Further Assaults on the Free Market

free-market-bumper1I have to make that statement about “further assaults on the free market” with a bit of a grin on my face. Because there is nothing free about the market anymore. Government has gotten its corrupt little hands into just about every facet of the free market and regulated and taxed and controlled it to death. But as we sit here watching the demise of the business world as we know it, I still find myself stunned at some of the moves. I wasn’t surprised when Team O’prompter used every miniscule misstep in the private industries to seize control and get government’s foot in the proverbial door. After all, that is what they do…. lie and get the American people fired up against a business and tell you that you need them to control this out of control company or industry….

palpatine-adresses-senate-2I harken back to the classic Star Wars movies. Specifically Revenge of the Sith. Perhaps you can remember the scene. After all the bad goings on and the “attacks on authority” by the rogue Jedi Alliance, Senator Palpatine, better known as the evil Emperor, goes before the Senate and says “In order to ensure the security and continuing stability, the Republic will be re-organized into the first Galactic Empire! For a safe and secure society.” The entire Senate erupts into loud cheering for the new move to save society. The scene then pans over to Queen Amadala, who looks at Senator Organa and says, “So this is how Democracy Dies… To Thunderous Applause.” 

You know the interesting thing is that we see the movie and wonder how all those Senators could be so easily fooled by the evil Emperor into giving up all of their freedoms and all of their sovereign rights. Yet we fail to see that President Bush and President O’prompter have used the exact same speech on a gullible American public. And both have received thunderous applause and support for doing so from a public too stupid to see what was happening. George Bush took away people’s freedoms with the Patriot Act under the guise of protecting Americans from the Terrorists. 

obama-sithNow Darth Bama is just doing it again from the opposite flank as he makes the move to become Emperor. They are taking away the freedoms of Americans while claiming to do so in order to protect Americans from these evil companies. Democrats look to tax AIG bonuses at a high rate after being the very same people who approved those bonuses in the first place. Democrats look to tell the private companies how to run their businesses and regulate how they operate in order to “stop the widespread corruption and greed that has infested Wall Street”.

And now the latest move by the Sith Lord, I mean President, no I mean Sith Lord. After he and his minions Darth Pelosi, Darth Franks, and Darth Darth Geithner have done a sufficient job of fanning the flames of public hatred for Wall Street and big business in America, he is ready to make his next proposal. He is proposing that the US government has the authority to limit the pay and bonuses of executives of PRIVATE companies, regardless of whether or not they have ever taken a single dime of government money. 

From the New York Times on Saturday: The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation. Officials said the proposal would seek a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system.

One proposal could impose greater requirements on company boards to tie executive compensation more closely to corporate performance and to take other steps to ensure that compensation was aligned with the financial interest of the company. The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies. 

A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large troubled companies not now regulated by Washington, like insurance companies and hedge funds. Under the proposal, the Treasury secretary would have the authority to seize and wind down a struggling institution after consulting with the president and upon the recommendation of two-thirds of the Federal Reserve board.

uncle-sam-suicideSo let me put all that into plain people speak. The Obama plan is to give the government the ability to determine the pay and bonuses in private companies that have taken zero government bailout money. The government would have the say as to whether the bonus criteria is good or not. And the Secretary of the Treasury would have the authority to take over any company in private industry he chooses after consulting with the Emperor and getting approval of 2/3 of the Federal Reserve Board.

This is wrong on so many levels I don’t even know where to begin. First, the government has absolutely no authority to interfere in ANY aspect of how a private company does business. If a private company takes bailout money from the federal government, then they are accepting the terms of government in exchange. But a company that takes no money from the fed has zero reason for the Federal government to have shit to say about what they do or how they do it, so long as it is legal.

Private business has the right to give a bonus for whatever the hell they want to give a bonus for. If I want to give my executives a bonus for peeing without dribbling on the seat for three months in a row, I have the right to do so. Where does government think they have the right to set the criteria for any company that hasn’t taken money from them?

tim-geithnerReally, Timothy Geithner would have the authority to take over and resolve problems of private institutions that haven’t taken government money? The guy who couldn’t figure out if had to pay his taxes gets to come in start calling the shots in order to fix a company? I would rather have my cat running the company that is in trouble than Geithner.

The bottom line here folks is that Obama and his minions are going to continue to come after the free market and turn it into state run government. That is the agenda. Socialists think the true free market is a bad thing to have. And they are going to continue this assault endlessly using the politics of fear that O’prompter railed against in his inaugural speech. “We will no longer allow the politics of fear”… he meant the politics of Republican fear. Democrats using fear to strip America and her businesses of their rights seems to be A-OK. Democrats fanning the flames of class warfare and making capitalism and big business into evil beings in order to gain state control seems to be OK with them too. 

The moment is upon us people. We are watching the end of the free market as we knew it. Well, to be more accurate, we are watching the last breaths of a free market that was slowly administered poison over the last 50 years. Obama is not the first President to eat away at the free market. He is also not the only President to use class warfare, public outrage, and fear mongering to take away citizen’s rights. He is just the latest to do so. And he is setting himself up to do so with previously unseen speed and at such a large scale that we cannot even seem to comprehend what we are seeing.

