Economy

DOW up almost 900 points

Drew McKissick — Tue, 28 Oct 2008 19:17:56 -0400

The market was up over 11% today...an amount by which, when it went down, all the folks in the media announced that, "over a trillion dollars of wealth was lost today...". How many saw - or expect to see - the reverse?

"Over a trillion dollars of wealth was added to American's pocket-books today, rising by the second largest point gain in market history....and in other news, the price of oil is down to 63 dollars a barrell - over 60% lower than where it was early this summer..."

Yea, I'm not looking for it either.

Common sense at the Washington Post

Drew McKissick — Mon, 20 Oct 2008 16:47:27 -0400

I have no idea what they're smoking over at the Washington Post, but PLEASE, get them some more! (But it does seem like a sign of the end of times...)

Check out their take on the cause of the financial mess...

IS THIS the end of American capitalism? As financial panic spread across the globe and governments scrambled to contain the damage, reality seemed to announce the doom of U.S.-style free markets and President Bush's ideology. But this is wrong in two ways. The deregulation of U.S. financial markets did not reflect only the narrow ideology of a particular party or administration. And the problem with the U.S. economy, more than lack of regulation, has been government's failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets.

It's true that the Bush administration has stood for light regulation of capital markets. But it did not invent this approach. By the middle of the last decade, experts across the spectrum believed that U.S. financial institutions faced outmoded restraints on their ability to innovate. Thus, the Clinton administration, supported by then-Federal Reserve Chairman Alan Greenspan, refused to tighten regulations on financial derivatives, memorably dubbed "financial weapons of mass destruction" by Warren Buffett. The 1999 repeal of the Glass-Steagall Act, a Depression-era law separating commercial banking and investment banking, passed with overwhelming bipartisan support in Congress and was signed into law by President Bill Clinton.

We'll never know how this newly liberated financial sector might have performed on a playing field designed by Adam Smith. That's because government interventions of all kinds, from the defense budget to farm supports, shaped the business environment. No subsidy would prove more fateful than the massive federal commitment to residential real estate -- from the mortgage interest tax deduction to Fannie Mae and Freddie Mac to the Federal Reserve's low interest rates under Mr. Greenspan. Unregulated derivatives known as credit-default swaps did accentuate the boom in mortgage-based investments, by allowing investors to transfer risk rather than setting aside cash reserves. But government helped make mortgages a purportedly sure thing in the first place. Home prices seemed to stand on a solid floor built by Washington.

Government support for housing was well-intentioned: Homeownership is a worthy goal. But when government favors a particular economic activity, however validly, it must seek countervailing control to ensure the sustainable use of public resources. This is why banks must meet capital requirements in return for federal deposit insurance. Congress did not apply this sound principle to Fannie Mae and Freddie Mac; they were allowed to engage in profitable but increasingly risky activities with an implicit government guarantee. The result was that taxpayers had to assume more than $5 trillion of their obligations. ...

The new capitalist model that emerges from this crisis must operate according to more consistent principles. The Fed should set interest rates with the long-run value of the dollar in mind. Government must be more selective about manipulating markets; over the long term, business works best when it is subject to market discipline alone. In those cases -- and there will and should be some -- in which government intervenes on behalf of social goals, its support must be counterbalanced with taxpayer protections and regulation. Government-sponsored, upside-only capitalism is the kind that's in crisis today, and we say: Good riddance.

Amazing. The only thing wrong with this piece is that it took them until two weeks before the election to write it.

Exit question: Since this actually appeared in the Washington Post, will the rest of the folks in the media pick up on it? Doubtful.

Economics and Politics

Steve McCullough — Wed, 08 Oct 2008 14:13:40 -0400

The fact is most people don't understand basic economics. The Democrat Party, supported by the liberal media, has recently been advancing the canard that the current financial crisis is the fault of the Bush Administration and Republicans. And most polls indicate that the majority of Americans have accepted this story line. But what is real and what is simply political propaganda? First, it is important to understand that the very groundwork for today's mortgage crisis is rooted in the Community Reinvestment Act (CRA) signed into law by President Jimmy Carter in 1977. The stated purpose of the act was to encourage financial institutions to meet the credit needs of low- and moderate-income neighborhoods. Federal oversight by government agencies meant that local banks had to prove that they were providing loans to residents in these neighborhoods who might otherwise be unable to qualify. However, vague guidelines created confusion within the financial community about compliance with the law. Federal agencies required complex record keeping by local lending institutions, some contained in public records and some in confidential records. In 1989, under pressure from local community organizing groups, the CRA was amended to require public release of all records. The community groups, now armed with more information, began demanding that more loans be made to low- and moderate-income applicants and that the financial institutions be held more accountable to providing these loans. Fast forward to 1992 when new legislation forced Fannie Mae (FMAE) and Freddie Mac (FMAC) to buy a substantial number of sub-prime loans from the local financial institutions. Prior to 1992 the lending institutions had to accept the risk of making risky loans because FMAE and FMAC would not purchase sub-prime loans that did not meet their guidelines. From 1992 onward the lending institutions could make money on originating the loans while pushing the sub-prime loans onto Freddie and Fannie. The number of sub-prime loans ballooned dramatically and so did the financial risk. In the mid-1990's signs of trouble were becoming too obvious to ignore. In 1994, President Bill Clinton tried to implement new regulations on FMAE but was strongly apposed by Barney Frank, the ranking Democrat on the House Financial Services Committee. The leaders of FMAE included CEO Franklin Raines and Herb Moses who was hired in 1991 and was the homosexual paramour of Barney Frank. Moses and Frank lived together throughout Moses' seven-year tenure at FMAE. Although Frank now blames Republicans for the failure of Fannie and Freddie, for years he consistently blocked efforts by Republicans to regulate the two agencies. Former president Clinton has rebuked Democrats for their opposition to the oversight efforts by the Republican-controlled congress during his presidency. "I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress and by me, when I was president, to put some standards and tighten up a little on Fannie Mae and Freddie Mac," Clinton said recently. Clearly, the foundation for today's mortgage meltdown was laid by Democrats during this time. Charges of mismanagement and accounting irregularities by the heads of FMAC and FMAE led to a proposed new regulatory agency to oversee the two agencies by President George W. Bush in 2003. The proposed legislation went nowhere thanks to Barney Frank and his fellow Democrats. For years liberal Democrats, led by Frank and Senator Chris Dodd, leading Democrat on the Senate Banking Committee, denied that FMAE and FMAC were taking huge risks that could lead to a financial crisis. Frank asserted that, "These two entities - Fannie Mae and Freddie Mac - are not facing any kind of a financial crisis." His colleague, Representative Melvin Watt, Democrat from North Carolina, agreed. "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing," said Watt. Matters got even worse in 2004 when HUD (Department of Housing and Urban Development) increased the percentage of sub-prime loans written. According to Republican lawmakers, a financial meltdown was imminent. In 2005, a bill sponsored by Chuck Hagel and co-sponsored by Elizabeth Dole, John McCain, and John Sununu, all Republican senators, was introduced in congress. The bill got tabled in the Democrat-controlled Committee on Banking, Housing, and Urban Affairs and died there. Despite many warnings from Alan Greenspan and the Bush administration, Democrats continued to deny any problems with the two agencies and pushed for Fannie and Freddie to provide even more sub-prime loans and more lenient screening of loan applicants. Why were Democrats so insistent on providing these risky loans? For one, Democrats count on low- to medium-income homeowners for their votes. Also, leading Democrats have been recipients of large campaign donations from employees and political action committees of Fannie and Freddie. It has recently come to light that Chris Dodd has received more than $165,000 (the largest recipient) and presidential candidate Barack Obama has received more than $125,000 (the third largest recipient). Franklin Raines made more than $90 million while he was head of FMAE and is now a financial consultant to Barack Obama. As they say, "follow the money." Now, in order to deal with a government-created problem, we have been saddled with a government-created "solution". I doubt the $700+ billion dollar bailout will correct the financial problems we face today. There will be more bailouts to come and the taxpayers who were fiscally responsible will be called upon to save those who were not. Free-market style solutions are the real answers to the problem. Anti-capitalists take delight in the current situation but they blame the wrong party. The market would work if we could get government out of the way. Democrats do not understand this. Government is the problem - not the solution.

Liberal housing policy chickens coming home to roost

Drew McKissick — Mon, 06 Oct 2008 15:01:25 -0400

Let's get one thing straight. The government and its misguided housing policies caused our current financial mess. And, as a result, the government should help fix it.

That said, exactly "what" should have been fixed, "how" and for "how much" are the right places to focus our attention. But that doesn't mean we shouldn't make sure everyone knows exactly how we got in this mess.

The origins lie in the Clinton Administration's misguided attempt to raise the percentage of homeowners in America by forcing banks to give loans to people with, shall we say, less than stellar credit, (those "sub-prime" mortgages you keep hearing about).

Stock market down

Drew McKissick — Thu, 02 Oct 2008 16:04:05 -0400

This is just too rich. Remember how we were told that the market tanked 777 points the day after the House voted "no" on the bailout this week? And how they blamed (primarily) House Republicans for killing the deal...and erasing a trillion dollars worth of wealth... (More than the bailout would have cost us, we were told).

Well, the day after the Senate voted to approve an even more costly version of the bailout, the market has gone down 359 points.

So will we now hear that the Senate's action helped drive the market down? That the market went down because the bill was so overloaded woth pork??

Yeah, right.

The point is that you cannot and should not do this kind of legislation under the gun, let alone allowing your actions to be dictated by daily tick-tock of the emotion driven stock market.

The REAL scandal

Drew McKissick — Thu, 02 Oct 2008 15:09:46 -0400

As I've said before, the bad thing about this financial "crisis" is that it's attracting all the media attention away from the real scandal that they don't want to cover. That being the crooks at Fannie Mae and Freddie Mac...and their buddies in the Democrat party.

Taxpayers for Truth have a new YouTube video out today which does a good job of comparing this scandal to the ones we were treated with wall-to-wall coverage of, (Enron and Tyco, etc.). Bottom line, dozens of times larger.

Click the video below, or go here: http://www.youtube.com/watch?v=KQtq77RQRf0

Nothing like have Democrat friends in high places, (like Congress and the media).

Tell Congress "NO" on the bailout!

Drew McKissick — Thu, 02 Oct 2008 12:25:07 -0400

Last week, conservatives all across America flooded Congress with the demand that they oppose the bailout, and the House complied. But now the Senate has "rescued" the bailout...and the pressure is on the House again.

The Senate let conservatives down yesterday...voting 3 to 1 in favor of what has now ballooned to a 451 page bill. Does anyone seriously believe that, given the rush to do this "now!", and with no hearings at all, that they all know just exactly "what" is in this monstrosity? Doubtful. (check out a copy of what they probably haven't read here).

Conservatives have to get in touch with their House members and let them know we want them to VOTE NO on this bailout.

We have to let them know that we want REAL solutions based on FREE-MARKET PRINCIPLES. That we want REAL REFORM of the policies and agencies (Fannie Mae and Freddie Mac) that caused this problem to begin with.

Let them know that you view any bill that does not have those reforms as a complete waste of tax-payer money...and that you'll hold them accountable at the ballot box in November.

The House email system has been overwhelmed, but you can still get through via fax.

Click here and send your members of Congress a personalized fax message today - before they vote tomorrow.

***

Michelle Malkin has a list of the GOP House members (with phone numbers) who voted "no" the first time. Give them a call.

New McCain video exposes the REAL problem

Drew McKissick — Tue, 30 Sep 2008 16:51:28 -0400

Just saw this and it was too good not to pass on. McCain's folks are FINALLY working to turn this thing to their advantage by focusing on the root of the problem that got us into this mess....which brings us right back to the Democrats.

(click image below or the following link: http://www.youtube.com/watch?v=r2RZ0sUcVcE)

Fantastic. And using Bubba to indict the Democrats in Congress is a nice touch.

Pass it on.

Stock market closes UP almost 500 points

Drew McKissick — Tue, 30 Sep 2008 16:33:23 -0400

Well, well, well. Congress refuses to pass a massive tax-payer bailout of Wall Street and politicians and the media lose their minds... The market goes down 777 points. The media tells us this is the single worst loss in Wall Street history. But what they DIDN'T say was 777 points in 2008 ain't the same thing as twenty years ago.

In other words, the market was only down in real terms about 6 1/2 percent...or the 17th "worst" day in market history.

We were told, "See, see! The market's down by a record...over 1 trillion dollars of wealth was eliminated...more than the bailout would cost...because we didn't pass it!" Well.

So what happens the day after the "panic"? The bargain hunters ruled the roost and the market closed UP almost 500 points. I wonder if they will tell us that today's gain was the THIRD best ever, (judging by the same standard as they reported yesterday's loss)...or just that it was up 4 1/2 percent.

So will we now hear on the evening news that over 3/4's of a trillion dollars of "wealth" was regained today??

I'm holding my breath. Call E.M.S.

Demand REAL solutions to the "crisis"

Drew McKissick — Tue, 30 Sep 2008 14:19:23 -0400

Conservatives all across America flooded Congress with the demand that they say NO to the $700 billion dollar bailout.

They felt the heat and they rejected the bill.

But conservatives can’t quit now! We have to let Congress know that any new bill actually fixes the problem that caused the mess to begin with.We have to demand FREE MARKET solutions.

Now we have an opportunity for REAL REFORM that actually abides by conservative principles and addresses the root causes of the problem, (such as privatization of Fannie Mae and Freddie Mac).

By standing up for conservative principles, Republicans on Capitol Hill – and even John McCain – can put themselves on the side of the American people and win credit at the ballot box.

But they have to be pushed.

Tell them you want them to take a stand for conservative, free-market principles.

Contact your members of Congress and let them know how you feel today!

Click here and fill out the form to send a personalized fax to members of Congress.