Economy: 2008 Archives

Obama has named a woman from UCal Berkeley Christina Romer as head of the Council of Economic Advisors, perhaps on the mistaken assumption that anyone from Berkeley had to be a left-wing economist. Luckily for the country, she isn't. Last year she and her husband published the results of a study they had done which concluded this:

"The most striking finding of this exercise is that tax increases have a large negative effect on investment."

Estimating the cumulative impact of a tax increase of 1% of GDP, they found that "over the next three years output is on average 1.8% lower than it otherwise would have been."

This "is followed by a large and highly significant rise in the unemployment rate." How much job loss? "The estimated output effect after 12 quarters is a decrease of 2.9%," the Romer study found.

Also, another Romer report issued last year found that "a tax cut of 1% of GDP increases real output by 3% over the next three years."

Will Obama listen to this wisdom?

All Roads Lead To Romer

Read it all.

Professor Thomas Sowell hopes that the federal governmnent will not repeat the mistakes of Franklin Delano Roosevelt that unnecessarily prolonged and deepened the Great Depression.

The stock market crash, which has been blamed for the widespread suffering during the Great Depression of the 1930s, created no unemployment rate that was even half of what was created in the wake of the government interventions of Hoover and FDR.

Gov't Solutions Only Deepened '30s Downturn

By THOMAS SOWELL

With both Barack Obama's supporters and the media looking forward to the new administration's policies being similar to President Franklin D. Roosevelt's policies during the 1930s depression, it may be useful to look at just what those policies — and more important, their consequences — were.

The prevailing view in many quarters is that the stock market crash of 1929 was a failure of the free market that led to massive unemployment in the 1930s — and that it was the intervention of Roosevelt's New Deal policies which rescued the economy.

It is such a good story that it seems a pity to spoil it with facts. Yet there is something to be said for not repeating the catastrophes of the past.

Let's start at square one, with the stock crash in October 1929. Was this what led to massive unemployment? Official government statistics suggest otherwise. So do new statistics on unemployment by two current scholars, Richard Vedder and Lowell Gallaway, in their book "Out of Work."

The Vedder and Gallaway statistics allow us to follow unemployment month by month. They put the unemployment rate at 5% in November 1929, a month after the stock market crash. It hit 9% in December — but then began a generally downward trend, subsiding to 6.3% in June 1930.

That was when the Smoot-Hawley tariffs were passed, against the advice of economists across the country, who warned of dire consequences. Five months after the Smoot-Hawley tariffs, the jobless rate hit double digits for the first time in the 1930s.

This was more than a year after the stock market crash. Moreover, the unemployment rate rose to even higher levels under both Presidents Herbert Hoover and Roosevelt, both of whom intervened in the economy on an unprecedented scale.

Before the Great Depression, it was not considered to be the business of the federal government to try to get the economy out of a depression. But the Smoot-Hawley tariff — designed to save American jobs by restricting imports — was one of Hoover's interventions, followed by even bigger interventions by FDR.

The rise in unemployment after the stock market crash of 1929 was a blip on the screen compared with the soaring unemployment rates reached later, after a series of government interventions.

For nearly three consecutive years, beginning in February 1932, the unemployment rate never fell below 20% for any month before January 1935, when it fell to 19.3%, according to the Vedder and Gallaway statistics. In other words, the evidence suggests that it was not the "problem" of the financial crisis in 1929 that caused massive unemployment, but politicians' attempted "solutions."

Is that the history that we seem to be ready to repeat?

The stock market crash, which has been blamed for the widespread suffering during the Great Depression of the 1930s, created no unemployment rate that was even half of what was created in the wake of the government interventions of Hoover and FDR.

Politically, however, Roosevelt could not have been more successful. After all, he was the only president elected four times in a row. He was a master of political rhetoric.

If Barack Obama wants political success, following in the footsteps of FDR looks like the way to go. But people concerned about the economy need to take a closer look at history. We deserve something better than repeating the '30s disasters.

There is yet another factor that provides a parallel to what happened during the Great Depression. No matter how much worse things got after government intervention under Roosevelt's New Deal policies, the party line was that he had to "do something" to get us out of the disaster created by the failure of the unregulated market and Hoover's "do nothing" policies.

Today, an increasing number of scholars recognize that FDR's policies were extensions of interventions begun under Hoover. Moreover, the temporary rise in unemployment after the market crash was nowhere near the massive and long-lasting unemployment after government interventions.

Barack Obama already has his Herbert Hoover to blame for any and all disasters that his policies create: George W. Bush.

As always, Professor Thomas Sowell sees things clearly and tells it like it is simply and plainly. Would that our government and government-to-be were as clear-eyed and sensible and would have learned the lessons of history.

The auto bailout that the Bush Administration and the Democrats are discussing is for the unions, not for the companies. The sooner the companies take the necessary steps to reform themselves through Bankruptcy's Chapter XI, the better the chance they will emerge as companies ready for the competiton. It worked for the airlines, it can work for the auto companies.

In the meantime, Dr. Sowell suggests we look at the larger picture of life, of which the auto rescue plan is just one example of denying what needs to be done. Reality is still there when the fantasy fades.

Postponing Reality At Detroit's Big Three By THOMAS SOWELL | Posted Wednesday, December 17, 2008 4:20 PM PT

Some of us were raised to believe that reality is inescapable. But that just shows how far behind the times we are. Today, reality is optional. At the very least, it can be postponed.

Kids in school are not learning? Not a problem. Just promote them on to the next grade anyway. Call it "compassion," so as not to hurt their "self-esteem."

Can't meet college admissions standards after they graduate from high school? Denounce those standards as just arbitrary barriers to favor the privileged, and demand that exceptions be made.

Can't do math or science after they are in college? Denounce those courses for their rigidity and insensitivity, and create softer courses that the students can pass to get their degrees.

Once they are out in the real world, people with diplomas and degrees — but with no real education — can hit a wall. But by then the day of reckoning has been postponed for 15 or more years. Of course, the reckoning itself can last the rest of their lives.

The current bailout extravaganza is applying the postponement of reality democratically — to the rich as well as the poor, to the irresponsible as well as to the responsible, to the inefficient as well as to the efficient. It is a triumph of the non-judgmental philosophy that we have heard so much about in high-toned circles.

We are told that the collapse of the Big Three automakers in Detroit would have repercussions across the country, causing mass layoffs among firms that supply the automobile makers with parts, and shutting down automobile dealerships from coast to coast.

A renowned economist of the past, J.A. Schumpeter, used to refer to progress under capitalism as "creative destruction" — the replacement of businesses that have outlived their usefulness with businesses that carry technological and organizational creativity forward, raising standards of living in the process.

Indeed, this is very much like what happened a hundred years ago, when that new technological wonder, the automobile, wreaked havoc on all the forms of transportation built up around horses.

For thousands of years, horses had been the way to go, whether in buggies or royal coaches, whether pulling trolleys in the cities or plows on the farms. People had bet their futures on something with a track record of reliable success going back many centuries.

Were all these people to be left high and dry? What about all the other people who supplied the things used with horses — oats, saddles, horseshoes and buggies? Wouldn't they all go falling like dominoes when horses were replaced by cars?

Unfortunately for all the good people who had in good faith gone into all the various lines of work revolving around horses, there was no compassionate government to step in with a bailout or a stimulus package. They had to face reality, right then and right there, without even a postponement.

Who would have thought that those who displaced them would find themselves in a similar situation 100 years later?

Actually the automobile industry is not nearly in as bad a situation now as the horse-based industries were then. There is no replacement for the automobile anywhere on the horizon. Nor has the public decided to do without cars indefinitely.

While Detroit's Big Three are laying off thousands of workers, Toyota is hiring thousands of workers right here in America, where a substantial share of all our Toyotas are manufactured.

Will this save Detroit or Michigan? No.

Detroit and Michigan have followed classic liberal policies of treating businesses as prey, rather than as assets. They have helped kill the goose that lays the golden eggs. So have the unions. So have managements that have gone along to get along.

