Poll shows one-quarter of world disenchanted with capitalism

BBC survey shows world disenchanted with capitalism

By Don Hank

Soon after last year’s disastrous bank crash, liberals and RINOs were quick to infer, from evidence to which only they seemed to be privy, that the capitalist system was flawed and needed regulation. Even conservatives seemed confused. Oddly, no one could come up with a uniform regulation design that would fix things or prevent such a crash. Something didn’t seem right about their take on the causes.

Not long after that, conservative pundits made an amazing revelation: Starting in the Clinton administration, an old banking law, the Community Reinvestment Act, passed under Carter for the purpose of channeling mortgages to the poor, had been strengthened. As a result, banks had been strong-armed into issuing mortgages to “underserved groups” meaning Hispanics and African Americans. Those that refused were harassed by radical groups like ACORN and/or blacklisted and/or sued by the government. Those that complied were given the highest marks and put into enviable positions from which they could make more money. The shrewdest lenders realized that this was a government-supported racket with which they could enrich themselves at little risk, as long as Fanny and Freddy were willing to back up their seemingly foolhardy lending policies. So they continued the game, and even lenders not subject to the CRA were soon cashing in, realizing that the government actually wanted them to play Russian roulette with public funds. Even when the inevitable crash came, they thought they were protected. Indeed many did get bailouts, but because of the innovative banking practice of bundling, or derivatizing, these mortgages, and then securitizing them – selling them as “securities” like stocks, bonds and mutual funds, the risk was actually multiplied to the point that even the bailouts were no longer a safeguard, because, surprise, even the US government isn’t too big to fail. The banking world on both sides of the pond, moving in lockstep like lemmings, sold and bought such “securities,” many made in the USA but also many homegrown ones, and a global disaster ensued that you are now witnessing, perhaps in person.

I know that many of you are aware of this background of the crash, but there is a whole industry devoted to telling you that this historical fact, authenticated by responsible, sober economists like Thomas Sowell, never happened. This disinformation campaign, supported by the mainstream media and universities, is overwhelming in both its magnitude and its absurdity.

I discovered this firewall of lies and distortions serendipitously while looking for articles on the issue. I had not read or heard anything lately on the causes and had also heard a Keynesian investment advisor on the radio boldly proclaiming that the capitalist system needs regulation to prevent such a crisis from recurring. Over a year ago, Sean Hannity had tried to tackle this issue, but I noticed that his grasp of the facts was a bit slippery. Later, the rest of the pundits also just dropped the ball. In retrospect, it is easy to see why. People are lazy by nature. There are a lot of esoteric concepts and language in this issue and it takes a bit of study. And after all, what’s it matter? We are only talking about your survival (please excuse the sarcasm).

To get to the bottom of this, I typed “cra causes bank crisis” in my search engine and found, compared to the legitimate articles plausibly describing the role of the CRA and government meddling in mortgages, about 20 times more articles either downplaying the role of the CRA and Fanny-Freddy and the strong-arming of banks or actually bold-facedly declaring that the CRA had absolutely nothing to do with the crisis. The gist of each one: capitalism can’t sustain itself without government regulation. We desperately need socialism under a scheme of global governance. Quick, give up your sovereignty and pledge allegiance to the UN before we all die. The truth is that government over-regulation of a toxic kind had threatened the world’s economy and those who were responsible for this outrage were self-righteously preaching to the rest of us that we were somehow the culprits and would now have to submit to their tyranny.

This is the time for conservative pundits to fly into action and defeat this insidious disinformation campaign. It is not new information that is needed, but someone must look at all the rubbish that is being written and start debunking it, because these government induced toxic loans are still ongoing. Right now the FHA has taken over the role of Fanny-Freddy in backing them and is starting to suggest that they too need a bailout. Nothing has changed. The actors are just shifting roles. We are not supposed to pull out of the crisis. It is just going to get worse — with “stimulus” money.

And that will be more evidence that the free market system “needs government control,” quick, before anyone has time to study the issues and recognize what actually hit them.

With the mainstream media and America’s – and Europe’s – professional pseudo-intelligentsia working overtime to show that global capitalism has self-destructed and that the story of the big-bad CRA and of Fanny-Freddy being the fox in the hen house are all part of a vast right-wing conspiracy, it is no wonder that the entire world is tilting to the Left in its thinking on so-called capitalism. As BBC reports (not without a certain unmistakable Schadenfreude), almost a quarter of people surveyed throughout the entire world are now saying that capitalism is fatally flawed.

Yet when you look at these statistics, you see that Americans are among the least deceived. BBC states: “In only two countries, the US and Pakistan, did more than one in five people feel that capitalism works well as it stands.”

I believe this is due to at least 3 phenomena:

1—Americans are smarter than the rest, including the BBC, because they have the commons sense to support the free market,

2–We have pundits like Rush, Savage, Farah, Beck and a whole slew of small but mighty web sites out there, like Laigle’s Forum, unspinning the spin and setting people straight.

But there’s also this I’m afraid:

2—Many Americans haven’t figured out that capitalism is no longer in place here. Many years ago they watched sanguinely as their government propped up a failing Chrysler, naively believing that the government was actually “saving” capitalism and the free market.

What was actually happening was that the stage was being set (BY BOTH PARTIES!) for Obama to come along decades later and deal the free market what was calculated to be its death blow.

There were other steps along the way to what is now being called alternately fascism, corporatism and even communism. Pick your –ism, but don’t call it capitalism, because Adam Smith would not see his ideal embodied in what we call big business in the West today.

Afterword: A reader emailed me that it was good news that 3/4 of the world still believe in capitalism. But if you go to the BBC article linked above, you see that of the 3/4 who still have not given up on capitalism, the majority by far believe the propaganda. They choose the option that capitalism “Has problems that can be addressed through regulation and reform.” A European Christian friend writes that neither capitalism nor communism are good — a conclusion that leaves socialism as the default system. If we lose this one, there will be no powerful conservative in the USA to say “tear down that wall.”

For Christians who think socialism is part of Jesus’ plan, please read the following article:

http://laiglesforum.com/2006/12/11/the-religious-left-in-bible-times-part-1/

Fanny-Freddy lock barn after horse escapes

Fanny-Freddy lock barn door after horse escapes

By Donald Hank

I just attended a settlement for sale of our home and while at the table, I had the opportunity to talk to the lender for the buyers, who was very savvy about the way government-backed mortgage lenders are enforcing and writing policies.

I asked him whether policies at the government sponsored lending agencies had changed. Here is what he said and what every American needs to know if we are to remain free:

Fanny and Freddy, the Democrat controlled GSEs (Government Sponsored Enterprises) who used to all but force lenders to lend without documentation or credit are now more strict than any other lender!

