10 signs the double-dip recession has begun

Double-dip begun? Really? For that to be true, the FIRST recession would have to have ended, and the signs of that having occurred would seem to be missing.

Nonetheless, whether it’s a new recession, or just an acceleration of the first, things aren’t getting better, and all the deficit spending in the world isn’t going to change that. Without a return to historically proven and sound economic principals (i.e. NOT Keynesian liberal/progressive/communist/socialist drivel), this ‘recession‘ WILL turn into a depression, and potentially an economic collapse.
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http://www.msnbc.msn.com/id/43946055/ns/business-us_business/#

By Douglas A. McIntyre
updated 7/31/2011 1:53:54 PM ET

Friday’s news on GDP shows the double dip has arrived — an expansion of only 1.3 percent and consumer spending up 0.1 percent in the second quarter. Astonishingly low by any account. The debt ceiling trouble and lack of a longer term resolution to the deficit will make it worse.

The U.S. has entered a second recession. It may not be as bad as the first. Economists say that the Great Recession began in December 2007 and lasted until July 2009. That may be the way that the economy was seen through the eyes of experts, but many Americans do not believe that the 2008-2009 downturn ever ended. A Gallup poll released in April found that 29 percent of those queried thought the economy was in a “depression” and 26 percent said that the original recession had persisted into 2011.

Obama Administration’s New Plan to Raise Cash

I think this is kind of like in the movie “Men In Black” where the rags like the National Enquirer were actually telling the REAL story of aliens. The Onion may just be on to something here.

Click link below for video.

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US To Trade Gold Reserves For Cash Through Cash4Gold.com

Rats May Be Smarter Than You Think

The rats are beginning to flee the sinking economic ship of the American dollar. This is not a good sign. All the major players around the world are beginning to dump the dollar, and when Obama or his minions, most notably Tim “Turbo-Tax-Cheat” Geithner tell the world “all is well,” they get openly laughed at. Yes, Geithner was openly laughed at during a speech he gave in China when he told them the dollar was sound. It’s much like Kevin Bacon during the closing scenes of Animal House when he tells the crowd to “remain calm, all is well” just before he is trampled to death by said crowd.

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India Joins Russia, China in Questioning U.S. Dollar Dominance

By Mark Deen and Isabelle Mas

July 4 (Bloomberg) — Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said he is urging the government to diversify its $264.6 billion foreign-exchange reserves and hold fewer dollars.

“The major part of Indian reserves is in dollars — that is something that’s a problem for us,” Tendulkar, chairman of the Prime Minister’s Economic Advisory Council, said in an interview yesterday in Aix-en-Provence, France, where he was attending an economic conference.

Singh is preparing to join leaders from the Group of Eight industrialized nations — the U.S., Japan, Germany, Britain, France, Italy, Canada and Russia — at a summit in Italy next week which is due to tackle the global economy. China and Brazil will also send representative to the summit.

As the talks have neared, China and Russia have stepped up calls for a rethink of how global currency reserves are composed and managed, underlining a power shift to emerging markets from the developed nations that spawned the financial crisis.

(rest of article HERE…http://www.bloomberg.com/apps/news?pid=20670001&sid=aR7yfqUwTb4M)

“You do not know the power of the Dark Side.”

Bobby, by jove, you’ve got it! Obama IS Emperor Palpatine. Would that mean that Rahm Emanuel is Darth Vader? Harry Reid and Nancy Pelosi aren’t smart enough to be anything other than battle droids. John Murtha must be Jabba the Hutt. Sadly, the rebellion can’t seem to find any real Jedi to champion our cause and save us from the Dark Side. I can see someone like Ted Nugent in the role of Han Solo. Perhaps we will find that the force is strong with some of the up and comers such as Bobby Jindal. “Help us, Obi Wan. You’re our only hope.”

‘Once the crisis has abated, I will lay down these powers’

Posted By Bobby Eberle On March 27, 2009 at 6:58 am

With money comes power, right? That is how the old saying goes. If that is the case, then it should surprise no one that with all the money pouring out of Washington (actually China), that the move to consolidate power would closely follow.

This week, Treasury Secretary Timothy Geithner released details of the Obama administration’s plan to further inject government control over the private sector. If Obama and Geithner have their way, more financial institutions will be forced to “report in” to the government and have restrictions placed on what the institutions and the investors can and can not do with their money. With each passing day, Obama and company are chipping away at America.

The premise of this new Obama/Geithner plan is to do something about “toxic assets,” which the government is now calling “legacy assets,” because it sounds less… well… toxic. As the Heritage Foundation describes in a new report, these assets represent “securities and loans held by financial institutions whose value is uncertain in the wake of the financial crisis.”

Under the proposed plan, “the idea is to use federal funds to facilitate the purchase of toxic (or what Treasury now calls “legacy”) assets by public-private investment groups, which would bid against each other for the assets.”

