Republicans get a bum rap in financial crisis

Don’t blame the Republicans for the financial crisis

 

Ken Brinzer

Blaming the current problems of the economy on Bush, McCain and the Republicans doesn’t cut it.   Here’s why:

1.  In 2006 Bill Lockyer the Democrat California State Attorney General sued the Big Three Automakers – soon perhaps to be the Big Two American Automakers – claiming they were responsible for global warming. 

(Caveat: While this suit was dismissed, I begin with it not because it caused significant economic damage per se, but rather because it is indicative of the highly imprudent use and abuse of legal power by government AGs that existed in 2006 following the Spitzer era (noted in Item two) and the colossal economic damage done in that era; and I observe that such an economic environment constitutes a great impediment to the operation of private sector entities on a profitable basis.)

2.  Eliot Spitzer the Democrat New York State Attorney General sued Mutual Fund industry over after hours trading violations.  He followed that siege with another long high-profile siege over the fees of mutual funds being too high. Then he followed the mutual fund campaigns with high profile long-running lawsuits of the CEOs of the New York Stock Exchange, General Electric, and the American International Group over compensation matters.

As a practical matter, the threat of Spitzer prosecutions loomed over our markets for a several years, undermining confidence in our markets, and doing grave damage to the reputations and goodwill of major corporate names needlessly.  Icon logos such as the NYSE, GE, and AIG were slimed along with countless other entities that played crucial roles in capital formation in the American economy, and ultimately by extension, all American enterprise around the world.

3.  Twelve States Attorneys General (Democrats) entered into a class action lawsuit and sued the Bush Administration for it’s easing of environmental standards on power plants (2003) as part of the Bush Administration’s plan to assist a distressed economy post the 9/11/2001 attacks which had gravely damaged the American economy. 

4.  Congress passed Sarbanes-Oxley Act in 2002 and it contained the pernicious mark to market FASB 157 accounting rules to be applied to level 3 long-term, hard to value, highly illiquid assets.  In November 2007, the Royal Bank of Scotland issued a warning  that if enforced these mark to market accounting rules would result in losses to American Banks and Brokerage firms in excess of $100 Billion.  By early fall 2008, Five Hundred  Billion Dollars of losses attributable to the imposition of mark to market accounting rules (FASNB 157) constituted 70% of all losses that had been sustained up to the bailout.  Democrat Senator Christopher Dodd the Chairman of the Senate Banking and Urban Affairs Committee knew of the warnings and the dangers related to mark to market valuations applied to level 3 assets, and yet he never managed to lift a finger or advocate any means to mitigate against the cause of these catastrophic losses.  Instead, he just watched as those rules destroyed over $500 Billion of vital American economic infrastructure, and then pointed his finger at others.

5.  In a vote along party lines Democrats blocked reform of Freddie Mac and Fannie Mae in 2004 while there was still time to stop their mad dash to insolvency.  This was long before the real estate bubble had reached epidemic proportions, while there was still time to stop the reckless behavior of Freddie and Fannie, behavior that contributed mightily to a colossal real estate bubble, then a pernicious credit crunch, and a market contagion that crippled the economy.

6.  Again Sarbanes-Oxley, this time though another provision of that congressional enactment that worked to reduce the number of Initial Public Offerings in the United States by 90% following its passage.  In brief, until Sarbanes-Oxley was passed, fifty percent of all successful Initial Public Offerings in the world originated in the United States.  After it was passed, the percentage of all Initial Public Offering originating in the US dwindled to five percent of total Initial Public Offerings.  Meantime, the number of Initial Public Offerings in London and Hong Kong skyrocketed.

7.  The Janet Reno/Clinton (Democrats) Justice Department threatened lending institutions with prosecution to the fullest extent the law allowed, if loans for socially good purposes were denied.  The result of this threat was that lending institutions that might have used prudent financial underwriting for loans that qualified as socially good purpose loans did not dare decline those loans on grounds they were too risky.  This set up a pernicious template for lending as should now be evident to all  

8.  Democrats consistently sided with extreme environmentalists in opposition to new domestic oil and gas development.  This exacerbated American dependency on foreign oil and made us both vulnerable and virtually without recourse as oil prices rose meteorically hurting consumers as well as manufacturers throughout the United States.

Those who would still insist on blaming the current nightmare threatening our economy on Bush, McCain, and the Republicans can of course vote however they please.  Hopefully though, the majority of voters will not be fooled by the deceptive rhetoric of those who would blame Bush, McCain, and all things Republican for the monumental economic catastrophe that so many Democrats have engineered and disingenuously try to blame on the other guy. 

It’s time to pin the tail on the donkey where it belongs.  It’s time for Americans to stand up and take their country back at the polls.  Now is the acceptable time.

 

Ken Brinzer is 62 years old, and lives with his wife, a high school chemistry teacher, in Penn Hills, PA. He and his wife have been married 34 years and have 3 adult children.  He is a financial services professional, licensed both as a life insurance agent and a registered representative series 6. He holds a BA degree in Spanish from Rutgers (1968).  He served in the USAF for 4 years 1968-1972 and attained the rank of captain.  He is a practicing Catholic, reads at church, and loves God, Family, and Country and the splendor of truth.

