Archive for September 25th, 2008

Stop The Bailout: The American Elites’ Bum Rush of The American People–No Sale!

Posted on September 25, 2008. Filed under: Blogroll, Economics, Investments, Life, Links, People, Politics, Rants, Raves, Regulations, Resources, Taxes, Video, War | Tags: , , , , , , , , , , , , , , , , , , |

“…deficits don’t matter…”

~Vice-President Dick Cheney

 

President Reagan – Government is the problem

 

President Bush Addresses Nation on Economic Crisis

 

Michael Bloomberg – Origins of the Economic Crisis

 

Milton Friedman: The Purpose of the Federal Reserve

 

Milton Friedman – Greed

 

Milton Friedman – Regulation – The Government Industrial Complex

 

 

The rush by the American elites of both political parties in the Federal Government and Congress to have the American people or taxpayers bailout financial institutions to avoid a financial crisis and in turn an economic recession should be stopped.

The case for the bailout simply has not been made.

Full, complete and fair disclosure of all the risks and rewards of the bailout needs to clearly stated  and analyzed.

Alternatives need to be explored and discussed in depth. This includes both alternative courses of action and alternative scenarios.  One course of action based on one scenario recommended by the Treasury Secretary is not only unacceptable, but dangerous.

Remember it is was government internvention in the mortage market requiring lenders to make loans to people that would normally never qualify that is the root cause of the problem.

The government is the problem and is certainly not the solution. 

The rush to socialism in the form of a massive government intervention in the financial markets should be defeated not encouraged.

Let the discipline of the market place penalize those who were financially irresponsible.

No believer in free enterprise would propose or for that matter even consider President Bush’s bailout or rescue plan.

The same American elites of both political parties that tried to cram down comprehensive immigration reform with amnesty and open borders are now trying to cram down a comprehensive financial bailout of financial institutions.

Only you can prevent socialism in America.

 

Goodbye America, We’ll Miss You!

 

Background Articles and Videos 

Ron Paul and Peter Schiff – America Financial Meltdow

 

Lobbying for a bailout – Lou Dobbs

 

 

CNN McCain bailout fate

 

Senator Jim Bunning Comments on Federal Bailout

 

Hannity Colmes Newt Oppose This BailOut CALL Capitol

 

Shocking!—Democrats Trying to Give Bailout Money to Obama’s Owner ACORN

 

Newt Lays It Out – Part 1 of 3 – Former Speaker of the House Newt Gingrich says the bailout plan is a disaster.

 

Newt Lays It Out – Part 2 of 3 – Former Speaker of the House Newt Gingrich says the bailout plan is a disaster.

 

Newt Lays It Out – Part 3 of 3 – Former Speaker of the House Newt Gingrich says the bailout plan is a disaster.

 

Wall Street “Socialism”, the new moral hazard

 

Charlie Rose – Fannie Mae & Freddie Mac

 

Barack Obama & Friends Caused U.S. Economic Crisis

 

Bill Moyers Housing Market Meltdown 1 of 2

 

Bill Moyers Housing Market Meltdown 2 of 2

 

Ron Paul on the Global Financial Crisis

 

Ron Paul talks about Bernanke’s testimony

 

 

Majority of Americans oppose $700 billion bailout, poll finds

http://www.newsday.com/business/ny-libzreax0925,0,1707264.story 

 

To the Speaker of the House of Representatives and the President pro tempore of the Senate:
 
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
 
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.
 
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come. 
 

Signed (updated at 9/25/2008 8:30AM CT) …”

 

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

 

Bailout: Opposition to Bush proposal among GOP lawmakers

“…Alabama Sen. Richard Shelby, the top Republican on the Senate Banking Committee, told NPR this morning that he wouldn’t vote for the proposal as it stands.

“I believe it will be reconfigured,” he says. One of Shelby’s biggest concerns is the lack of specifics about the plan’s overall cost. He says doing “nothing’s always an alternative.”

“I think they might pass something, but I don’t think we should just pass a three-page proposal and give this kind of power, unfettered power, to the secretary of the treasury — and with more to come probably,” Shelby says.