For “legacy” loans, private investors would provide 1/14 (about 7 percent) of the partnership’s total assets, matched by another 1/14 provided by the Federal Deposit Insurance Corporation. The remaining amount (6/7 of the total, or about 85 percent) would be covered by guaranteed loans provided by FDIC. For “legacy “securities (as opposed to loans), up to five fund managers pre-qualified by the Treasury Department would raise private capital that would be matched dollar-for-dollar by the government. Treasury would also provide loans to enable the partnership to purchase even more assets.

In both cases, while the government would share profits equally with the private-sector partner, taxpayers bear most of the risk of losses. In other words, the private-sector partner cannot lose more than its investment. Any further losses after the private capital is gone would be covered by the taxpayers.

The Heritage Foundation notes multiple flaws in this plan. In particular, “the plan will almost inevitably lead to even more expanded government micro-management of financial firms.”

Recent history with the TARP program shows that participants in PPIP (“Public-Private Investment Program”) can expect controls—sometimes retroactive—over compensation and other management decisions. It is hard to imagine a hedge fund or other investment group enjoying profits under this program without some level of federal restrictions accompanying the deal or following soon thereafter. It is equally possible that if profits exceed some unspecified percentage, there will be an effort to “recapture” them.

This big-government plan has thankfully drawn swift opposition. As noted in the news story Financial overhaul plan draws GOP opposition, not only do some lawmakers and business people reject more government intrusion, they also question whether it would accomplish the specified result.

“We’re not in this mess because we need new rules,” said Bill Fleckenstein, a Seattle-based hedge fund manager who accurately predicted the housing bubble. “We need to enforce the rules we already have,” he said. “What we had was a complete breakdown by all our regulators. They simply didn’t do their jobs.”

We don’t need new rules? We just need to enforce the ones we have? Sounds eerily similar to what conservatives have said about immigration reform and a host of other issues!

Some of Geithner’s proposals as reported in the news story include:

• Imposing tougher standards on financial institutions that are judged to be so big that their failure would threaten the entire system.
• Extending federal regulation for the first time to all trading in financial derivatives — exotic instruments such as credit default swaps that are blamed for much of the economic carnage.
• Requiring larger hedge funds and other private pools of capital, including private equity and venture capital funds, to register with the Securities and Exchange Commission.
• Creating a regulator to monitor the biggest institutions. Geithner did not say which agency should wield such authority, but the administration is expected to favor the Federal Reserve.
• Empowering the government to take over major nonbank financial firms such as insurers and hedge funds if deemed necessary.

The last thing America needs is more control transferred to the federal government. Once control is taken by Obama, the next logical step is to seize more power. No one ever gives it back.

Begin Side Note

• Being a fan of Star Wars, I can’t help but recall Emperor Palpatine’s words as he was granted even more power by a willing society: “It is with great reluctance that I have agreed to this calling. I love democracy. I love the Republic. Once this crisis has abated, I will lay down the powers you have given me!” (Yeah, right. And I’m the inventor of the internet.)

End Side Note

Obama goes on television with his townhall press conference, answers softball questions from an audience that is growing more and more dependent on government, and he just smiles. He smiles because he knows that he is moving America exactly in the path that he wants… a path toward socialism.

This Geithner plan is just one more step in lulling the American public into placing more power in government. Thankfully, more legislators are speaking up, and more of the public is taking notice. But will it be too late?

An Example of Courage for our U.S. Politicians

If only our politicians had this kind of courage and grasp on the reality of our situation. The ship of our nation is taking on water, and rather than bail water overboard, the Obama administration is pouring more buckets of water INTO the ship. For another analogy, the emperor isn’t wearing any clothes. Telling him will only get you attacked, and no one has the courage to throw a blanket over him.

I’ll drop the Obama birth certificate thing if Hannan can run in our next presidential election.

U.K. MEP Daniel Hannan: Transcript of His Attack on Gordon Brown

March 25, 2009 08:43 AM ET | James Pethokoukis | Permanent Link | Print

I don’t normally delve into the politics of the European Parliament, but this video of Conservative MEP Daniel Hannan stripping the bark off British Prime Minister Gordon Brown is worth noting. (“The devalued prime minister of a devalued government.”) Many American politicians might be hearing the same criticisms next year if the U.S. economy is still depressed even as the national debt soars. Here is a transcript:

