A Ripe Moment - The Party that Wercked America

[Joseph Burkeson, CMI]

A Ripe Moment
By James Howard Kunstler


It turns out the real hurricane blew through Wall Street last week, not Galveston. This morning, Manhattan is strewn chest-deep with the debris of banking and at this hour (seven a.m.) nobody knows how far, deep, and wide the damage will spread. The fear, of course, is that we are witnessing a classic "house-of-cards" or "dominos-in-a-row," situation, and that the death of Lehman Brothers and Merrill Lynch will cascade into a generalized collapse of the entire consensus of value that supports mediums of exchange.

At least one thing ought to be clear: this has happened due to the negligence and misfeasance of the regulating authorities, namely the Republican Party, and that now all the hoopla surrounding Sarah Palin can be swept away revealing that group to be what they actually are: the party that wrecked America. I hope one or two Barack Obama campaign officials are reading this blog. You must commence the re-branding of the opposition right now. The Republicans must be clearly identified as, the party that wrecked America.

Many things happening this week will be interesting to see and hear, but just now an outstanding question is how on earth can the Bank of America buy Merrill Lynch for $50 billion after assuming the liabilities of the tarbaby known as Countrywide? But that little detail may be lost in the din as other banks and bank-like organizations start crashing like sequoia trees in a national forest.

I wish I knew whether this extravaganza of ruin might settle the question as to whether America goes into hyperinflation or implacable deflation, but the net effect is that money is leaving the system in big gobs. And if not money per se, then the idea of money as represented in certificates, contracts, counter-party positions, and gentlemen' agreements. This is the day that America finds itself a much poorer nation. The capital we thought was there, is gone.

A lot of it was actually translated over the years into Hamptons villas, Gulfstream jets, and other playthings that will now go up on Ebay or some equivalent as we turn into Yard Sale Nation in a general liquidation of remaining assets. Of course, the trouble in a situation like this, where absolutely everybody is trying to pawn off assets, is that there are very few buyers on the scene, so the prices of all these things go down, down, down. Everything is for sale and nobody has any money.

This was essentially the state of things in the Great Depression of the 1930s, and the only escape from that turned out to be the mobilization for war. And in the aftermath of that terrible war, we were the only industrial nation that hadn't been bombed to rubble. What's more, we had a very handsome supply of industrial world's primary resource, oil, at our disposal. So we spent the next thirty years making oodles of things and selling them to people in other lands (lending them the money to buy), until these nations were back on their own feet and solvent. And after 1975, the industrial club picked up a bunch of new members and they all began to clean our clock.

So, as our industrial base waned, and our factories got old and brittle, and our labor force was steeply under-bid by cheaper labor forces, we embarked on a quest for "the new economy." This was represented in successive turns as the information economy, the consumer economy, the high-tech economy, et cetera. They were all ruses, aimed at concealing the truth -- which was that we had become a society no longer producing things of value, no longer generating real wealth. The final act of this farce has been the so-called "financial industry."

That "industry" turned out to be most earnestly devoted to the production of complex swindles. They were so finely engineered that it took twenty years for the swindles to stand revealed, and they were cleverly hitched to the primary thing that the American public vested its identity in: house-and-home. Thus, much of the public finds itself in very real danger of becoming homeless and broke.

We generally recognize that some wicked-massive transfer of wealth occurred in the process of the mortgage fiasco, but it remains to be seen whether any residue of this wealth can actually be retained, as represented by currencies, contracts, and supposed securities. The wholesale settling of debt now underway may leave an awful lot of this stuff with no value.

We should be frightened by the political implications of this Great Implosion of presumed wealth. Some group of somebodies will have to clean up this mess. Moving toward a major election, it is hard to imagine the American people giving the clean-up task to the very group that created the mess -- no matter how many cute little faces Sarah Palin can make on TV. Both parties have so far managed to ignore the gathering crisis of banking and money, but they can't ignore the sequoia trees crashing down around their ankles and shaking the earth they stand on.

At issue now will be the question of legitimacy in all its human social dimensions. Is our money legitimate? Is the authority of our elected officials legitimate? Are our values and ideas legitimate? These are the things that will determine what kind of future we find ourselves in.

So, to begin this process, and to clarify the situation, I urge readers of this blog to identify the Republican Party by its new brand-name: the party that wrecked America. At least, then, we can reinstate one cardinal value into the juddering structure of what we claim to believe: that actions have consequences, that you can't just swindle and loot a society and walk away with the swag.

Spread the word, change the tone of this campaign, and keep posted. This will be a momentous week.

[Michael Larson]

NOT!

Serious misrepresentation of history.

Do some research and see who has fought reform in the banking industry especially Freddie mac and Fannie mae.

[John McKenna]

The Democratic majority in the congress failed to stop the known corruption of Fannie
and Eddie (along with the rest), despite the legislation put forth by McCain to stop it
....while Obama was sucking up the money from Fannie and Eddie...

Obama One of Leading Recipients of Fannie/Freddie Political Contributions
While McCain was trying to reform the corruption.

September 11, 2003

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago....

FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005

The United States Senate
May 25, 2006

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation.

If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

Alas, thanks to the Democrat Party and the special interests of the left, both of these attempts to reform the banking system were still born.

http://sweetness-light.com/archive/b...ousing-finance

But isn’t it funny how our watchdog media have missed
these two stories? Hmmm.

BUT AT THE SAME TIME ...


Obama One of Leading Recipients of Fannie/Freddie Political Contributions

The top three U.S. Senators getting big Fannie and Freddie political bucks were democrats and number two is Senator Barack Obama. Now, remember, he has only been in the Senate four years but still managed to grab the number two spot ahead of John Kerry...

http://wizbangblog.com/content/2008/...tributions.php

This was all confirmed by Rush Limbaugh today.. Funny.

McCain was trying to reform the corruption, while Obama was milking it for big bucks.
and... the Democratic majority in the congress failed to stop the known corruption for
the last two years, even when pushed and warned to.

Joe B... loves Obama.

[Brian H. Chesser]

Is it me or is Joe b. a socialist? In his rant I see class envy and anti-capitalism along with other maxist ideas.

[John McKenna]

Originally Posted by bchesser

Is it me or is Joe b. a socialist? In his rant I see class envy and anti-capitalism along with other maxist ideas.

No.. he hates the war and will use any tool available to fight it.
He really despises Obama and would much rather vote for Ron Paul.

That's all... the rest if just a tennis match to him..

[William J. Decker]

He is a thrid party losertarian, not a serious political observer.

Hope this helps;

[klott]

Nyet, Nyet comrade Joseph, you mean the party who is wrecking America, your party, the Communist Peoples Party.

[klott]

Originally Posted by bchesser

Is it me or is Joe b. a socialist? In his rant I see class envy and anti-capitalism along with other maxist ideas.

It is not just you.

[Michael Larson]

The Democrats are Lying to you.

Congress Tries To Fix What It Broke

By INVESTOR'S BUSINESS DAILY | Posted Wednesday, September 17, 2008 4:20 PM PT

Regulation: As the financial crisis spreads, denials on Capitol Hill grow more shrill. Blame an aloof President Bush, greedy Wall Street, risky capitalism — anybody but those in Congress who wrote the banking rules.
Read More: Election 2008 | Iraq

Such denials won't hold against the angry facts banging on their doors. The only question is whether the guilty party can keep up the barricade until Election Day.

A visibly annoyed House Speaker Nancy Pelosi rejected suggestions that Democrats share blame for the meltdown. "No," she snapped at reporters who dared ask.

Stick to our narrative, she scolded: The bursting of the housing bubble was another story of market failure and deregulation.
"The American people are not protected from the risk-taking and the greed of these financial institutions," she said, while calling for investigations of the industry.

Only, the risk-taking was her idea — and the idea of all the other Democrats, along with a handful of Republicans, who over the past 30 years have demonized lenders as racist and passed regulation after regulation pressuring them to make more loans to unqualified borrowers in the name of diversity.

They were the ones who screamed — "REDLINING!" — and sent banks scurrying for cover in low-income neighborhoods, where they have been forced to lower long-held industry standards for judging creditworthiness to make the subprime loans.

If they don't comply, they are threatened with stiff penalties under the Community Reinvestment Act, or CRA, a law that forces banks to make home loans to people with poor credit risks.

No fewer than four federal banking regulatory agencies are responsible for enforcing the law. They subject lenders to racial litmus tests and issue regular report cards, the industry's dreaded "CRA rating."
The more branches that lenders put in poor neighborhoods, and the more loans they make there, the better their rating. Those lenders with low ratings can not only be fined, but also blocked from mergers and other business transactions needed to expand.

The regulation grew to monstrous proportions during the Clinton administration, obsessed as it was with multiculturalism. Amendments to the CRA in the mid-1990s dramatically raised the amount of home loans to otherwise unqualified low-income borrowers.

The revisions also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages. The changes came as radical "housing rights" groups led by ACORN lobbied for such loans. ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama.

HUD, in turn, pressured Fannie Mae and Freddie Mac to purchase more subprime mortgages, and Fannie and Freddie, in turn, donated to the campaigns of leading Democrats like Barney Frank and Pelosi who throttled investigations into fraud at the agencies.

Soon, investment banks such as Bear Stearns were aggressively hawking the securities as "guaranteed." Wall Street's pitch was that MBSs were as safe as Treasuries, but with a higher yield.

But they weren't safe. Everyone in the subprime business — from brokers to lenders to banks to investment houses — absolved themselves of responsibility for ensuring the high-risk loans were good.

The mortgage lenders didn't care, because they were going to sell the loans to other banks. The banks didn't care, because they were going to repackage the loans as MBSs. The investors and traders didn't care, because the MBSs were backed by Fannie and Freddie and their implicit government guarantees.

In other words, nobody up and down the line — from the branch office on main street to the high-rise on Wall Street — analyzed the risk of such ill-advised loans. But why should they? Everybody was just doing what the regulators in Washington wanted them to do.

So everybody won until everybody lost, including the minorities the government originally mandated the banks to serve.
The original culprits in all this were the social engineers who compelled banks to make the bad loans. The private sector has no business conducting social experiments on behalf of government. Its business is making profit. Period. So it did what it naturally does and turned the subprime social mandate into a lucrative industry.

Of course, it was a Ponzi scheme, because they weren't allowed to play by their rules. The government changed the rules for risk.
In order to put low-income minorities into home loans, they were ordered to suspend lending standards that had served the banking industry well for centuries. No one wants to talk about it, so they just scapegoat Wall Street. Even John McCain has joined the Democrat chorus on this.

The FBI is now investigating 24 large mortgage lenders for alleged abuses. But who will investigate the pols and the lobbyists and the community agitators who made the bad decisions that ultimately forced businesses to make their bad decisions?

[Joseph Burkeson, CMI]

[quote=jmckenna1;413448
That's all... the rest if just a tennis match to him..[/quote]

I do like the game.

[John McKenna]

Your serve...

[Brian H. Chesser]

Mike great article and in simple to read words for you comrades out there. Everytime the federal government acts on our behalf they always make our lives harder. Supply and demand (our free market system) works best and to the benefit of all when it is only watched and not directed by our government.

Oh and can anyone name one area outside the military where the federal goverment actually does a comparatively good job. If you say education consider yourself slapped on the back of the head.

[Joseph Burkeson, CMI]

Originally Posted by bchesser

Mike great article and in simple to read words for you comrades out there. Everytime the federal government acts on our behalf they always make our lives harder. Supply and demand (our free market system) works best and to the benefit of all when it is only watched and not directed by our government.

Oh and can anyone name one area outside the military where the federal goverment actually does a comparatively good job. If you say education consider yourself slapped on the back of the head.

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin

[William J. Decker]

Originally Posted by bchesser

Mike great article and in simple to read words for you comrades out there. Everytime the federal government acts on our behalf they always make our lives harder. Supply and demand (our free market system) works best and to the benefit of all when it is only watched and not directed by our government.

Oh and can anyone name one area outside the military where the federal goverment actually does a comparatively good job. If you say education consider yourself slapped on the back of the head.

Federal highway system.
Coast Guard (Dept. of Transportation, not the military, usually)

That's about it.

[William J. Decker]

Originally Posted by jburkeson1

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin

Thus, the Federal Reserve. The "private banks" to not control the issue of money, the Fed and the Treasury does.

Hope this helps;