29 September 2008

Bailing and the problem

Bailing a boat out is the process of taking water that has gotten past the hull and into the part of the vessel that allows it to do this thing known as 'float'.  Now large ships do have some areas where such water is kept for ship stability and trim, so that the mass of water can counteract wave action.  That isn't bad for a large ship.  Once the ship starts to take on more water past that, you need bilge pumps and other pumps and if you are at the point of having to bail water out of the areas that give the ship propulsion, you have a serious problem on your hands.

A 'bailout' is also the process of stepping from an aircraft and into the unknown with a parachute.  With all luck the parachute has been properly packed, you are at enough altitude to deploy said parachute and you have someplace to land that you are prepared to land *in*.  Bailing out of an aircraft that is on fire, lost an engine and is suffering structural problems is a process of stepping from certain disaster into an unknown future.

When we refer to a financial 'bailout' we normally think of the former, the ship based analogy, and only does the latter get invoked with the 'golden parachute' for executives seeking to get away from responsibilities and get a bonus and guarantees as they leave the disaster they caused.  In modern times the former is more appropriate as even the Great Depression did not encompass the latter.  For that we can look to the fall of the Roman Empire, Persian Empires, Chinese Empires, and Egyptian Empires where entire economies go belly-up, usually as no one is getting paid enough to defend them.  That is a huge 'credit crunch' problem, to say the least.  Unfortunately they had no place to bail out *to* and when the places cratered their civilizations went into steep and rapid decline for decades, some never to recover.

In the modern era we think more of the 'bail out the ship' idea, and it is a bit more appropriate.  We can think of the bilge areas as the legislative 'correctives' to rampant capitalism: those necessary labor laws to protect minors and enforce humane working conditions.  Then someone gets the very bright idea that they can actually 'control' the economy via regulation!  This is a formulation of the outgrowth of those things Nations can do under the Law of Nations, and governments can and must seek to protect their economies, establish trade, and seek reciprocity in those trade relationships when possible.  Indeed, dictatorial control over an economy is perfectly allowable under the Law of Nations.

Not wise, perhaps, but perfectly valid as an internal schema for a Nation.

The problem is that 'regulation', that function of making sure things keep in working trim, is not indicative of 'control': regulations set guidelines and workable agreements to operate under while control systems give absolute guidance on direction, speed and course.  Somewhere we have slipped from government 'regulating' the economy to those wanting government to 'control' aspects of the economy.  Unfortunately those that have chosen their ideas for 'control' are now faced with the problem of the Captain of the Titanic.

Their course has gotten them a disaster and they want to bail the ship out, calling for more regulation of how much water can come into the ship.

They are ignoring the gaping hole in the ship that they caused.

As the economy is *not* a ship, but a structure of accounting for resources and their utilization, that means we don't have to actually abandon the ship.  It does mean that we have to patch the holes and pump out some of the water, much of it through the old fashioned bilge pumps.  That will mean a slightly unstable vessel, but the ship, itself, is huge and the seas around it, while rough, are not a full-fledged tropical storm.  When this is applied, and it is an imperfect analogy, of course, to the Nation, then the course becomes one of what is right and proper to actually address the problem of legislators being unable to fathom the world of finance they have unwisely meddled in.

First - Patch the holes.  This will mean some diving under the water to get to the things.  Those higher up come first to stop the influx at those levels... and really, going around and having folks open up the portholes for the healthy storm breeze is not a good idea, so future legislation on the expenditure side should damned well get STOPPED... and then start to pump the bad credit out through the market process.  No new 'big ticket' expenditures for the housing, medical, social welfare or earmarks.  Expend money to demonstrate that the National government is willing to hold itself accountable for those that made such asinine loans, but to not give anyone a single, red cent for cooperating in stepping away from common sense and fiscal responsibility.

Second - Fix the big holes. Some sections of the hull are so badly riddled they need to be cut out and jettisoned with new hull put in their place.  Get rid of Fannie and Freddie.  Also get rid of the 'Community Reinvestment Act' which allows Congress to think it can CONTROL home ownership LEVELS for those without sufficient jobs, income or assets to do so.  Repeal all such legislation.  For now plug those holes, let the pumps do the pumping and get those section to where new hull can be put in its place.  An extremely good patch job will last for awhile, but the hull itself is riddled with corrosion.

Third - Examine the old, leaky patches.  This is the Federal Reserve and SEC, along with a slew of smaller government agencies in the Treasury/Commerce side of things.  Requirements to show current 'book sale value' means that long-term expenditures that look like losses due to the need for a company to expand cannot be properly examined.  A multi-year average showing how the company has done by its valuation is a good thing and will allow for some liquidity on the private side without losing 'regulation'.  Since the failed housing projects of the 1960's have taught us that demolishing housing that people can invest in and replacing it with housing they can't invest in is a very, very, very bad idea, the concept of low cost yet durable and sustainable housing  that can be OWNED is a good one and can be prudently backed by the tax code.  Not by loan guarantees.  The 'entitlement' structure is ill suited to our population and economy, and no one paying social security taxes, today, expects the program to be around when they retire.  Medical help is distorting the market, bowing to pressures from companies to raise prices, and causing massive inflation in that part of the market.  These things must go sooner or later as a new era of finance, medicine and how we apply the former to the latter must come into play without 'regulation'.

Fourth - Trust the crew to do its job.  The crew, in this case, is you and me and every other citizen.  We are the ones who saw the leaks in the ship expanding and water rushing in YEARS AGO and Congress did NOTHING.  Worse, Congress made the holes larger.  That means that the crew has not been doing ITS job of keeping the folks regulating the trim of the ship under close scrutiny.  We also set the course, amongst all of us, in what we do and how we act.  That voice has been disenfranchised by those doing the 'regulating' as they have determined that we don't need a larger voice in government.  They have set the size of the House of Representatives and an expanding population means you get LESS say in how things are run at the National level.  Someone has locked a tiny rudder in place while the ship has undergone major expansions in size, volume and mass.  That rudder looked very nice on a small coaling vessel of the 1910's.  It is asinine to keep it for the huge mega-cargo vessel we are today.  A large economy requires MORE say by the people, not LESS.  It is time to point this out to the Congress, and that in regulating itself it is trying to control each and every one of us and ruin our democracy.

We don't need a bucket brigade.

Patch the holes and let the pumps do their jobs.

Remove the bad and corroded portions of the hull and fit with new and strong members that will NOT have holes easily put into them.   And let the pumps do their jobs.

It is time to see if we can actually 'regulate' at ALL via those old patches put in in the 1910's and 1930's.  They might have been a good idea, then, but we are placing a different type and form of stress on them today that could have been projected for, but not easily imagined.  Some of those need to go and we need to ensure that those promised what has been promised can still get it, while offering full repayments with INTEREST to those who want nothing to do with government trying to secure their economic future can GET IT.

Instead we have the bucket brigade in Washington now seeing how nicely they can re-arrange the deck chairs.

And no one knows exactly how large the hole in the ship IS.

Worse they don't want to patch the leaks... which means that the bucket brigade will be overwhelmed and the electrical system will go down and the pumps will stop.

Then we will be in *real* trouble.

The bucket brigade is the symptom of that.

Our job as citizens is to point this out, demand accountability, keep our wallets closed, and tell Congress that it is time to fix the holes FIRST.  And let the pumps do their job so that we can do ours.

And if executives are really worth their weight in gold, then lets give them a real 'golden parachute' at 5,000'.  We can recover the gold, at least...

27 September 2008

Bailout? Lets see who needs a 'bailout' now...

Ok, we got the Fannie to cover and the Freddie to conceal, so those two start the parade of bailouts that are being pushed to our lovely government.  Just $700 billion... or more... depending on who you talk to.  We have the bully pulpit on its wheels going back and forth in the klieg lights, a bit of the old authoritarianism thrown into the mix, and the idea that we just might parallel the relatively stolid Nordic crisis which has all sorts of differences no one wants to point out also gets floated here and there.  Its a 'crisis' here and a 'bailout' there and money flowing everywhere.

Hey, here are some of the folks that Fannie and Freddie asked to help smooth this along:

fannie and freddie lobbying
Source: Investors Business Daily

Such big-hearted, swell folks to push sub-prime lending and removing all sorts of things like actually having to have some income on the way to home 'ownership'.  Guess they never heard of 'renting'.

And two of the big holders of Fannie and Freddie?  Well there is China to the tune of $400 billion and Russia with $100 billion.

From your pocketbook to their countries.  Not that either had any reason to actually want a financial meltdown in the US!  I am sure that Russia was all just keen on having US funds pulled out after the Georgia campaign opened.  And China is looking for a major foothold in oil exploration in Iraq.

Awwww... these are such swell countries to be holding on to sub-prime debt in the US, no?

Luckily Lehman Brothers didn't get a bailout... but AIG did get the nod.  Way to 'bolster the market' so that Fannie and Freddie still need a bailout, too!

So who is up next?  Well, those making auto loans want a bailout!  Come one, come all, get your car and watch as the federal government steps forward to pay for it.  Buy what you want!  I'm sure that some Congresscritter will make this a 'civil right', too... only a few tens of billions there.

Hey!  How about bailing out some of the folks who caused this mess to happen in the first place?  Like ACORN, which has been pushing sub-prime NINJAs for years via the 'Community Reinvestment Act' put in place under... President Jimmy Carter.  What?  President Reagan couldn't get rid of this?  Or the Dept. of Education which has not improved the reading rate in the US above those of 1958 when poor Johnny couldn't read? 

Yes you get ACORN who complains that 'people can't afford a home' and lobby Congress with the help of Freddie and Fannie, get sub-prime loans to folks 'on the margins', they 'get a home' they can't afford or pay for, they start to 'walk away' or default, and then ACORN wants MORE MONEY to help these people who 'can't afford a home' that they got a home they couldn't afford!  Yes they want 20% of the money from the bailout to help those they helped to hurt themselves.

Remember that ACORN is far more interested in their agenda than in actually helping communities.  They are 'community organizers' out for their own benefit at the expense of communities.  The guys who founded it got arrested for embezzlement and trying to cover that up.  Lining your pockets with money meant to help 'communities'.  Great, huh?

At another Investors Business Daily Editorial we get reminded of who *else* was involved in the sub-prime, no ID needed, get a tax ID number - get a loan deal:  La Raza.  Yes!  Vote for Amnesty and get a bailout!  Or vote against and get a bailout!  Because those poor people here illegally just need your money... yes we can step from the No Income, No Job or Assets NINJAs to those who aren't even here legally and are acting as squatters demanding cash for homes they shouldn't have!

Hey!  Why are such wonderful Leftists supporting of a group going by 'The Race', anyways?  Thought they were against racism....

Then, then the lovely Congresscritters decide that what is really needed with a bailout is... EARMARKS!

Be still my beating stomach...

Sen. Reid, you know the D-Majority Leader in the Senate?  Sour puss?  Wanted to load up another $56 billion of taxpayer spending because, you know, we are in an economic crisis in which stimulation of the economy is *not* the problem.... plus he wanted to stop all development of oil shale!

Then, not to be outdone, D-Majority Leader Nancy Pelosi in the House wanted to lard up $61 billion in earmarks, but didn't have the wit to try and cut America's energy future at the same time.  Just goes to prove that no one can screw things up better than a Senator.

So how is that for what the Congress is trying to do?

Bailout China and Russia, AIG, increase amounts going to ACORN and La Raza and get folks like those making auto loans pounding on the door for more money.  Plus earmarks.  And maybe a monkeywrench into a better energy future.

And the Federal Reserve and SEC just looked on at the behest of Congress, because it is Congress who calls the tunes and has the purse strings.

Federal organizations to oversee other federal organizations then directed to look the other way while fiscal sanity was removed, foreign capital flowed in to our domestic housing market, and those trying to 'aid' the 'poor' and illegal exploited them to encourage unwise purchases which hurt the economy so they can now ask for more money to 'solve' the problem they helped to create.  Who else will show up with their hand out next?

Yea, and verily do I understand why President Jackson wanted no part of having a federal role in this sort of thing.  Because the ills that were present when this was done from President Jefferson to President Jackson were already being observed:

Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? The president of the bank has told us that most of the State banks exist by its forbearance. Should its influence become concentered, as it may under the operation of such an act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the purity of our elections in peace and for the independence of our country in war? Their power would be great whenever they might choose to exert it; but if this monopoly were regularly renewed every fifteen or twenty years on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections or control the affairs of the nation. But if any private citizen or public functionary should interpose to curtail its powers or prevent a renewal of its privileges, it can not be doubted that he would be made to feel its influence.