Isn’t it obvious what is happening? This new crackdown is aimed to make it look like the Bush administration caused the whole problem by not regulating anything. But for decades, Fanny-Freddy had all but caused the entire banking problem by 1) refusing to regulate lending and 2) by enforcing the CRA, which forced banks and other lenders to lend without checking documents and without requiring down payments. People on welfare were getting mortgages. People with bad credit were getting mortgages. Millions of illegal aliens were even fraudulently getting mortgages, all with the blessings and encouragement of Democrat-controlled Fanny-Freddy.

Read more at http://www.jbs.org/jbs-news-feed/5027

Bankers in lockstep across the globe — coincidence?

Extrapolate the details in the following article by David Noakes to the bank crisis in the US and you get a plausible explanation for a disaster whose causes so far have not been explained or even investigated.

The author blames deregulation, although that was a secondary cause in the US. In the American media, deregulation is often blamed as well but without even a hint at the supposed mechanisms by which a “lack of regulation” might have operated to bring down the banks, and particularly how this would have happened simultaneously all over the globe. Indeed keen observers outside the elitist system have pointed out plausible causes and plausible mechanisms for our banks’ failures, such as the CRA and Fanny-Freddy and the complete lack of documentation and lack of down payments required by those semi-government Democrat-managed entities for mortgage lending. Laigle’s Forum is one of the few sites that has even attempted to tackle this issue in some depth. We find that rather than just simple deregulation or lack of regulation, it was in fact over-regulation that wrought the havoc. Specifically, Clinton had strengthened the CRA, requiring banks to make $1 trillion in loans to “underserved communities.” The only way to accomplish this was to force them into requiring no documentation of income and no down payment, absolutely suicidal policies. Bush, put up a meek fight, then went right along, urging a Zero Downpayment Initiative at his HUD web site in 2005.

But I have published the following article to show the striking similarity between the behavior of bankers on both our continents.

Knowing the extent of corruption among money managers, the below-described situation in the UK does not seem so far fetched a scenario for this country either.

Is there a clue in here for us? Note that managers of failed institutions here also got bonuses and exorbitant salaries, and none left in shame. No shame was shown on either side of the Atlantic and no one has apologized for bringing down Western finance and threatening the financial security of every citizen of dozens of countries. No accountability was demanded by government. And indeed, a dissident British banker was murdered for protesting the bad policies in place there (see below).

Compare this with the strong arm tactics used in the US when some banks wanted to refuse the bailout money. Wasn’t it really hush money?

Is it really plausible that the bizarre behavior witnessed in US banks would have mirrored the behavior of bankers on the other side of the Atlantic just by accident? How about the bailouts? They happened in concert all over Europe as well, over the protests of the citizenry, especially in Britain. Here, 90% of all calls to the US Congress urged lawmakers to vote against the bailout.

One thing is certain: International elitists in government and finance do not operate independently of each other, they are basically all in agreement, they use their willing media lackeys to overcome the public’s mistrust, and public mistrust of them is at an all-time high everywhere. There is no debate over the “wisdom” of the bailouts, no hint that the payments would be accompanied by any change in policy or regulations. And this despite the whispered accusation that bank failures were due to under-regulation – an accusation that catapulted ultra-elite, ultra-Left, ultra-incompetent Obama to power. Why wouldn’t bailout payments under Obama be predicated then on the passage of new regulations and strict compliance therewith?

Clearly, the public is being led around by their noses by an international group of cynical idealists and elitists who think we are all stupid.

It is a miracle that we have not yet seen massive protests.

But then, our bellies are still full.

Just wait…

Donald Hank

 

Did directors deliberately destroy their own banks?

By David Noakes

The Royal Bank of Scotland (RBS) went from assets of plus £88 billion in 1999 to estimated liabilities of minus £1.3 trillion in 2009 – equal to a year’s income (GDP) for the whole of Great Britain. If Directors with mental disabilities had been appointed, they might have reduced the bank’s value by half. But to utterly destroy it on so stupendous a scale took real knowledge and determination.

It seems clear the wholesale mismanagement and corruption of banks by their directors was not unbelievable incompetence, but criminal. The government huffs and puffs at bonuses and pensions paid as a reward for failure, but then in every case it lets those corrupt payments, totaling billions of pounds, stand without passing legislation to confiscate.

It looks as though these huge bonuses and pensions were intentionally paid to compensate directors precisely for destroying their own banks, and for a job well done.

HSBC quietly possesses an ethical, Christian board. They are well managed, profitable, and took no part in creating this crisis. Standard Chartered Bank’s profits actually went up, even in 2008/9.

But take the case of Abbey National. In July 2004 their risk management officer, Richard Chang, was objecting that the run down of the bank by directors was deliberate (it resulted in the Bank’s ownership being transferred to a European Bank, Santander.)  The HBOS whistleblower alleged the same.

Anonymous documents then arrived at the board with similar suggestions, with additional evidence of sexual impropriety among Directors. Richard denied he had sent them, but was called in for a two and a half hour interrogation by the directors at the hands of Kroll corporate security, during which he was bullied and threatened, and at the end he was found dead five floors below at the bottom of the internal Atrium in Abbey’s London head office in Euston.

The courts, CPS, coroner, FSA, directors and police have closed ranks to prevent a criminal prosecution or investigation. These services all have large numbers of freemasons in their senior structures.

High ranking Freemasonry runs right through this banking crisis. All the failed banks, Northern Rock, Abbey, RBS, Halifax Bank of Scotland (HBOS) had Freemasonry controlling their boards. Gordon Brown is a 33rd degree Scottish Rite Freemason, as was Tony Blair; there are 400,000 of them in Britain.

Brown’s job seems to be to take advantage of the destruction of the banks, by pouring far too much of our economy into those ready made back holes, which will destroy the Pound Sterling.

The crisis was caused by the USA and EU governments deregulating banks in 1999. Massive, self collapsing bubbles predictably formed in every market including housing, stocks, and derivatives. It is deregulation that enabled corrupt boards to wreck their own banks. They now have estimated liabilities of £7.2 trillion or £250,000 per household; they should now go bust; Britain cannot afford to save them.

Freemasonry and Common Purpose are the European Unions’ foot soldiers on the ground in Britain. They know the EU dictatorship cannot be built while there is a strong Britain on the doorstep; we stopped them twice before in 1918 and 1945, and Britain has to be destroyed if the dictatorship is to succeed.

These British traitors get their massive payoffs for handing Britain to the EU on a plate, poverty stricken and stripped of democratic defences.

Many of those won’t realise that the initial deflation of the recession they worked so hard to create will, with the trillions Brown is borrowing for the banks, turn into hyper inflation with super high interest rates, and in two years they could be starving with the rest of us, their gravy trains and bribe money useless, their houses repossessed, as ours will be.