I leave you with the words of Queen Amadala to the Senate. She addresses the security measure being pushed against separatists, but if you simply change it to her addressing the current path to socialism that we are seeing from the far left in power today and make her audience the American public instead of the Senate, her message is a relevant one today. This scene was actually cut from the movie:

“Wake up Senators, you must wake up. If you offer the separatists violence they can only show violence in return. Many will lose their lives, ALL will lose their freedom. I pray you will not let fear push you into disaster. Vote down the security measure which is nothing less than a declaration of war. Does anyone here want that? I cannot believe that they do.” 

It is time to wake up America. This administration is taking us on the path to failure. They will take away our rights. They will take away our guns. They will take away our businesses. They will take away the fruits of our labor. They will take away our FREEDOM. The time for action is now.

Advertisements

Comments

  1. And once again, we have Science Fiction turning into reality . . . . .

    And the beat goes on . . .

  2. It is refreshing to read a “real” view of the changes we are facing. Our liberties are diminishing as we all smile and feel secure because our government is looking out for us.

    It is time to wake up! We are witnessing yet another abuse of power; second verse same as the first. The free market has become a hostage of the socialistic regime.

    AIG and there ilk are no longer private companies because they are funded by public funds. However, truly private companies should not be infiltrated by a government run amok.

    It is our responsibility to keep the dialogue active and on every American’s mind.

  3. Black Flag says:

    Matters not who sits in the chair of government power, their goal is the same.

    Perhaps time to stop keeling at the chair?

  4. A truely private business should be able to pay whomever,whatevet it chooses.I have no problem with that,but when a business sells shares it is no longer a private business and the public needs protection from overpaid CEO’S.This protection should not come from government but from business itself.It should be self policing,but it isn’t.Business has allowed these crooks to fleece the public long enough.If it won’t be self correcting,that leaves government.

    The bonuses paid to AIG was a real stupid move with really stupid timing.These high salaries and bonuses have been simmering with the public for a long time and they just keep going on.A lot of people had money invested in these companies that went belly up with the high paid executives in charge that didn’t have a clue,apparently.

    I understand that government laid the foundation of failure in the housing market.I know that,but I do not believe that government compelled any company to do all the misdeeds that were done.Most of them were done so the executives could gather higher and highr salaries and bonuses.In other words,greed propelled this debacle more than any other factor.This is too widespread for Barmy Frank or Chris Dodd to have engneered this by themselves.

    • Calf Roper says:

      Ron,

      The system of control in place to control CEO compensation of publicly-held companies is the shareholder’s invididual and unequivocal right to vote with their shares (dollars). If you hold a share of AIG stock, and you as the shareholder feel that the CEO and other executives are fleecing the company, then sell your damn share. Enough shareholders do this and the stock price drops, the Board starts to worry, and heads begin to roll. This system works if you give it time.

      What are you trying to protect here with big daddy government? The shareholder? Why would you want to protect the shareholder? They chose to invest their dollar in AIG. They can sell the share at any time. They understood the risk of owning a stock certificate when they first invested. If they think that the bonus’s are no big deal, then they can hold on to their share for the long haul and maybe just maybe get the kind of return they are looking for. Again, it is up to the shareholder and the risk is (or should be but it’s not anymore) on the shareholder. Now the risk is on non-shareholders.

      I have just paid, as a tax-paying citizen, to purchase ownership in AIG. I didn’t want to. I don’t think they’re a good long-term investment. I’m not going to get the return I want. But there is absolutely nothing I can do about it. You just made the decision for me. You decided where my money was going to go. And for that I say… to hell with you (meaning government) that is. Not you personally 🙂

      Now we are all shareholders in AIG. So, naturally, we should have a say in how the company is run? Right? NO. If I were a normal shareholder, and not a government-forced shareholder, I have no say in how the company is run other than to vote with my share. As a shareholder, I can’t tell the CEO to limit his pay. All I can do is vote up or down one way or another. So, AIG is no longer a publicly-traded company. It is a government agency, like Fannie Mae or Freddie Mac. The government now just took over complete control of an American business. I don’t know about you, but that doesn’t sit well with me.

      • The shareholders of AIG are a widely varied lot.They include just about every walk of life in this country,I would imagine.They invested their money in AIG for a future or present income.That’s gone,wiped slick by a group that had no idea what they were doing.For doing this they were rewarded rather more handsomely than either you or I will ever be.Rewarded for failure.

        The people who lost their money are going to take a double hit.Their money is gone and their tax money is going to reward the very people that made this happen.You’d need a hacksaw to cut through the irony here.

        I don’t like the idea of government taking over these companies at all.I believe they should have been allowed to fail.They should now be just a footnote in history,but they’re not.The taxpayer now owns a good part of them,so I say let’s at least get a pound of flesh out of this because we’re not going to get anything else.