	“Prime Minister, I see you’ve already mastered the essential craft of the European politician, namely the ability to say one thing in this chamber and a very different thing to your home electorate. You’ve spoken here about free trade, and amen to that. Who would have guessed, listening to you just now, that you were the author of the phrase ‘British jobs for British workers’ and that you have subsidised, where you have not nationalised outright, swathes of our economy, including the car industry and many of the banks? Perhaps you would have more moral authority in this house if your actions matched your words? Perhaps you would have more legitimacy in the councils of the world if the United Kingdom were not going into this recession in the worst condition of any G20 country?”
	“The truth, Prime Minister, is that you have run out of our money. The country as a whole is now in negative equity. Every British child is born owing around £20,000. Servicing the interest on that debt is going to cost more than educating the child. Now, once again today you try to spread the blame around; you spoke about an international recession, international crisis. Well, it is true that we are all sailing together into the squalls. But not every vessel in the convoy is in the same dilapidated condition. Other ships used the good years to caulk their hulls and clear their rigging; in other words – to pay off debt. But you used the good years to raise borrowing yet further. As a consequence, under your captaincy, our hull is pressed deep into the water line under the accumulated weight of your debt We are now running a deficit that touches 10% of GDP, an almost unbelievable figure. More than Pakistan, more than Hungary; countries where the IMF have already been called in. Now, it’s not that you’re not apologising; like everyone else I have long accepted that you’re pathologically incapable of accepting responsibility for these things. It’s that you’re carrying on, wilfully worsening our situation, wantonly spending what little we have left. Last year – in the last twelve months – a hundred thousand private sector jobs have been lost and yet you created thirty thousand public sector jobs.”
	“Prime Minister, you cannot carry on for ever squeezing the productive bit of the economy in order to fund an unprecedented engorgement of the unproductive bit. You cannot spend your way out of recession or borrow your way out of debt. And when you repeat, in that wooden and perfunctory way, that our situation is better than others, that we’re ‘well-placed to weather the storm’, I have to tell you that you sound like a Brezhnev-era apparatchik giving the party line. You know, and we know, and you know that we know that it’s nonsense! Everyone knows that Britain is worse off than any other country as we go into these hard times. The IMF has said so; the European Commission has said so; the markets have said so – which is why our currency has devalued by thirty percent. And soon the voters too will get their chance to say so. They can see what the markets have already seen: that you are the devalued Prime Minister of a devalued government.”

Market Tanks when Geithner Momentarily Speaks the Truth

Obama is a radical among radicals, and he has surrounded himself with like minded radicals. They want to destroy capitalism and freedom, and replace it with a class-based socialism. One component of that is the destruction of the U.S. dollar as THE world reserve currency. Obama and the democrats have pretty much succeeded on that front by spending us into oblivion in only 3 short months. The nail in the coffin of the U.S. dollar (and the American economy) would be the establishment of a single world reserve currency, and the sell off our U.S. dollars to move to that currency. Before thinking about what he was saying so he could craft a good lie, Geithner blabbed that he supported the Chinese plan to use IMF SDR’s, and or the establishment of a new reserve currency. Within 10 minutes of his remarks, the market dropped almost 2%.

Businesses, voters, world leaders, etc., etc., have all started to figure out that when anyone in the Obama administration is moving their lips, he/she is lying. Honesty and transparency? No lobbyists in the new administration? New era of fiscal responsibility? The list of lies goes on and on.

Stories below:

http://www.bloomberg.com/apps/news?pid=20670001&refer=home&sid=aSZTgpL48TZQ

http://www.politico.com/blogs/bensmith/0309/Geithner_open_to_China_proposal.html?showall

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Obama Seeks Power to Seize Firms

Uh-Bama and the Demo-rats are trying to take ALL of our freedoms before enough people wake up.  This is an overt power grab, and an obvious shift to communism/socialism.  They have already grabbed control of the census so they can shore up their power base.  Via a dishonest campaign of fear-mongering, they have spent trillions of dollars that we don’t have ensuring our financial demise.  They created our current financial crisis and now have the gall to claim that more of the same corruption and spending is the solution to the problem.  After creating the problem and enabling certain businessmen/women to take advantage of the problem created by government, they turn around and criticize those businessmen for doing what they were told to do by the government.  They are extorting the AIG execs into giving back their LEGAL bonuses by threating to publish their names on a list so the Obama Brown Shirts can go pay them a visit.   They have taken steps to finish what they started in the destruction of our health care system by completely socializing it. Now they unlimited authority to step in and take over your business if they don’t like the way you’re running it.  Don’t have any illusions that this power grab will stop with banks and financial institutions.  That is just the camel’s nose under the tent.  Obama and many of his fellow leftists that are now running our government and universities are hard-core socialists brought up under the tutelage of Anti-American socialists/terrorists like Saul Alinsky and Bill Ayers.  They will not let this opportunity to destroy capitalism and the American way of life slip away quietly.  If we do not wake up and get rid of these people who are bent on destroying our freedom, wealth, and nation, we deserve the suffering that will surely ensue.

U.S. Seeks Expanded Power to Seize Firms
Goal Is to Limit Risk to Broader Economy
By Binyamin Appelbaum and David Cho
Washington Post Staff Writers
Tuesday, March 24, 2009; A01

The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.

