Today in Politics...

It's blog time once again, folks. I meant to do some blogging over the weekend, as the proverbial fan is a very dark shade of brown after this weekend... but I was busy apartment hunting and doing lease paperwork and such. 

In slightly positive news, the Missouri Highway Patrol retracted a document in which they linked conservative groups with domestic terrorism. Mentioned by name were the folks (such as myself) who agree with and are active for the causes championed by Ron Paul. 

The document was originally released last month by the Missouri Information Analysis Center. The name of this government agency sends chills up and down my spine, as thinking of it reminds me in too many ways of 1984. The agency is meant to be a collaborative "fusion center" for government agencies in Missouri and around the country when dealing with national security issues, namely militia movements. 

The document suggests that domestic militias often oppose immigration, abortion, and federal taxes; it is "not uncommon", according to the report, to support third-party political candidates, such as Ron Paul.

Pardon me, but as an American citizen, I have a Constitutional right to make my voice heard. Just because my voice happens to find harmony with a political figure who, by modern standards, is neither Republican nor Democrat, that should not allow some asinine, privacy-violating government agency to associate me with terrorists. The political movement in which I am active does not condone nor does it encourage violent or aberrant behavior. It encourages it's members to grow support for the cause using the Internet and other resources to educate people. I reiterate, it's our Constitutional right to do so.

I know I'm not alone in this belief, because Campaign for Liberty called upon its members to peacefully make known their grievances relating to this document. It was subsequently retracted. 

I mentioned how this particular agency reminds me of 1984. The government in this story controls everything, from the newspapers to the manufacturing. Everything is controlled and manipulated by the government. The book is absolutely horrifying, yet I see the real government of the United States heading right in that direction.

Take, for example, the proposed bailout of the newspaper industry. Yeah, you read that right. We've nationalized (read: socialized) the mortgage industry, the banking industry, a heaping chunk of the insurance industry, and the auto industry (more on that in a minute), and now we'd like the government to control the newspapers too. Well, perhaps "we" as the American public wouldn't like to see that, but the government probably would. Essentially, the government would allow the newspapers to become non-profit organizations with a bunch of tax breaks. So, the government offers the newspapers money (tax subsidies) in exchange for semi-nationalization of the industry. Does that scare anybody else? That's not too many steps away from our very own Ministry of Truth.

Sorry to all the journalists out there who work for newspapers, but the industry is dying and we need to allow it to do so. The industry has been going under for quite some time; it really has nothing to do with the current state of the economy. Simply put, why wait to read today's news in the paper tomorrow when I can just go online and find it right now? The news-reporting model of the newspaper is outdated and will never see a comeback in the age of the Internet and 24-hour news networks. I think the bigwigs in the industry realize this, but they are either too stubborn or greedy to let it happen. Alas, they ride the wave of companies requesting government bailouts and try to get their share of the pie.

Dominoes Pizza is currently running a line of commercials that show the CEO poking fun at companies who are looking for bailouts. while its jest is obvious, it's still sobering to be reminded of it every time Heroes goes to a commercial break.

In perhaps the most horrifying turn of events from the weekend, the Obama administration has forced Rick Wagoner to retire. For the unfamiliar, Wagoner was the CEO of General Motors. In a speech given at the White House over the weekend, Obama promised us that he is absolutely committed to the survival of the U.S. auto industry, but he feels the industry is not moving in the correct direction fast enough. 

This comes after the announcement that GM and Chrysler requested, and were turned down for, additional bailout funds. As part of the original auto bailout approved by the Bush folks, the two automakers received a total of $17.4 billion in bailout funds - $13.4 billion to GM, $4 billion to Chrysler. GM requested another $16.6 billion and Chrysler requested another $5 billion. Obama said "no", a decision I approve of. He did, however, say that the government is now backing the warranties on all US-made automobiles. So, in reality, if you purchase an American-made vehicle (particularly from GM and Chrysler - Ford did not receive a bailout), you might as well be purchasing from the government. 