Toyota, Honda and other foreign automakers are not heading for Detroit, even though there are lots of experienced automobile workers there. They are avoiding the rust belts and the policies that have made those places rust belts.

A bailout of Detroit's Big Three would be only the latest in the postponements of reality. As for automobile dealers, they can probably sell Toyotas just as easily as they sold Chevys. And Toyotas will require just as many tires per car, as well as other parts from automobile parts suppliers.

UPDATE: No reality. President Bush punted to the union-supporting Obama administration and the Democratic Congress, who will use taxpayer money to save the unions, not GM and Chrysler. Painful changes are needed and Chapter XI bankruptcy is the obvious ways to accomplish them. Unaffordable contracts are dragging the car companies down: Think of this: 90,000 build cars for the Big Three, but the Big Three are paying the health care and pension costs for one million retirees. Doesn't work.

So the Big Three auto executives will troop into Congress tomorrow armed with spiffy new plans they will never be able to implement. Should Congress pour yet more money down a bottomless pit?

A special approach to bankruptcy to take account of the needs of continuing financing diffiiculties and warranties along with a drastic overhaul of unsustainable costs could be the best way of saving the American car industry and as many jobs as possible at the Big Three and all the suppliers they work with.

A Real Bailout for Auto Makers

By JAY PALMER
November 29, 2008
Barron's

Detroit's only hope may be to let ailing auto makers file for prepackaged bankruptcy.

IS A BANKRUPTCY THE BEST OPTION FOR GENERAL MOTORS, Chrysler and Ford ? While their CEOs insist otherwise and the risks would be high, a growing chorus of outsiders says yes. "It's the only real option that would allow GM to take the steps necessary for its long-term survival," asserts John Casesa, managing partner of New York's Casesa Strategic Advisors.

Unless the companies solve their problems, they're hurtling toward an ignominious fate: liquidation.

As the bailout rolls on, a real difference in philosophy is emerging in the case of the auto industry. Democrats want to use bailout money to "save" the industry. The White House and Congressional Republicans oppose that, saying that reviving credit for all is what the bailout was intended for and money should be limited to that sector.

Democrats, eager for a European-style socialist economy, or worse, want to keep the U.S. auto companies afloat pretty much as they are. Those who know how bloated and unsustainable the costs of the industry are say that bankruptcy is a far better solution, as it has been for other industries and companies, including large ones such as the airlines. In bankruptcy, companies keep operating but work together with their creditors and all other involved parties and the court to fashion a solution for sensible survival. All parties generally have to give up something to make it work, including, in this case, the powerful auto unions that the Democrats are trying to continue as business as usual. It is labor costs that are sinking the U.S. auto companies, as Charles Krauthammer points out. Toyota's worker cost is $48 per hour; GM's.$73.

Also, if bailout money is used outside the credit industry, where do you stop? There is no longer any "bright line," it's who has the muscle, the clout and the connections to get on the gravy train to socialism. Let bankruptcy work and make the auto industry competitive. Asian carmakers are turning out millions of vehicles in America profitably. So can the Big Three.

Obama is setting another historic record in addition to his election as the first African-American president. The stock market has suffered its worst immediate short term loss ever after a presidential election in history.

The substance of what Mr. Obama has promised for the economy is bearish for stocks. The threat of higher tax rates, especially on capital gains and dividends, now may be getting priced into the market. Add that to investor doubts about Democratic policies on unions, health care and trade -- and no wonder stocks are falling. Lower stock prices in turn reduce household net worth, thus slamming consumer confidence and contributing to what appears to be a consumer spending strike.

Obama is an intelligent, but inexperienced ideologue with a socialist agenda he is determined to push through. Whether he will do that despite facts indicating this would be disastrous for the economy -- and for all those he says he believes are entitled to welfare benefits from the government -- is unknown. Will a Democratic Congress led by Speaker Pelosi and Senate Majority Leader Reid be a restraining force? Unlikely.

Obama's plans are anti-growth and will cost the country jobs. So are investors right to be worried? Not only should investors be worried, everyone should be.

NOVEMBER 13, 2008
Wall Street Journal editorial opinon

A Barack Market

The voters may be full of hope about the looming Obama Presidency, but so far investors aren't. No President-elect in the postwar era has been greeted with a more audible hiss from Wall Street. The Dow has lost 1,342 points, or about 14%, since the election, with the S&P 500 and Nasdaq hitting similar skids. The Dow fell another 4.7% yesterday.

Much of this is due to hedge fund deleveraging, as well as dreadful corporate earnings reports and pessimism that the recession will be deeper than many had hoped. We also don't want to read too much into short-term market moves. But there's little doubt that uncertainty, and some fear, over Barack Obama's economic agenda is also contributing to the downdraft.

The substance of what Mr. Obama has promised for the economy is bearish for stocks. The threat of higher tax rates, especially on capital gains and dividends, now may be getting priced into the market. Add that to investor doubts about Democratic policies on unions, health care and trade -- and no wonder stocks are falling. Lower stock prices in turn reduce household net worth, thus slamming consumer confidence and contributing to what appears to be a consumer spending strike.

If Mr. Obama wants to reassure markets, he could announce that he won't be raising taxes for the foreseeable future. Unlike hundreds of billions in new government spending or more taxpayer cash for Detroit auto companies, this no-tax-hike declaration is a "stimulus" that would cost the U.S. Treasury nothing. In the current market, there won't be many capital gains and few companies will have surplus earnings to pay out in dividends. A higher tax rate on zero gains yields zero revenue, so what's the point of raising rates?

What markets want to see from Mr. Obama is a sense that the seriousness of this downturn is causing him to rethink the worst of his antigrowth policies.

Update: At tne end of the week the market is down 14% from Election Day. It looks like more lows are to follow.

Dr. Sowell looks ahead to what he fears will happen when Democrats take control of the White House with strong majorities in both Houses of Congress.

Wars, economic crises and other disruptions all provide opportunities for the left to seize on current problems to create enduring changes in the institutions of society. That is what we are witnessing today. . . .

It is not just a question of being able to put scare headlines on newspapers or alarmist rhetoric on television. Such things are just the prelude to massive political "change" in fundamentally sound institutions that have for more than two centuries made the American economy the envy of most of the world.

If the left succeeds, it will be like amputating your arm because of a stomach ache.

To add to the painful irony, many of those who are most eager to have a massive government intrusion into the market are among those whose previous intrusions into the market are largely responsible for the current financial crisis.

It was the left-- the "liberals" or "progressives"-- who led the charge to force lending institutions to lend to people whose credit history made them eligible only for "subprime" loans that were risky for both borrowers and lenders.

Read it all.

Thomas Sowell is the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution. Over the past three decades, Sowell has taught economics at
various colleges and universities, including Cornell, Amherst, and the University of California at Los Angeles, as well as the history of ideas at Brandeis University. He has also been associated with three other research centers, in addition to the Hoover Institution. He was project director at the Urban Institute from 1972 to 1974, a fellow at the Center for Advanced Study in the Behavioral Sciences at Stanford University in 1976–77, and was an adjunct scholar of the American Enterprise Institute in 1975-76.

Sowell was awarded the National Humanities Medal in 2002. In 2003, Sowell received the Bradley Prize for intellectual achievement. Sowell received his bachelor’s degree in economics (magna cum laude) from Harvard in 1958, his master’s degree in economics from Columbia University in 1959, and his Ph.D. in economics from the University of Chicago in 1968.

No one has dug deeper and written more about the real Obama than Stanley Kurtz, the independent researcher at Washington's Ethics and Public Policy Center. On the day before the election he provides his overall conclusion based on what he has learned from his extensive investigation: Barack Obama is a Far Left radical deeply steeped in and following the principles and practices of his intellectual and spiritual guiding light the communist agitator Saul Alinksy, whose goal was to destroy America's capitalist society and replace it with a totalitarian socialist one.