The government at present has the authority to seize only banks.

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president’s Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.

The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury’s role, are still in flux.

Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill about the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials have said that the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.

The administration’s proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed’s other responsibilities, particularly its control over monetary policy.

The government also would assume the authority to seize such firms if they totter toward failure.

Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG’s most troubled unit.

The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

Geithner plans to lay out the administration’s broader strategy for overhauling financial regulation at another hearing on Thursday.

The authority to seize non-bank financial firms has emerged as a priority for the administration after the failure of investment house Lehman Brothers, which was not a traditional bank, and the troubled rescue of AIG.

“We’re very late in doing this, but we’ve got to move quickly to try and do this because, again, it’s a necessary thing for any government to have a broader range of tools for dealing with these kinds of things, so you can protect the economy from the kind of risks posed by institutions that get to the point where they’re systemic,” Geithner said last night at a forum held by the Wall Street Journal.

The powers would parallel the government’s existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp. Geithner has cited that structure as the model for the government’s plans.

Gingrich Calls on Obama to End Bailouts

Let unprofitable, poorly run business fail. Period. The businesses that rise up to replace them will be leaner, better run, and more profitable for shareholders than the business they replace. That is the way of capitalism. The Obama administration with the aid of liberal representatives and senators, and sadly a few RINO Republicans, are destroying our constitution and the rule of law that our country has been based on since its founding.

by Newt Gingrich (more by this author)
Posted 03/18/2009 ET
Updated 03/18/2009 ET

“Outrage” is the word on everyone’s lips to describe the fat bonuses being paid with taxpayer funds to the failed executives at AIG — and it is an outrage.

It’s an outrage that the American people are being asked to pay for the bad behavior of people who should have known better, be they reckless traders on Wall Street or reckless borrowers on Main Street.

But the cure for our outrage is not merely, as President Obama is demanding, that AIG be prevented from paying its executives. The $165 million in planned bonuses — as manifestly undeserved as it is — is chicken feed compared to the $170 billion in taxpayer funds AIG has received so far.

Nor is it acceptable to ask Americans to keep throwing their tax dollars at failed companies and their leaders.

The answer is an old fashioned one: AIG should choose between receivership or bankruptcy. It should not be allowed to choose more bailouts from the taxpayer.

Restore the Rule of Law: Allow Failing Corporations to go Bankrupt

Under U.S. law, Chapter 11 bankruptcy allows a company to reorganize. Chapter 7 allows a company to dissolve itself.

The choices for AIG, as both an insurance and non-insurance company, are more complicated, but ultimately boil down to the same options. And for other companies either receiving or looking to receive a bailout from the taxpayers, the option should instead be bankruptcy.

Bankruptcy would send a needed message to U.S. investors: Don’t assume the government will bail you out when you do something stupid.

And most importantly, bankruptcy would replace the rule of politicians over U.S. financial institutions with the rule of law.

Geithner Didn’t Inherit the Policy of Throwing Billions at Failing Companies — He Helped Create It

Because when it comes to Washington’s handling of the financial crisis, so far we’ve had the rule of politicians, not the rule of law.

Most prominent among the politicians in question is Treasury Secretary Timothy Geithner.

As Americans’ level of outraged has risen, so has the level of finger pointing by Geithner and others for the mess we’re in.

But Treasury Secretary Geithner is disingenuous at best and untruthful at worst when he says that he “inherited the worst fiscal situation in American history.”

The truth is that Secretary Geithner didn’t inherit the policy of throwing billions of taxpayer dollars at failing companies — he helped create it.

Even before he was Treasury Secretary — when he was still head of the New York Federal Reserve — Geithner was so deeply involved in the government’s bail out of Bear Stearns, its take over of Fannie Mae and Freddie Mac, and its bailout of AIG that this was the Washington Post’s headline from September 19, 2008:

“In the Crucible of Crisis, Paulson, Bernanke and Geithner Forge a Committee of Three”

The first meeting of the first bailout — of Bear Sterns — was held in Geithner’s office. And the first meeting of what has become a $170 billion bailout of AIG was held — where else? In Geithner’s New York Fed office.

Why Not Bankruptcy for AIG? Because Wall Street Wouldn’t Have Done As Well

From the outset, Geithner was central to the developing policy of having the taxpayers bail out ailing financial institutions like AIG rather then allow them to go bankrupt. And for months now, we’ve been told that these bailouts were necessary to avoid a wider, cataclysmic, financial meltdown.

But now it’s clear that other, less noble, considerations were at play.

As the Wall Street Journal editorialized yesterday, the real outrage over the AIG bailout isn’t executive bonuses, it’s that billions in taxpayer funds intended for AIG have been passed through to benefit foreign banks and Wall Street behemoths like Goldman Sachs.

