In the early to mid 1930's the most educated, cultured, liberal country in Europe VOTED to give up their rights and elected the NAZI party and Adolf Hitler (well, sort of. Hitler lost when he initially ran for President, but several years later, after being sworn in as Chancellor, the Nazi party won 43.9% of the parliamentary vote and the rest is history) and willingly gave up their civil, and human, rights. Why? Because their economy had collapsed, and the NAZI's represented "Change", complete with scapegoat, political theatre, and theme song.
Why is it that people think it can't happen here? Everyday we are bombarded by calls for the government to "Do Something (even if its wrong)". And just "WHO" in government do you think is going to do the "SOMETHING"? You can vote for Mayor, President, Councilman, Congressman, Sheriff, Dog Catcher... but you can't vote for your favorite regulator.
Who is watching these $%#$$#! guys, anyway? And if they "DECIDE" you have violated a regulation, who made them Judge, Jury, and Executioner? Baloney, you say. "You can have your day in court!" Do you know ANYBODY that thinks our legal system works in a fair and balanced way for the average citizen? The best definition I have heard for a Jury is:
"Twelve people brought together to decide who has the better lawyer(s)"; and, "Twelve people brought together to determine who has more money to fund their legal team".
Maybe when 2 Goliath's head to Court the system works, but for John Q. Public? Give me a break!
When did we give up our republican (small "r") democracy, anyway? Is the President of the United States now the "Regulator in Chief"? The Federal Communications Commission, The Environmental Protection Agency, The Federal Trade Commission, etc... these agencies are run my APPOINTEES, not elected officials, and are populated by the kind of folks you can't meet anywhere else besides the Department of Motor Vehicles (one of my PERSONAL favorites).
And whenever a regulatory agency catches too much heat from the U.S. Constitution you know what the powers that be do to address said heat? Give the agency Law Enforcement Powers. Do you know what an agency with Law Enforcement Powers does to justify their budget? They arrest "Evil Doers", that's what they do, and they are not too picky about the "Evil" either (think Eliot Spitzer and Rudy Giuliani. A little fun fact to know: Giuliani arrested guys in their offices on Christmas Eve, and dragged them down the street for politically motivated "perp walk". Guess how many of his "convictions" held up on appeal? ZERO. Arrests make the Front Page in Bold Type, Acquittals make page 12 under Lost and Found). Just take a hard, thoughtful, non manipulated by the media look at the Texas Department of Children & Family and their raid against the "Polygamists and Child Rapists" 3 months ago.
Take the families of ANY 475 kids. In that data subset you will find child abusers, drug dealers, rapists, murderers, etc... Unfortunately, the Texas Dept. of Children & Families did not find a whole lot of that going on, no drinking, drugs, violence, etc... Underage sex?? None yet, and going by teen mother and abortion data, nothing like the subset of ANY inner city grouping of 475 kid's families under any circumstance... so they had to work the public and the media with stories of forced marriages, child rape, etc... to justify destroying the peace and well being of 475 kids and their families. And they had folks convinced, too... but under the harsh light of day, the Dept. of C & F lost both the initial court case AND the appeal - but not before traumatizing the children and demonizing their parents. Maybe you don't like Fundamentalist Christians. Maybe you don't like Fundamentalist Jews, or Muslims. I am rather secular myself, and reject most of their dogma out of hand. So what? But if you give some self-important REGULATOR (or worse) the budget, they are going to use that budget - and no ELECTED official of the PEOPLE is going to be following behind them doing a cost/benefit analysis of their behavior.
Now think about giving a bloody BLANK CHECK to the U.S. Treasury and unparalleled regulatory power to the Federal Reserve to "solve" the housing/mortgage crisis. Does that sound like a good idea? How long before we have the Democratic Socialist Party calling the shots? Or the Christian Republican Socialist Manifesto (hey, they got a Christian Democratic party in Germany)?
The Fed IS the problem! Fannie Mae and Freddie Mac ARE the problem. Here is the link to Congressman Ron Paul's website. Unfortunately for America Ron Paul is not half black Democrat, or half something (spare me your "racist" accusation, my wife and children are most definitely not "White". I loved Dmitri Orlov's observation that America's politically correct decry racism, yet nearly always marry within their race), or our next President might have actually accomplished something besides "Change".