If you wish to avoid this ghastly future, you need to do your part now in talking to people about a General Strike against the EU, our government, Law Lords, and all the senior officials who are so deliberately sabotaging our nation.                                                                 David Noakes. eutruth.org.uk. 07974 437 097

Republicans threw the election

Republicans threw the election

In the video linked below, hear the Democrats deny in their own words that there was a mortgage lending problem at Fanny Mae and Freddy Mac. One even cussed out the Republicans who dared to suggest there might be a problem.

Why didn’t McCain mention this?

I think the obvious answer is: McCain didn’t want to offend any of his buds on the other side of the aisle, where he was busy reaching most the time instead of being a Republican.

McCain sort of wanted to maybe possibly be president under certain conditions (to be set by the Democrats).

This is why this swell idea of getting along with everyone wrecked the Republican brand just as it wrecked the financial institutions.

No Republican would defend the free market.

Now there’s no one left to defend the Republican Party. And rich people everywhere, including the rich guys who supported Obama and his socialist worldview, are losing – reportedly the founders of TomTom have lost a million so far.

Watch here.

 

“Gays” reject democracy

http://www.foxnews.com/printer_friendly_story/0,3566,447744,00.html

 

 

More on making leftists squirm

I have found that one very effective way to deal with leftists is to ask a question they can’t answer or will inevitably answer incorrectly based on a popular misconception, and then to suggest the answer in a cryptic way that he can’t quite comprehend. That makes you the master. Like the lefty I met at the polling place. I asked him what caused the banks to crash.

He said “lack of regulation of the market.” [All lefties say that because they hate the free market].

I said “what about the CRA?” knowing that he had never heard of it.

Then when he drew a blank, I taunted him by saying: “You know [of course he didn’t], the Community Reinvestment Act.”

At this point I had defeated him psychologically because he knew I knew more than he did and my matter-of-factness suggested this was common knowledge —  which in fact, it should be and would have changed the election results had it been.

But you note that I didn’t explain what the CRA was. I didn’t want him to be able to think up some half-baked argument showing that the bank crash was still the free market’s fault. And I also wanted him to be keenly aware that the media and the Dems were keeping him in the dark

I told him it was up to him to look it up and walked away the clear winner — even in his own eyes.

But not only that, I gave him ammunition to use in a conversation with someone else that will make him look good, and on top of that, because he looked it up himself, this has the psychological effect of making him think of himself as “self-taught,” a source of pride that will stimulate him to further study in the future and may eventually moderate his leftist views.

Donald Hank

 

 

My ears are burning…

A pro-Obama, anti-Hillary Democrat blog cites “Laigle’s Forum:

“23 October – the ultra-far-right-wing blog “Laigle’s Forum” shows Berg the meaning of the saying “lie down with dogs, wake up with fleas”. [Quoting Laigle’s Forum:]

Remember that Berg claims to be a Sen. Clinton supporter. Yet these are the people supporting his suit.

“Note that Berg is a Hillary supporter and suddenly the Hillary camp is sounding like they want the Constitution restored. Can you see anything wrong with this picture of the Clinton camp complaining about injustice and lawlessness? The lady who made off with the White House silverware? The president who made a brothel of the White House and then perjured himself? The couple who rudely fired the kitchen help on trumped up charges as soon as they entered the White House, and whom Judicial Watch has been trying for years to indict for a wide assortment of suspected felonies?”

“(Is it just me, or do the tired old smears against the Clintons sound a LOT like the smears that Berg, “TexasDarlin”, and their supporters use against Sen. Obama. Hmmmmm……)”

This citation of Laigle’s is ironic for various reasons, for one thing, because a pro-Hillary blog had also cited an article by me in WorldNetDaily criticizing Obama.

About that “ultra-far-right-wing” epithet, why do Dems cite us if we are nothing but ultra-far rightwingers with whom they supposedly don’t agree with? When we criticize Obama, suddenly the Hillary camp cites us as authorities. When we criticize Hillary, the Obama supporters (in the present case) cite us as authorities but simultaneously undermine our authority with the “ultra-far-rightwing” epithet.

So, how to sort this out? first, thanks for the compliment, I think.

Second, Laigle’s does not bill itself as ultra-right, so where does this come from?

Our site has published articles from writers of different countries around the world who promote the free market and traditional values, particularly Christian traditions.

But wait: during their campaigns, both of the major Democratic candidates (Hill and Obama) have made a big issue out of being Christians themselves. So on this issue, whey don’t they qualify as ultra-far-rightwing”?

Laigle’s Forum has also tended to favor the free market, in keeping with Adam Smith’s book The Wealth of Nations. Smith is regarded as one of the first liberals.

Wouldn’t that make us liberals? Don’t they claim to be liberals?

Strong defense is another rightwing issue. Doesn’t Hillary support that, as she herself said repeatedly in her campaign?

Thus far, we are shaping up as very much like our Democrat counterparts.

The real difference is that we actually support the free market, strong defense and traditional religion, whereas the Left pretends to support them when it suits them for political purposes.

Now that Obama has mesmerized much of our youth into supporting communism, the Left is showing its true colors.

So the main difference is honesty and integrity.

If being honest makes us ultra-far-right, then I say guilty as charged, Your Honor!

BTW, they used to call people like us far right. Now they have added the “ultra.” But this tells us more about them than about us.

America is drifting to the far left, and the names the Left calls us change to match their leftward drift, not our rightward drift. We haven’t drifted.

Donald Hank

 

Spreading Islam through public and Christian schools:

 

By Berit Kjos

Our friend Tom* enrolled his seventh grade son in a local Christian school this year. But he felt a bit uneasy when he saw the new history text. And as he leafed through the pages of World History: Medieval and Early Modern Times (a standard nationwide textbook), his concern grew.

The dramatic images, evocative suggestions and interesting group assignments would probably prevent boredom, but what would his son actually learn? How accurate were the lessons? And most important: What kinds of values would they instill?

Page 4 (in the section on “Strategies”) told students to “Try to visualize the people, places, and events you read about.”[4] With all the inspiring stories and pictures, that should be easy! Group dialogue and peer consensus would help seal those biased impressions! This was not what Tom expected from a Christian school!

Read more here.

 

U.S. may soon accept Sharia Law

Incredibly, in recent days, the U.S. Treasury Department has begun embracing Shariah-Compliant Finance.  Deputy Secretary of the Treasury Robert Kimmitt has professed an interest in “studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisis.”  According to a press report out of Saudi Arabia, he has declared that “experts in the Treasury Department are currently learning the important features of Islamic banking.”

Read more here.

 

William Lobdell article:

William Lobdell says he lost his faith and is cashing in on his faithlessness to sell his book. Fair enough. Christians and Jews cash in on what they believe too.

I emailed William and told him our stories are reversed: I lost my faith in Marx after worshipping the Left for 40 years.