And as former AIG CEO Hank Greenburg testified last October, these financial institutions wouldn’t have faired as well if AIG had filed for bankruptcy protection rather than do what it did, which was to negotiate a bailout with Timothy Geithner’s New York Federal Reserve.

Here’s how Greenburg put it:

“Although AIG stockholders could have fared better if the company had filed for bankruptcy protection, other stakeholders — like AIG’s Wall Street counterparties in swaps and other transactions — would have fared worse.”

For the Cost of Bailing Out AIG, Every American Household Could Have Free Electricity For a Year

So now everyone is outraged, and rightly so. But the lavish executive bonuses being paid with taxpayer funds are just the beginning of the story.

So far, the American taxpayers are on the hook for $170 billion to AIG — that’s an astounding $1,224 per taxpayer.

What else could we have done with all this money?

$170 billion would pay for more than doubling the Navy’s fleet of aircraft carriers.

$170 billion would pay for a four-year education at a public university for more then two million Americans.

$170 billion would cover the electricity bill of every household in America for an entire year.

When You Reward Failure, All You Get is More Failure

What Washington should learn from all this outrage is to return to the common sense that should have guided it all along: When you reward failure, all you get it more failure.

A company that needs a $170 billion taxpayer bailout is a failed company. The executives that led that company are failed executives. But instead of having to face the consequences of their failure responsibly through bankruptcy or receivership, AIG and its Wall Street “counterparties” are being rewarded for their recklessness — with our money.

Thanks to the Bush-Obama-Geithner policy of bailing out failing companies, we now have the worst of all possible scenarios: A taxpayer subsidized, government supervised private company; an unsustainable public/private hybrid that is too public to make its own decisions and too private to be responsible to the taxpayers that are keeping it alive.

Outrages like the fat cat bonuses currently dominating the headlines will only continue as long as the rule of politicians supplants the rule of law on Wall Street.

Congress should rethink this entire process. The dangers of a domino-like financial meltdown are real. But so, too, is the danger that the outrage of the American people will reach the point that we no longer trust the dire warnings — or the righteous indignation — coming from Washington.

(Barney) Frank assails bonuses paid to executives at AIG

There’s one really shiny golden nugget in this story. Can you find it? It’s not hard. I’ll help.

Associated Press

Frank assails bonuses paid to executives at AIG

Associated Press, 03.16.09, 08:04 AM EDT

Rep. Barney Frank charged Monday that a decision by financially strapped insurance giant AIG to pay millions in executive bonuses amounts to “rewarding incompetence.”

Echoing outrage expressed on both sides of the political aisle in the wake of revelations that American International Group (nyse: AIG – news – people ) will pay roughly $165 million in bonuses, Frank said he believes it’s time to shake up the company.

“These people may have a right to their bonuses. They don’t have a right to their jobs forever,” said Frank, a Massachusetts Democrat who is chairman of the House Financial Services Committee.

Appearing on NBC’s “Today” show, Frank noted that the Federal Reserve Board, using a Depression-era statute, was the institution that gave AIG its initial government bailout, before Congress passed legislation providing for additional assistance. He said he did not think sufficient safeguards were built into that initial bailout by the Fed.

The $165 million was payable to executives by Sunday and was part of a larger total payout reportedly valued at $450 million. The company has benefited from more than $170 billion in a federal rescue.

Said Frank: “These people may have a right to their bonuses. They don’t have a right to their jobs forever.” He added on NBC’s “Today” show that “it does appear to be that we’re rewarding incompetence.” (There it is!. Did you see it? Is that the pot calling the kettle black, or what? These idiot politicians have no grounds to belittle ANYBODY, least of all Barney “Itatatawa Puddy Tat” Frank. This butt-monkey was one of the main causes for this whole mess. It’s about like me punching you in the nose, and blaming you for bleeding on my carpet. AAAAHHHHHH!)

AIG reported this month that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.

It also was revealed over the weekend that American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts.

(Click here or on the story title above for the rest of the article…)

The End Of The American Dream

Can the “American Dream” be saved, or will the left damage it beyond repair?

By Star Parker
February 23, 2009

As our new political leadership leads us into the fiscal twilight zone, is it too much to ask for a little honesty as they do it?

The day after President Obama unveiled his plan to bail out distressed mortgage holders, Treasury Secretary Geithner and Housing Secretary Donovan wrote an op-ed in USA Today explaining it.

“Ordinarily, American homeowners don’t need government help … But these are no ordinary times,” they say.

But practically every American homeowner does get government help by being able to deduct mortgage interest from their taxes.

And, Fannie Mae and Freddie Mac, the taxpayer backed quasi-government mortgage behemoths, own or insure around fifty percent of all outstanding mortgages in the country.

So, how about a little truthfulness here. It would be extraordinary if the government did not get involved. Which gets to the broader point.