        • Calf Roper says:

          You have a point. The government becoming an owner in a private sector, publicly-held company changed all of the rules.

  5. Well stated USW.

  6. esomhillholler says:

    US, This sounds so familiar to me. Just yesterday evening my 13 yr old son looked at me and asked, “could Obama become dictator of the United States?” Well, for a second, I was kind of Silent. It seems, that in his Social Studies class, they were learning about modern day dictators, and ways they had gained power. He wondered if it was possible that Obama could become a dictator and how he could bring it about. Sounds strange coming from a 13 yr old huh? If HE can think that, then how about O’Prompter and his minions? I am going to do some research on this and see if it could be possible. Even if not dictator, how about no more term limits, and extended terms of office? I Know for sure that couild happen. Hard to, but possible. And how much fear do you have to put into a Blind panicked mob before they are begging for an Emperor or dictator to take charge? This is nagging at me worse than the thoughts of the gov’t taking over the markets. Maybe because every day it is becoming more of a reality. I am becoming afraid we’ll NEVER get The Sith Lord Emporer out of office.

    • It is really getting scary when our kids are asking these kinds of questions.

    • Black Flag says:

      We have been under a dictatorship since at least 1936, probably back since 1914, and arguably back until 1865.

      It almost got overthrow in 1965, but that was solved by a visit to Dallas.

      —-

      Because the Man in office changes matters not one wit.

      See through that – and see that nothing changes when the Man in the Chair changes.

    • FDR did it, so there is no reason history cannot repeat itself. It would have to be voted on, now what was that story about the white house running the census?
      I keep wondering is this deliberate, or just them taking advantage of situations as they arise? Fannie/Freddie caused the bubble to burst, setting up the financial crisis. Now they are pressing us on CO2 and energy, which will cause another crisis.
      And they seem to be very good at distracting the public from what is important while they make their moves.

    • Black Flag says:

      FDR changed nothing – he continued to implement the same plan that was placed before him.

      Wilson created the Fed – who created fiat money – which could not stand gold in the hands of the people – so FDR got rid of the gold.

      • I was meaning his four terms and the possibility of the 22nd amendment being repealed. And then the reign of Obama.

      • Black Flag says:

        Ah, got it!

        However, the Power finds this unnecessary.

        Since it matters not who sits in the Chair, anyone will do. The Power doesn’t change, only its mask.

        Why alert people to the Power, when they believe the changing of the Mask has meaning and hides the Power.

        • Cannot agree. Hitler was not the same as Churchill or FDR.
          Obama is not the same as McCain, Ron Paul or Bob Barr (not endorsing any of them). Having someone in the “chair” who advocates less government and letting people live their own lives vs the all knowing left who know whats best for us.

          And you may be right that any government means we are slaves and there is no good master. But there are ” BAD ” masters.
          I would rather be exploited than raped, beaten and exploited.

        • Black Flag says:

          Cannot agree. Hitler was not the same as Churchill or FDR.

          You jest.

          Churchill

          Poison Gas use against Germany Memo
          http://www.globalresearch.ca/articles/CHU407A.html
          I quite agree that it may be several weeks or even months before I shall ask you to drench Germany with poison gas, and if we do it, let us do it one hundred per cent.

          Mustard Gas against Iraqis
          In a War Office minute of 12 May 1919, Winston Churchill argued for the use of tear gas: “I do not understand this squeamishness about the use of gas. We have definitely adopted the position at the Peace Conference of arguing in favour of the retention of gas as a permanent method of warfare. It is sheer affectation to lacerate a man with the poisonous fragment of a bursting shell and to boggle at making his eyes water by means of lachrymatory gas. I am strongly in favour of using poisoned gas against uncivilised tribes.

          FDR

          President Franklin Roosevelt authorized the internment with Executive Order 9066 on February 19, 1942, which allowed local military commanders to designate “military areas” as “exclusion zones”, from which “any or all persons may be excluded.” This power was used to declare that all people of Japanese ancestry were excluded from the entire Pacific coast, including all of California and most of Oregon and Washington

          Obama is no different than anyone before him and anyone after him.

          Ron Paul will never be President, so that argument is futile.

          Reagan advocated all the things you say, and every aspect of government grew anyway. As I said, It doesn’t matter who

          • esomhillholler says:

            I disagree with you BF. It DOES matter who. Comparing Churchill and FDR to Hitler is ridiculous and you know it. Talking about using poison gas, (and they were talking about retaliation at the time) against the Germans, and using tear gas on Iraqis is a hell of a lot different than systematically exterminating over 12 million people solely because of who they were. And I for one, thank you, would rather have ol’ W back than have a permanent Obama in office. I don’t see how you can even think that way. But I guess that’s your right. That is unless Obama gets his wish.

          • Black Flag says:

            Churchill was supporting the use of Mustard Gas – and besides, dying by gas or by machine gun bullets raked across your village by aircraft has little difference to the dead.