You are going to get "Change" alright. Spare "Change" from a lifetime of working and saving blown to pieces by the very guy that sat atop the pinnacle of capitalism while his firm baked the mortgage disaster to a perfect "WELL DONE". And this Valentine's Day massacre of what is left of the financial system will be burying its dead long before the Agent of Change or the Aged War Hero get their hands on the train set.
Fannie Mae and Freddie Mac are not Too Big To Fail... They are Too Big To Save!
Mentatt (at) yahoo (d0t) com
13 comments:
As a member of the "regulators" (I work for the Feds but not in regulating), we all know by now Obama is going to win, and once in office, he won't be able to do a damn thing -- we're too far gone financially. But demonizing and cutting the nuts off the regulators is what gave us the housing debacle to begin with! I for one was very happy there was a "HUD-1 form" guiding the purchase of my house, and don't get me started on need for testing the water supply. Mr. Bush and his anti-government loonypusses (the people you seem to admire) neutralized the Federal (and state) banking regulators all along, so they couldn't stop stupid ideas like "unaffordable adjustable mortgages." I'm used to being hated as a Fed, but I know in the back of my mind, for all the blowhards who blame "government," I know there are 100 million people here who want done what we do, nonsensical or not. Stop complaining and fill out your forms! - you might live longer! :)
Dear Anonymous:
That is the "regulator" point of view.
Mine is the "regulated" point of view.
FYI - I hold NO admiration for the Bush Administration. These guys have brought us to ruin, and probably ended the REpublican Party. Maybe that is a good thing. Maybe it isn't.
I think the question is more:
HOW MUCH regulation? Take a good look at our deficits - state, federal and trade. Clearly, we can't afford the regulations we have.
Go to Fannie Mae or Freddie Mac's web site. Read their mission statement.
Now I ask you: Did they accomplish the "keep housing affordable" mission? PUHLEAZE!
Go to the Federal Reserve Web site. Read their mission statement.
Did they maintain the value of the currency? Sorry, NAFC. A stamp was 5 cents in 1968 and 44 cents in 2008, a loss of nearly 90% in the value of the currency in just 40 years.
I can continue with the Department of Energy, Education, FTC, etc...
Do we need to regulate the water supply? Of course. The question becomes this:
Who performs the cost/benefit analysis on the regulatory function?
The bloody regulator!! You don't see a PROBLEM with that?
I very much appreciate your comments and would very much like to hear from you by email.
Greg
One thing more...
Did you read the first paragraph of the post? MILLIONS of German citizens wanted Adolf Hitler and the Nazi party to lead them.
I think it unfair to compare American regulatory personnel to Nazi's. I do not mean to draw that comparison.
I mean to point out that the MASSES have proven very willing to give up their civil, personal, and human rights for reasons yet unclear, but once the those rights have been abrogated, the usuperers were very disinclined to give up their new found power.
Might I suggest some Libertarian reading? Email me if you are so inclined, though I doubt it. To be fair, if you were of a Libertarian bent you would not be working in government.
Let us talk some more.
Good luck!
Some author said that when fascism comes to America, it'll be draped in the flag and carrying a cross. And the type of economic problems the US is about to experience are exactly the type that can bring a hitler or Mussolini (with more of a 'down home USA' feel, of course) to power.
The US needs to do something about two things:
1) Trade and budget deficit. In recent history, whenever a country has these 2 things, it leads to currency devaluation. So that means the conventional wisdom of making the trade-off of shipping manufacturing jobs overseas in exchange for cheap goods at wal-mart should be seen for what it is, a pyramid scheme and a Faustian bargain. Also, bush's tax cuts for those making over $500K/year should probably go, too.
2) End dependence on foreign oil. That means nuclear power, probably a nuke plant in every city with a population over, ooh, 100,000. Use pebble-bed reactors, which are throttled with heat, therefore no "china syndrome". That and solar/wind etc. Use all that unoccupied, largely-uninhabitable desert around Vegas to power Vegas, for example.
Peak oil is coming, whether it's now, in 5 years, or in 50 years. The sooner the US stops being a net importer of oil, the easier it'll be. Might as well get started.
Never mind the price of gas. Europe's had the equivalent of $8/gallon gas for at least a decade now, and it hasn't been the end of the world. But consider this: for every calorie of food grown on a north American farm, at least one calorie in petroleum or petro-byproducts (fertilizer, herbicide, pesticide, etc) is used. So we are in a very real sense, eating oil.