This $275 billion mortgage plan, coupled with the “stimulus” package and the banks bailout, adds up to a cool couple trillion dollars. In one short month, the Obama administration has committed us taxpayers to new obligations equal to what the whole federal budget was a couple years ago.

Beyond any liberal Democrat’s wildest dreams, this unprecedented government-spending binge, has been enabled by a narrative. According to this narrative, we now understand that unbridled capitalism doesn’t work. Unregulated markets are behind today’s problems and all agree that we need more government.

According to our president, because “Big banks traded in risky mortgages … lenders took advantage of homebuyers … homebuyers knowingly borrowed too much …” we have today’s housing crisis.

But it’s all so untrue.

What has failed in our country is not capitalism. It is our intentional undermining of it.

As government spends us into oblivion, and we recall Roosevelt and the New Deal, we should also recall the role that the Supreme Court played then in changing the rules by which we live.

In a decision in 1937, Helvering v Davis, the Supreme Court upheld the constitutionality of key provisions of the new Social Security Act. Until then, the power of Congress to tax us was limited to paying for those functions of government explicitly laid out in the Constitution. This decision opened the door to government taxing us for anything the Congress could deem in the “general welfare.” In other words, anything they could pass.

A central tenet of capitalism, of course, is private property. But what is private property in a nation where citizens can be taxed to pay for anything politicians can get passed?

In 1938, the very next year, Fannie Mae was created, which got the government — taxpayers — into the housing business.

In 1968, President Johnson took Fannie Mae off budget and transformed it into a government-chartered company to buy and insure mortgages. A private company whose securities were guaranteed by we taxpayers. Private investors get the profits and taxpayers pick up the losses.

Could we have had this housing disaster without Fannie Mae and its brother Freddie Mac? Certainly not.

Why would a mortgage originator sell a mortgage that couldn’t get paid back? Only if it could be re-sold to taxpayer backed Fannie or Freddie.

Both went belly up last year and put under explicit government control. Their five trillion dollars in debt went right onto us taxpayers, doubling the outstanding debt of the US government.

Now President Obama is “solving” our mortgage crisis by adding another $200 billion of taxpayer guarantees behind these two entities and, for the first time, allowing them to guarantee mortgage refinancing for more than 80 percent of the home value.

And those who can’t make their mortgage payments will be subsidized by taxpayers to the tune of $75 billion so they can.

A failure of capitalism? This could never happen in a country where private property was respected and people were not subsidized by government to buy what they can’t afford.

Rather than saving the American dream, the Obama team could be bringing it to an end.

—

Star Parker is an author and president of CURE, Coalition on Urban Renewal and Education (www.urbancure.org). She can be reached at parker@urbancure.org.

Plague of the Fedzillacrats, Devouring All In Their Path

Stop Fedzilla
by Ted Nugent
02/18/2009

Granted, I’m just a hyperactive, over-souled greasy Motown guitar slayer, but is it really too much to ask for and expect the truth and demand accountability from those who represent and work for us? I have a few suggestions.

How about, for starters:

* Have the IRS to conduct an audit of overt tax cheats such as Treasury Secretary Geithner, former U.S. Senator Daschle, and Rep. Rangel.

* Force our Congress critters to actually read the 800 billion dollar Fedzilla Spending Bill before voting on the most expensive piece of legislation in our nation’s history. The Heritage Foundation has calculated this mess will cost us over three trillion dollars over the next ten years.

* Have some member of the press (at least one of them who can actually get close enough) ask President Obama if he is willing to borrow and spend another trillion of taxpayer dollars on another Porkosarus Spending bill if the current Porkosarus Spending bill fails to do much of anything.

* For the entire Republican delegation on Capital Hill to demand the Three Stooges (Republican Senators Specter, Snowe and Collins) leave the Republican Party and shun them altogether until they do.

* Have the Fedzillacrats provide the most fundamental oversight and control of the financial institutions who were given $350 billion of our tax dollars in TARP funds.

And there are a few other questions worth asking and demanding answers to, such as why an American citizen in good standing who has turned over 12,000 illegal aliens from Mexico to our Border Patrol can be sued in an American court for thirty million dollars by illegal alien invaders from Mexico?

How in God’s name could the Security Exchange Commission (aka Keystone Cops) fail to nab a $50 billion Ponzi schemer when the Keystone Cops were specifically told by a financial expert that Bernie “Ponzi” Madoff was a bandit?

Why did none of our overpaid Fedzillacrats or the Obama media sychophants pay any attention to the non-partisan Congressional Budget Office who reported the stimulus bill will hurt the economy more in the long run than if we did nothing?

Why is the American taxpayer being forced to pay $30 million taxpayer bucks to protect the endangered salt marsh harvest mouse — that’s right, a mouse — that lives in the San Francisco Bay area (which is the congressional district of House Speaker Nancy Pelosi)?

