Bailout marks Karl Marx's comeback

In his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state. Proposal Number Five was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.” [snip]

At first glance, anyone who understands economics can see that there is something wrong with this picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.

For decades, Austrian School economists have warned against the dire consequences of having a central banking system based on fiat money, money that is not grounded on any commodity like gold and can easily be manipulated. In addition to its obvious disadvantages (price inflation, debasement of the currency, etc.), easy credit and artificially low interest rates send wrong signals to investors and exacerbate business cycles...

[Recommended > ]

READ MORE

Stunning day for Dow: Closes up more than 450

NEW YORK - Wall Street snapped back Tuesday after its biggest sell-off in years amid growing expectations that lawmakers will salvage a $700 billion rescue plan for the financial sector [stop.

this is bull stuff: it rebounded because the overreaction of yesterday created bargains that were snapped up today.

This constant implied-assumption that government is the only solution to this mess is a Washington/Wall Street/Media cabal (not coincidentally the same cabal that created it) that's deliberately ignoring the scores of competing ideas on how best this could be handled -- don't consume it as fact.]

READ MORE

Bankruptcy, not bailout, is the right answer

This bailout was a terrible idea. Here's why.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government.

So what should the government do? Eliminate those policies that generated the current mess.

This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.

[again: postings are not endorsements but that less likely to be seen on TV]

READ MORE

No depression ahead, experts say

Hearing some of the dire predictions for an economy struggling to avert a financial collapse, it's easy to recall 1930s photos of people huddled in soup lines or traveling the country for work, and wonder what a depression would look like in the modern world.

Experts say that won't happen. Yes, banks are failing and the stock market plunged Monday. And yes, there is genuine concern that, regardless of the government's $700 billion bailout proposal, the United States still could land in a severe recession.

But despite the alarms, including dire warnings from President Bush, economists insist there is no risk of a second Great Depression because, for some time now, the U.S. economy has been in the midst of a very different, less-threatening phenomenon: "the Great Moderation."

The term refers to a U.S. economy shaped by more flexibility and far less volatile swings in growth. That flexibility, fueled by everything from financial deregulation and global trade to the shift toward a service economy, will keep the nation from sinking into a depression

[Highly Recommended > ]

READ MORE

Some sweating, but local investors not panic-stricken

Local investors might be sweating a bit, but they apparently are not selling much in the face of Monday's drop in the national stock markets. (Snip) Most of the downdraft appears to be coming from institutional investors and other big traders, rather than individuals, Heck said.

"It still seems like it's more .... professional than it is our clients on the street,"

READ MORE[not to say 'no worries'; there's serious risk and there will be pain - but ignoring morality {pity how often we need do that}, how much will such pain be needlessly magnified by an apocalyptic press and will government interference help mitigate the pain or only prolong it {as history suggests}? As a friend recently said, when he thinks of the impact to his children his view on the bail out changes...]
.

CNBC Analyst Debunks Myth Bailout Will Make a Profit

The theory that bailout legislation recently defeated in the House of Representatives would make money for the federal government has been propagated by the financial media.

The September 2008 report from the IMF stated the chances of the government recouping anything more than just a fraction of the bailout costs is unlikely. Alex Patelis, head of international economics at Merrill Lynch, explained the report and cited history as an indicator on CNBC's Sept. 29 "Squawk on the Street."

"What you find in the IMF report is of course that banking crises happen all the time," Patelis said. "If you look at the history of banking crises - that on average they cost about 13 percent of GDP to the government, both in terms of direct recapitalization costs, but also lost revenue."

READ MORE

Threefer...

.
WhoCaused the Financial Meltdown
There is something genuinely sickening about seeing Rep. Barney Frank (D-MA), House Speaker Nancy Pelosi (D-CA), and others trying to stick President Bush and the Republicans with the blame for the financial meltdown that has put the American taxpayer in hock for the problem they created.
.....One need only read The New York Times, September 30, 1999 article by Steven A. Holmes, headlined “Fannie Mae Eases Credit to Aid Mortgage Lending”...
READ MORE


Fannie Mae Strong-Arm Monitoring of Race

CW Underwriter: I need your help on the "Smith" file. We need you to complete the Government Monitoring Section of the 1003.

Broker: I did complete the Government Monitoring section.

CW Underwriter: But you haven't filled in the borrower's Race or Ethnicity.