(From the bureaucrat from earlier):
Germany got Hilter because they had the same inflationary/screwed up economy that I and (you) and others are trying to stop from happening (via yelling). They got Hitler for economic reasons (the Jews were just convenient scapegoats). We could easily end up with something similar here in the worst of times (we got Nixon after all :) ). Also, as a numbers man, you know very well that 80% of the Federal budget is Social Security, Medicare, Medicaid, Interest on the National Debt and Defense. The people DEMAND this spending -- we like caring for old people & bombing foreigners. We can't afford it, but we LOVE it. So we borrow, and that is causing the dollar to drop. The spending will stop -- we'll have no choice, as you have said
Dear Anonymous Regulator:
Thank you for your response.
The runaway increase in housing prices was caused by the easy credit from Fannie Mai and Freddie Mac.
The runaway increase in the U.S. government spending on the things we love, bombing people, medicare, social security, the U.S. petroleum protection forces (the DOD), etc... was caused by easy credit coming back from our trading partners,
Peak Oil is going to stop this cycle. How far and how fast we decide to head off that cliff IS up to us.
Nazism is generally considered by scholars to be a form of fascism, and while it incorporated some elements from the political left, it formed its most solid alliances on the political right. Among the key elements of Nazism were anti-parliamentarism, ethnic nationalism, racism, collectivism, eugenics, antisemitism, opposition to economic liberalism and political liberalism, anti-communism, and totalitarianism.
tvjThe problem here is the predatory lending and it is a regulatory issue. When loan agents offer to lower the payment on ones “expensive” conventional loan with the teaser rate on a interest-only or a negative amortization loan, ones ability to see through their toxic-benevolence is a direct function of ones intelligence and by definition 50% must be below average. With the level of predatory lending out there the interest rate resets would have caused a rescission even without the energy crisis. They maliciously hurt their customers when they gave them loans they couldn’t afford, probably even more than the typical mugger in a dark parking lot would have.
After we set up social security large families decreased in popularity because they weren’t needed, the government would tax someone else’s children to provide your support. When there was 16 payees per retiree it worked great; today at 3.3 per retiree it doesn’t work so well, and sometime in the near future soon it’s toast.
Excepting women’s suffrage it’s the dumbest thing we have done.
Some great comments here, well said gents.
Greg, I work for the federal government (D.O.D. in fact), and formerly worked for many years for the USDA, but am a civil Libertarian (what used to be called a Jeffersonian liberal). There is not necessarily any cognitive dissonance to be found in such.
Also, from a devil's advocate perspective, there is no inherent superiority to libertarianism over any of the other ideological positions espoused or supported. To think otherwise smacks of the highest form of hubris and arrogance (i.e. authoritarianism at its finest). Be cautious when making such judgments, as you are a product of your own experiences (and others are likewise).
Oil Shale, Offshore drilling, Solar, Nuclear, Coal to oil, etc., etc. All of these are immensely, obscenely profitable today. Right now.
Every barrel of imported oil that any of these displaces helps to soften the blow as we fall on our collective butt. Why are we getting virtually none of these? Simply, the regulatory climate in this country is so capricious and contrary to our national interest that no one with a brain larger that a pea would take the risk.
The bastards printing worthless money, as you so clearly point out. Beyond that, they are doing their damnedest to prevent anyone from giving it value.
None of the alternative fuels previously mentioned are profitable -- that's why no one is doing them. There are no good alternatives to oil/gasoline and diesel, or someone would have brought them to market and generated profits. Oil is here to stay for everyone who can afford its products (gasoline and diesel specifically), and those prices are going to go up.
Most of the afore-mentioned alternatives are also, at best, net energy neutral.
State of the art coal-to-oil (FTL) conversion, for example, actually squanders 40-50% of the initial energy in the coal, which is why it only ever made sense for the Nazis and (embargoed) Apartheid South Africa, both of whom were so desperate for liquid transport fuel that 'anything goes'.
You'd be better off just burning the coal for electricity.
Oil shale has never made economic sense, no matter the price of a barrel of oil, and never will. The fossil fuel inputs required to extract and refine it into something usable will always exceed the finished product's net worth.
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