Sen. Jim DeMint, R-S.C., an outspoken critic of the bailout, says he plans to slow down the bill.

“There’s no question we’ve got a big mess here. But I’ll tell you the one sure thing is this mess was caused by the government. They broke it. I don’t trust them to fix it at this point,” he tells Fox News. “I see this as a trillion dollar band-aid that’s designed to get people past the next election, but it is not going to solve our problem. I think it’s going to make it worse by expanding our national debt, lowering the value of our dollar.” …”

http://blogs.usatoday.com/ondeadline/2008/09/bailout-opposit.html

 

Kill the bailout: Newt Gingrich gets on board

By Michelle Malkin 

“I said it yesterday.

Newt Gingrich said it today.

Hans Bader sums it up succinctly: The Bush/Paulson bailout is “Inflationary, Unnecessary, and Unconstitutional.”

Yes, it’s time for ideological purity.

Kill it. …” 

http://michellemalkin.com/2008/09/23/kill-the-bailout-newt-gingrich-gets-on-board/

 

A Political “Solution”: Part II

by Thomas Sowell  

“…But bailing out people who made ill-advised mortgages makes no more sense that bailing out people who lost their life savings in Las Vegas casinos. It makes political sense only to people like Senator Dodd, who are among the reasons for the financial mess in the first place.

People usually stop making ill-advised decisions when they are forced to face the consequences of those decisions, not when politicians come to their rescue and make the taxpayers pay for decisions that the taxpayers had nothing to do with.

The Wall Street Journal, which has for years been sounding the alarm about the riskiness of Fannie Mae and Freddie Mac, recently cited Senator Christopher Dodd along with Senator Charles Schumer and Congressman Barney Frank among those on Capitol Hill who have been “shilling” for these financial institutions, downplaying the risks and opposing attempts to restrict their free-wheeling role in the mortgage market.

As recently as July of this year, Senator Dodd declared Fannie Mae and Freddie “fundamentally strong” and said there is no need for “panicking” about them. But now that the chickens have come home to roost, Senator Dodd wants to be sure to get some goodies from the rescue legislation to pass out to people likely to vote for him. …”

http://townhall.com/Columnists/ThomasSowell/2008/09/24/a_political_solution_part_ii

 

Laugh Line of The Day

By Michelle Malkin 

“…From Bush’s address to the nation tonight, urging taxpayers to fork over a trillion dollars to Treasury Secretary Hank Paulson to distribute to whichever failing banks he chooses, at home or abroad, in order to rescue them from their bottomless pit of toxic debt:

“I’m a strong believer in free enterprise.”  …” 

http://michellemalkin.com/2008/09/24/laugh-line-of-the-day/

 

Why Bailouts Scare Stocks

by Alan Reynolds

“…Owners of common stock are supposed to be last in line during an actual bankruptcy, getting leftover scraps after creditors pick a firm’s assets to the bone. But in anything short of that, patient stockholders stand a decent chance of eventually seeing some recovery in the share price, if and when the firm gets back on its feet.

And in the recent crises, bankruptcy was involved only in the case of Lehman – the one time the feds kept their hands off.

From Treasury Secretary Hank Paulson and Fed chief Ben Bernanke on down, top officials have shown too little confidence in markets and too much confidence in themselves. As a result, anyone who’s still holding stock in a financial firm now faces a big new risk premium – because these companies are now subject to compulsory mergers on unfavorable terms (as with Bear Stearns, where the feds initially tried to force stockholders to take just $2 a share) or quasi-nationalization.

This new risk of forced mergers or a government takeover artificially depresses the stock prices of vulnerable firms. And Standard and Poors incorporates equity prices into its credit ratings – so the risk can also bring a downgraded credit rating. And a credit-rating drop triggers regulations that oblige the company to increase its capital – while simultaneously making it nearly impossible to raise capital.