Republican or Democrat, conservative or liberal, we can surely all admit that Fedzilla is on the rampage, running amok, out of control, destroying everything in its bloated, unaccountable, ineffective path. We the people had best get cracking and turn up the heat right now, or Fedzilla will eat the American Dream and all her Dreamers like the cannibalistic pig it is.

Rock legend Ted Nugent is noted for his conservative political views and his vocal pro-hunting and Second Amendment activism. His smash bestseller Ted, White & Blue: The Nugent Manifesto, is now available at http://www.amazon.com. Nugent also maintains the Official Ted Nugent Site at http://www.TedNugent.com.

To Boldly Go Where No Economy Has Gone Before…

As Mr. Babbin says, “…the principal problem with the Geithner plan: it’s not a plan, it’s an idea.” The only “plan” is to spend as much of our money as possible paying off their cronies, and checking off every item on the liberal pork barrel wish list, while stealing as much power as possible from the American people.

Trekonomics
by Jed Babbin (more by this author)
Posted 02/12/2009 ET
Updated 02/12/2009 ET

President Obama says we have to act boldly to solve the financial crisis. On Tuesday, supposedly explaining the new and improved bank bailout plan, serial tax evader and Treasury Secretary Tim Geithner added that we have to try things that have never been tried before.

The Obama team wants to boldly take our economy where no economy has gone before. Ladies and gentlemen, I give you the birth of “Trekonomics.” It’s like the old “Star Trek” series, just without the brainy, logical Vulcans.

And Obama’s Trekonomics begins with a violation of the Prime Directive for a free-market economy: that government policy shall not hinder industry’s planning for the long or short term. As I learned the hard way while working in the aerospace industry two decades ago, even minor revisions to tax policy — if done too often — can prevent millions or billions in investments in research, new plants and equipment and hiring.

In contrast, Geithner promised to “bring the full force of the United States government to bear to strengthen our financial system.” But he didn’t say how, when or why. Which is the principal problem with the Geithner plan: it’s not a plan, it’s an idea.

As if to drive the instability knife deeper, Geithner did say of his new strategy, “We will have to adapt it as conditions change. We will have to try things we’ve never tried before. We will make mistakes. We will go through periods in which things get worse and progress is uneven or interrupted.”

This announcement was the perfect antidote to confidence: any credibility Obama and Geithner had gained in the over-hyped lead up to the announcement was vaporized. Wall Street expressed its opinion of Geithner’s plan by dropping like a rock: the Dow Jones sank nearly 400 points, nearing the pre-Obama bottom of about 7800 points.

Geithner’s approach — Obama’s, of course — is based on the assumption that doing something quickly is more important than doing it right. And if you don’t know what you’re going to do, make an announcement that is designed to placate people with vague promises of bold action.

Which is precisely the opposite of what our economy needs. It’s no wonder the Dow Jones Industrial Average sank. Geithner’s speech sowed doubt: he tossed a financial grenade into the mess Hank Paulson made last fall and then stood back to watch the rubble bounce.

This is becoming a parody of government. FDR said we had nothing to fear but fear itself. President Obama and his team don’t fear the fear: they embrace a piece of it, react to it and then find another.

But according to Geithner, “When the crisis began, governments around the world were too slow to act. When the action came, it was late and inadequate. Policy was always behind the curve, always chasing the escalating crisis.”

Which was true last fall, and is still true today. Hank Paulson demanded the bank bailout, using apocalyptic rhetoric to stampede Congress. And since the Obama administration began (was it only a month ago?) we’ve heard little more than how bad the crisis is.

The financial markets cannot have confidence in themselves and regain their strength until they know that the biggest influence on them that is beyond their control — government policy — has stabilized.

But in his big moment, Geithner promised the markets only continued experimentation and gave them no reason to expect a stable policy for another year or more. He thus guaranteed that we will be in a worsening recession at least until the spring of 2010.

Even if you spend money at warp-speed, it takes a long time to run out of it. Geithner’s plan promises to spend up to another $2 trillion in the financial market rescue. And this comes on top of the $1 trillion that’s in the president’s faux-stimulus package.

President Obama seems comfortable with that time table. In his first prime-time press conference, he was asked how Americans should judge the success of his stimulus plan. Answering ABC’s Jake Tapper, Obama said that it will take time to work. The president proposed that his success be judged by three criteria at the end of the year.

First, Obama said we should measure how many jobs have been “created or saved,” repeating the goal of four million jobs to be in one category or the other.

Second, he said that if the credit markets are operating properly (and here he mixed the Geithner plan with the so-called stimulus), that is another measure of success. (But what is “properly”? Maybe he and Geithner will figure that out.)

Third, the president said that success will be achieved if the housing market has been stabilized and the rate of foreclosures has been reduced. There, at last, is a measurable criterion.