            He started (and supported) the indiscriminate bombing of civilian targets.

            Churchill was a murderous SOB (PS: he is a cousin of mine – his grandmother is my great-great grandmother)

            • esomhillholler says:

              BF, OK! Truce about Churchill! So he was a murderous SOB. That still don’t put him in the same ballpark as Hitler in my eyes though. I have an Uncle who liberated a Concentration Camp. He told me he could never appropriately describe that experience. You had to live it for yourself.

    • My 9-year old is making comparisons between the Star Wars movies and the current administration. She likens the POTUS to Emperor Palpatine, and says the “Jar Jar Binxes” (voters)played right into his hands.

      By the way, there was a TV special (either History Channel or Nat Geo) a few months ago about how Lucas’s movies were actually a political and historical commentary…she doesn’t remember if she saw it or not; but, even if she did, her observations are pretty astute. Perhaps we can change the parts of Article I to lower age requirements for public office?!

  7. I totally agree, USW, and I love this site and all the discussions. My question though is, okay, what kind of actions do we take and how? I’m a firm believer that one can impact a big problem by each of us working in our little corner of the world. I recently retired at 54 (yes, 54) by working and planning. Now, I have lots of energy to direct toward these issues, but don’t know where to start. More than anything, I think conservatives need to re-focus on principles and get beyond the blaming and fingerpointing. But, how do rational, logical, analytical people get heard in a world of narcissistic sound bytes?

    • Black Flag says:

      You can’t.

      No matter how loud sane, rational expression will not be heard.

      …because the rational thinking means incredible pain and suffering for the people as the economy resets itself.

      …and no one likes to here bad news, even if it is the truth.

      All you can do is try to protect yourself and your family and friends.

      Prepare now. Panic will comes soon, and you will not be able to compete with the desperation of other people.

      Get ready now, while there is very little competition.

      • Oh BF, enough of the doom & gloom talk my friend . . .

        Why don’t you believe in your own philosophy? You know, the one you told me about how we will all live in peace and harmony AFTER we just ignore government and it just goes away?

        Yes we need to stop rearranging the deck chairs on the Titanic . . . If we all pull our own weight and bring this form of government into the 21st century, it can be done. Remember my idea? Somebody needs to turn something like that into a plan.

        Would you volunteer for that job?

        Or do you just want to moan and groan about gloom and doom forever . . . ?

      • Black Flag says:

        G. A. Rowe

        Enough of the doom & gloom talk my friend . . .

        Sadly, it is not enough.

        The magnitude of the financial tsunami is so huge that there is no precedent in history.

        I am the guy carrying the “End is Near” sign on the corner –

        Why don’t you believe in your own philosophy? You know, the one you told me about how we will all live in peace and harmony AFTER we just ignore government and it just goes away?

        Oh, please tell me where I said that?

        I’ve proposed a MORAL BASIS for society.

        From that basis, comes the optimal solutions for human problems.

        That does not mean all problems can be solved.

        There will still be crime, suffering, poverty, illness, disasters.

        But we will be free.

        bring this form of government into the 21st century, it can be done. Remember my idea? Somebody needs to turn something like that into a plan.

        Would you volunteer for that job?

        Sorry, nope.

        There exists no form of government that is moral.

        As long as people believe they have a right to impose upon non-violent people to force their beliefs – tyranny will always -always- be the consequence.

        Or do you just want to moan and groan about gloom and doom forever . . . ?

        Moaning I am not.

        Informing I am.

        Remember, G.A.

        Guilt is knowledge of the future wasted.

        You cannot say, next year, I didn’t warn you.

    • OR–Buy a nice boat and go fishing or travel and see the States.Stay out of politics and trying to do anything to help the situation.There are just too many of them out there to overcome.Enjoy yourself before the body patrs start dropping off.

      • You’re right Ron, thanks for reminding me that I can only control myself and my behavior–something a very wise person told me once. The last few years before I retired, there was a really chaotic atmosphere at work (much like today’s politics). There was no systems improvement and a lot of character assassination going on. In order to preserve my sanity, I focused on my department and on my doing the best job I could. It earned me a high departing evaluation and many good nights’ sleep.

        So, I shall enjoy my retirement….just spent the afternoon gardening (moved to FL in Oct). The grandkids are coming to visit soon and in the summer hubby and I will be going to the Caribbean to celebrate our third anniversary. Yep, still newlyweds. Now, if I could just get my husband to turn off the news channels………lol

  8. Black Flag says:

    Ron

    …I understand that government laid the foundation of failure in the housing market.I know that,but I do not believe that government compelled any company to do all the misdeeds that were done.

    In fact, the government DID compel those loans by law.

    It is important to understand that.

    Carter signed the Urban Redevelopment Program – forcing banks to loan to risky low income people.

    The banks couldn’t do it; they’d lose their shirts – so government, as a carrot, created Freddie Mae and Mac to guarantee those loans against default.

    So, now 90% of the entire mortgage industry is insured with Mae and Mac.