Wealth redistribution, not wealth creation, is at the center of Obama's plan. He will build support for this socialist end by vastly expanding the ACORN-style community organizating movement by linking the massive youth corps that he has said he will create as president. As Kurtz points out, ACORN, funded by Obama and Ayers through foundations, was a prime agent in undermining the credit standards of the nation's banking system as Obama supported “major redistributive change. Via ACORN, that project has already nearly wrecked our economy. What will happen when it’s generalized?"

Obama's words will be soothing and moderate as always (Alinsky preached using vague words such as "hope" and "change" rather than the specifics of the socialist agenda), but a totalitarian socialist society will continue to be his ultimate goal.

Kurtz's brilliant exposés have been ignored by the nation's mainstream media when they could and whitewashed by them when they could not. The tragedy for America is that the vast majority of voters has never seen, heard or been able to discuss Kurtz's Obama disclosures. What Obama and the Obama campaign have chosen to hide from the general public largely remains hidden because of the media's corrupt complicity.

Kurtz deserves our heartfelt thanks. If this far left radical, so far out of and opposed to mainstream American values, is elected president, at least a core few will be armed, alert and ready to do battle to defeat his totalitarian socialist agenda.

Here's Kurtz's conclusion in its entirety. To read all his investigative pieces, click here.

November 3, 2008

What We Know About Obama

The illusion of pragmatism advances far-left goals, in baby steps.

By Stanley Kurtz

Reflecting on all that I’ve written about Barack Obama over these past six months, four inter-related points stand out: Obama’s radicalism, his stealthy incrementalism, his interest in funding and organization-building, and his willingness to use — or quietly support — Alinskyite intimidation tactics. Since we stand on the cusp of the election, I’ll lay out the bottom line. For those who want to know more, go back and read the detailed studies on which I base these conclusions.

Obama’s troubling associations are more than isolated friendships or instances of bad judgment. His ties to Jeremiah Wright, Bill Ayers, Bernardine Dohrn, Rashid Khalidi, Michael Pfleger, James Meeks, ACORN, the New Party, and the Gamaliel Foundation all reflect Obama’s sympathy with radical-left ideas and causes — wealth redistribution prominent among them. At both the Woods Fund and the Chicago Annenberg Challenge, for example, Obama and Ayers channeled money into ACORN’s coffers. ACORN, a militant group pursuing economic redistribution, succeeded in undermining credit standards throughout the banking system, thereby modeling the New Party’s plans to tame capitalism itself. So the association with Ayers is not an outlier issue, but part and parcel of a network of radical ties through which Obama’s supported “major redistributive change.” Via ACORN, that project has already nearly wrecked our economy. What will happen when it’s generalized?

Similarly, Obama’s “association” with Wright was far more than a mere pastor-parishioner — or even mentor-protégé — relationship. Obama’s work with the Gamaliel Foundation required him to “organize” left-leaning churches into a larger political force. His real interest in Wright, Pfleger, and Meeks was to turn them into the nucleus of a far broader politicized coalition of radical black churches — as shown, for example, by his work with them on the Illinois racial-profiling bill. Again, we are not dealing with mere “associations,” but with intentional political partnerships.

Although media malfeasance is at the heart of our ignorance about these broader patterns, Obama’s absorption of Alinskyite strategies of stealthy incrementalism have helped to hide the truth. Following well-worn organizer strategies, Obama knows how to wrap ideological radicalism in the soothing rhetoric of “pragmatism” and classic American values. There is a kernel of truth to the pragmatism, however. Radical though his ultimate goals may be, Obama follows classic organizer strategy — pursuing his ends in tiny, incremental, and cumulative baby-steps. The municipal “living wage” campaigns supported by Obama, Wright, and groups like ACORN and the New Party were never designed, in themselves, to bring fundamental economic change. These ordinances actually applied to only a very small number of companies. The broader purpose of these battles was to build coalitions for deeper structural change on the national level, when the moment was right. Obama would likely hew to this incrementalism in power, with the same radical long-term goals in mind.

Obama was a master at channeling funding to his organizer allies. He was the key force turning the Woods Fund toward a major increase in support for community organizers, at a moment when other foundations shied away from funding the militant and confrontational tactics of groups like ACORN. In his now infamous 2001 radio remarks, Obama’s preferred strategy for promoting “major redistributive change” was through society-wide organizing from below. As president, Obama would connect his massive youth-volunteer program to his favorite community-organizer groups, thereby creating a political force for long-term restructuring of the American economy. This was the program of the New Party, and I believe it is still Obama’s long-term goal.

In pursuit of his goals, Obama has shown himself willing to quietly support, and sometimes to openly use, radical Alinskyite tactics. At the Woods Fund, Obama’s allies bragged about the way their “post-ideological” cover had allowed them to fund ACORN’s confrontational tactics, while escaping public criticism. Obama has shamelessly used Alinskyite “direct action” to silence and intimidate political foes during the current campaign (a matter well-known to conservatives, yet little noted by the mainstream press). Victory would only cement the conviction in Obama and his allies that these tactics had “won,” and therefore should be used again.

Has Obama changed? Was he merely using his radical Chicago allies to gain national renown, and thereby an opening for a more moderate political program? I find this view unconvincing. Obama has often claimed that his early community organizing, and his redistributive legislative work, were at the very core of his political identity. We’ve heard his radicalism on the radio in 2001. Does anyone really believe that he’s changed in 2008? Obama’s political radicalism consolidated his shaky personal identity. It formed him as an adult. He cannot abandon that inner stance without losing hold of an already precarious self. Obama chose to live in Hyde Park — chose that radical setting as the site of his adult self-creation. Hyde Park was never the place Obama needed to conquer in order to escape. On the contrary, it was the personally chosen home he now hopes to nationalize by spreading his organizing gospel to America’s youth.

Obama is clever and pragmatic, it’s true. But his pragmatism is deployed on behalf of radical goals. Obama’s heart is, and will remain, with the Far Left. Yet he will surely be cautious about grasping for more, at any given moment, than the political traffic will bear. That should not be mistaken for genuine moderation. It will merely be the beginning stages of a habitually incremental radicalism. In his heart and soul, Barack Obama was and remains a radical-stealthy, organizationally sophisticated, and — when necessary — tactically ruthless. The real Obama — the man beyond the feel-good symbol — is no mystery. He’s there for anyone willing to look. Sad to say, few are.

— Stanley Kurtz is a senior fellow at the Ethics and Public Policy Center.

Democratic policies promoting mortgage loans to those who couldn't afford them created the housing boom and bubble and its collapse that was at the heart of the worldwide financial panic that has cost American savers hundreds of billions of dollars of losses in their life savings. There was a chance to head off disaster in 2005 and 2006 but Democrats in the Senate led by Harry Reid and supported by Barack Obama and other Senate Democrats blocked the Republican bill to rein in Fannie Mae and Freddie Mac. House Democrats led by Pelosi and Barney Frank backed them up. The Democrats who pushed such policies deserve to be rejected. They sought to "spread the wealth" and instead impoverished tens of millions.

However, the most important decision on November 4th is electing our Commander-in-chief.

These are dangerous times, it is a dangerous world. Many don't want to think about it, but Islamic radicals are waging a world war against Western Civilzation targeting first and foremost the United States. Battlefronts are in Iraq, Afghanistan, Pakistan, Somalia, Lebanon, Israel, Nigeria, across all of Western Europe and in the United States, Canada and Australia. In some places it's active warfare, in others, terrorism, in others, subversion of our values and way of life to replace them with Islamic law. And Russia and China are building military strength while Iran seeks nuclear warheads for its long-range missiles.

Only John McCain is qualified and fit for the job of Commander-in-Chief. 69% of our military polled agree. McCain loves America and will do his utmost to protect it. Obama finds it difficult to say a good word about America. He constantly disparages America, it's bad and it needs to be changed.