 

Bush: Free market is best — under government control, that is

  Bush: Free market is best – under government control, that is

 

By Donald Hank

 

President Bush’s speech of 9/05/08 gave various reasons for the recent financial crash involving, among others, Bear Stearns, Lehman Brothers, AIG, Fanny Mae and Freddy Mac. But he overlooked one reason — the underlying one.

He attributed the crash to a large influx of money to US banks and financial institutions, which in turn made it easy for people to get credit, leading them to borrow for cars, college tuition, homes and so on. He said “Easy credit combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.”

Ok, let’s stop right there and analyze this. The last sentence indicates all this was your fault, you irresponsible borrower.

But was it?

American realtors had seen a crisis on the horizon as early as July 15, 2004, when the National Association of Realtors sent a letter to HUD expressing their concerns that a proposed rule to increase the percentage of mortgages to “underserved” populations (minorities) could create precisely the kind of market destabilization that led to the recent meltdown.

What was this rule? Under Clinton, Fanny Mae and Freddy Mac were obligated to serve at least 21% of the “underserved” communities with mortgages. Under Bush, the percentage more than doubled. In reality this translated into providing mortgages to a significant number of families who simply could not afford them, at sub-prime rates and often with no down payment required. For many, foreclosure was a foregone conclusion at the outset. It was affirmative action for borrowers and worked just as well as the affirmative action in colleges, where minorities were assured of admission under diluted requirements, and almost equally assured of failing after the first year. Like welfare, which harmed the inner cities by making out of wedlock births a lucrative business, leading inevitably to an astronomical incarceration rate for blacks, it ensured failure for minority home-owners, making ownership a revolving door. For many in the “underserved” community, it was: “welcome homeowner,” followed immediately by “get out, deadbeat”!

This is really the essence of “compassionate conservatism,” which is a euphemism for a planned economy. Thus the people blaming the crisis on lack of regulation had actually made and enforced regulations that brought down the financial markets. Regulation was in fact the disease pathogen, not the remedy.

Bush goes on: “I’m a strong believer in free enterprise, so my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business.”

He then explains that this current crisis is an exception and describes the “distressing scenario” that must be avoided at all expense — your expense, that is:

More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically.

But the banks that would fail would be the ones most heavily invested in the “compassionate conservatism” that you promoted through your HUD rules, Mr. Bush. That would be a very good thing. They should fail. They embraced the false utopian ideal of “social justice” at the expense of self-regulation of markets.

“And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.”

Farmers and small businesses running thriftily will be the ones to survive. That too would be good, if only because it would enable the market to punish the foolish investors and reward the wise ones. And that in turn would serve as a useful example to the next generation of business people. If people became unemployed, they would be reminded that politicians who push snake-oil schemes with names like “compassionate conservatism” (or for that matter, who excuse illegal immigrants by saying things like “they are good people looking for a better way of life”) ultimately result in lost jobs.

“Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And, ultimately, our country could experience a long and painful recession.”

Mr. Bush, it should be difficult to get loans. They aren’t for everyone. They are for people with good credit, regardless of race, color or creed. Period. But even so, how is the taxpayers experiencing an unwieldly debt any better than Americans experiencing a “long and painful recession”?

David Walker, the ex US Controller General, predicted that over the next 75 years the gap between what has been promised for entitlement programs like social security and Medicare and how much in dedicated revenue is likely to be received (e.g., through payroll taxes and premiums) is $38.8 trillion. Walker calls these “implicit exposures,” and says they represent the money we would need today, invested at Treasury rates, to pay for future entitlements. This gap represents over $128,000 for every man, woman, and child in the United States.

Peter Sims writes:

According to the GAO, the total fiscal burden over the next 75 years represents $400,000 for every full-time worker in the United States and $440,000 per household.

The bipartisan bailout plan is typical Bush double-talk. While paying lip service to the free market at the beginning of his speech, Bush sounds like a true leftwing revolutionary when his alter ego chimes in:

“Earlier this year, Secretary Paulson proposed a blueprint that would modernize our financial regulations. For example, the Federal Reserve would be authorized to take a closer look at the operations of companies across the financial spectrum and ensure that their practices do not threaten overall financial stability.”

In other words, the free market is fine, as long as it is under government control. That is why both parties can reach across the aisle so easily and into your pocketbook.

If McCain signs on to this plan and manages to somehow get elected, look for 4 more years of disastrous Bushonomics posing as free market principles.

If Obama gets elected, look for the same, but called by its real name: socialism.

If you agree that America deserves better than this devil’s bargain, contact your lawmaker at the site linked below and tell them to vote AGAINST the bailout:

http://www.alipac.us/ftopic-63874-0-days0-orderasc-.html

 PS: For those who think I am making this up, here is the Bush Administration’s HUD site and a quote from that site promoting the “zero downpayment” initiative:

 http://www.whitehouse.gov/news/releases/2004/09/20040902-5.html

  • “Zero-Downpayment Initiative. In his FY 2005 budget, the President proposed the Zero-Downpayment Initiative. Preliminary projections indicate this Initiative would help about 150,000 homebuyers in the first year alone. This proposal would eliminate the statutory requirement of a minimum three percent down payment for FHA-insured single-family mortgages for first-time homebuyers. “
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    PS: McCain on illegal immigration. He’s for it (no one knows where Palin stands):

    http://hotair.com/archives/2008/09/12/new-mccain-ad-no-it-is-i-who-will-deliver-the-nightmarish-amnesty-america-neither-wants-nor-needs/