    If you’re a bank – and responsible for generating profits to pay your employees and shareholders – your job is to make money.

    If the government, to force a twisted policy, is going to guarantee no-losses on mortgages, what would you do — say no????

    The government purposely made the carrot so that banks would eat it.

    If they didn’t eat that carrot, the government would have made cookies or cake, or some sort of enticement for businesses to act on the twisted policy of government.

    There is no limit to the twisted, perverted acts of government to force their policy into the economy.

    The only constraint on government is appearances – they didn’t want to appear so overt as to expose their sick, twisted minds.

    So, you’ve Catch-22’d the banks, Ron.

    They don’t lend money – their core business – so you’ll complain that they are heartless and cruel greedy tight SOB that don’t support the US consumer or borrower

    – and when they do lend money, you complain that they are cruel heartless greedy SOB that don’t care about the US consumer or borrower.

    • Black Flag says:

      And even more carrots.

      People didn’t buy house anyway! Most people aren’t stupid – they knew they couldn’t make the payments no matter who loaned the money.

      So the government, adds more twists – tax deduction on house payments.

      Result: housing boom. Lots of loans. Lots of people wanting houses. Housing prices rise faster than they can be built.

      But the poor still can’t participate.

      Government agency of Mae and Mac create a new derivative – variable short-term mortage.

      Mae&Mac authorize loans for no down payment to be insured. Why? They sell these loans by saying — “See, houses appreciate 10% per year – your interest is less than that. Figure it out – just make the interest payment, and let the appreciation earn your equity!”

      People took out their pencils – and sure enough, the claim was correct….as long as the housing market appreciates.

      …. now you know most of the story….

    • B.F.—Government did not compel Richard Fuld to run Bear Sterns into the ground.No one compeled Standard and Poor’s and Moodys to issue false ratings.No one compeled AIG to go into the speculation business.No one compeled the British banks to get involved,ditto the rest of the worlds banks and investors.Greed did.

      S&P and Moody’s issued glowing ratings on worthless assets because high ratings pay more than low ratings.There’s more money for the company,thus the CEO.

      I know the role government played in this,I’m simply pointing out they weren’t the only player.Not by a long shot.

    • Black Flag says:

      It was their job to lend money.

      To insist that they should not have done this would be bizarre.

      If it was their job to lend money, it is also their job to do it on the best terms they can get.

      Government provided those terms.

      Do not be confused with the waving hands pointing to the culpability of the banking community as the cause of the disaster – they are merely part of the consequence of government action.

  9. Black Flag says:

    Another lesson (as if anyone needed more).

    Education. Let’s think about this for a bit….

    In 1950, a person could pay for their college education by working summers as a waiter – and end up with a degree and no debt.

    That is impossible today.

    Because government got involved, today, college education costs a veritable fortune.

    By guaranteeing loans to students, government completely distorted the college free market business model.

    Instead of making college affordable, government’s warp made college incredibly expensive – but government subsidizing the college with loan guarantees, people could still go to college by going into debt.

    For colleges, there is no free market discipline – it has been destroyed by the debt guarantee of government. They can continually raise their prices knowing that the students can get whatever loan they need to pay.

    So, 1950 – college was afforded by working summers.

    2009 – college meas the student pays for 10 to 20 years into his earning career for the same goods.

    This same effect occurred in the Stock Market, Housing Market, Car Industry…. everywhere government places its finger, you have this incredible, disastrous distortion.

    • BF, you are correct, EVERYTHING the government touches goes to shit…EVERYTHING!

    • esomhillholler says:

      Now THAT BF, I agree %1000 with. I have a son in College and I am feeling the pinch pretty hard. For instance: There ain’t a book in the world worth $300.(American History) But there are very few COLLEGE books Under $100.00.

  10. BF,

    I have to agree with everything that you have said in this thread. Those banks were doing exactly what they are supposed to do, if the government hadn’t stepped in and said “We’ll guarantee these risky loans, go ahead and make them” the economy would probably still be crap but maybe not such a big pile of it. I asked my husband the other day when it became a bad thing for business to make money. He didn’t have an answer that I was satisfied with. I wonder who the american people are going to blame when all big business fails and we’re still in the economy that we are in now? They can only blame Bush for so long before it just won’t fly anymore.

  11. Mr Flag:

    “Matters not who sits in the chair of government power, their goal is the same.”

    Pray tell, who are they?

    JAC

  12. OK, OK, OK, read through everything twice and I have to agree with BF! Pains me to say that because I want to believe that there is some mechanism in place, some people there in Washington that can get a grip on this?!? I want to believe that all of us around the country that don’t buy into this CAN do something as rational, tax-paying citizens of this country. I refuse to cave in to this fear and get swallowed up by the power grabbers. (However, I am going to go back to a previous post of BF’s “getting prepared” or something along that line, and take another look.)

  13. Calf Roper says:

    BF,

    As a current commercial loan officer with past experience in residential mortgage loans, you are dead on in your analysis. No right-minded bank holds a long-term 30 year fixed rate note in house. I don’t care how financially strong the borrower is.