Let's go back to the original statement though. Obama's administration has forced GM's CEO to retire and appointed a new CEO, who happens to be the old COO. They also appointed a new chairman of the board. In his speech Obama said, “Let me be clear: The United States government has no interest in running GM; we have no intention in running GM." Soooooo, all that forced reorganization stuff, that's not actually considered "running" GM? Do I have that right?

Like I've been saying since the beginning, while I agree that GM (and Chrysler, for that matter) is very much on the wrong course, it is not, nor should it ever be, the the place of the government to make hiring and firing decisions. That is so far beyond the scope of what the founding fathers had in mind in literally bewilders me that our country has come to this. Under the guise of "change," Obama is literally trying to take over the private sector. If the past has taught us anything, such a system is bound to collapse under the weight of its own greed and depravity. 

What's more, the government is now bailing out the companies that supply parts to the American car manufacturers to keep them afloat. MagicMoney at work here, folks. We don't have it, but we're spending it anyway.

I'm going to derail this train of thought before I end up writing a novel. As always, I encourage all my readers to be more active in politics, because now it's more important than ever. Start educating yourself at the Campaign for Liberty. 

Idiotic Government News - Another $1 Trillion in MagicMoney

Yet again, the government, in the form of the Federal Reserve, has made a poor decision while spouting "save the economy" as the reason. The Fed is now looking to "pump" another $1 trillion+ into the economy. They're accomplishing this by purchasing treasury bonds and mortgage securites. According to the International Herald Tribune:

Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed's measures in the last year.

There you have it. MagicMoney at work again. Has nobody in the US's central bank (now there's a socialist term for you) heard of the inflation that comes with printing too much money? Anybody? Hands?

Never mind how the Fed is keeping interest rates artificially low. Never mind that the Fed's only real idea here is that the economy can be saved by increasing banks ability to loan out money to consumers - as if we actually need more debt - even though credit is a big portion of what got us here in the first place. Never mind that despite the government's "efforts," banks are lowering credit limits (one of my cards just got lowered by $400 for no real reason and with no notice) and raising interest rates and fees. 

The government's "best efforts" are failing, and failing miserably at that. It is beyond ridiculous that the people this country elected (and in some cases, the people put into power because they were friends with the people we elected) refuse to sit down and actually think about a way to solve this problem. No, the government is, and has been since this whole thing started, is in reactionary panic mode. 

Take, for example, AIG. Who hasn't heard of these bastards by now? We, the taxpayers, have pumped $180 billion into that company to save it from going under. Let's timeline this:

• AIG gets $85 billion in bailout funds
• AIG Executives take $440,000 taxpayer-funded weekend retreat, execs say they will do it again soon
• AIG receives second bailout of $37.8 billion, public outcry forces AIG to cancel second retreat
• AIG execs take $86,000 hunting trip, financed by taxpayers
• After meeting with New York Attorney General Anthony Cuomo, AIG agrees  to reduce expenditures, including a $10 million severence package for it's former CFO. These cut expenditures include cancelling over 160 conferences/events that would have totaled more than $8 million.
• By this point, AIG has used about 3/4 of its $123 billion in bailout funds.
• AIG receives yet another $40 billion in bailout money. This comes after AIG posted a 3rd quarter loss of $24.47 billion dollars. In their press release, the Fed and Treasury state that this additional bailout is necessary "to keep the company strong and facilitate its ability to complete its restructuring process successfully." When did the restructuring begin exactly? This additional funding brings the total AIG bailout to about $163 billion, which means taxpayers own about 79.9% of AIG stock.
• AIG execs hold $343,000 seminar. Execs state that meetings like this are "necessary". AIG CEO issues a statement also calling the meeting necessary.
• AIG sends letter to NY AG Cuomo promising that the 7 top execs will not get bonuses. Everybody else will, but those guys don't get raises. Instead of bonuses, AIG execs get "Retention Payments". Because they don't make enough money as it is.
• AIG posts 4th quarter losses totalling a whopping $62 billion. 
• AIG announces that it will use $165 million in bailout monies to pay bonuses. Lawmakers and taxpayers get upset. The sad part here is that the bonuses are being paid out to the executives of the Financial Products division, which was the division responsible for bringing AIG tumbling down. AIG says they have to pay these bonuses for retention purposes, and because they are contractually obligated to. 
• NY AG Cuomo starts investigating, issues subpoenas. It is discovered that these "retention" bonuses are being paid to people who left the company.
• House Financial Services Subcommittee holds hearing about AIG.
• AIG CEO Edward Liddy requests half the payments be returned, calls payments "distasteful."
• It is made known that President Obama and Congress have been aware of these bonuses for months. 
• Finally, the House and Senate both plan to vote for taxing any bonuses paid to AIG execs or any exec that works for a company the governement bailed out under TARP a whopping 90%.