Broker: If you notice, the Borrower checked the box indicating: "I do not wish to furnish this information."

CW Underwriter: You also checked the box indicating that this interview was done face-to-face.

Broker: So?

CW Underwriter: So you saw him. Is he black?

Broker: I don't understand. My client indicated his preference to keep this information to himself.

CW Underwriter: Well, you saw him and you know his race and ethnicity. Our ability to fund our deals and source new money depends on doing a certain percentage of loans with black and minority clients. If you want this loan underwritten at Countrywide, you need to furnish this information: Is he black?

READ MORE


ACORN, Obama, and the Mortgage Mess
The financial markets were teetering on the edge of an abyss last week. The secretary of the Treasury was literally on his knees begging the speaker of the House not to sabotage the bailout bill.
.....(Snip) ACORN is where Sixties leftovers who couldn't get tenure at universities wound up. That the bill-writing Democrats remembered their pet clients during such an emergency speaks volumes.
READ MORE
.

An ACORN Falls from the Tree

As negotiations over Congress’s emergency rescue bill continued over the weekend, repeated rumors leaked out that the Democrats were trying to funnel money to a hyper-partisan organization involved in criminal voter fraud.

20 percent of the profit proceedings for asset sales in the future would go to what is called the Housing Trust Fund, subsidizing certain groups for ostensibly nonpartisan activity. One of these groups that this trust supports is ACORN...

READ MORE

[ACORN... where have I heard that before... right:

NNBrief-080918 > ACORN, Fannie Mae and Motor Voter
NNBrief-080915 > Bad voter applications found
NNBrief-080910 > The Evolving Agenda of George Soros’s Democracy Alliance
NNBrief-080619 > Obama's Red Roots

.

[and we're looking to the exact same cast of actors to fix this mess??]
.

Commodity Futures Modernization Act & Gramm-Leach-Bliley Act

[HT:TS {top half, re: the 'under regulated' argument}]

The housing bubble was the result of the Ponzi-scheme antics of those other financial entities: commercial banks, stockbrokers and hedge funds, which were allowed in a GOP-deregulated market to get into the "swap"

business. Through the rampant reselling of loans, the obligation to collect on a loan was divorced from the act of selling it in the first place, so who cared if the recipient of the loan was not at all qualified or the appraisal of the property value was inflated. [snip]

The mortgage swaps distancing the originator of the loan from the ultimate collector were only made legal as a result of the Commodity Futures Modernization Act that former Texas Republican Sen. Phil Gramm pushed through Congress just hours before the 2000 Christmas recess. Gramm, until recently co-chair of the McCain campaign, also had co-authored the Gramm-Leach-Bliley Act that became law in 1999, with President Bill Clinton's signature. That gem destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies.

Those two acts effectively ended significant regulation of the financial community, and no wonder we have witnessed an even more rapid and severe meltdown in housing values than during the Great Depression.

[BUT: in reading wiki on the Gramm-Leach-Bliley Act, we learn that:

"Crucial to the passing of this Act was an amendment made to the GLBA, stating that no merger may go ahead if any of the financial holding institutions, or affiliates thereof, received a "less than satisfactory [sic] rating at its most recent CRA exam", essentially meaning that any merger may only go ahead with the strict approval of the regulatory bodies responsible for the CRA.[3]. This was an issue of hot contention, and the Clinton Administration stressed that it "would veto any legislation that would scale back minority-lending requirements." [4]

[4] = ^ Compromise over Community Reinvestment Act crucial to repeal of Glass-Steagall

[I.e., the act originally encourage more competition by leveling the playing field for investment banks that had already been opened to commercial banks - but to get passed it had to retain this critical poison pill... I.e.2: political correctness above sound financial principle - and again we're back to government meddling as the genesis of the problem - meddling consistently promoted by one particular political party...]

READ MORE

Meanwhile, in the media...

.
Poll: GOP blamed for failed bailout

Respondents to a new ABC News/Washington Post poll blame Republicans over Democrats by more than a two-to-one margin for Monday’s failed vote on the $700 billion bailout package.

The poll, conducted Monday evening after the vote, reported 44 percent of respondents said the GOP is “mainly responsible” for the failed deal. Twenty-one percent blamed Democrats while 17 percent said the two parties share equal blame.
READ MORE

[the Democrats control the House with a majority - they don't/didn't need a single Republican vote to pass the bill - But Nancy and Barney did noting to rally the Democrats to the cause {twelve of Barney's own committee members voted agains it}.

