Inevitable? I hope not!

I'm not normally a big Patrick Buchanan fan....but this article in WorldNetDaily titled "Is America's Financial Collapse Inevitable?" asks some serious questions about the economic future of this country. Mr Buchanan quotes some pretty heavy-hitter economic thinkers who think that the current government policies, which have grown the government's deficit, will eventually cause the debt to grow larger than the gross domestic product; leading to the bankruptcy of our government and the collapse of our economy. Scary stuff! Particularly when the political realities, and trying to keep various voting blocks happy, preclude the hard decisions (cutting entitlements or increasing taxes) that will reduce the deficit. Really scary stuff.

I'm not an economist, nor do I fully understand the interplay of forces on our National economy; but I do believe that growing government (consequently growing government salaries) and growing entitlement programs when our National debt is so high violates common sense. It seems as stupid as using one credit card to pay off another credit card. Maybe our current crop of elected officials are too busy trying to please enough special interest groups to ensure their re-election that they've forgotten basic common sense lessons of life.

Totally Scary!

If you want to be totally scared, check out this website that shows the US National Debt Clock....plus a couple of other clocks. The numbers are so big, it takes a while to comprehend them....but when you do, the fright sets in....big time!

Conspiracy Theories--Economic Terrorism?

It seems like some economists may have a theory that the economic crisis and the continuing world-wide stock market decline may be a deliberate act of "economic terrorism." In a FOXNews interview, Governor Huckabee discussed the "signs" that the market is being driven down deliberately by people (or a person) who use electronic trading to deliberately sell a large number of shares at the end of the selling day, driving down prices. The large number of shares for sale drives down prices, which creates panic. Because it's late in the trading-day, the market cannot correct itself, the media picks up on the late-day panic and reports it to the world, and the panic infects other markets as they open. Governor Huckabee says that he doesn't know if this theory is correct or not, but that it was "advanced" to him by someone in the "capital markets business." BUT, he doesn't identify who the "source" of this information is. Instead, he looks at the market activity for the last 12-days and the extremely heavy activity (9 times the norm) in the half-hour before trading ends. He does want an investigation to see if there really is someone manipulating the market. Check out the video....



h/t HotAir

Conspiracy Theories, Anyone?

I'm not normally willing to take the first answer given, instead, I want to know what's "underneath." You know . . . what's the reason for the answer, or what's behind the action taken. Maybe it's my profession that makes me want to see the cause and effect, to look for the motive, to understand the "why." I am a lawyer, after all, and have done my share of courtroom work. I also tend to look for connections; because nothing stands alone. Perhaps that's why I enjoy conspiracy theories; even though I'm usually very skeptical about them. (Maybe I enjoy a good conspiracy-theory because I grew up on the post-Kennedy assignation fascination with just who was really on the grassy knoll.) Anyway, in recent days I've wondered just what, or who, was behind the "economic crisis" and speculated whether the "crisis" was real, or manufactured and manipulated to implode just before the Presidential election.

So it was with real interest that I read an article by Jim Simpson posted on American Thinker, titled Barrack Obama and the Strategy of Manufactured Crisis. I strongly suggest you go read the entire article. It's lengthy, but it will make you think. I'm not certain I agree with Mr. Simpson's entire premise, I am a skeptic, after all; but he's done a lot of work and has documented his sources.

According to Mr. Simpson's theory, the "financial crisis" is just another manufactured crisis designed to lead this Nation into a form of Marxist-Socialism. Mr. Simpson posits that the current crisis is just another successful effort made by the far-left liberal fringe, guided by the Cloward-Privin Strategy first proposed by two radical socialist professors at Colombia in 1966. This strategy "seeks to hasten the fall of capitalism by overloading government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse." (From Discover the Networks.org, a right-wing site.) According to Mr. Simpson, the strategy has three main features:

1. The offensive organizes previously unorganized groups eligible for government benefits but not currently receiving all they can.
2. The offensive seeks to identify new beneficiaries and/or create new benefits.
3. The overarching aim is always to impose new stresses on target systems, with the ultimate goal of forcing their collapse.

In order to overload government bureaucracies, the strategy relies on a cadre of community organizers who, in the guise of working for the poor and afflicted, try to use our laws, policies, and practices against us. These community organizers have been successful in expanding the welfare rolls, and according to Rudy Giuliani, were behind the dramatic increase in New York City's welfare caseloads. In 1960, NYC had 150,000 welfare cases. In 1970, welfare cases had risen to 1.5 million. According to Mr. Giuliani, the strategy was also behind the shift from viewing welfare as a temporary solution to help those with no where else to go, to a life-time entitlement.