Isn't all that exciting?!?!? Isn't it funny that despite the fact that our economy is taking a grand nosedive, we can focus this much attention on one company? Obviously what they're doing here is wrong, but there's a bigger picture to all this. These bailouts aren't doing anything to stimulate the economy. The news is riddled with sotries about banks using bailout funds to fill their own coffers, not to provide money to customers, as the bailout funds were designed to do. You have companies like AIG abusing the money we are giving them. The bailout plans are obviously failing, so we instead just pump more money into things like buying securities and bonds, using money that actually doesn't exist. Both plans, the bailouts and the buying, hinge on the idea that we can "make" as much money as we want, but here is a simple fact: every dollar printed reduces the global value of the dollar. When you print trillions of those dollars, just think of how much the value of the dollar is going to plummet. 

I would call yet again for America to start paying attention to what is happening to the country around them. Apathy no longer cuts it - we all need to be involved or this country is going to keep right on spiraling out of control. You can start educating yourself and immersing yourself in ideas and solutions at the Campaign for Liberty.

There's my rant for the day. A thank you shout-out to The Consumerist who do a great job at tracking these things, and all issues relating to consumers, and being snarky about it. 

Hooray, Common Sense Prevails...

... for now. The ridiculous bailout for the not-so-big 3 has failed in the Senate. It failed to pass in the Senate because the UAW refused to support a Republican-sponsored bill that cut union wages. I say just abolish it. I suppose I can't really call this bill not passing "common sense" because it didn't fail on the basis of people refusing to pass it, it failed on insignificant minutiae. There is NO reason that a bailout should pass through the Senate (why it passed the House is beyond me), and to me, it is infuriating that our elected officials are acting on their own whims as opposed to the pleadings of the folks they're supposed to support. Even if their constituents are split, the guiding hand in our country is (well, should be) the Constitution, which does not in any way give Congress power to decide to make taxpayers bail out large corporations (in fact, that's called socialism, which is why that power was never given to Congress).

Moving on, the Bush administration (in all their infinite wisdom) has made a statement saying that they will not allow the big 3 to fail, and have plans on using part of the $700B from the bank bailout to keep the auto industry from imploding until Congress reconvenes next month. Sad days ahead for us all. 

I've said it before, but it's the automakers' fault and it's the UAW's fault that this is happening. The automakers fought tougher fuel standards and continued to make sub-par models that drove consumers to more richly designed imports that came with the same features, better design, better fuel economy, and often a smaller price tag. The UAW strangled the auomakers, because they are bloated and overpowered and they could. Now they are both begging to a bailout, though the UAW is too dense to allow union wage cuts to be part of a bailout plan, which cost them today's bailout vote. Oops.

I'd like to say that eventually these companies will learn, but as long as we continue to throw money at them, they never will. In his mad dash to secure a legacy that he hopes will exonerate him in the eyes of historians (don't even get me started), Bush is insisting that we cannot allow the auto industry to fail. Save the American company - the sadly mismanaged company run by greedy SOBs - at the expense of the American taxpayers. 

More to the point, let's call this what it is: socializing this country. Anybody who does not now see this bailout crap for what it is is either completely naive or voluntarily ignorant. Part of the definition of capitalism is that companies that suck go out of business. The simple fact of the matter is that even without the current economic crisis, domestic automakers were well on their way to bankrupting themselves, because the imports were better. By the rules of capitalism, a free market, companies who cannot adapt to keep up with the times should die so that the companies who are more successful can take their place. This is not what's happeneing here with the bailouts (I'm also talking about the bank bailouts). We are very quickly moving away from a capitalist sort of economy, and we are barreling right down the throat of socialism, which advocates the government owning industry and forced spreading of wealth (as seen with taxpayers bailing out large corporations and banks). 

