Pulling for Socialism

September 30, 2008 at 1:04 pm (Uncategorized)

Well, the bailout plan failed, and the extreme Left and Right wings of this country find themselves in a peculiar position:  On the same side.

The Right hates the concentration of central power that is given to the state by the bailout and the lack of accountability for high-powered executives, while the Left reviles the same lack of accountability, among other factors.

Everyone is in agreement that something must be done to solve this financial crisis, but the forces of radicalism rushed to the biggest proposal possible, using threats of “worst crisis ever” if we don’t vote for their plan.  As usual, a measured, even-handed evaluation of the proposal revealed gaping holes throughout the structure of the bill:

No actual recourse for violaters of the new plan,

No oversight on the Treasury for how the money is spent/wasted,

No change in mark-to-market accounting,

20% of all potential profit is funneled to ACORN, a huge factor in this crisis’ start, and

No control over “golden parachutes” for existing CEOs and Board Members.

Based on the causes of our crisis -granting loans to high-risk borrowers as forced by ACORN, leveraging those faulty mortgages on foreign markets, backing up invisible assets with scant “actual money”, and claiming far more wealth on an asset than its current worth- one is forced to wonder what this bill actually would have accomplished, short of paying companies for making horrid decisions, and allowing them to continue.  As over 100 economists have suggested, this may have only made matters worse.

So the plan failed, and the Dow dropped 777 points.  Then the sun came up, despite more fear-mongering from Obama, McCain and Bush.  Paulson is yelling that we’ll suffer great damage from doing nothing.  The news is aiming blame every direction possible, even at the Dems.  Despite all the doom and gloom about our markets, and fears of a credit slowdown, which would devastate the economy in real ways, the citizenry seems to be doing fine, as well as non-financial businesses.  Any average American has the good sense to recognize that if financials are having problems of their own making, why in the hell would you spread it to the taxpayer, especially the ones who haven’t taken out the terrible mortgages?  Let’s not forget, however, that its an election year, and its easy to get elected if you have the title of savior under your name (Just ask Obama).

So what do we do?  The real danger to our system is a credit crunch, so we prevent it.  Use a fraction of the original 700B to ensure credit lines remain open, and oversee an orderly sale of assets, good and bad, to stable firms.  If the assets are worth nothing, buy them for nothing.  Its tough, but getting out of this mess is payment for the reckless way we got into it.  Also, help small businesses calm down by ensuring FDIC deposits up to 250K or more.  This will restore faith in a shaken banking system.

As far as executive pay, the government has no say in how much a man makes.  If the company gives him too much, that’s their bad decision.  Giving government oversight to such matters is a slippery slope to government control over many elements of business.  A less invasive way to remedy this in part is to enforce the federal obligation that companies have to their shareholders via the promises a publicly traded company makes when it goes public.  If a company loses money and/or crashes, there is recourse to investigate a 90M payoff to the CEO, but there is another hitch:  Most of these golden parachutes are hammered out as contractual terms to get a CEO in the fold to begin with.  Such contracts simply must be fulfilled, and the Feds must not be interfered with.   Violating contracts due to “unfair practices” is very KGB or Marxist, and injures our credibility, to boot.

Now, there is a huge contingent of Washington demanding that we pass this tired old plan still, and they won’t rest until the government controls even more of our lives.  You see, crisis is the perfect mechanism to seize power, because its for the “good of the country”.  It is imperative that they be resisted as harshly as they were the first time this foolishness came around.  Let’s not forget the government, in 1977, started this problem to begin with the CRA, or community reinvestment act, which began the tide of lending to risky citizens.

We want accountability in the bailout plan more than anything, but let’s show D.C. that accountability begins with them, and defeat this failed plan outright.

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The real financial crisis

September 18, 2008 at 9:50 am (PPR, Political, Social Issues, Taxes) (, , , , )

The American economy is in an extremely difficult position these days, as we realize just how easily the ignorance/greed of lendors and the ignorance/greed of homebuyers can add up to a disaster.  Banks are falling apart all around us now, as ARMs and No-interest loans suddenly become untenable, and the barely treading water mortgage holder swims over to drag the large banks further underwater.

The problem is that the two candidates for President of this country, Obama and McCain, are blankly promising ambiguous “reform” and “regulations”.  McCain has said the most, referring to coporate greed as a driving force of all of this.  We don’t expect Presidents to know a whole lot about economics (the nuts and bolts, that is), but the suggestion that more government is somehow the answer is simply scary.

People have trumpeted this crisis as the end of capitalism, and sadly, they may be right.  Those who hold socialist ideals closely to their hearts have been waiting for this, and jump with glee at the chance to regulate and pass laws that limit our freedom and our ability to provide for our families and future.  The monstrous bailouts of Bear Stearns and AIG (loans, for now) represent nationalization of formerly private enterprises for the supposed mutual good of the market.  Not only are they blunt weapons of socialism, but AIG was “saved” when it didn’t even need that much money to make it over.  The insurance revenue streams of AIG are still intact and healthy, and this bailout probably wasn’t needed at this huge level.

What ever happened to capitalism?  Businesses that fail, fail, even if its a big business.  Bear Stearns, Merrill, Lehman, Sachs, etc. should land with a hard thud and die.  Shifting the burden of corporate greed and lunacy to the taxpayers is about as fair as one man getting sent to jail for another man’s crimes.  I have signed no bad mortgages in my life, and as such, I shouldn’t have to pay the penalty for millions that did.  Let them deal with their own problems.  Its the American way throughout our history.  That’s not to say we don’t care about those in need, because we certainly do.  That, however, has a name:  charity.  This is the most charitable country in the history of the world.  Problems arise when the government either forces our hand or takes on responsibilities for us.

There would be an adjustment period if those banks fail, but we’d survive as a free people in a free market, able to bounce back.  New banks would rise to meet demand and we’d move on with a lesson learned.  On the other hand, if the feds buy the whole industry and regulate their tails off to “protect us”, our freedoms are reduced, and this crisis gets worse.  Our national debt soars and loses value to other countries, taxes go up to try and bridge the gap, and the standard of living in this country will suffer greatly.  The last thing this country should want is to hand more power and oversight to the government.

Think about it: Why would you trust our economy at large and even our healthcare to an entity that destroyed public schools and social security?

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