    If we (bankers in general) hadn’t been able, and still be able, to sell these long-term fixed rate notes off to Freddie Mac, Fannie Mae, and other secondary market investors we wouldn’t have made the loans. It’s a cyclical effect.

    Government dangles carrots so people will buy homes. What was Clinton’s theme, “everyone should own a home”. Prices of homes go up. People can’t afford the monthly payments on these now expensive homes unless you stretch the amortization out 30 years of more. So government creates a secondary market that buys these mortgages, because no bank would ever fix a rate that long on an inhouse loan. House prices continue to climb because the government tells banks to make loans to anyone or else we will shut you down through regulation. So banks make home loans to anyone coming thru the door because the government tells them to and because they can sell the loan on the secondary market.

    In the meantime, investors figure out how to make more money on these secondary market loans. They offer to insure those with little to no down payment – hello PMI insurance, FHA, etc. However, these loans start to default on the secondary market (ie people who normally couldn’t qualify to afford the house can’t make the payments – surprise, surprise, surprise). We can’t have that. We can’t kick people out of their homes.

    In steps the Fed. We must lower the long-term fixed rate market for home loans to entice refinancing. We must buy up toxic mortgages so that these same investors can go out and buy more toxic mortgages from banks who still need to make these toxic loans to comply with government regulations.

    Like I said its cyclical.

    • esomhillholler says:

      Calf Roper, If I got what you’re saying correctly, and I’m pretty sure I did, You mean that gov’t needs to stay out of the banking business. So, why in the crap are they instead getting even deeper in? This is what I said in and erlier post about Congress screaming about situations that they created to begin with. You’re correct about the cycle, but how do we stop the carousel?

    • Black Flag says:

      Allow the reset of the economy.

      This means suffering a Great Depression, but by orders of magnitude worse.

      I recall an interview with Hayek after he won his Noble Prize back in 1970’s.

      He was being assaulted by the pundits for his suggestion that the US economy needed to suffer a serious depression so to save the economy and western society.

      The pundits were aghast. They grilled him:

      “How much unemployment would the US citizenship allow? 10%? 20%? 30%?”

      Hayek: “It does not matter – it must be suffered to save America”

      Pundit: “They people will revolt!”

      Hayek: (sigh) “Yes, that might happen. However, if this suffering does not take place, it will be the end of America regardless”

      Later…

      Hayek: “Yes, it is unfortunate. People will suffer but there is no other way. Avoiding this reckoning will only delay it, and add to it. The sooner, the less suffering and the quicker the recovery”.

      This was in 1970.

      We are long past the “less suffering” and the “quick recovery”.

      • Hey BF
        Where is your getting prepared post? Just want to make sure I have not forgotten one of my ducks.

  14. Okay great audience once again…with outstanding commentary. I do have a question to pose to everyone who reads this comment, ready? Great!

    As much ‘lip-flappin” that’s been going on about this oversight on executive compensation, bonuses, and the financial industry…how many of you really (in your hearts) believe that any of it will come to fruition?

    I will suggest just a couple of matters for this comment. (1) This rubbish has been going on since the dawning of the exchanges; in fact, it could be argued that most of the alleged assets that one believes they are buying don’t really exist whatsoever.

    The stock market and even worse–the commodities markets–are based on the presumption of lies. This effort which humankind is so good at–lying–is what creates the very market we trade in. More later….

    jps

    • JP,
      Hopefully none of it will come true. Based on Geithner’s request for more powers for the Treasury, it’s not about improving the system, but about power over the ‘free’ market. It would be regulation overkill if the T actually got so much power, not to mention opening ways to fund socialist policies.

    • USWeapon says:

      Great thoughts Jon-Paul. I look forward to more on this later

    • JP,
      I don’t think it will pass this time. In my opinion it’s a trial balloon to see if the American public is ready for more government control of prices set by corporations. FDR taught the democrats that you could buy votes with government checks and this group has always voted to keep those people in office irregardless of their other polices. I heard recently on Fox that the democrats goal is to have the majority of the middle class receive government checks too. Now the problem, as the democrats see it, is that they tax the corporations to pay for these checks but those blame corporations just pass this cost on to the consumer. If they start with something as outrageous as the AIG bonuses then that gets their foot in the door for framing the argument that government needs to “protect” the public. It’s a short walk from there to setting salary caps and most importantly profit margins. Think this won’t happen, look at your local electricity provider.

      Great forum by the way!
      Tejas

      • Tejas,

        Great and very insightful response, in fact I’d say contribution. I totally agree with your thinking vis-a-vie what the left is up too. I have no doubt that the Fed through the T is trying to gain a stronger hold on the inner workings of Corporate America.

        All one needs to do is look at the kinds of figures these people are pulling down…and anywhere there is a flow of unrestricted money, we will find the Fed.