As our Congress sits back and indulges themselves with the feeling that they are doing the right thing, patting themselves on the back for such a hard effort, I can visualize the House floor as they received word of the bailout passing. I picture cheers and whoops, like something amazing and good was actually accomplished in that room. Yet the image sickeningly paralell to another, this out of Star Wars. The new Emperor announcing that he is taking over the government, turning it into a dictatorship, and everybody is applauding. And we see Padme Amidala, and she says, "So this is how liberty dies... with thunderous applause." It rings so true right now, as we edge closer and closer to that precipitous drop, where the government owns it all and the idea of capitalism, of a free market, of the liberties on which we have prided ourselves on as Americans, blow away, nothing more than dust in the wind.

There is one person, though, who is fighting against the socialization of America, our own Padme, if you will. Ron Paul. At the moment, he's fighting a losing battle (as evidenced by the passing of both bailout packages through the House). I'd like to take a moment here to urge you to call your representatives when Congress reconvenes after the holidays. Your Congressmen are currently throwing your country away, so now is not the time to sit idly by and watch. Contact your Congressmen, tell them in no uncertain terms that you oppose this and all future bailouts. Equally imprtant, however, is that you hold them accountable. If they end up voting for these bailout plans, do not vote them back into office when they come up for re-election. The power of your vote is what holds sway over their votes, and if they won't listen to you, put somebody in office who will

You can find contact information for all Congressmen at campaignforliberty.org (it's on the "States" page). While you're there, check out some of the literature they have posted on the site. It's remarkably educational.

Auto Bailout Update

The news of last night saddens me a bit. The House passed the auto bailout plan yesterday evening 237-170. Dispicable. 

Now the campaign is on to convince the Senate to turn this thing away. There's no reason at all that the not-so-big 3 should ever be bailed out. Period. they are private companies that were mismanaged and overrun by an all-too-powerful union. They should go under, in my most humble opinion. 

Visit Congress.gov to find the contact information for your Senators to urge them to vote "no" on this bailout plan. 

Fun with Bailouts

That title was meant more in an ironic sense...

So anyway, in brief bailut news:

The Big 3 (Ford, Chrysler, and GM) are still petitioning the g-man for a large sum of money to help get their businesses back on track. There is a problem with their proposed business models, however. Namely, it assumes people will buy their cars. As sales trends have shown over the past decade or so, people don't. They buy "imports". I quote imports because more of my Honda was built in the good ol' US of A than any car offered by the Big 3 (at least at the time of my purchase). More than 70% of my car was built and manufactured here. It has US-built parts and was assembled in a US factory. When I was shopping big 3, I was lucky to find a US-built percentage greater than 50%. It's sad, all things considered. 

I've been accused of being heartless by certain people who are supporting this idiotic bailout plan, but if you stop to think about it for a moment, these three companies have had years to fix themselves. I mean this at both the companies' execs and the overpaid union workers who are employed by them. The money-mongering executives rode on the SUV wave and failed miserably to put any money back into R&D to invest in a future where gas wasn't $0.99 a gallon. Gas prices have been trending upwards for at least 8 years, but instead on noticing, the car companies sat on their haunches while the import companies innovated and innovated again. 

The bloated and overpowered Union of Automotive Workers is also to blame though. The car companies have to pay exorbitantly to employ anybody because of the outrageous demands of the inflated union. I read somewhere that GM pay an average of $2400 per car above the cost of the employees' salaries for benefits and other union fees. I won't vouch for the validity of that particular statistic, but if it's true, it's outrageous. Unions have gone past their prime and should have faded out a long time ago. 

Nevermind the domestic vs. import dispute. People aren't buying cars at all. What part of that does a bailout fix? None. When (if) the economy stabilizes, we're still left with a trend of declining big 3 car sales. The collapse of the big 3 is completely inevitable, so I say let 'em burn.

Yet, Congress is still at it. Here's the draft of the bill proposing the bailout as posted by CNN today. Barack Obama, our oh so wonderful President-elect has said that he supports the bailout as well... so long as fuel economy improves. 