Heavy-handed federal bailouts started this mutually reinforcing spiral rolling downhill by scaring anyone still holding stock in similar firms. And other regulations make it more likely to end badly. …”

http://www.cato.org/pub_display.php?pub_id=9650 

 

‘Wall Street’ No Longer Exists

by Alan Reynolds

“…Since the 1933 regulatory wall has collapsed as definitively as the Berlin Wall, all the giant financial conglomerates now face oversight and regulation by the Federal Reserve, the Securities and Exchange Commission, the Comptroller of the Currency and the Federal Deposit Insurance Corp. Innocents who seek security in regulation need to recall, however, that not one of those august agencies exhibited timely foresight or concern about the default risk among even prime mortgages in some locations, or about any lack of transparency with respect to bundling mortgages into securities. People do not become wiser, more selfless or more omniscient simply because they work for government agencies.

Wall Street was always a metaphor, of course, but so are words like “bailout” and “toxic” debt. Nationalization of Fannie Mae and Freddie Mac was a bailout for creditors (who received windfall gains), not for stockholders or executives. The federally enforced shotgun marriage between J.P. Morgan and Bear Stearns at the initially ridiculous price of $2 a share was no bailout for Bear. The 11.3% federal loan to AIG, contingent on the potential expropriation of 80% of shareholder value, is no bailout either.

By contrast, what was done to stop a run on the money-market funds is a real bailout which could encourage them to hold risky paper and also make it tougher for commercial banks to attract deposits. The proposal to buy up mortgage-backed securities is a bailout too, though the beneficiaries are not just the tattered remains of Wall Street. The bailout consists of shifting the risk of loss to taxpayers. Actual losses could not reach $700 billion unless the securities were literally worthless, which would mean the value of the underlying real estate fell to zero.

What was “toxic” for investment banks is not equally toxic for the Treasury Department because the government does not even bother to keep a balance sheet, much less abide by mark-to-market accounting rules. A powerful motive for converting investment banks into commercial banks is to get around those onerous balance-sheet rules that required fire-sale pricing of securities that were virtually unmarketable during a panicky scramble for liquidity. Strict adherence to those rules made patience a vice and a “buy and hold” approach impossible. This confirms what many of us have long been saying about the foolishness of letting arbitrary bookkeeping rules dominate economic reality.

Turning Wall Street into a bunch of commercial banks is a solution of sorts to a problem aggravated by foolish mark-to-market regulations, not by the inevitable demise of the 1933 wall between investment banks and commercial banks. Something good may yet come out of all this, because that wall never made much sense in the first place. …”

http://www.cato.org/pub_display.php?pub_id=9660

 

The Financial Bailout (and the New Resolution Trust Corp.) Must Restore the Markets and Protect the Taxpayer

by David C. John

“…The House and Senate must have two objectives when putting together their versions of the financial bailout proposal made by the Treasury and Federal Reserve: They must (1) restore the markets and (2) protect the taxpayers. Congress should act clearly and decisively to address the turmoil in the financial markets and not burden this legislation with other issues, problems, or projects.

These objectives should be resolved in the regular order of business. This legislation must not become a Christmas tree. If it does, it will likely backfire, and the intentions of either or both objectives will fail. Sadly, the Senate’s version is already on the wrong track, and the House’s is likely to follow suit. …”

http://www.heritage.org/Research/Economy/wm2072.cfm

 

No bailout necessary

Earl Thompson 

“…Our country’s leading financial officials (the heads of our Department of Treasury and Federal Reserve Bank) have proposed to bail out an enormous array of overpaid wall street phonies in order to become a foreclosing creditor for 700 billion dollars worth of real estate debt — even though they know nothing whatever about collecting or foreclosing on non-performing real estate debt. They cannot possibly do their traditional jobs, which they have normally done quite respectably, under such an administrative burden. The mess would continue, perhaps even worsen.
All the Fed Chairman has to do is do is spend half that amount of fresh Federal Reserve Notes on U.S. Government Bonds and stop making a fool of himself by begging Congress for a favor that would just create a nightmare for him, and ergo the rest of us. What that simple inflationary monetary shock would do is immediately increase the U.S. price-level by just about 20%. The dollar would sink that much in the world’s money markets and this would (1) stimulate our economy out of its current recessionary threat; (2) raise the value of real estate by 20% and immediately end the wave of current real estate foreclosures; and (3) immediately restore liquidity and financial flexibility to our banks and financial institutions so as to end our current financial woes on the spot. …”

More on the diversity racket and the home loan debacle

By Michelle Malkin  

 

“…Referencing my column yesterday on illegal immigration and the mortgage mess, Hans Bader at Open Market shares his experience. I’ve been getting a lot of e-mails with similar stories. Tip of the iceberg:

When I and my wife, a legal alien, bought our house, the mortgage company told me that if my wife were an illegal alien, rather than legal, we would have qualified for certain loan programs with big banks. But because she was a legal alien waiting for her green-card (which she had recently applied for), we didn’t qualify.