Why? Because there's a score of Democrats up for re-election and they know, through a deluge of calls and emails, that the majority of Americans hate this bail out. For the record, that puts those that voted against this bill on the side of right (or does this crisis justify abandoning democracy?}

But of course most Americans weren't there... they're relying on the media to tell them what happened...]
.

Couric Badgers Palin on Pakistan; Had Cued Up Biden on Economy

At a Philadelphia restaurant on Saturday a man demanded: “So we do cross-border, like from Afghanistan to Pakistan, you think?” Palin answered: “If that’s what we have to do stop the terrorists from coming any further in, absolutely, we should.”

Couric decided: “That's almost the exact position Barack Obama has taken and that you, Senator McCain, have criticized as something you do not say out loud. So, Governor Palin, are you two on the same page on this?” Couric pounded away: “Is that something you shouldn't say out loud?” and “Are you sorry you said it Governor?”

When McCain called it a “gotcha soundbite,” Couric retorted: “It wasn't a 'gotcha.'”

Couric turned to Palin: “What did you learn from that experience?”

Palin: “That this is all about 'gotcha' journalism.”

READ MORE

It's economy with the truth, stupid

Just imagine what the sneering left intelligentsia, in the United States and elsewhere, would have said if a Republican vice-presidential candidate had told CBS News that "when the stockmarket crashed [in 1929], Franklin Roosevelt got on television" and informed Americans what had happened.

No doubt scores of left-liberal types would have lined-up to say the Republican Herbert Hoover, and not the Democrat Roosevelt, was in the White House when the Great Depression began, and regular TV broadcasting did not occur in the US until about 1941.

Yet when the Democrat Joe Biden made these howlers in an interview with Katie Couric she did not correct the vice-presidential candidate.

This is the same Couric who grilled Sarah Palin in an interview which aired a few days later. The line of this interrogation turned on the thesis that the Governor of Alaska is not well enough informed to hold the second-highest office in the US.

[what bias?]

READ MORE

Sarah Palin’s Level of Experience Is a PLUS; Not a Minus

Time in office isn’t as important as what one does with this time.

It is false to state that Palin began her political career in public service as mayor of a town. First she served two terms on the City Council; then she served two terms as the mayor; and then she was elected governor of the largest state in the country.

What Palin’s detractors often do not mention is that even though she was so young during her terms as mayor and so relatively inexperienced, she was elected President of the Alaskan Conference of Mayors, and Chair of the Alaska Conservation Commission, which shows that she matured on the job and impressed her colleagues far beyond what one would expect based on age and seniority.

As governor, she likewise has transcended her local position, serving as not just a member but the Chair of the Interstate Oil and Gas Compact Commission, a multi-state government agency. She was also named not just a member but the Chair of the National Governors Association (NGA) Natural Resources Committee, after having served as co-chair.

It is clear that Governor Palin has demonstrated that she is a “quick study,” rising to positions of leadership and respect in record time, which is what is needed in a person with limited experience.

By contrast, Obama was such a slow learner that he sat in church for 20 years without realizing what his pastor stood for...

READ MORE

Brit Finds Biden Wisdom Lacking While USA Media Keeps Slamming Palin

What is it with the American mainstream media when we have to turn to Britain to get a more accurate analysis of our political scene than we can get here? [snip]

And now we have this column by Dominic Lawson in the UK Independent that gives us a clear picture of how utterly unqualified Joe Biden is to become vice-president. Yes, while the Amercan MSM remains obsessed with pointing out how Sarah Palin might not be familiar with every last detail of political policy they continue to overlook not just gaffes but astounding gaps in Biden's basic wisdom.

So let us allow Lawson to now go where the American MSM fears to tread...

[Recommended > ]

READ MORE

Dobbs: Biden Makes 'Many More Misstatements Than Sarah Palin'

An astounding thing happened on CNN Monday evening: not only did Lou Dobbs say that Democrat Vice Presidential candidate Joe Biden makes "many more misstatements than Sarah Palin," but he also chided Wolf Blitzer and the "Situation Room" crew for failing to point it out during their Bash Sarah session.

Well, Wolf, I'm shocked. I wish you guys would take it easy on Joe Biden, because I think you're being really unfair to him, just because he makes so many more misstatements than Sarah Palin. But, anyway, I'm sure you can sort that out.

READ MORE