But before that I had lost my faith in God when I saw some of the same things he saw that caused Lobdell to doubt. My swing back to faith is partly the product of free will, and the willingness to submit and obey – not to religion but to God. That is a subtlety than I think many atheists haven’t understood.

Lobdell and I agree on one thing: religion in itself is not the way. Jesus Christ agrees with both of us on that. I think Lobdell is confusing religion with God, as I once naively did.

I am negotiating with Lobdell to submit an article to Laigle’s Forum so that we can respond.

Joran wanted to traffic in Thai women?

There is evidence that Joran van der Sloot wants, or wanted, to traffic in Thai prostitutes.

Read about it here.

 

Obama required by SCOTUS to present a birth certificate:

“At this point, Supreme Court Justice David Souter’s Clerk informed Philip J. Berg, the lawyer who brought the case against Obama, that his petition for an injunction to stay the November 4th election was denied, but the Clerk also required the defendants to respond to the Writ of Certiorari (which requires the concurrence of four Justices) by December 1. At that time, Mr. Obama must present to the Court an authentic birth certificate, after which Mr. Berg will respond.”

“If Obama fails to do that, it is sure to inspire the skepticism of the Justices, who are unaccustomed to being defied. They will have to decide what to do about a president-elect who refuses to prove his natural-born citizenship.”

Read more here.

How the Democrats crashed the banks

How the Democrats crashed the banks. Part I

 

By Ken Brinzer

 
Those who buy into the so politically-convenient disinformation that blames Wall Street greed for our economic woes are likely to overlook the real culprits in the economic plunge story that has taken place from Wall Street to Main Street, coast to coast, and far beyond.  That’s because the real culprits are in the United States Congress, not on Wall Street.  And to be sure, it may be a matter of greed, but it would be of political greed and or myopia.
For example, take a look at the devolution in the Freddie Fannie debacle.  It all began with a reasonable idea that was enacted into law under President Carter in 1977.  Known as the Community Reinvestment Act (CRA), it caused little harm and surely did some good, until it was morphed into something quite different, quite insidious and pernicious during the Clinton years.
In 1995 under the version of the act revised by the Clinton administration, lenders were told that proof of income, source of down payment and credit history of a loan applicant would no longer be required as qualifying criteria.  In addition to this revision of the CRA, the lending community was threatened by Clinton’s Attorney General Janet Reno, who promised to prosecute to the full extent of the law those who violated the 1995 lowered standards for lending.  The die had been cast under Clinton and the situation was such a mess that in 1999, then Clinton Treasury Secretary Lawrence Summers warned that reform of Freddie and Fannie was essential.  His warnings fell on the deaf ears of those at Fannie and Freddie and over in congress who should have pushed for reform following Secretary Summers’ call for it, but instead promulgated the expansion of their powers.
Then during the Bush years, there were 18 further calls for congress to reform Freddie and Fannie and all were ignored.   Most notable among those who issued calls for reform of Freddie and Fannie during the Bush years were Treasury Secretary Snow, then Fed Chairman Alan Greenspan, and even President Bush himself.  All calls for reform were ignored or blocked by those members of congress who had their own agenda and did not hesitate to belittle and demagogue against these legitimate calls for reform.  One such belittlement came from the mouth of Representative Barney Frank who characterized the calls for reform as “inane”; but they weren’t, they were really needed and that became obvious when information surfaced that 5 million home loans had been made to illegal aliens alone, many without income or asset verifications, and all without citizenship papers.
Clearly those in congress had a responsibility to reform the financial nonsense that became public policy under Clinton and went unreformed throughout the Bush years despite abundant calls for reform from both inside and outside of the executive branch.

(to be continued)

Ken Brinzer is 62 years old, and lives with his wife, a high school chemistry teacher, in Penn Hills, PA. The Brinzers 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.

http://mises.org/story/2451

Making Kids Worthless: Social Security’s Contribution to the Fertility Crisis

Daily Article by Oskari Juurikkala | Posted on 1/24/2007

“Kinder haben die Leute immer – People will always have children,” assured Konrad Adenauer, the German Chancellor, in 1957. He was convinced that the future of the brave new pay-as-you-go social security system would not be undermined by demographic changes.

Adenauer was as wrong as ever. Social security schemes around the developed world are facing a major crisis due to greater longevity, declining retirement ages and – lo and behold – below-replacement fertility rates.

What the good statesman did not realize is how the new system would affect the incentives of individuals to work, to save, and to have children. Labor force participation rates among older workers have declined dramatically since the 1960s throughout the Western world. The rules of social security benefits in most countries mean that working just does not pay off. In this way, pay-as-you-go social security schemes contribute to their own bankruptcy.[1]  

Read more here.

Laigle’s Forum featured on Christian Newswire:

http://www.christiannewswire.com/news/405798484.html

Subprime crisis: the overall picture

Subprime crisis : the overall picture


By Vincent Benard

 

In many aspects, the current financial meltdown that brought many banks and insurers to insolvency may be compared to the nuclear meltdown that affected the Chernobyl power plant. And whatever Big Government pundits may tell us endlessly – without real in-depth arguments – inappropriate state intrusions in the economy are as much responsible for the financial crisis as poor state management of nuclear facilities by USSR was for the Chernobyl disaster.

If the mechanisms of the so-called “Chinese syndrome” can be described as a process of ignition, amplification, and then propagation of atomic reactions, likewise, the current crisis is a story of state interventions in the economy, that ignited, amplified, and then propagated the meltdown from its original core to the whole financial system.

Ignition

The main factor that ignited the current crisis is how politicians forced two state regulated enterprises, Fanny Mae and Freddie Mac, to refinance a growing part of unsecured loans to low and very low income families. In exchange, Fannie and Freddie were exempted from some accounting requirements generally expected from ordinary firms, allowing them to leverage too much credit compared to their equity, by an extensive use of off balance “special purpose vehicles.” All these operations were made under an implicit taxpayer provided safety net, as the statutory rules of the department of Housing and Urban Development made possible the nationalization of Fannie and Freddie in the case of bankruptcy.

These government provisions, coupled with a law mandating banks to find ways to originate loans to some high risk-profiled borrowers (the much discussed and controversial Community Reinvestment Act), reversed the usual prudential rules governing company CEOs: first, don’t fail, and then, make a profit. Due to their government backing, Fannie and Freddie only had to expand their volume of business, without too much consideration of the underlying risks. The purchase of so many bad loans by two state-backed giants encouraged reckless lending by banks and mortgage brokers to many risk-unaware families.

This behavior was greatly helped by Alan Greenspan’s decisions to lower and maintain very low interest rates in the early 2000s without consideration of the obvious asset bubble that was emerging in the housing sector. When credit is too cheap, borrowers tend to be less careful in their investments.