Not only is Obama unqualified, he denies the importance of these threats, has pledged to slash our military to help fund new welfare programs and seems to believe appeasement and a weakened military will bring us peace in our time, just as Neville Chamberlain did in 1939. What prize would he offer up to Iran as Chamberlain offered (and gave) the Sudetenland to Hitler? No wonder Israelis polled prefer McCain by a wide margin.

The media is now joining Obama is playing the race card. And here. Simply put, if you don't vote for Obama, you're racist. You have no legitimate reason not to.

1. That you're troubled by the elite media's attempt to force you to vote for Obama to prove you're not a racist, is no reason.

2. That you're troubled by Obama’s constant playing of the race card, first against Hillary Clinton, then against John McCain and now against anyone who raises a question or a criticism, is no reason.

3. That you're troubled by his fixation on black power and dislike of whites as revealed in his own books in which he approvingly refers to "white men's greed" as the cause of the world's problems, is no reason.

4. That you're troubled by his attraction to Marxist socialist principles that began in high school and continued through college where he “hung out” with black power advocates and Marxist socialists and distanced himself from whites, as he describes in his books, is no reason.

5. That you’re troubled that he put his Marxist socialist principles into practice by becoming a community organizer of blacks against the white establishment in Chicago working with communist/socialist ACORN and other community organizers, is no reason.

6. That you're troubled by his attraction to and absorption of the communist Alinsky method of community organizing (studied in Chicago and while at Harvard Law School) in which socialist purposes are carefully hidden by sticking to platitudes like "hope" and "change" to solve every human dissatisfaction, is no reason.

7. That you're troubled by his telling Joe the Plumber he was going to impose higher taxes on him to "spread the wealth," that is, to take money away from people who pay taxes to give to people who don't pay taxes, which is pure socialism, is no reason

8. That you're troubled by his long association (as trainer, lawyer, collaborator and employer) with the communist/socialist community organization ACORN that has been involved in vote registration fraud controversies, including convictions, across the country, including this year, is no reason.

9. That you're troubled that Obama hired ACORN this year to do voter registration, knowing as he did about its record of voter fraud registration accusations, investigations and convictions (investigations of ACORN fraud are under way right now in at least 12 states), paying $320,000 to ACORN and then covering up the payment, is no reason.

10, That you're troubled that every day there are new stories of fraud involving ACORN workers in states across the nation and all the Obama campaign can say is that such reports are "a distraction" from the real issues, is no reason.

11. That you're troubled that he was an early pioneer, working with ACORN, in showing how to intimidate banks and bankers into making uncreditworthy mortgage loans to minorities and low-income people who could not afford them, which pressure tactics spread and ultimately led to the housing bubble, its collapse and the present world financial crisis and loss of hundreds of billions for investors and tens of thousands of jobs, is no reason.

12. That you're troubled that Obama, having worked closely with the communist/socialist organization ACORN throughout his entire career, recently said his views are still pretty much the same as when he helped ACORN force banks to make risky mortgage loans they never should have made and ran a voter registration drive with ACORN, is no reason.

13. That you're troubled that Obama has vowed to the communist//socialist group ACORN and other such organizations will be called in to work with him, if he's elected president, even before inauguration to shape the agenda of his administration,, is no reason.

14. That you're troubled that in just a few months in the U.S. Senate Obama was able to become the second biggest recipient, some $126,000 -- over a 20-year period -- of campaign contributions from Fannie Mae and Freddie Mac sources, is no reason.

15. That you’re troubled that when John McCain and others were proposing reforms in 2005 and 2006 to prevent a collapse of the out-of-control practices of Fannie Mae and Freddie Mac buying up far too many risky subprime mortgage loans, Obama instead sided with Barney Frank and Christopher Dodd in opposing reform, thus bringing on the present world financial crisis, indeed being quoted saying subprime loans were a good thing, is no reason.

16. That you're troubled by his association with people who hate America such as white hater Jeremiah Wright, unrepentant admitted terrorist bomber and self-described communist William Ayers (who said in 2001 the mention of America "makes him want to puke"), Nation of Islam’s Louis Farrakhan, former PLO spokesman Rashid Khalidi and nutcase Father Michael Pfleger, is no reason.

17. That you're troubled that he was attracted in the first place to black power, white-America hater, anti-Semitic pastor Jeremiah Wright and stayed with him for 20 years, knowing he was a follower of black liberation theology that preaches that any god that is not exclusively on the side of the blacks against whites must be killed, is no reason.

18. That you're troubled that he lied about never in 20 years hearing Jeremiah Wright make any of his anti-America and anti-white speeches, but then admitted he had when his campaign advisors realized the lie could be easily disproved, is no reason.

19. That you're troubled that he brought his young children to Jeremiah Wright's sermons Sunday after Sunday to listen to his bigoted tirades against whites and his hateful harangues against America, is no reason.

20. That you’re troubled that he helped Nation of Islam’s anti-Semitic Louis Farrakhan organize the Million-Man March in Washington and that Farrakhan has called Obama the messiah for black Muslims, is no reason.

21. That you're troubled that, working for years jointly with unrepentant terrorist bomber William Ayers, who describes himself as a communist, Obama funneled $150 million to fund programs to turn Chicago teachers and students into socialist revolutionaries who hate America, is no reason.

22. That you're troubled that, working jointly with America hater William Ayers, Obama directed charitable funds to separatist Afrocentric, America-hating programs designed by allies of Jeremiah Wright, while denouncing “the unrealistic politics of integrationist assimilation,” is no reason.

23. That you're troubled that, working jointly with America hater William Ayers, Obama, "to change America," directed charitable funds to the communist/socialist ACORN that was intimidating banks to make unsafe mortgage loans and engaging in voter registration fraud, as he well knew, is no reason.

24. That you're troubled that Obama continued his collaboration with Ayers after Ayers allowed himself to be photographed for the cover of Chicago magazine in 2001 standing on the American flag and telling an interviewer the thought of America made him "want to puke," is no reason.

25. That you're troubled that, working jointly with admitted terrorist bomber William Ayers, he steered charitable funds to an Arab-related organization that handed money over to a Palestinian terrorist organization, is no reason.

26. That you're troubled by Obama’s decision to go inside the Chicago Daley Democratic patronage and payoff political machine (often called by Chicago newspapers the “corrupt” Daley Democratic political machine) and become a go-along, loyal member of the machine, which is now running his campaign, is no reason.

27. That you're troubled that as an Illinois state senator Obama refused to support reformers against the Daley patronage and payoff machine, but supported the Chicago Democratic political machine at all times, is no reason.

28. That you’re troubled that in his first run for public office he was able to force all three Democratic opponents off the primary ballot to run unopposed, which if not unprecedented is so highly unusual as to raise questions about the objectivity of Democratic election officials beholden to the Daley political machine which Obama supports, is no reason.

29. That you're troubled by the fact that he is the most extreme advocate of abortion in public life, having pledged to Planned Parenthood as president he would like his first act as president to be signing a bill removing all restrictions on abortion, including partial birth abortion which 75% of all Americans oppose, is no reason.

30. That you're troubled by the fact that he engineered the defeat of a bill in the Illinois senate to protect babies who survive a failed abortion (and then lied about it), a bill that was identical to one that passed Congress unanimously, is no reason.

31. That you're troubled by his callous statement that, if either of his girls made a mistake, he wouldn't want them "punished with a baby," is no reason.

32. That you're troubled by his wife's statements that only now, for the first time in her adult life, she's proud of her country, is no reason.

33. That you're troubled by his wife's view of America as “just downright mean,” is no reason.

34. That you're troubled by his view of America as having done harm to the world for which he must apologize (in Berlin, to Germans no less), is no reason.

35. That you’re troubled that he so often seems ashamed of America, speaking ill of it, as in Berlin, is no reason.

36. That you're troubled that Obama didn't put hand to heart during the national anthem until his advisors told him to, is no reason.

37. That you're troubled that Obama left injured servicemen and women waiting at a military hospital in Germany when he canceled a scheduled visit to work out at a gym, is no reason.

38. That you're troubled that he is so naive that he can say tear down the walls between Muslims and Jews (as in Israel?) and there will be peace, is no reason.

39. That you're troubled by his statements in support of the Palestinian cause and his support by a former member of the terrorist-listed PLO Rashid Khalidi, who is now the director of the most rabid anti-Israel Middle East Studies department in the U.S, is no reason.

40. That you're troubled by his lukewarm and equivocal statements about Israel (for an undivided Jerusalem one day, opposed the next), is no reason.

41. That you're troubled by his vocal support by leaders of Hamas and the lack of support by a leading Israel statesman and author such as Natan Sharansky, is no reason.

42. That you're troubled that Obama's running mate Biden is reported to have told Israelis they had just better get used to the idea of a Iran with nuclear warheads on missiles that can destroy Israel, is no reason.

43. That you're troubled that Obama declined to appear at an anti-Iran rally sponsored by Jewish organizations and made sure that Sarah Palin was disinvited, is no reason.

44. That you're troubled that all Obama wants to do is talk and talk with the leader of our deadly enemy Iran and do nothing of consequence to stop their development of nuclear weapons, is no reason.

45. That you're troubled by his position well over a year ago to withdraw troops from Iraq on a fixed timetable regardless of conditions and to oppose the surge that was not only dangerous for our troops but would have resulted in al-Qaeda taking over Iraq as its new world headquarters, with riches like oil and gas that Afghanistan cannot even dream of, is no reason.

46. That you're troubled by his opposition to doing what is necessary to make America independent of hostile and unstable overseas energy suppliers by drilling for gas and oil domestically and by supporting nuclear power and clean coal along with all other alternatives, is no reason.

47. That you're troubled that Obama naively wants to cut defense spending in an increasingly dangerous world, and that Obama refuses to acknowledge the existence of the Islamic supremacist war against the non-Muslim world, is no reason.

48. That you're troubled that Obama actively and openly spoke in favor of his Muslim cousin Raila Odinga in his recent campaign for president of Kenya, during which he reportedly pledged to decree Islamic law for all Kenyans and ban Christian missionaries throughout the country, is no reason.

49. That you're troubled by his protectionist statements supporting unilaterally repealing NAFTA and opposing the free trade agreement with our hemishere's closest ally Colombia, and his lying about the facts to justify his opposition, is no reason.

50. That you're troubled that he wants to end secret ballots in union elections so as to increase the power of union intimidation, is no reason.

51. That you're troubled that he is so obsessed with himself, appears to be such a narcissist, that he can tell a campaign gathering that light will come down from above and convince them to vote for The Obama, is no reason.

52. That you're troubled that when you look at his record of accomplishment you only see that he has written two books about himself (partially fictionalized, possibly ghost written), graduated from college and law school, spent four years in socialist community organizing, and years in the Illinois senate (voting present 130 times) toeing the Democratic machine line -- and gave a nice speech at the 2004 Democratic National Convention, is no reason.

53. That you're troubled that he had for years as a major fundraiser (at least $250,000) Syrian-born political fixer and slumlord Tony Rezko, who has been convicted on 16 counts of political corruption, is no reason.

54. That you're troubled that while Rezko was being investigated on corruption charges and reportedly in debt for more than $10 million, Rezko's wife (said to have no assets of her own and income of only $37,000 as a city worker) somehow made it possible for him to buy his dream house in the upscale Hyde Park section of Chicago by buying an adjacent empty lot for full price ($625,000) while Obama purchased his house and lot for a $300,000 discount ($1.65 million) from the same seller on the same day, is no reason.

54. That you're troubled that Rezko's wife shortly thereafter sold a strip of land from the adjacent empty lot that Obama wanted for one-sixth her purchase price, paid for a fence Obama wanted between the properties, then sold off the lot to one of Rezko’s attorneys for an undisclosed price, is no reason.

55. That you're troubled by his plan to give $50 billion of American taxpayer money to the corrupt United Nations for a new anti-poverty program, is no reason.

56. That you’re troubled by his socialist “tax cut” plan to take more money from those who earn it – including imposing higher taxes on hundreds of thousands of small businesses -- and make welfare payments to the 44% (63 million) of American’s who pay no income tax, is no reason.

57. That you're troubled that Obama is hiding so much of his record, that he has refused to allow access to information or has blocked research about his past, such as his joint socialist programs with William Ayers in Chicago, the official State of Hawaii birth records, his Columbia College and Harvard Law School records and years and his ideological affiliations before joining Jeremiah Wright's church, is no reason.

58. That you’re troubled that his campaign has apparently raised tens of millions of dollars from sources outside the country in deliberately small sums (under $200) to avoid federal reporting requirements and the campaign has no controls to identify such sources, some of which are clearly fraudulent, whereas the McCain campaign can track every dollar, is no reason.

59. That you're troubled by what Michael Barone calls the thug tactics of the Obama campaign to silence all criticism with cries of “lies,” “discrimination,” racism,” including even discussion of Obama's socialist and machine partisan activities in Chicago, and that Barone fears an Obama Administration "thugocracy" stifling First Amendment rights, is no reason.

60. That you’re troubled that Obama’s socialism smacks of totalitarianism, as his campaign’s efforts to shut down free speech shows, is no reason.

61. That you’re troubled that Obama is rated the most far left senator in the U.S. Senate, a radical with a socialist agenda "to change" an America he is not proud of to something we will not like, and who is blind to the defense needs of the United States, is no reason.

62. That you're troubled that Obama is so "flexible" and evasive when it comes to telling the truth and just plain lies, is no reason.

63. That you're troubled that he could coldly dismiss the legitimate fears of the white grandmother who raised him as those of a "typical white person," is no reason.

64. That you're troubled that the Chicago Democratic machine that is running his campaign may be intending to take its patronage and payoff operations onto the national stage, at staggering cost to American taxpayers, is no reason.

65. That you're troubled by his elitist attitude towards simple working people, sniffing at them for clinging to their God and their guns, is no reason.

66. That you're troubled by the many, many times that Obama misstated historical facts to suit his own agenda, including misdescribing his past positions, and that the mainstream media did not challenge Obama’s statements, is no reason.

67. That you're troubled by the hypocrisy and double standard of the elite media that can proudly report that 95% of blacks now say they're voting for Obama, but can express horror that some white Americans might vote for McCain, which they assert can only be for racist reasons, is no reason.

68. That you're troubled that the elite media, which has decided it wants a Democratic black president now, whoever it is, qualified or not,, has deliberately avoided its obligations to the American public by refusing to do any detailed investigation into who Obama really is, his alliances, involvement in sleazy machine politics and his history, so that all that exists is the fictionalized narrative contrived by the Chicago Daley Democratic machine that is running his campaign, which leaves too many questions unanswered and voters still wondering "Who is Barack Obama?", is no reason.

69. That you're still troubled about who Obama really is though you are deeply troubled about what you know already and wonder what else he may be hiding, is no reason.

70. That you're troubled that Obama appears to be cleverly hiding who he is, presenting a false image to the world as postpartisan, moderate and a healer, when he is none of those, as his record shows, is no reason.

71. That you're troubled that Obama, if elected, may have a Democratic House and Senate, to implement his extreme socialist agenda of higher taxes, trade protectionism, stifling free enterprise, stifling free speech, enacting extreme pro-abortion policies such as reviving partial-birth abortion, relaxing our defense vigilance, cutting defense spending and increasing taxpayer funding to subversive organizations such as ACORN, is no reason.

72. That you're troubled that foreigners see things so much more clearly than our media and view the president candidate Obama as having a "nexus comprising black power anti-white racists, Jew-haters, revolutionary Marxists, unrepentant former terrorists and Chicago mobsters," is no reason.

73. That you're troubled that, as Professor Thomas Sowell notes, John McCain and Sarah Palin have not spent "decades working with people who hate America" and Obama has, is no reason.

74. That you're troubled that, as Professor Thomas Sowell also notes, the values of John McCain and Sarah Palin "are the values of this nation, whose loyalty and dedication to this country’s fundamental institutions are beyond question" and this cannot be said about Obama, is no reason.

75. That you're troubled by reports that as much as $63 million in campaign contributions to the Obama campaign in amounts smaller than the $200 required to be reported federally are from foreign sources, may be illegal, are not tracked by the Obama campaign though McCain tracks ALL his contributions, and more than 80% of all Obama contributions are not identified and may not be identifiable, is no reason.

76. That you're troubled that the Obama campaign had deliberately collected tens if not hundres of millions of illegal contributions by disabling all security settings on online credit card systems so as to facilitate fake and foreign contributions and contributions over the limit and have no controls for contributions under $200 though the McCain campaign has all such controls, obviously seeking to steal the election and disenfranchise American voters, is no reason.

77. That you're troubled by the Gestapo tactics against Obama critics like the attacks on Joe the Plumber and throwing reporters off the campaign plane whose organizations endorse McCain, is no reason.

That you're troubled that if you don't vote for McCain/Palin you will be doing a dangerous disservice to your country and generations of Americans is no reason, either.

Three Democrats stand out as responsible for costing Americans much of their life savings in the name of putting more people into affordable housing that turned out to be not affordable at all.

The three Democratic politicians who, not accidentally but deliberately, undermined the American financial system and caused this global catastrophe are Barack Obama, Massachusetts Congressman Barney Frank and Connecticut Senator Christopher Dodd.

What is driving the world collapse of the stock markets? What is causing the savings of Americans to shrivel up? Democratic policies.

Yes, it's the world financial credit freeze-up. But what triggered the freeze-up? Democratic policies.

It was the defaults of subprime mortgages packaged and sold by Fannie Mae and Freddie Mac around the world. But what caused the defaults? Democratic policies.

Who made banks make unsafe mortgage loans? Well-intentioned Democrats who thought it would be "fair" for people who couldn't afford houses to get them.

Who made Fannie Mae and Freddie Mac buy up those bad loans and palm them off on the world? Democrats in Congress pressured by interest groups such as Obama's ally ACORN.

The cost to investors so far has been hundreds of billions of dollars. American workers who have invested in mutual funds and 401(k)s have suffered badly. People are losing their jobs because of this crisis.

The following account is the story the mainstream media will not tell the American people because they fear it would jeopardize an Obama victory. It will be a travesty and a tragedy for Americans if Democrats capture the White House and Congress after their policies brought on this worldwide catastrophe.

It will be too late after the election to document the involvement of Obama and his Democratic colleagues, whose zeal to change America into a socialist state brought disaster to the world. You know what will happen: Democrats will convene hearings with their favorite witnesses to blame anybody but themselves. Democrats don't like the free enterprise system they meddle with and in this case brought crashing down.

Democratic policies brought on the housing bubble and its collapse, the default of U.S. backed obligations all around the world and panic everywhere. Democrats are pointing the finger at Wall Street, but that doesn't wash. Wall Street was packaging and selling Fannie and Freddie mortgage loans for years. What happened was Fannie and Freddie started buying up so many subprime loans that the packages they were now sending around the world were junk, but still backed by the implicit guaranty of the U.S. government so people, banks and governments bought.

Fannie and Freddie abandoned their obligation to protect the taxpayers of the United States to please the Democratic congressman who were pressing them to expand the subprime mortgage loan market by buying risky loans and giving banks and mortgage companies more money to make more risky loans.

President Bush and Senate Republicans including Senator McCain pleaded with Congress in 2005 and 2006 to pass legislation to get Fannie and Freddie under control. Senate Republicans even got a bill to do just that out of the Senate Banking Committee (S. 190), but Senate Democrats led by Senator Harry Reid and Christopher Dodd, with the vocal backing of Massachusetts Congressman Barney Frank, said there was no crisis and blocked a vote on the Senate floor. As a Democratic U.S. Senator Obama supported their action.

How key was Obama's role? Obama helped train ACORN operatives in the early 1990s how to bully and intimidate banks and bankers into making risky mortgage loans to those who couldn't afford them, shouting cries of "discrimination" and "racism." Obama was one of the very first pushing for such unsafe loans to be made. Those cries kept building through the '90s and into this decade. As a result, riskier and riskier mortgage loans were made and Fannie and Freddie was pressured more and more by Democrats in Congress to buy the unsafe mortgage loans and send them off in packages to the world as if they were of the same quality they had been in the past. They weren't. Obama lived to see the colossal damage done by his policy of intimidation of banks and indeed to help give the final push to disaster by opposing reform of Fannie Mae and Freddie Mac as a senator in 2005 and 2006. Despite the world chaos and massive losses to American investors, Obama as late as 2007 was still insisting subprime mortgages were a "good idea."

To read about the roles of the other two principal destroyers of savings, click here. Also, look for the heading Categories on the right side of this website and click on Democratic Financial Crisis.

Obama lies, again.

Colombia under President Uribe is our most reliable ally in Latin America. It is fighting the drug war with us with increasing success. Uribe has fought the drug dealers and other criminal elements and reduced their power. His coutrymen support his aggressive policies; Colombia cities are safer as a result.

Yet Democrat Speaker of the House Pelosi has chosen to ignore the rules of the House and deferred a vote on the Colombia Free Trade Agreement to a later time -- perhaps never.

Colombia had done much to support America. Michael Barone has justly called Peolosi's sidestepping of the required vote by legislative chicanary the most despicable act of this Congress. Obama defends that position.

Shame.

REVIEW & OUTLOOK OCTOBER 17, 2008

Obama Makes It Up

Repeating union distortions.

In Wednesday night's debate with John McCain, Barack Obama defended his opposition to the U.S.-Colombia Free Trade Agreement this way: "The history in Colombia right now is that labor leaders have been targeted for assassination, on a fairly consistent basis, and there have not been any prosecutions." Among the many falsehoods in this Presidential campaign, this is one of the worst.

It is true that Colombia has a history of violence. But since President Álvaro Uribe took office in 2002, that violence has been substantially reduced. The homicide rate through the end of 2007 was down by 40.4% and the rate among union members was down almost 87%. There is nothing "consistent" about a drop to 26 union member murders in 2007 from 155 in 2000.

As for prosecutions: In union-member killings, there were zero convictions from 1991-2000 and one in 2001. But from 2002-2007, there were 80. According to the Colombian attorney general's office, 29% of those murders were "found to have been results of theft, petty crime and random violence unrelated to union activity." Mr. Uribe has nonetheless created a special investigative unit for crimes against union members, and he expanded a special government protection program for unions.

More broadly, in 2004 Mr. Uribe pushed through congress a judicial reform that has reduced the average time needed to issue an indictment for a homicide to 50 days from 493. He also increased the budget for the attorney general's office to $598 million in 2008, from $346 million in 2002 -- a 73% increase.

If Colombia hopes to keep spending on judicial improvements and better law enforcement, it needs an expanding economy. In addition to misrepresenting the country's progress on reducing violence, Mr. Obama has never explained how denying Colombians the FTA will help the country reduce violence. Maybe this is because he knows he's merely repeating union distortions.

Joe the Plumber has emerged as the star of the presidentiial campaign. His complaint about Obama's "tax cut" plan that would raise taxes on him that evoked Obama's response that he just wants to "spread the wealth around" did more to expose Obama's socialist plans than anything else to date. Joe's exchange with Obama certainly was a major factor in the final debate between John McCain and Obama, since it highlighted the kind of handout America Obama would create if elected president:

We first covered Joe's exchange with Obama here in which he let slip he just wanted to "spread the wealth" around. Clearly, Obama plans to roll back the welfare reform worked out by a Republican Congress and the Clinton Administration.. Obama apparently is counting on having a Democratic Congress to go along with his "spread the wealth" plans.

Well, that remark will live on. The plan will not if John McCain is elected president.

Two videos:

The first is the original airing of Joe's exchange with Obama.

The second is a phone interview Joe had with Neil Cavuto yesterday. As Joe points out, he's just a simple, hard-working guy trying to make a living and he doesn't want the government telling him who he should give his money to.

ACORN is a communist/socialist organization whose mission is to "change America.,"

Barack Obama has been allied with ACORN since at least 1992 in its efforts to "change America." He has trained ACORN workers in how to intimidate banks and bankers into making mortgage loans they should not make and how to register voters. Obama ran a voter registration drive himself with ACORN in the early 1990s. Obama has represented ACORN in suing to "change America."

The kind of unsound loans that ACORN forced banks to make in its mission to "change America" are at the heart of the housing bubble, its collapse and the financial wreckage now destroying the savings of Americans and costing American jobs.

ACORN also has been working to "change America" by massive voter registration fraud to register Democratic voters. This year it claims it has registered 1.7 million new voters; one can guess the percentage of Democrats. Voter registration fraud investigations involving ACORN are ongoing in 12 states right now. Obama paid ACORN over $800,000 this year for voter registration despite its long and notorious involvement in voter registration fraud complaints, investigations and convictions. One recent report is of a young man bribed by ACORN with "cash and cigs" to sign up 72 times.

ACORN did not stop with intimidation of mortgage lenders to force them to make bad loans. Stanley Kurtz details how ACORN moved on to Congress to get Democratic support for throwing sane lending standards out the window and authorizing Fannie Mae and Freddie Mac to buy up these unsound loans from mortgage lenders. The present world financial crisis is the result. As Kurtz notes, "the bad seed that started it all was ACORN."

HOW does Barack Obama fit into all of this? Obama has been a key ally of Chicago ACORN going back to his days as a community organizer.

Later, as a young lawyer, he offered leadership training to the activists who were forcing Chicago banks into high-risk subprime loans. And when he made it on to the boards of Chicago's Woods Fund and the Chicago Annenberg Challenge, he channeled money ACORN's way.

Obama was perfectly aware of ACORN's intimidation tactics - indeed, he oversaw a Woods Fund report that boasted of managing to fund the radical group despite its shocking behavior.

And as a lawmaker, in Illinois and in Washington, he has continued to back ACORN's legislative agenda.

And allied with ACORN in Congress in pushing to loosen mortgage lending standards was none other than Massachusetts Congressman Barney Frank. And later, in 2005 and 2006, it was Barney Frank, Senators Christopher Dodd and Barack Obama who blocked efforts of the President and John McCain and other Republicans to stop Fannie's and Freddie's dangerous subprime mortgage purchase programs that brought on this world financial crisis.

The kind of change Obama's bad judgment has already brought to America has cost the nation dearly in dollars, lost jobs and the integrity of the voting system. Will voter fraud nonetheless win him the election?

Read the appalling story in its entirety.

Dr. Thomas Sowell, senior fellow at Stanford's Hoover Institution in economics and public policy, points out how crazy it is to look to Congress to develop a solution for the financial crisis when they were the people who caused it in the first place. Special mention is given to the two chief culprits Democratic Congressman Barney Frank of Massachusetts and Democratic Senator Christopher Dodd of Connecticut.

Whatever is done, Dr. Sowell says, Fannie Mae and Freddie Mac should be wound down and put out of our misery as soon as practicable. No more private corporations with federal "implicit" guaranties. Brilliantly right, as always.

Bailout Politics Thomas Sowell Tuesday, September 30, 2008

Nothing could more painfully demonstrate what is wrong with Congress than the current financial crisis.

Among the Congressional "leaders" invited to the White House to devise a bailout "solution" are the very people who have for years created the risks that have now come home to roost.

Five years ago, Barney Frank vouched for the "soundness" of Fannie Mae and Freddie Mac, and said "I do not see" any "possibility of serious financial losses to the treasury."

Moreover, he said that the federal government has "probably done too little rather than too much to push them to meet the goals of affordable housing."

Earlier this year, Senator Christopher Dodd praised Fannie Mae and Freddie Mac for "riding to the rescue" when other financial institutions were cutting back on mortgage loans. He too said that they "need to do more" to help subprime borrowers get better loans.

In other words, Congressman Frank and Senator Dodd wanted the government to push financial institutions to lend to people they would not lend to otherwise, because of the risk of default.

So the rescue bill failed and the media immediately began babbling about how the Republicans in the House didn't come through. In fact, the majority Democrats have all the votes they need to pass a bill without a single Republican vote. Democrat Speaker of the House Pelosi did not crack the whip of party discipline and 95 Democrats voted no, when if only 11 more of them had voted yes the bill would have passed.

Much has been made of Pelosi's highly partisan pre-vote speech ladling blame for the financial crisis on the Bush Administration and Republican policies. Is that the way to build a coalition on a must-pass bill?

Some have speculated that Members of the House may have decided Pelosi knew something they didn't know, that perhaps the bill wasn't all that do-or-die or else she wouldn't have leveled such a partisan shot against Republicans. Calls to Congress were running 40 or more to 1 against the bailout bill, so many Members were nervous about voting yes. Well, if Pelosi didn't think the bill was all that important, it's not surprising that a number of Republicans (who despised the bill) and 95 Democrats voted no.

Such reckless Democratic incompetence in economic matters -- and governing -- is taking a savage toll on the American economy and the life savings of all Americans.

Those who track such figures note that the losses in the U.S. stock markets at the close of business after the bill's defeat were $1.1 trillion, some $400 billion more than the rescue bill would have authorized be spent to stabilize the financial markets.

Principally responsible for the housing bubble and its collapse is of course Democratic House Financial Services Chairman Barney Frank, who blocked the many demands for reining in Fannie and Freddie by the Bush Administration and Republicans, including Senator McCain, going back to 2003 and continuing into 2007. Now Pelosi has added one trillion dollars to the Frank-induced losses as American savers watch in horror as their life savings shrivel.

More losses are almost certain to follow as rescue proponents regroup and the clock ticks on without a solution. No official business is expected in Congress till Wednesday or, more likely, Thursday.

UPDATE: A Karl Rove analysis of the vote and other sources indicate that Speaker Pelosi allowed several of her senior colleagues, including House Chairmen, and 16 vulnerable freshmen to vote no. Republicans saw and heard this and concluded that Pelosi apparently had some inside information and didn't think the vote was such a big deal. So many Republicans voted what they felt: It was a bad bill, representing too much government intervention in the economy.

Also, Jesse Jackson, Jr., Obama campaign co-chairman, from Chicago, voted no. A subcommittee chairman on Barney Frank's committee voted no.

SECOND UPDATE: A Republican on Capitol Hill explains why the bill is viewed as bad by Republicans and offers a few alternatives that would be more in keeping with a market economy:

And as for alternatives:

- how about reinforcing FDIC to give people confidence in their savings? Maybe more support for money markets?

- How about cutting corporate taxes or cap gains taxes?

- How about buying up (or financing the purchase of) the AAA securities that currently are having trouble moving but are not “toxic,” in order to increase liquidity and help with possible insolvency for healthier institutions rather than the old line investment banks?

- How about doing something about the silliness of the $62 Trillion Credit Default Swap market (e.g. the margin requirements, etc…)?

- How about immediately changing mark-to-market rules?

- And – heaven forbid – how about belt-tightening in Washington? Don’t hold your breath – but imagine what a signal that would send – a freeze in discretionary spending, a moratorium on earmarks and a real plan to educate America about entitlements and talk about the need to get our fiscal house in order.

THIRD UPDATE: It now appears that Pelosi planned it all. She gave her people a pass, figuring the Republicans would provide enough votes to put the bill through anf then the Democrats would use their votes to beat them over the head in the November election. Too clever and her cynical politicizing cost the nation's markets one trillion dollars.

There's a lot of wisdom here, not the least of which is this:

As a rule, Congress is good at two things: 1) doing nothing at all. 2) overreacting.

Something to keep in mind.

September 23, 2008

A Free-Market Fix

By Edwin Feulner

Nobody has ever lost money by betting on the federal government to overreact to a crisis. And as Congress weighs a bailout of the financial markets, it looks as if that’s where the smart money should go yet again.

Any day now, lawmakers are expected to agree to invest some $700 billion -- more than the country spent on the first five years of the Iraq war -- to restore the financial markets. But lawmakers should also be careful to protect taxpayers.

Let’s begin by noting that there is a legitimate federal role in extraordinary circumstances. There are things Washington needs to do to keep our economy functioning. For example, it was a smart move for the Federal Reserve to pour $150 billion into the system. The Fed exists, after all, to make sure money keeps moving and credit remains available.

But as lawmakers debate buying up hundreds of billions in assets, they should realize that the government’s aggressive meddling in financial decision-making is what got our economy into this mess in the first place. The long-term answer isn’t more federal control, it’s a return to free-market principles.

One way to do so is to make sure that any bailouts are as limited as possible. If a private firm is so integral to the financial operations of the economy that it requires assistance, so be it. But in that case, the taxpayers’ should be investing as little as possible, and company employees and stockholders should suffer the consequences of their bad investments.

Also, lawmakers should avoid turning the rescue package into a Christmas tree, loaded up with goodies for special interests. One proposal in a Senate bill would require 20 percent of any profitable transaction to be deposited into a special fund that pays for low-income housing. That’s a silly idea that would, in the long run, only serve to make things worse.

Consider one of the root causes of today’s problems: the collapse of the sub-prime mortgage market.

A big reason for that failure is federal policies aimed at increasing home ownership. Getting more people into homes was a stated goal of the Bush administration and lawmakers of both parties, many of whom received massive campaign contributions from government-sponsored enterprises Fannie Mae and Freddie Mac.

Fannie and Freddie played up their status as GSEs, telling shareholders they were a safe place to invest. Now they’ve been absorbed by the government, meaning investors may indeed be safe, but taxpayers are at risk. Washington needs to get out of the housing business. It shouldn’t be a federal concern whether or not someone owns a home.

Also, Wall Street firms should consider changing how they compensate their investment bankers. Many earn the lion’s share of their pay in bonuses, a policy that tends to encourage bankers to make risky deals to prop up the short-term bottom line at the expense of long-term planning. Firms should revise their compensation packages, paying bonuses based on a 3-5 year rolling average. This, of course, should be done by management, not by federal regulation.

Similar shady accounting was occurring at Fannie Mae, by the way.

The Office of Federal Housing Enterprise Oversight, the regulator charged with keeping an eye on Fannie and Freddie, reported two years ago that, “Between 1998 and 2004, Fannie Mae’s senior management deliberately and intentionally manipulated accounting methodologies to hit earnings targets and help executives maximize their bonuses.” That’s why former executives were able to cash out millions of dollars and stick taxpayers with the bill.

Finally, lawmakers should repeal Sarbanes-Oxley, the regulation-heavy law it passed after Enron collapsed a few years ago. Sarbox, as it’s known, hasn’t worked. It didn’t protect our economy from the current crisis, for example. But it has helped drive entrepreneurs to invest overseas (where regulations are lighter) instead of here at home. Washington could encourage growth on the Street just by getting out of the way.

As a rule, Congress is good at two things: 1) doing nothing at all. 2) overreacting.

Lawmakers appear ready to prove that rule with a massive overreaction. They would be better off letting free-market principles guide any rescue package. Otherwise, who’s going to bail out taxpayers?

Ed Feulner is president of the Heritage Foundation (heritage.org).

Speaker Pelosi pushed a sham energy bill through the House that on its face appears to authorize drilling offshore. It also has lots of money for wind and sun. But the main thing the bill does is permanently prohibit offshore drilling where the oil is, in waters within 50 miles of the coast. For example, Governor Palin of Alaska has pointed out that there are rich deposits of oil and natural gas jus off the Alaskan coast that could be providing energy to the nation in one to two years.

The good news is that there aren't 60 votes in the Senate to pass this cynical Pelosi attempt to make it look as if Democrats were doing something for energy when in fact they are doing the bidding of the environmental extremists who have a stranglehold on their party. (The president said he would veto the bill, anyway.)

Misguided Republicans in the Senate have teamed up with Democrats to sponsor a "compromise" that will ensure that the U.S. can never use the vast majority of its existing resources to achieve energy independence. That bill, too, will not be able to muster the 60 votes to pass, since Senate Minority Leader has vowed to use all his skill and power block it.

In fact, the solution to the public's demand to "drill now" is less than two weeks away. The principal ban on drilling has been renewed annually for decades. If it not renewed by September 30, it will expire. If renewal of the ban were put to a clean up and down vote, it would lose by substantial margins in both houses of Congress, because Democrats would be exposed as enemies of national energy security if they were to vote for a continuation of the ban.

You can be sure that Speaker Pelosi and Senate Majority Leader Reid are feverishly working up an omnibus budget bill that must pass before the start of the government's fiscal year on October 1 or the government will be shut down in the midst of a financial crisis. Buried in the bill will be the renewal of the drilling ban.

Democrats intend to defy the Republicans and the President, daring them to shut the government down and take the blame for it. (How stark an example can one ask for to demonstrate why the President should have the same line item veto that governors of states have.)

Since there will be a party line Democratic vote to approve the omnibus bill in the House, the showdown will come in the Senate. Senate Republicans and the President must stand firm. This is a matter of vital national security and Democrats working against the interests of the nation must be exposed and defeated. Not only are these Democratic leaders working to keep the U.S. dependent on oil producers who wish us no good, they are willing to put the nation's economy in jeopardy by paralyzing the government with a shutdown.

The drive for energy independence can start on October 1.

With access opened up to our rich resources of oil and natural gas offshore and in Rocky Mountains shale (a separate Democratic moratorium running to December 31), dependence on hostile and unstable oil producers will be dramatically cut. Legislation to authorize and provide incentives for nuclear power, clean coal, coal gasification, wind, solar, thermal and all feasible energy alternatives can then be put together. McCain and Palin, Congressional Republicans in the House by their summer-break energy information sessions on the House floor and President Bush have all made it clear that years of saying "no" must end now. (Obama sides with the environmental extremists in supporting the fakery -- and risks to the nation -- the Democrats are perpetrating.)

The showdown is at hand and the public wants, needs and deserves "All of the Above."

Doctor Sowell is blessed with practical wisdom and the ability to express his thoughts with great clarity. We are the beneficiaries of his gifts. Today he focuses on the Left's world and the real world.

September 09, 2008, 6:00 a.m.

Grow Up
The vision of the Left.

By Thomas Sowell

Conservatives, as well as liberals, would undoubtedly be happier living in the kind of world envisioned by the Left.

Very few people have either a vested interest or an ideological preference for a world in which there are many inequalities.

Even fewer would prefer a world in which vast sums of money have to be devoted to military defense, when so much benefit could be produced if those resources were directed into medical research instead.

It is hardly surprising that young people prefer the political Left. The only reason for rejecting the Left’s vision is that the real world in which we live is very different from the world that the Left perceives today or envisions for tomorrow.

Most of us learn that from experience — but experience is precisely what the young are lacking.

“Experience” is often just a fancy word for the mistakes that we belatedly realized we were making, only after the realities of the world made us pay a painful price for being wrong.

While the Democrats and their boosters in the mainstream media keep wishing to see the U.S. in recession, inconvenient facts point in the other direction. Second-quarter GDP growth of 3.3% shows a strong recovery gathering force following the collapse of the housing bubble, the ensuing credit lockup and escalation of world oil prices due to a shortage of supply. Federal Reserve Chairman Bernanke and Secretary of the Treasury Paulson, both selected by President Bush, have performed brilliantly to keep the nation from sinking into Japan-style deflation, which is enormously difficult to defeat -- as Japan's decade plus struggle shows.

There is still a lot of work to be done for GDP growth to reach potential, but the trendline seems to indicate that the disaster that could have been has been averted by prompt, skillful and innovative action.