        However, your analogy regarding AIG, in my humble opinion is spot on. Furthermore, (and this really irks me!) the number one job of the federal government is to protect the security of the people. Most people forget that the Framer’s were referring to National security and protecting citizen’s property. Your notion of ‘protecting the public’ is great.

        Finally, I’d like to restate my original thesis: This back handed, hand signs, SEC, NASD, Fraud Patrol, amisdt in the indicies security i.e., NYSE, AMEX, PHIL, Chicago Board of Trade, NY MERK, Duke & Duke all have their own agencies in house for compliance and due-diligence.

        Now above and beyond that, the government has their ‘regulators and overseer’s’ who are allegdly doing something. I don’t believe that any combination of humankind and the markets will ever be an ‘arms-length’ trasaction. Cheers and thanx gang.

        jps

  15. This whole mess is a result of Government getting involved in peoples lives. The housing callapse, as has been commented on here, began under Carter, was made worse under Clinton, finally collapsed, and here we are on this blog expressing our anger over all of this. Until the rest of this country can understand this and tell the idiots in Washington to cease and desist, it will continue, with bad results.

    • esomhillholler says:

      That’s what this blog and thousands of others like it are for. It’s also telling everyone you know or run into about it. The only way it will change is if all of us get pissed and say, That’s ENOUGH!

  16. Black Flag says:

    Prepare post:

    A short one was awhile ago – maybe USWep might find it ’cause I can’t remember where I put it.

    However, let’s do this too…. with a short explanation.

    I am resistant to offer specific advice to a general audience.

    For that audience, I’d rather try to alert the situation and allow everyone make their own decisions because everyone’s particular situation is unique, and the strategies would be different.

    However, there are a handful of things to think about when trying to prepare for the near-future.

    I’ll put together some thoughts and pass them on to USWep, if there is an interest.

    • I’m always willing to listen, thats a part of communication that is very un-utilized. While my short term preparation is set, some of my long term prep has a few decisions that need to be made. With the resources that are available too me, those decisions won’t be hard. I do have some certain skills that would ensure survival under the toughest times, I’m always looking for some new ideas.

  17. TexasChem says:

    Good read US..

    The Free Market isn’t exactly the Free Market any longer since our govt. has been calling the shots with interet rates and loan terms for years.

    If Obama has his way it will never be a Free Market again. His Marxist beliefs which have determined his core political decisions since taking office will never allow it.

    I don’t know how many of you have researched the current POTUS background but check out this site for lots of intereting reading about him. I was amazed he even won the election after this read.