Amplification

But these facts do not explain by themselves how big the housing bubble has become. The average Joe, in the mortgage broker’s office, was not as unsophisticated as generally described. He could lose his common sense and succumb to easy credit only because the brokers could show him impressive Case-Schiller index curves, which seemed to show that any housing investment could gain more and more value every year, making the purchaser richer even while he was sleeping. Without this apparent housing inflation, many people wouldn’t have jumped so recklessly onto the easy credit bandwagon.

But this housing inflation did not occur everywhere in the country. Some of the most dynamic metro areas, in terms of population growth, haven’t experienced any housing bubble. Recent Nobel Prize Paul Krugman, supported by several research papers, notably from academics like Ed Glaeser or Wendell Cox, explained it by land use regulations: when these regulations are flexible and tend to be respectful of the property rights of the land owner, housing bubbles cannot even get started. But when regulations allow the existing real estate owners to prevent farmland holders to build the houses required to satisfy all housing needs, housing prices start skyrocketing.

Housing mortgage debt owed by families grew from 4.8 to 10.5 trillion USD (from early 2000 to late 2007. But had every city in the USA had the same flexible land use regulations that they had in the fifties, and that still exist in fast growing areas like Houston or Atlanta, this exposure to risk would have been much lower, by 3 to 4 trillion. More borrowers would have qualified for the prime credit market and its less risky loans, since the lower price of the purchased homes would have resulted in better credit ratings. So, despite the bad lending practices mentioned above, the risk of a general collapse of the credit market would have been nearly equal to zero.

Propagation

At this point, we just explained the roots of a mortgage crisis. What is still missing is the way it has spread throughout the financial system. Once again, bad laws are to blame.

First, this crisis shows how risky the bank’s business model, grounded on low equity and very high leveraging ratios, has become unsound in these time of high volatility of some assets. Some will blame banks for this, but you should be aware that before the creation of the FED in 1913, most banks’ business models were based on equity levels over 60%: the shift from a high equity to a low equity model comes first from tax policies which have, in nearly every country of the world, severely taxed capital gains, but encouraged debt by deducting the interest payment from the corporate tax base. The second reason is that central banks, as “last recourse lenders,” usually with a state’s warranty, have themselves favored this shift to a highly leveraged model: borrowing  money was de facto a cheaper resource than raising capital to finance operations.

But of course, this doesn’t explain how a 10% default risk on a credit niche market (the subprimes), totaling less than 10% of the total housing debt (12 trillion at the end of 2007), itself less than one fifth of the total assets being exchanged on American financial markets, generated such turmoil.

The culprits must be sought within a set of rules named “Basel II,” and their declinations in local laws in most countries, aimed at regulating the activities of banks or insurance companies. In some cases, poorly designed accounting rules may have contributed, too.

Basel II rules — and the like — mandate banks and insurers to hold a diversified portfolio of assets aimed at providing them the liquidities they need to face hard times: for a bank, a major loss of customers; for insurers, a series of major disasters. These rules were supposed to “protect” investors from reckless diversification policies. So institutional investors were mandated to own only high quality bonds, or to value some kinds of assets, like stocks, with a weighting that de facto prevented their securities from handling such assets directly.  

But banks and insurers needed the yields of “lower quality” bonds, or even stocks, to remain attractive to private investors. Otherwise they wouldn’t have been able to beat the performance of state labeled bonds, and thus wouldn’t bring any added value to their customers, forcing them out of the market.

So the late 80’s and the 90’s saw the onset of a huge market of “derivatives,” all based on the following principle: lower quality assets (like subprime based securities bonds) are put together in another security, which itself sells new bonds sliced into several “tranches.” The first slice, the “z-tranch,” is a very risky one, which is aimed at bringing a higher yield to unregulated investors as hedge funds but must absorb primarily the first percentages of any losses of the security. Other tranches bear a lower risk but serve a lower yield. The “cushion effect” of the high risk tranch allows the lower tranch bonds to receive an AAA rating from rating agencies, particularly if they are covered against credit default by a special derivative called a “credit default swap,” allowing lender and borrowers to reinsure themselves against defaults on their bonds. And there can be other “derivatives of derivatives” involved in these designs. In many cases, institutions issuing AAA tranches guaranteed the payment of the corresponding bonds.

So the current situation is that many institutional investors do not hold many real stocks or bonds in their portfolios. They mostly hold a majority of derivatives.

But all this incredibly complex financial engineering not only is extremely costly, but has one perverse effect: while reducing the probability of AAA tranches to default, it actually makes the amount of the risk higher in the event that losses are high enough to impact the AAA tranches. And all these complex designs of derivatives make it increasingly difficult to understand where the risks are located in complex securities mixing prime mortgages, subprime mortgages, and other kinds of credits. So when an AAA tranch is impacted by higher than forecast losses, nobody really knows what is the resulting worth of the best tranch if it has to be sold. Is it 95% of the nominal? 60%? Nobody seems able to value these bonds reliably.

So when the mortgage debtors began to be insolvent in a higher proportion than usual, the losses on subprimes derivatives began to exceed the “cushion” effect of Z-tranches. AAA bonds were impacted. Some holders of these bonds, forced to sell off in panic in order to get cash, couldn’t find purchasers, except some highly speculative funds that toughly negotiated the price.

But then, because of inflexible accounting laws, all institutions holding the same kind of toxic assets had to write down the values of these assets in their balance sheets, even if their treasury level didn’t force them to proceed to a fire sale of these assets. So they might have been declared virtually insolvent even if actually they were not. This affected their ability to borrow on short term liquidities markets, and thus led some of them ultimately to file for bankruptcy.

If no regulatory limitations had been placed on the assets that banks and insurers could hold, it is likely that they would not have found the use of exotic derivatives so attractive, and that early difficulties in subprime credits would have resulted in clear signals prompting securities managers to recompose their portfolios. Some investors’ failures could have occurred earlier, but would not have reached such proportions. 

Big Government is the culprit

So, at the root of every mechanism identified as a catalyst of the current crisis, we can find a bad federal or local regulation.

Does this mean that private institutions have no moral and technical responsibility in the current mess? Certainly not. They’ve deliberately chosen to take advantage of these poisonous regulations instead of fighting them, even though some of the underlying risks were clearly identified. Many of them ifnored warnings issued by economists like Nouriel Roubini, or atypical politicians like Ron Paul, and preferred to listen to reassuring assessments of the soundness of the system written by star economists like Joseph Stiglitz. People don’t like dream breakers.

Competition to overturn bad regulations doesn’t exonerate financial private institutions from having failed to do so properly. Whatever conditions are created by the states, firms must act wisely. Many of them obviously did not. But in the ranking of responsibilities, states’ inaccurate and inordinate regulations obviously rank highest. Had its diverse regulations and interventions focused on principles (honesty in contracts, no concealment of malpractice, full disclosure of operations, respect of property rights) and court litigation; had they let private individuals or enterprises decide what was good for them without trying to curb their behaviors in particular directions, none of the elements that allowed this crisis would have been in place.

Government’s economic interventions in human interactions once again have proved counterproductive and finally wrought havoc. This should make people very careful about government claims that new interventions are necessary to solve the crisis and avoid the next one!

 

Vincent BENARD is the president of the Hayek Institute, a French speaking think tank based in France and Belgium – www.fahayek.org . The institute has published several tribunes advocating the free-market point of view on the current crisis. His personal blog is www.objectifliberte.fr

French mainstream press confirms our assessment of the financial crisis

French mainstream press confirms our assessment of the financial crisis

 

Some American news consumers insist that anything not based on mainstream reports is not worth their while reading. In fact, I just heard Alan Colmes attacking Jerome Corsi on his book The Obama Nation and one of his chief criticisms was that Corsi uses conservative media as factual support.

Now, I have previously refuted at this site the leftist view that our current financial crisis is due to rampant laissez-faire free-market finance. I have shown, based on various sources, that in fact, the blame lies squarely with the government, and particularly with the CRA and its beefed up enforcement under Clinton, and unfortunately, under second-term George W. Bush as well. Certainly, some readers who think like Alan Colmes were skeptical and dismissive of my facts, even though most come from neutral sources.

That is why I was delighted when a French colleague recently sent me an article from the online version of the daily newspaper Figaro confirming my assessment of the financial crisis and its origins.

Now, while the Left in France does classify Figaro as right of center, you need to understand that this is a highly respected century-old publication that enjoys a very large hardcopy readership, with over 400,000 copies distributed and with an amazing 4.224 million unique on-line visitors, making it the number one news site in France today.

By contrast, the newspaper at the other end of the political spectrum, Libération, has a hardcopy readership of only 160,000 and claims only 150,000 visitors to its web site.

Clearly, French readers on both the Left and Right trust and prefer Le Figaro.

 This is why I took the pains to translate Figaro’s recent article “Subprime accused, State guilty” by Vincent Bénard.

This translation is one item you can safely forward to your most skeptical friends.

Donald Hank

 

 

Translation  of :

Subprime: market accused, State Guilty

 
09/09/2008 | Updated : 10:43 |

 

Vincent Bénard, President of the Hayek Institute of Brussels, author of “Le Logement, crise publique, remèdes privés” (Romillat), reviews the subprime lending crisis and takes the side of the free economy when Freddie Mac and Fannie Mae, two mortgage refinancing agencies, are placed under the conservatorship of the United States government.

The cause is understood by many observers: the subprime financial crisis is due to the madness of the markets and shows the limits of unbridled finance.  And they urge more public regulation of financial institutions.

Free enterprise is the whipping boy again, because there is no market more perverted by the intervention of the federal government than that of mortgage credit in the United States.

The two institutions with the cute nicknames Fannie Mae (FNMA) and Freddie Mac (FHLMC) bear a heavy weight of responsibility in the financial unmooring of the American banking system.  The former was initially a government agency created in 1938 by the FDR administration to issue low interest mortgages thanks to federal guarantees, which supplied liquidity to a home loan market at low rates accessible to lower-income families.

In 1968, the Johnson Administration, realizing that the State-guaranteed commitments of Fannie Mae were becoming broader and would be subject to the lending capacity of a treasury department mired in financing the Vietnam War, arranged for it to be privatized.  Then in 1970, the Nixon administration created Freddie Mac to provide a semblance of competitiveness in this mortgage credit refinancing market.

This background provided Fannie Mae and Freddie Mac with a hybrid status of Government Sponsored Enterprise (GSE).  Thus, they were private but legally bound to deal exclusively in home loan refinancing under federal control in exchange for tax breaks.  Worse yet, while being officially private, the two agencies have always been considered – thanks to their public sponsorship and their social role, to benefit from an implicit guarantee on the part of the American Treasury!

Privatized benefits, collectivized losses: such a cocktail was bound to prompt the executives of the GSEs to take excessive risks if the state sponsorship came up short.  This is exactly what happened in the 1990s.  It was reminiscent of a famous French scandal…[The author is referring to the Credit Lyonnais scandal in which the French government bailed out that bank]

The sponsorship of these two enterprises was transferred to the US Housing and Urban Development Department (HUD) in 1992, because that agency wanted to influence GSE-financed loans to satisfy a major objective of any self-respecting politician in America, namely, increasing the home ownership rate among low-income populations, notably minorities.

Thus, the HUD forced Fannie Mae and Freddie Mac to increase both the volume and the proportion of refinanced subprime credits (up to 56% in 2004).  To make matters worse, one of the HUD bosses, fearing that the declaration of risks taken by the two GSEs in order to satisfy these rules, would cause the markets to lose confidence in them, solved the problem by making it perfectly legal for them not to disclose too many details about their exposures.

Thus, using increasingly complex mortgage products, Fannie Mae and Freddie Mac refinanced more than five trillion dollars in credits, or 40% of American homes, including more than half of subprime credits even though they did not have enough of their own funds to commit to such amounts.  As a result, the banks issuing these credits could afford not to be too particular about the loans they authorized, because there were two refinancers on the stock market to back them up.  Countrywide, the bank whose lending policies to lower-income families is now vilified, was incensed only three years ago by the executives of Fannie Mae for their brash subprime lending policies.

But the downturn in the economic boom multiplied borrower defaults, and the two GSEs are threatened with not being able to meet their obligations, which could spread to all institutional investors.  Now the State is urgently calling for their rescue, which will cost the taxpayer several hundred billion dollars.

A second public intervention expanded bank excesses in granting credits to insolvent families.  In the 1990s, studies showed that members of black and Hispanic communities had loan applications turned down somewhat more than whites or Asians, although these refusals only amounted to one application out of four.  Certain lobbies saw in this not a logical reflection of less wealth in these communities but rather proof of purported racism in the financial world.   

An antidiscrimination law of 1977, the Community Reinvestment Act (CRA), was thus strengthened in 1995 to crack down on banks refusing credit to minorities under penalty of greater sanctions.  The banks were thus obliged to partially relinquish the precautionary role they normally play when refusing a loan to a person who is objectively less solvent.  No big deal: Fannie Mae and Freddie Mac were there to refinance these shaky loans!

Today, many experts believe that, without the CRA, and without the GSEs, minorities would have more access to property than they now do, less quickly but more soundly.  By trying to artificially accelerate what the free economy accomplished at its own rate, it was the State that, through both regulations and legislation, led the actors in the credit chain to behave irresponsibly, causing a serious financial crisis and resulting in the failure of many families it purported to help.

Translated by Donald Hank

 


[1]

Help McCain avert a fatal scandal

Help McCain avert a fatal scandal

 

By Donald Hank

Ladies and Gentlemen, you have been recently treated here at Laigle’s Forum to a well-rounded smorgasbord of information about the causes of this latest financial crash. You have been regaled with information and insights not seen at any other web site, not mentioned in the “conservative” media or, much less, in the mainstream media. And now you will learn about one of the biggest scoundrels of all time, namely, that one of the authors of the biggest financial crisis in US history, has been chosen by John McCain as his new SEC chair. No, this is not going to happen. You are going to stop this insanity and we will tell you how. Keep reading.

First let’s review the time line of our financial crisis:

1-1977, Jimmy Carter proposes and gets a bill called the Community Reinvestment Act (CRA), which calls for more mortgages for minorities. It was pretty harmless at first, so Reagan didn’t bother to challenge it.

2- In 1995, Clinton put the CRA into overdrive, ordering the Treasury Department to rewrite the lending rules, thereby bypassing the Republican congress. The main criterion for getting a loan was race, and many loans required no income and no money down. In other words, bad credit risks got the lion’s share of the loans and still do. Clinton’s HUD secretary helped mightily to create this crisis. We’ll tell you about this guy shortly.

3-Bush protested these practices in his first term, when he was still a Republican, but later caved and increased the required percentage of loans to minorities and pushed for a “zero down-payment initiative.”

Bush now wants to pay for this with $700 billion of hard earned money from you, good hardworking people who do not renege on their loans. (Remember when people with good credit histories were rewarded and deadbeats were punished? We’re going to bring those times back by not agreeing to a bailout of any kind – BTW, gas prices are going down as a result of the crunch.)

ACORN, which the first version of the failed Democrat-authored bailout bill wanted to reward, was the group that agitated and lobbied hardest for the policies that brought down the lending market!  Obama worked hand in hand with ACORN and received huge donations from the associated criminal enterprises Fanny Mae and Freddy Mac.

Here’s where it really gets interesting. Please pay attention:

Andrew Cuomo, whom McCain has picked as his SEC Chairman, was Clinton’s HUD secretary when the new regulations were forcing banks to lend at ridiculous rates and under dangerous confitions, and according to the Village Voice, made “a series of decisions that… gave birth to the present crisis.”

Writes Village Voice correspondent Wayne Barrett:

Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that – in combination with many other factors – helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.

Did you get that? McCain has picked one of the authors of the present crisis, one of the most heinous scoundrels in American history, to head his Securities and Exchange Commission!

According to a Newsday article, here is what McCain says about Cuomo:

Cuomo would be a good replacement because he is respected and “did a good job” as secretary of Housing and Urban Development in the Democratic Clinton administration, McCain said.”I think he is somebody who could restore some credibility, lend some bipartisanship to this effort,” the senator said on CBS’ “60 Minutes” program.

Has McCain been on another planet for the last few years? Is bringing down American banks “doing a good job”?

Neither the “conservative” press (is there one any more?) nor the liberals have made the embarrassing connection between Cuomo’s pivotal role in creating the financial crisis and the fact that McCain wants this tarnished politician as his SEC chairman. Each side has decided to give you only the news that will help their side get elected. But the trouble with that approach is, it doesn’t put you, the new Ron Reagan, in the position to avert scandals and bad decisions of the kind McCain wants to make. Laigle’s Forum does not subscribe to the philosophy that presentation of news must be tailored to propagandistic agendas. You can’t change what you don’t know about.

So now that you do know, what can you do about this scandalous, potentially fatal situation for the McCain campaign?

Well, we Americans are usually seen by government as those little bugs out there that were made to squash, but that come in handy at election time.

But, Ladies and Gentlemen, you and I know we’re a lot more than that. We are the new Ronald Reagan. Last year, in the spirit of Reagan, we stopped the Amnesty bill dead in its tracks. Yesterday, in the same patriotic spirit, we stopped the bailout. The Bush-McCain-Obama steam roller can’t squash us after all. The Wizard of Oz is not all-powerful.

So what to do next?

Write to the McCain Campaign

http://www.johnmccain.com/Contact/

and then call the campaign HQ at

1-703-418-2008

Tell them McCain had better walk away from Andrew Cuomo fast because Cuomo is at the center of a scandal in the financial crash, was a pivotal player and will mar the campaign with a scandal McCain can’t afford right now when he is already losing. Send them a link to the Village Voice article, tell them this is all over the internet, and then make sure it is (send it to your list with a link to this Laigle’s Forum article)! Tell them McCain can’t rely on a conservative VP pick to lend him credibility. He has to actually talk the talk and walk the walk himself. We’re not buying the wishy-washy weasel words any more. And tell him for gosh sake, stop sounding like illegal immigration is A-ok. It’s not.

Then get in touch with your radio talk show hosts, including Rush (don’t bother with Hannity. He won’t jump on the band wagon until the scandal is too big to contain).

Link:

http://www.villagevoice.com/content/printVersion/541234

John McCain likes to brag about how he made people “famous” for doing things that cost the American people money.

Well, now it is our turn.  Tell his campaign we’ll make John McCain famous if he fails to walk away from this awful choice.

Why even help  the campaign of a guy who seems not to want to be president at times?

There is one very good reason to help McCain: Obama.

 

Obama can’t fix what his party broke

Obama can’t fix what his party broke

 

by Donald Hank

Before reading further, make sure you see this amazing video:

http://www.youtube.com/watch?v=H5tZc8oH–o

 

Did you see the debate last night?

Despite his relaxed exterior,and his pontifications on the economy, Obama was on the defensive, as well he should have been. McCain knew stuff he didn’t know, like the difference between a strategy and a tactic, or the names of presidents in Eastern Europe. After McCain rattled off these names and associated facts, Obama could only say “I agree with Senator McCain on this.” It was obviously all he could say. And then there was the gaffe about “taking out” Pakistan. And the misquote of Kissinger. Not a good night for Barack.

McCain was like a father lecturing to a son who hadn’t done his homework.

Again, Obama tried to make the claim that McCain is a laissez-faire capitalist who wants no regulation of the Fanny Mae and Freddy Mac, and, unfortunately, McCain muffed his chance to really explain the crash mechanism as well as Barack’s (and the Democrats’) primary role in the crash. Republican politicians seems to have little understanding of this mechanism, but it is all important for voters to know.

Folks, I had written a column on Bush’s role in the bank crashes that some thought was blasphemous, but what I said had to be said and no one else was willing to say it (that’s what Laigle’s Forum is all about, you know). And now we know the role Bush played in bringing down the banks. So is the bank crash all about Bush?

Not by a long shot, although he aided and abetted. It is more about Obama, his pals and his party. Much more.

I believe Bush’s role is related to his blind belief in New Age Christianity. As I have shown in various columns, evangelical Christians have been brainwashed by the Left into accepting what we might call “Christian socialism,” which includes teachings of globalism and surrender of sovereignty. Mainstream pastors now talk as though God had added an eleventh commandment: Thou shalt share the wealth. Indeed, my Brazilian colleague Olavo de Carvalho showed that the revolutionary mindset, which we now call the Left, started as a Christian heresy in the 13th century. Strangely, this heresy, which teaches that Christians must build the kingdom of God by eliminating social injustice, is now becoming the dominant doctrine in America, to our great peril, and the latest financial crash is its spawn. This heresy was first introduced into the American church by way of the far Christian Left (Jim Wallis, Tony Campolo) and was mainstreamed by preachers like Robert Schuller and later his protégées such as Rick Warren as well as supposedly “conservative” church leaders. If this sounds like blasphemy to you, you are no doubt a true believer in the emergent church’s New Age teachings. Beware.

But yes, the crash is really mostly about Obama and his party, which sabotaged American business.  Characteristically of the Left, they behaved like naughty school kids who made the spitballs and let other kids throw them. That’s how it works. There are always some smart aleck troublemakers who are highly popular and the other, shy kids with a good upbringing, want to imitate them. Pretty soon the kids with the good upbringing are the worst offenders in the schoolyard and the smart alecks are posing as angels, laughing up their sleeves as the poor suckers get punished.

Naughty boy Jimmy Carter (another Christian leftist, by the way) started things off by introducing the Community Reinvestment Act in 1977, which the Democrats passed. This was a typical Carter goody-goody initiative to bring housing to people who would only get housing if you twisted their arms and made them pay no more than they would pay to rent. You know, the group we used to be called poor credit risks. Now we call them the “underserved.”

The program was modestly dimensioned at first and ran with no major glitches until Clinton took it into high gear, demanding $1 trillion in sub-prime mortgages, with the semi-government bureaucracies Fanny Mae and Freddy Mac leading the charge. Banks that could not or would not comply were punished. Punished for implementing nothing other than good business practice, mind you! (Remember that government-business partnerships are a feature of fascism, hardly the American way).

Then Bush morphed into Clinton on steroids and all but doubled the percentage of subprime loans, but added the cherry to the sundae with his “zero down payment initiative.”

There were a few futile attempts to put the brakes on, notably Senator McCain’s attempt in 2005 to enact the Housing Enterprise Regulatory Act. The Democrats blocked it. Obama doesn’t want you to know any of this, and the networks and mainstream media are helping him hide it and sell his fiction.

In all fairness to Bush, he too had tried to rein in Fanny and Freddy, back in 2003, but ran up against the Democrats.

So while Bush must take some of the blame, because he did push for higher percentages of sub-prime mortgages and his administration did write the disgraceful “Zero-Downpayment Initiative,” he was, after all, just following the Democrats’ lead and, I believed, trying, in a bungling way, to be a good little Christian, guided, unfortunately, by principles of the Christian Left, which had subtly and gradually become the mainstream in America.

Bottom line: while Obama claims regulation is necessary and accuses McCain of not wanting it, it was McCain himself who tried to introduce regulatory legislation that would help remedy the damage done by the Democrats through over-regulation of the socialist kind.

Keep that in mind when you go to the polls.

 

 

Another video on the subject:

http://www.youtube.com/watch?v=usvG-s_Ssb0

Plenty of shame to go around

The Right grovels, the Left takes the spoils

 

We had previously shown how the Bush administration had so willingly run along with the Left’s agenda to provide affordable housing to minorities, demanding that 50% and more of Fanny Mae mortgages go to minorities, and even trying to foist a “no-downpayment” scheme on the public.

Today we look at how the other side of the aisle, including Barack Obama, shamefully benefitted from Fanny and Freddy’s donations.

It is clear from all reports that, while Bush and RINOs groveled to ingratiate themselves with the kingpins of Big Mortgage, these kingpins were pushing for more power to the Left.

The easiest explanation why the Republicans want to run along with this shameful process is that there seems no longer to be any meaningful difference in ideology between the two parties.

We now have a one-party system, and it is up to American ingenuity to destroy this evil empire before it destroys us.

Your fury is ignited and is growing. It may be sufficient to turn enough Americans against the elites who brought on this financial crash to elect a third party candidate.

Not much is known about our most viable alternative, Chuck Baldwin, but he does have some surprisingly powerful endorsements, such as Jerome Corsi.

They say he has no government experience.

Neither did George Washington.

Are you angry enough to ditch the Republicans who helped mightily to bring down the American economy and are now poised to socialize the American financial market?

Do you dare to dream?

Another alternative is to vote for McCain and then be prepared to fight him tooth and nail on issues like finance and illegal immigration for the next 4 years. We have not found the new Reagain, but have you ever considered that you, the American people, can be the Reagan you long for? Think about it.

At any rate, you can start by opposing the bailout like you opposed the amnesty bill. If you give it your best shot, that miscreant legislation will fail.

http://conservativehq.com/active-petitions/petition-to-stop-the-bailout/

Donald Hank

 

 

From the Heritage Foundation:

 

Morning Bell: A Vicious Cycle of Their Own Making

 

“But Fannie and Freddie pushed back hard, turning to friends on the left for protection. Former Walter Mondale and Barack Obama campaign adviser James Johnson led a fierce lobbying campaign to fight reform of Freddie and Fannie. Clinton administration OMB director Franklin Raines told investors when he was Fannie Mae CEO in 1999: “We manage our political risk with the same intensity that we manage our credit and interest rate risks.” Fannie and Freddie’s lobbying power over the left continues to be strong to this day. According to the Center for Responsive Politics, the top three recipients of campaign donations from Freddie and Fannie’s PACs and employees are all Democrats. From 1989 through today, Sen. Chris Dodd received $165,400, Barack Obama $126,349, and John Kerry $111,000. The Washington Post concludes: ‘Blessed with the advantages of a government agency and a private company at the same time, Fannie Mae and Freddie Mac used their windfall profits to co-opt the politicians who were supposed to control them.'”

 

http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html

Update: Fannie Mae and Freddie Mac Invest in Lawmakers

Published by Lindsay Renick Mayer on September 11, 2008 11:26 AM | Permalink | Comments (22)

When the federal government announced two months ago that it would prop up mortgage buyers Fannie Mae and Freddie Mac, CRP looked at how much money members of Congress had collected since 1989 from the companies. On Sunday the government completely took over the two government-sponsored enterprises, and we’ve returned to our data to bring you the updates, this time providing a list of all 354 lawmakers who have gotten money from Fannie Mae and Freddie Mac (in July we posted the top 25). These totals are based on data released electronically from the FEC on Sept. 2 and include contributions to lawmakers’ leadership PACs and candidate committees from the floundering companies’ PACs and employees. Current members of Congress have received a total of $4.8 million from Fannie Mae and Freddie Mac, with Democrats collecting 57 percent of that. This week we also wrote about how much money lawmakers had invested of their own money in the companies last year–a total of up to $1.7 million.

 ….