Anyway, I'm done ranting. Down with bailout proposals! They won't help anything (and they haven't yet, but more on that in another blog).

Ron Paul's Statement Regarding the Bailout Passing and Being Signed Into Law

United States House of Representatives 
Statement on HR 1424 
October 3, 2008 

Madame Speaker, only in Washington could a bill demonstrably worse than its predecessor be brought back for another vote and actually expect to gain votes.  That this bailout was initially defeated was a welcome surprise, but the power-brokers in Washington and on Wall Street could not allow that defeat to be permanent.  It was most unfortunate that this monstrosity of a bill, loaded up with even more pork, was able to pass.  

The Federal Reserve has already injected hundreds of billions of dollars into US and world credit markets.  The adjusted monetary base is up sharply, bank reserves have exploded, and the national debt is up almost half a trillion dollars over the past two weeks.  Yet, we are still told that after all this intervention, all this inflation, that we still need an additional $700 billion bailout, otherwise the credit markets will seize and the economy will collapse.  This is the same excuse that preceded previous bailouts, and undoubtedly we will hear it again in the future after this bailout fails.  

One of the most dangerous effects of this bailout is the incredibly elevated risk of moral hazard in the future.  The worst performing financial services firms, even those who have been taken over by the government or have filed for bankruptcy, will find all of their poor decision-making rewarded.  What incentive do Wall Street firms or any other large concerns have to make sound financial decisions, now that they see the federal government bailing out private companies to the tune of trillions of dollars?  As Congress did with the legislation authorizing the Fannie and Freddie bailout, it proposes a solution that exacerbates and encourages the problematic behavior that led to this crisis in the first place.   

With deposit insurance increasing to $250,000 and banks able to set their reserves to zero, we will undoubtedly see future increases in unsound lending.  No one in our society seems to understand that wealth is not created by government fiat, is not created by banks, and is not created through the manipulation of interest rates and provision of easy credit.  A debt-based society cannot prosper and is doomed to fail, as debts must either be defaulted on or repaid, neither resolution of which presents this country with a pleasant view of the future.  True wealth can only come about through savings, the deferral of present consumption in order to provide for a higher level of future consumption.  Instead, our government through its own behavior and through its policies encourages us to live beyond our means, reducing existing capital and mortgaging our future to pay for present consumption.    

The money for this bailout does not just materialize out of thin air.  The entire burden will be borne by the taxpayers, not now, because that is politically unacceptable, but in the future.  This bailout will be paid for through the issuance of debt which we can only hope will be purchased by foreign creditors.  The interest payments on that debt, which already take up a sizeable portion of federal expenditures, will rise, and our children and grandchildren will be burdened with increased taxes in order to pay that increased debt. 

As usual, Congress has show itself to be reactive rather than proactive.  For years, many people have been warning about the housing bubble and the inevitable bust.  Congress ignored the impending storm, and responded to this crisis with a poorly thought-out piece of legislation that will only further harm the economy.  We ought to be ashamed.

Thanks to Campaign for Liberty for the transcript.

More Bailout Info

The following article is a great piece of education on why the bailout is bad news for all but the elite upper-class. It also contains a fascinating video about the Constitutionality of printing $700B.

Click here to read it.

Bailout Voted Down 228-205

That was a relief to read this morning. The $700B bailout was voted down. For thoroughness' sake, that's $700,000,000,000 written out. The House slapped that down 228-205. Thanks to all the people who wrote their Congressmen about how bad the issue really is. 

Ron Paul has the following thoughts on the vote, and the market's subsequent drop.

It's likely that now the poo-flinging will begin on Capitol Hill - the gloves are off, and all shreds of bipartisanship will likely be shed. You've got the group that thinks a bailout will work, then you've got the group that knows it won't.

A full list of who voted how can be found at Campaign for Liberty. If your Senators/Congressmen are on the "aye" list, it's time to write them and let them know how you feel about your tax dollars being put towards fixing big coporations' mistakes, how you feel about the socialization of the free market, and how you feel about devaluing the dollar even father than it already is by magically printing $700B out of thin air.