    Link: http://www.theobamafile.com

  18. Hi BF,

    I saved your response, just like I said ;o) Here it is for all who are asking:
    1. Black Flag said
    March 19, 2009 at 1:02 pm
    Cyndi P
    As far as your boyfriend… he is in denial.
    So far, the traditional panic break in the stock market has not occurred. When it does, the psychological devastation will be too great for some people.
    Some people can’t believe that their portfolios have collapsed. Some get defensive, shrugging it off. “The stock market will come back.” It never came back to March 2000. Why will it come back this time? Others are frightened badly. Others have adjusted their retirement dreams downward.
    When a couple are having different responses, both of them will have problems expressing their concerns. The other one does not want to hear about these concerns.
    But here is my point, the one who has a plan should take the lead. A bad plan is better than no plan. A plan can be adjusted.
    By “take the lead,” I mean first and foremost cost-cutting. Create a budget and stick to it. The one with the plan must control the checkbook… make it clear that this is an emergency situation. Take over control over the spending. Start looking for less expensive housing (if you are renting), or renegotiate your mortgage for a term rate as far into the future as possible (if you are not upside-down already today).
    The one without the plan must defer to the other. The leader ought to stop talking about how bad things are. Talking is useless. Actions count. If you control the checkbook, shut up and cut the budget.
    You are probably not in much worse shape than others — you are actually way ahead of most people because you are aware.
    If the person in denial controls the checkbook and refuses to turn loose of it, the other party is in trouble.
    If this is what happens, you had better start spending on food storage and similar fall-back items. When reality catches up with the bank account, at least the family will have a few months’ reserves. That will give time for the other in denial to face reality.
    A person in denial is probably ready to surrender control. Graciously make a move for the checkbook.
    The person who faces reality is in a better position to take responsibility. If that’s you, wait for the opportunity. The person in denial will at some point be ready to surrender authority. He or she just wants out from under the burden. Be patient. There isn’t anything you can do about it anyway. It does not pay to fret about things you cannot control.
    If you get no cooperation, go out and get a job if there are no children at home, and you don’t already pull in a paycheck. Don’t ask. Just go out and find work. Find a second job if you can. That will help you psychologically. It may force the other person to face up to reality.
    What signs of the implosion do you see? What do you believe the chances are of it happening by the end of the year? I’m curious about your thoughts…..
    Watch commodity prices – when they start to rise, that is a sign that currency is being converted to real value – which means the market believes inflation is coming – which means economic disaster is around the corner.
    PS: Commodities showed a big rise today, as a response to the Fed buying $300 billion of government debt yesterday. This is different from the bailout. This money goes directly to government to spend like drunk sailors. No waiting on banks to lend, this money will hit the government economy essentially tomorrow and the real economy in about 4 months. That is your window. But this is just Phase One – a little taste of what will be coming.
    Other things, which require budgets, is food prices. Food economy rests across a broad base – land prices, oil prices, weather, shipping, storage, employment, etc. It is the bellwether of the economy. When the staples start rising in prices, big problems are happening across the economy. The CPI index rose 3% – the highest increase in 15 years.
    Other signs – lots of ‘emergency preparedness’ government commercials are on TV. On the right side of the government’s mouth, they are saying loudly “We got it handled!” – but quietly, from the other side of the mouth – “get ready, we’re outta control!”
    But the big signs are always out-of-sight of the normal view of the normal citizen. But, fortunately, I have good eye-sight economically-wise
    Please bear with me, as I explain the trigger that will explode the greatest inflation or greatest depression in world history –
    With all this talk of trillions in bail out, why haven’t we seen the inflation now?
    There is a reason why the banks are not lending money to the public.
    Instead of taking the risk of lending, the banks are depositing hundreds of billions of dollars with the Federal Reserve.
    Beginning last October, the Federal Reserve began paying low rates of interest on money above the legal reserve requirement that banks must deposit at the Federal Reserve system. This new policy was not to go into effect until October of 2011, but the banking crisis forced the Federal Reserve to speed up the legal timetable. Congress, of course, did nothing.
    Because the banks place their money with the Federal Reserve, this money is taken out of the fractional reserve process.
    The Federal Reserve System does not lend this money to borrowers. It is not part of the FED’s balance sheet. The FED keeps the money in reserve. The banks were initially paid only 1.25% for these deposits, and this was dropped to 1% before October was over.
    The new Administration understands that something is wrong. Advisors know the banks are not lending.
    They do not seem to understand why the banks are not lending.
    They are not lending because bankers are fearful that they will not be repaid. They are so terrified by this economy that they would rather put the money with the Federal Reserve System, receive essentially no interest, and suffer losses on interest paid to depositors.
    They would rather lose a little money, month by month, then put their money at risk by lending it. This gives some indication of just how bad the present economy is.
    So hundreds of billions of bailout money sits idle in the Banker’s bank, the Federal Reserve.
    The government will not allow this to happen very long – without lending the economy will fall into a great depression and no government wants this as it will stop the government from funding itself (it funds itself primarily from inflation – therefore, deflation is the equivalent of taking a pay cut, and government will never take a pay cut. Thus, it must inflate or raise taxes to unheard of levels. The latter is political suicide).
    Thus, the government will force the banks to lend. The Federal Reserve has indicated it will reverse it’s policy, instead of paying interest on excess deposits, it will start charging negative interest on these excess deposits.
    The banks are in business to make money, not lose money. They will start lending, hard and fast. They will not take the money out of the Reserve. They will lend against it, using the Fractional Reserve system. It allows a 9 to 1 lending – for every dollar in the Reserve, a bank can lend 9 dollars, made out of thin air.
    If approximately $20 billion in Federal Reserves was enough to place all the currency of the United States economy, imagine how much currency will explode into the economy with $600 billion in reserves. We are talking +2000% annualized inflation rate – yes, you read that right.
    The date of the implementation of this policy has not yet been set. Today, the Federal Reserve is paying 0% on the excess deposits – with no change in the lending attitude with the banks. Therefore, I do not believe the Fed will wait much longer before they pull the trigger.
    When that happens, not one person in a hundred thousand will realize it. It will be a side note on a back page of boring press release. No pundit will make note of it. No Main Stream Media (MSM) news will announce it.
    But that will be THE trigger that changes the world as we know it.
    I will let you know, here on USWep’s blog, when that happens.

  19. I find it EXTREMELY offensive to see Uncle Sam potrayed as shooting himself!

    It is extremely IGNORANT and OFFENSIVE to take a country’s ICON and change the colors to use it as your own logo.

    You are offending MULTIPLE cultures by defiling the symbol and misusing it.

    Be creative and make up your own icon, or be proud and use one of your own countries symbols, do not offend this multicultural society by your pure ignorance.

    • I find it interesting how people are so moved by cartoons and abstractions – to a point they will kill or die for them.

    • USWeapon says:

      Cee,

      And what led you to believe that I was from another country? I think the picture is appropriate. The depiction was that the US is committing suicide by doing the things they are doing. If you disagree, then you are welcome to discuss it. But your taking so much offense to the picture doesn’t do anything to address the issues.

      You sound a bit like the Muslims who are up in arms when a picture of Muhammed is used.

      USW

  20. ignorant kid says:

    hey… don’t get your panties in a bunch.

    It’s a free country.

Trackbacks

  1. […] is why I will just link to it. This was a peice just done on my other blog home on the freedom stripping that our government has been doing and is now doing at an accellerated […]

%d bloggers like this: