Financial Meltdown: Where Does The Buck Stop?

That's a good question. Where does it stop? And what can we do to make sure that something like this doesn't happen again?

Well, we need to find out where this all started and how. Without doing so, all the debate will be meaningless and the current efforts at a bailout will simply result in more crises down the line.

So, where did it start? Sheldon Richman, editor of The Freeman and an economist with the Foundation for Economic Education has the answer to this. According to Cybercast News Service:

“The biggest culprit, I think, is the implicit guarantee the government has always issued to Fannie Mae and Freddie Mac,” Richman said. “Something like 80% of the mortgages these days are held or backed by Fannie Mae or Freddie Mac,” he said, and “they get special treatment from the government like no other lender gets.”

Okay, there was a big bailout of these two earlier this year. What do they have to do with anything and why?

“[T]he financial industry is regulated all over the place.” In Richman’s analysis, it is precisely the government guarantee of Fannie and Freddie that is “short-circuiting” the market.” ... Providing context, Richman said government policy laid the foundation of this crisis more than 30 years ago when Congress passed the Community Reinvestment Act of 1977. This law forced banks to loan money to low-income borrowers as a way to ensure that financial institutions would “meet the credit needs of the local community.” Under the Clinton administration, federal regulators began using the act to combat “red-lining,” a practice by which banks loaned money to some communities but not to others, based on economic status. “No loan is exempt, no bank is immune,” warned then-Attorney General Janet Reno. “For those who thumb their nose at us, I promise vigorous enforcement.”

Now we are getting to the meat of the problem. Government had been forcing lending institutions to make high-risk loans and Freddie Mac and Fannie Mae have been buying up those loans. When the defaults on these loans began to pile up, the collapse of Freddie and Fannie happened and the need for the bailout soon followed.

Further, it wasn't that banks wanted to make (or even encouraged the making of) these loans. They were forced to.

The Clinton-Reno threat of “vigorous enforcement” pushed banks to make the now infamous loans that many blame for the current meltdown, Richman said. “Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.” This threat combined with the government backing of Fannie and Freddie set the stage for the current uncertainty, because the “banks could just sell the loans off to Fannie or Freddie,” who could buy them with little regard for negative financial outcomes, Richman said.

The problem is that the government's policy of requiring private institutions to make these bad loans is still in place. The failures of Freddie and Fannie and the bailouts of AIG and Bear Stearns are just symptoms. The disease of government intervention is still on the books.

One of the conditions for enacting a bailout should be to remove the ridiculous high-risk loan requirements put in place by the Carter and Clinton Administrations.

You can access the complete column on-line here:

Financial Meltdown: Where Does The Buck Stop?
Matt Cover
CNSNews.com
September 22, 2008

Letters To Senator John Warner And Senator James Webb Concerning The OPEC Accountability Act

The Senate will soon be voting on a resolution to file a lawsuit against OPEC. The bill is called the "OPEC Accountability Act" and it is without a doubt one of the most idiotic pieces of legislation to ever come out of this Dem controlled Congress.

As such, I have written my Senators (John Warner and James Webb) asking them to vote against this foolishness. The following is a copy of my letter. Feel free to copy it, paste it to a word document and send it to your own Senators.

Dear [Senator], I am writing this letter to ask you to vote “Nay” on an upcoming bill (S. 2976 IS) that was introduced by Senator Lautenberg and co-sponsored by Senators Dorgan, Casey, Levin, Sanders and Clinton. This bill is known as the “OPEC Accountability Act.” The co-sponsors of this bill claim that launching a lawsuit against OPEC will somehow bring down the price of crude oil and in turn reduce the price of gasoline. I’m sorry, but only a fool would believe such claims. The price of gasoline has gone up for many reasons, most of which can be attributed to the policies enacted into law by this very Congress. For example, the mandate of using ethanol, despite its supporters’ promise of bringing down gas prices, actually drove the price of gasoline up as it also drove up the price of food. The end result: people now have to pay more at the pump in order to get to the store to pay more for food. Further, there was also a promise of lower carbon emissions, but since it requires the burning of 1.5 gallons of petro-chemicals to produce a single gallon of ethanol, that promise was nothing more than fantasy as well. But I digress. The main reason for the high price of oil is simple supply and demand. Nations that have been aggressively developing the industrial sectors of their economies (India and China) have been using more and more oil which means demand has gone up. As any first year economics student knows, when demand goes up, so do prices. But, when demand goes up and supply does not keep pace, or even goes down, prices rise even faster. Many of your peers are trying to blame the oil companies for the situation in the world market, a few of them ignorantly throwing out the charge of “price gouging.” However, the oil companies’ profit margin is well under the average profit margin for other commodities, the market traders of which are not being accused of price gouging. This means that no price gouging is taking place. As such, if Congress carries out its threat to raise taxes on the oil companies in response to this mythical price gouging, the price at the pump will sky-rocket even further. As you can clearly see, Senator, it is the Congress that has been hurting the American people at the gas pump, not OPEC or any of the oil companies. And finally, I need to ask the obvious. Why would members of this Congress actively try to damage our relations with OPEC nations by filing a lawsuit when those same members of Congress are criticizing the President for damaging our relations with these OPEC nations? Wouldn’t you consider that to be hypocritical? When S. 2976 IS reaches the Senate floor for a vote, please do the right thing and vote “Nay.” Thank you. Sincerely, [Your name here]

Hillary Caught In Huge Lie!

If there was any lingering doubt that Hillary Clinton was a pathological liar, such doubt has been completely erased. After denying that she ever knew Tony Rezko and then tried to link him with B. Hussein Obama, a picture surfaced. From the Drudge Report:

Clinton injected the indicted developer's name this week in heated debate with Obama: "I was fighting against those ideas when you were practicing law and representing your contributor, Rezko, in his slum landlord business in inner city Chicago" ... Clinton tells NBC 'TODAY' show on Friday: "I probably have taken hundreds of thousands of pictures. I don't know the man. I wouldn't know him if he walked in the door..."

But to say that she never met him? That's hard to believe:



Drudge Report
January 25, 2008

A Hat Tip To The Virginia Federalist

Great blog entry about Hillary vs. the facts:

Hillary Vs. U.S. Constitution Vs Fact
The Viginia Federalist
January 21, 2008

Clinton, Buffet Renew Support For The Tax That Is Killing Family Owned Businesses

Here's more of that leftist socialist spew from Hillary Clinton. Note the idiotic things she says about the Death Tax:

At a joint appearance with billionaire investor Warren Buffett, Clinton said the inheritance tax, due to be temporarily repealed in 2010, was a symbol of "what kind of society we are." "The estate tax has been historically part of our very fundamental belief that we should have a meritocracy, that we do not want a system -- where we expect people to make it on their own -- to be, over time, dominated by inherited wealth," she said. "That we do believe that people should have to get out there and make their way, to a great extent."

I don't think any politician has ever been so detached from reality.

The Inheritance Tax does not make us a "meritocracy." In fact, it destroys the concept of advancement by merit and replaces it with the concept of advancement by being super-rich already.

Everyone thinks that Wal-Mart and other super-corporations are crowding out the Mom & Pop stores and family farms. Wrong. The Death Tax is killing them. Here's how:

Suppose a man started his own small business back in the 50's or 60's. He bought property and built up his trade over the years. He bought a house and some land and paid it off over time. When he originally purchased his property, it was a total value of, say $50,000.

Then he dies in 2007 leaving his business and property to his family survivors. Today the business and property is worth over $5,000,000. If the Death Tax was 45%, then his survivors would owe $2,250,000 in taxes as a result. If he left only $20,000 in his bank account, his survisors would have to come up with $2,230,000 to pay off the tax or the government would come in and take everything leaving them with nothing.

What is the family going to do to raise $2,230,000? They sell the business and the property thereby leaving a hole in the local market for Wal-Mart or some other corporation to come in and fill.

I can easily believe that Hillary Clinton is incapable of grasping this concept, but Warren Buffet? I guess he likes the idea of mega-corporations taking over the small businesses of America.

The Death Tax must be done away with entirely and any politician who calls for its revival should be tarred and feathered.