According to Mr. Simpson, community organizers (such as ACORN, the organization Senator Obama worked for) are also an integral part of the radical-left's implementation of the Cloward-Privin strategy. ACORN is active in voting registration drives that seek to sign up voters who will support leftist policies, are active in voting fraud, and advocate giving felons and illegal immigrants the right to vote. ACORN is also extremely active in pushing banks and lending companies to provide sub-prime mortgages to those who would otherwise not be able to qualify for a mortgage. It was these sub-prime mortgages which created the housing bubble that, when it burst, was the prime cause behind the current financial crisis.

According to Mr. Simpson, the Democrat Party in general and Senator Obama in particular, are heavily involved with ACORN. For example, he says that according to Senator Lindsay Graham, the Democrats want 20% of the bailout money appropriate by Congress to "solve" this "financial crisis" to go to ACORN. In Mr. Simpson's view,

This entire fiasco represents perhaps the pinnacle of ACORN's efforts to advance the Cloward-Piven Strategy and is a stark demonstration of the power they wield in Washington.

Mr. Simpson goes on to detail Senator Obama's associations with the radical-left, and his record of working on extreme liberal causes. He concludes that

Barrack Obama, the Cloward-Piven candidate, no matter how he describes himself, has been a radical activist for most of his political career. That activism has been in support of organizations and initiatives that at their heart seek to tear the pillars of this nation asunder in order to replace them with their demented socialist vision. Their influence has spread so far and so wide that despite their blatant culpability in the current financial crisis, they are able to manipulate Capital Hill politicians to cut them into $140 billion of the bailout pie!

Although I wonder at a lot of conspiracy theories (more tend to be fiction rather than fact) Mr. Simpson's theory of a conspiracy to threaten our way of life is more interesting than most. I hope it's not true. I hope that our politicians are not that manipulative. I hope that there's honor still existing in those who go into public service. Nevertheless, it does make you think. . .

UPDATE
It looks like the ACORN provisions have been removed from the final draft bailout plan. That's a good thing. Now I hope we get some details about the rest of the plan.

What? No Partisanship?

Senator McCain has announced that he'll suspend campaigning in order to focus on a response to the "economic crisis." He's asked Senator Obama to join him is setting aside politics in order to reach a clear consensus on how to resolve the meltdown. In making the announcement, Senator McCain said,

"We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved. I am confident that before the markets open on Monday we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners, and earn the confidence of the American people. All we must do to achieve this is temporarily set politics aside, and I am committed to doing so."

IT'S ABOUT TIME! I wish more politicians would ditch the partisan wrangling and work at getting things done! Let's hope Senator Obama has the character to join Senator McCain, President Bush, and others from both parties in figuring out the best way to lead this Country, and Wall Street, away from the threat of economic panic. After all, didn't we elect them to lead?

UPDATE!!

In suspending his campaign, Senator McCain asked that Friday's debate be postponed. Well, it seems Senator Obama will not suspend his campaign, and doesn't want to delay the debate. It seems he thinks that anyone who wants to be President ought to be able to "multitask." He's missing the point. The point is that the presidential campaign is, by its nature, devisive and politicized. Senator McCain recognizes that a good solution to the "economic crisis" requires a consensus, not devisive politics as usual. I don't know why I'm surprised by Senator Obama's position. After all, his entire career in the Senate has been nothing but a run for the White House. I guess I shouldn't expect him to have the character to put the Nation's needs before his own.

Why a Bailout?

Now I’m not an economist or a financial wiz. I don’t have some “inside” story or scoop on the current financial situation. I’m only a concerned citizen-taxpayer watching the market, the mortgage “crisis,” and the failure of large investment companies. And I’m wondering why? Why has there been a failure in the mortgage industry? Why are these large investment banks failing? But most of all, why is it the responsibility of the American taxpayer to bail them out? Potentially to the tune of $700 Billion!

Before we decide how to resolve the crisis, isn’t it important to know what contributed to it? In this election year, there’s bound to be a lot of partisan finger-pointing; and it looks like there’s sufficient blame on both sides to satisfy the most rabid political partisan. But who cares who or what is to blame. The real question is why? If we identify why this “crisis” happened and what contributed to it, we could better identify how to resolve it and, most of all, how to prevent it from happening again.

The Democrats, and those supporting an Obama presidency, claim it was deregulation of the banking and mortgage industries. For example, the New York Times said in a Saturday editorial that, “This crisis is the result of a willful and systematic failure by the government to regulate and monitor the activities of bankers, lenders, hedge funds, insurers and other market players.” Those believers in big government and bureaucratic oversight claim that the 1999 Gramm-Leach-Bliley bank deregulation bill (by the way a bill sponsored by former-Senator Phil Gramm, who was a McCain advisor) is responsible for the financial meltdown.