Mark Krikorian, an activist against illegal immigration, argues that “we’re in this mess, ultimately, because our political elites thought it was good social policy to encourage banks to give mortgages to uncreditworthy people, resulting in what Sailer months ago called the “Diversity Recession” (if this doesn’t work, make that the Diversity Depression). In other words, if poor people in general, or blacks or Hispanics in particular, were less likely to be approved for a mortgage, the only possible reason was racism or classism or whatever. Thus ‘creditworthiness’ was an illegitimate, dead-white-male concept, like middleclassness. Because, after all, isn’t everyone entitled to credit?” …”

A Bailout We Don’t Need

By James K. Galbraith

“…Is this bailout still necessary?

The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They’re called “loans.”

With banks, runs occur only when depositors panic, because they fear the loan book is bad. Deposit insurance takes care of that. So why not eliminate the pointless $100,000 cap on federal deposit insurance and go take inventory? If a bank is solvent, money market funds would flow in, eliminating the need to insure those separately. If it isn’t, the FDIC has the bridge bank facility to take care of that.

Next, put half a trillion dollars into the Federal Deposit Insurance Corp. fund — a cosmetic gesture — and as much money into that agency and the FBI as is needed for examiners, auditors and investigators. Keep $200 billion or more in reserve, so the Treasury can recapitalize banks by buying preferred shares if necessary — as Warren Buffett did this week with Goldman Sachs. Review the situation in three months, when Congress comes back. Hedge funds should be left on their own. You can’t save everyone, and those investors aren’t poor. …”

Glenn Beck Explains Fannie & Freddie & Racism & Extortion

 

Kudlow & Company, September 22, 2008

 

Bernie Sanders “You’re a socialist, Larry [Kudlow]” w Allard

 

Dodd and Kyle on the Bailout Package (part 1)

 

Dodd and Kyle on the Bailout Package (part 2)

 

Bernanke Warns Congress of Possible Recession

 

Dick Armey Discusses the Dodd/Frank Bailout Bill

 

Deconstructing the Subprime Crisis

 

Richard Herring on Mortgage-backed Securities

 

Joseph Gyourko on Fannie, Freddie, and the Housing Bust

 

Franklin Allen on Past Crises

 

Franklin Allen on Lessons from the Subprime Crisis

 

Jeremy Siegel on the Resilience of American Finance

 

Susan Wachter on Securitizations and Deregulation

 

See I.O.U.S.A. themovie, visit the YouTube site

 

IOUSA Live – Panel Discusses our Fiscal Crisis

 

Buffett on Fannie / Freddie and Oil

 

Wall Street’s Day of Reckoning: The Fannie & Freddie Bailout

 

Housing Bailout For Deadbeats Gamblers Liars Thieves

 

 

Part 1 – Exposing Fannie Mae and Freddie Mac: Origins

New York Investing meetup organizer Daryl Montgomery discusses the origins of Fannie Mae and Freddie Mac in the first episode of a multi-part series. The New York Investing meetup is an organization of 1800 independent traders and investors that provides unbiased stock market education and analysis. We also have a blog,”The Helicopter Economics Investing Guide” which can be found at:

http://nyinvestingmeetup.blogspot.com

 

Part 2 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 3 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 4 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 5 – Exposing Fannie Mae and Freddie Mac: Origins

 

The Big Lie – The U.S. GDP Figures

 

Ron Paul vs. Ben Bernanke

 

Constitution Rally4Republic

 

LOL

Democrats responsible for Economic Disaster…

 

Solution to Our Economic Problems…

 

We’ve been lied to AGAIN…

 

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