And it is frightening.

And this is most likely only the beginning, the tip of the proverbial iceberg. On Monday former President Bill Clinton called for a bailout for all those homeowners who can’t afford to make their mortgage payments. The auto industry in Detroit is lining up for handouts to the tune of $50 billion minimum, a deal that has all but been cut between Detroit lobbyists and Speaker Pelosi. One can be sure that credit card debt will mushroom sooner rather than later and all those banks holding that debt will be demanding their share of the taxpayer-funded pie. The airlines won’t be far behind as they are being crushed by unprecedented fuel prices. And on it goes with no end in sight, and that is precisely the problem with government bailouts on such a massive scale; once they begin they do not end.

Right now it is difficult to assess whether we are still at the crossroads or if we have turned a corner toward authoritarian socialism, but is the language in the proposed plan is any indication suffice it to say that things to not look good for the future of a free market or for liberty in the US. And this is unconscionable.

In undertaking to engage in the extraordinary practice of massive government bailouts and nationalization of the most fundamental sector of the economy the US government has stepped into territory unknown since before the Revolutionary War. In fact, it was this exact type of arbitrary government authority that was the reason for fighting the Revolutionary War. While the talking heads on TV and radio speak of entering into “uncharted territory,” the brutal fact of the matter is that this is far from uncharted territory for this same unchecked and arbitrary government power was seen, understood and resisted the Founding Fathers of our republic as they were not afraid to call it for what it is. It is called tyranny.  

It is no secret to anyone who has read the Constitution of the United States with even a modicum of understanding that al three branches of the Federal Government have been violating their Constitutional authority for quite some time now. However, the actions taken by the government over the course of the last week are truly unprecedented. No branch of the government has any Constitutional authority whatsoever to takeover operations of a private business. No government authority is granted by the Constitution to appropriate public fund for such purposes. And certainly no Constitutional authority exists to allow for granting dictatorial powers to a cabinet secretary to run and attempt to manipulate the economy as he sees fit. It is unprecedented and entirely unconstitutional.

And yet knowing it is unconstitutional, out of fear this Congress will overwhelmingly approve this illegal action. And they will hope and pray that it works. And if it doesn’t? It this plan doesn’t work – and keep in mind that there is no Plan B because this is Plan B – amid all the uncertainly that would follow such events, the one thing you can be assured of is even more invasive and strict government intervention. But to what end? Government issued and approved credit becoming mandatory and the sole acceptable manner of conducting commerce? Government seizure and control of all banks and credit issuing agencies? Where does it end?

And what if it does work? What if those administering the government later decide that the government should remain in total control of the financial sector and through still more illegal Acts of Congress continue to "renew" the contrived authority to seize and maintain private companies in conservatorship? What then? 

Perhaps most frightening is that no one in government is listening to anyone who is raising these concerns because that is what happens when fear rules the day, and more alarming still is the known fact people will accept anything that promises even temporary security when real fear is being held over their heads. Hitler, Stalin and Mao did not rise to power because people were happy and comfortable and felt secure politically and economically. Fear is a dangerous weapon and history has shown time and again how fear, when employed and exploited by government, always proves fatal to liberty. And when government moves quickly to address a problem, even a well-intentioned solution will result in some very foreseeable repercussions that no one in Washington wants to acknowledge, much less address.

When a people willingly sacrifice their liberty – as is about to occur here – they are no longer sovereign, but subjects, for a republic exists only when a free people willingly submit to a governmental authority de jure, that is an established and mutually agreed upon system of government that by law may operate only with clearly defined limitations, purpose and intent. Should said government exceed any or all of those limitations, thereby exceeding its constitutional authority, it is the responsibility of a free people to take what power with which it is vested – that is all real power – and bring an abrupt end to government abuses of authority. 

In a republic, government exists and operates at the pleasure and by the authority of the people. That is what is meant by government de jure – government by and of legitimate law. When government abuses its power and acts outside of its legally defined authority it acts arbitrarily and becomes a government de facto, that is government by decree or imposition. In such a case citizens are no longer sovereign, but subjects; and, so it almost goes without saying that given the purpose of government being control, thus it’s natural tendency to encroach on liberty and thereby necessitating a clear legal definition of its valid scope of authority, once government exceeds said limitations of authority with impunity it will continue to do so. And in doing so it will continue to encroach upon and usurp individual rights and liberty unless the people fulfill their own obligations as a free people and stop it. 

In a republic such as ours, all true, valid and legitimate power and authority is vested in the people, not in the government. That is unless or until the people relinquish that power either by action or inaction to the government. Such is our present predicament.

As stated above, we all know that all three branches of our government have been exceeding their legitimate authority for many, many years now, encroaching on liberty and violating the Constitution. With this latest government incursion and illegitimate execution of authority it does not have the stakes have become frighteningly high and all too real in a vey short span of time. Now is the time for the people to decide: subject or sovereign, courage or cowardice. This action now being undertaken by the US Government takes the idea of sanctioning the violating of the Constitution to an unprecedented and very dangerous level. This time the politicians and bureaucrats have not only arrogantly wiped their hind-sides with the Constitution, but once they are finished wiping they intend to rub it in our collective faces – but only if we let them. 

If we rise up and let our voices be heard, they will respond, for nothing motivates career politicians like fear, especially in an election year and with the elections a little over a month away. We have a choice: we can make our collective voices heard now, loud and clear and force them to respond, or we can wait and see what happens. The problem with the latter choice is that the next time the people decide to rise up in the face of tyranny they may have to do it with torches and pitchforks and rifles.

So what is a trillion dollar government bailout really worth? What does it really cost? The true cost of the thing is liberty and a free market economy. The price we will eventually pay is subjection to tyranny.

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…

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.