The Gramm-Leach-Bliley bill eliminated 60-years of government bank regulation, and allowed commercial and investment banks to consolidate by repealing the Glass-Steagall Act that prevented banks from offering other financial services, like insurance, investments, or commercial banking. The bill was necessary to allow US banks to compete on the world-market, particularly with European banks who could offer “universal banking” to their customers. It’s interesting to note that the Gramm-Leach-Bliley bill was enthusiastically endorsed by Democrats, (including Senator Biden), passed the Senate with 90 of 100 votes, and was signed into law by President Clinton. So was it the root of this financial-crisis evil, as many Democrat pundits would have us believe? Probably not.

Despite the partisan desires of “big government” advocates to point to bank deregulation and Senator Gramm as the “ground zero” of the current financial troubles, deregulation is not the major contributing factor. Bank deregulation simply allowed financial service companies, like banks, to diversify their businesses. Diversification is a good thing, isn’t it? At least that’s what they tell us small investors. In fact, without the deregulation we might have had more taxpayer bailouts of financial institutions. Under the old regulations, some of the bigger, more diversified entities would not have been able to purchase troubled companies. J.P. Morgan would not have been able to take over Bear Stearns, for example. Most of the failing firms have been non-diversified commercial banks or purely investment banks.

So deregulation, per se, isn’t necessarily the root of the problem. Instead, the major contributor (it is too simplistic to say that there is a single failure that caused this mess) seems to be the push to provide high-risk mortgages to people who would not otherwise be able to buy their own home. Now, I’m all for home ownership, and I like the idea of affordable housing. Someone who has a stake in the community, in the form of a home, is more likely to be a responsible citizen. But, it looks to me like advocates for affordable housing lost track with reality.

The Community Reinvestment Act, a piece of legislation heavily backed by Democrats, permitted community organizers (like ACORN) to pressure banks to make more mortgage dollars available to folks that didn’t have the assets or credit to otherwise qualify for a home loan. The Community Reinvestment Act permits the FDIC and other banking regulators to punish banks who don’t lend money to low-income and minorities. For example, community organizers who didn’t like the level at which a bank was providing loans, or didn’t like the bank’s response to political demands, could block mergers and acquisitions that would help the bank’s assets grow. Subprime mortgages are the result; money lent to people who do not have the credit, assets, income, or down payment to qualify for a normal mortgage. Of course, banks got on the bandwagon and found that subprime mortgages were a money-maker, as long as the real estate market was hot. After all, if the borrower couldn’t pay on the mortgage, the home could be sold and the mortgage money recouped. But when the market slowed, the bubble burst and banks were left holding lots of bad paper.

Added to the problem created by the Community Reinvestment Act and the explosion of subprime mortgages, there was a political component involved in creating the credit-friendly environment that contributed to the current financial mess. Politics created Fannie Mae and Freddie Mac. Politics allowed them to dominate the mortgage market. Politics allowed these two entities to shift the risk of subprime mortgages to the US taxpayer. In 2005, Democrats opposed, on a party-line vote, a bill to more strictly regulate Fannie Mae and Freddie Mac to prevent their more questionable loans to “underserved” populations (a code-term for low-income or no-asset borrowers). It’s interesting to note that the two mortgage corporations were managed by Democrat power-brokers, like Jamie Gorelick who made multi-millions of dollars when she left for bigger and better things; like advising Senator Obama.

Now, on principle I don’t like big government or over-regulation. There are things that government does well, like protect us from threats, but government shouldn’t be in the business of running businesses. Although I don’t like government intrusion into the free market, some oversight may be necessary. It’s interesting that Senator McCain saw a potential problem as early as 2006. He said, “If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole.” Investment is risk. Businesses that invest do so by taking calculated risks. The key to government oversight is identifying just how much regulation is necessary to permit investment, and risk-taking, without either over-regulating and stifling business or under-regulating and permitting the possibility of financial collapse. Like everything else in life, balance is essential here.

So where does that leave the proposed bail-out plan? Good question. I’m concerned over the “need for speed.” Why do we need to move so fact that the details of the plan are not readily transparent to anyone without a Ph.D. in economics? Why are we putting Billions of dollars in the hands of one man and telling him to “fix it.” Why do we need to accede to the Democrat’s demands that we include a plan to permit judges to restructure individual mortgages for bankrupt homeowners, or worse subsidize them with taxpayer money? Why do we need to add other “toxic assets” to the plan, like bad credit card debt? I say we should slow down a bit, analyze the problem, and fix it; not put a band-aid on it and hope it will heal.