As the Congressional Budget Office said last week, the Obama-Pelosi “stimulus” bill will — in ten years — do more damage than good to our economy. We’d be better off if Congress took six months off rather than passing this awful bill. Which it may do today.

Our free market economy — at least what’s left of it after Bush, Paulson, Obama and Geithner are done with it — craves a reason to be confident in government. Not for government salvation, but for stability of government action and minimization of interference.
Obama’s Trekonomics promises only experimentation and continued instability in government action. He and Geithner will take our economy where no nation has gone before at the warped speed of government spending. And while they do, our economy will have no opportunity to recover.

Cartoon by Brett Noel.

Mr. Babbin is the editor of Human Events and HumanEvents.com. He served as a deputy undersecretary of defense in President George H.W. Bush’s administration. He is the author of “In the Words of our Enemies”(Regnery,2007) and (with Edward Timperlake) of “Showdown: Why China Wants War with the United States” (Regnery, 2006) and “Inside the Asylum: Why the UN and Old Europe are Worse than You Think” (Regnery, 2004). E-mail him at jbabbin@eaglepub.com.

Character Matters

Character IS important, especially in a “leader.” The people we have elected have shown us that they have not character, and they are appointing cronies who are just as devoid of character as they are. Were you or I to dodge paying our taxes on the scale of Mr. Geithner or Mr. Daschle, we would become permanent fixtures in some penitentiary. But because of their ideology and who they supported in the campaign, they are forgiven and appointed foxes guarding the hen house.

Geithner’s Copout
By Harris Sherline
February 2, 2009

In 1934, U.S. Court of Appeals Judge Learned Hand famously said, “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.” — (Gregory v. Helvering, 1934).

Judge Hand’s statement refers to “tax avoidance,” which is legal. However, tax evasion is not. In short, avoidance is managing one’s finances within the law in such a way as to pay the least amount of tax, whereas “evasion” involves violating tax laws to minimize or eliminate income taxes.

Given the complexity of our tax laws today, which require something on the order of 66,000 pages to document, the difference is often unclear. Even those who work for the Internal Revenue Service (IRS) and tax professionals are often unable to interpret our tax laws. So, why should Timothy Geithner be expected to understand them, even though the IRS is one of the agencies he will supervise?

What did he do that should be cause for concern? In the Senate hearings to confirm his appointment to the nation’s most important financial position, Mr. Geithner confirmed that he failed to pay Social Security and Medicare taxes on his income for the four years 2001 through 2004, saying it was due to “careless but unintentional mistakes.” Should that matter and, if so, should it have disqualified him from being confirmed as the Treasury Secretary for the new administration?

The facts are not complicated:

Mr. Geithner failed to pay Social Security and Medicare taxes for four years (2001-2004), while he was working for the International Monetary Fund (IMF).

The IMF advised him in writing that he was responsible for paying U.S. Social Security and Medicare taxes on his earnings, which he acknowledged in writing, and they gave him the money to pay the taxes.

In 2006, his 2003 and 2004 income tax returns were audited, and he was assessed and paid $16,732 in taxes plus interest for the Social Security and Medicare taxes due for those years, a total of $25,970.

However, he did not pay the back taxes for 2001 and 2002 — because the time within which the IRS could audit those years had expired. Although Mr. Geithner knew or should have known that he was obligated to pay these taxes at the time he filed his income tax returns, he did not do so, and he did not voluntarily pay them in 2006.

He did subsequently pay his Social Security and Medicare taxes for 2001 and 2002, but not until he had been nominated for the position of Treasury Secretary.

Mr. Geithner said he made “honest mistakes” and that his accountants had failed to catch the error. But, they don’t look like honest mistakes to me. The Wall Street Journal reported that Senator Jon Kyl (R-AZ) said it was “‘incomprehensible’ that Mr. Geithner didn’t realize he needed to pay employment taxes.” I agree.

Although his actions may not rise to the level of tax evasion in the technical sense, my conclusion is that he believed it was safe to forget about paying the additional taxes for those years for which the statute of limitations had expired. Perhaps it was, legally speaking, that is. But, this is not a legal issue, it’s a moral one.

To me, this is about character. People who are appointed to head a major federal agency should have the highest “character” possible. It’s especially important in this case, given that the Department of the Treasury’s responsibilities include investigating and prosecuting tax evaders. Mr. Geithner may not become directly involved in making decisions in specific tax cases, but I wonder how he might judge the “honest mistakes” of other taxpayers.

I would have voted against this nominee because I believe he does not have the honesty and integrity that should be required to head a major federal agency. However, that Obama went ahead with Geithner’s appointment after learning of his nominee’s ethical breach is the most telling aspect of this situation. Where else will we see Obama’s actions depart from his rhetoric about transparency and honesty in government?

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NOTE: Read more of Harris Sherline’s commentaries on his blog at “opinionfest.com.”