You can access the complete article on-line here:

Clinton, Buffett Denounce Income Gap
Scott Lindlaw
Associated Press via GOPUSA
December 12, 2007

CNN's Dishonesty During GOP YouTube Debate

Okay. I saw about fifteen minutes of the GOP YouTube debate last night on Headline News. Fortunately, the programming switched over to Nancy Grace shortly thereafter but it would not have mattered. I was getting ready to turn it off anyway. Not because of what the candidates were saying, but because of how CNN was treating the candidates in general and how biased CNN was in it's coverage.

I happened to catch the part about gays in the military and was stunned by what I saw. The one guy that was responding admitted that he was a U.S. Army retiree and was gay. I thought, "How convenient is that?" Pretty convenient as it turns out.

CNN also had a live panel of "Registered Republicans" that were participating in a tracking poll during the debate. The CNN newsreader covering the panel just happened to pick one woman "at random" and asked who she would vote for. The woman responded, "John Edwards." At that point, the gay guy became too convenient and it was clear that this woman on the panel was also planted there by CNN.

There is no way a true Republican would choose a liberal like John Edwards over the entire field of GOP candidates. Further, if John Edwards were to their taste, the field of Dem candidates would certainly be more palatable than any in the GOP field. The woman was definitely a plant.

But about that gay guy.

Check this out from NewsBusters:

Like Rudy and Romney going after each other over immigration last night at the GOP debate, MSNBC was taking some jabs at rival CNN this morning on the issue of the gay questioner who turned out to be a member of Hillary Clinton's campaign. "Morning Joe" host Joe Scarborough scoffed at the notion that no one at CNN was aware of retired Brigadier General Keith Kerr's involvement with the Clinton campaign. JOE SCARBOROUGH: This is twice now in a couple of weeks that CNN has been ensnarled in a Clinton controversy. Before with James Carville sitting there giving his opinions despite the fact that he's contributed to Hillary Clinton, obviously worked for Bill Clinton, he sent out letters saying we really need to fight hard for Hillary Clinton. They didn't even mention it. And again, the damndest thing. And last night, not only do they have this guy delivering a YouTube video, they also had him there sitting in the audience, they had a shot with him [more than a shot. Anderson Cooper asked whether he was satisifed with the answers he had received and grilled Romney over his answer. Kerr himself made an extended comment from the floor]. It's Bill Bennett [who was a CNN post-debate panelist], it is up to Bill Bennett to explain to CNN, and don't tell me that CNN didn't know, that some people at CNN did not know, that he was part of the Clinton campaign. Don't lie to me. Maybe Anderson Cooper didn't know, but somebody at CNN that put this guy in the video knew that.

Somehow, I knew my suspiscions from last night were correct. It was too convenient.

CNN needs to acquire some integrity and admit that they are in reality pro-Dem and anti-Republican. At least then, they won't look like such complete idiots when they pull a ridiculous, irresponsible stunt like this.

You can access the NewsBusters article on-line here:

Scarborough: 'Total Crap' CNN Didn't Know Gay Questioner Is Hillary Campaigner
Mark Finkelstein
NewsBusters.org
November 29, 2007

The Washington Times has this:

Clinton Plant Infiltrates CNN Debate
The Washington Times
November 28, 2007

It is yet another reason why fewer rationally thinking people trust Old Media anymore.

---

And Michelle Malkin has more about the plants at the debate:

Concerned Undecided Gay Military Retiree Brig. Gen. Keith H. Kerr = Hillary/Kerry supporter and anti-”Don’t Ask, Don’t Tell” activist Keith H. Kerr Concerned Undecided Mom LeeAnn Anderson = Activist for the John Edwards-endorsing United Steelworkers union LeeAnn Anderson Concerned Undecided Log Cabin Republican supporter David Cercone = Obama supporter David Cercone Concerned Young Undecided Person “Journey” = John Edwards supporter “Journey”

How many others could there be? Maybe CNN would like to come forward and admit to engineering this whole farce, that is if they learned anything at all from Dan Ra^ther's fakery.

You can access Michelle's complete article (with photographic evidence) on-line here:

Digging Out More CNN/YouTube Plants
Michelle Malkin
MichelleMalkin.com
November 29, 2007

Be sure to check back at Michelle's site for updates. I'm sure more plants will come to light.