Should the stock of the bank principally pass into the hands of the subjects of a foreign country, and we should unfortunately become involved in a war with that country, what would be our condition? Of the course which would be pursued by a bank almost wholly owned by the subjects of a foreign power, and managed by those whose interests, if not affections, would run in the same direction there can be no doubt. All its operations within would be in aid of the hostile fleets and armies without. Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than the naval and military power of the enemy.

If we must have a bank with private stockholders, every consideration of sound policy and every impulse of American feeling admonishes that it should be purely American. Its stockholders should be composed exclusively of our own citizens, who at least ought to be friendly to our Government and willing to support it in times of difficulty and danger. So abundant is domestic capital that competition in subscribing for the stock of local banks has recently led almost to riots. To a bank exclusively of American stockholders, possessing the powers and privileges granted by this act, subscriptions for $200,000,000 could be readily obtained. Instead of sending abroad the stock of the bank in which the Government must deposit its funds and on which it must rely to sustain its credit in times of emergency, it would rather seem to be expedient to prohibit its sale to aliens under penalty of absolute forfeiture.

Owning a home is NOT a 'civil right', but a liberty you may exercise with hard work and prudent saving.  There is no 'right' to have a roof over your head - those on the Left closed asylums to throw the unable on the street to prove that point in the 1970's, instead of ensuring that strict accountability and standards were applied to such institutions.  Those poor folks are entitled to the exact, same liberty that you or I have and they cannot exercise it as they are mentally unable.  But those wanting the institutions closed claimed that this was far better than institutionalization gone bad.  They are correct: it shows exactly how much we depend on liberty to be able to lead a good life and is a prime example of that.

They wanted society to wash its hands of the institutions, so be it.  And don't complain about the working poor having problems making ends meet as they, at least, are trying to make ends meet and have not been thrown out of their only place of sanctuary by benevolent oversight.  These are not 'hobos' who were, by an large, honest wanderers searching for a good job so they could wander a bit more in search of a better life.  Hobos knew what they were doing.  Until ACORN, La Raza and every other 'civil rights' group that has a gripe actually gets every, single homeless person off the street and cared for, and those with mental illnesses treated, they can go take a hike.  And those that WANT to live that way should damned well be left ALONE to do so as a conscious free choice and exercise in liberty and freedom.

You do not have the 'right to work': you have the liberty to seek out gainful employment.

You do not have the 'right to a roof over your head': you have your liberty to put to the end of gaining shelter for yourself.

You do not have the 'right to transportation' or the 'right to on-time air travel': you have feet, a mind and your liberty to back them and if YOU choose unwisely, then don't complain about what a poor choice YOU made.  Suck it up and deal with it.

As President Jackson put it, here is what we should expect from government:

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.

Yes, rain upon the rich and poor equally and shine upon them both.  We cannot make all people equal in talents, in birth, in money but we can, should and must treat them all equally without seeking favor from government that will bias those institutions meant to serve each and every single one of us.

Equal treatment from government is an unqualified blessing, indeed.

If you want to get a house, earn it the 'old fashioned way'.


Plenty of places to rent until then.

24 September 2008

US lending doesn't follow the Nordic crisis

I have Nordic background, being half-Swede. Luckily I am also half-Polish so there is more than a large dose of common sense about affairs that also help me out culturally. In the aftermath of the Nordic Banking crisis of the 1990's, the Director Monetary and Exchange Affairs Department, Stefan Ingves at the IMF had a perspective speech that he gave in 2002, and while many are pointing to the similarities in what the US should do, lets see if there is basis for that in the original problem. I will paraphrase heavily, but hope to retain the gist of his overview. In that overview he gives the following as causes for the Nordic Banking crisis:

  1. Bad banking - Not only poor lending practices but lack of internal oversight and a culture aimed at gaining market share. There were few incentives to make prudent loans for bank managers or lending officers and there was no accountability when they did hand out loans to those with high risk background.

  2. Inadequate market discipline - Lack of transparency in lending practices leading to financial institutions being unable to judge the health of banks. Weak legal institutional and legal frameworks to ensure good banking practices. "Expectations of depositor and creditor bailouts may overpower any policy to the contrary."

  3. Weak regulatory and supervisory frameworks - Concentrated lending, portfolio mismatches and inadequate loan valuation. This lead to an overstatement of profits and working capital, as well as leading to poor market valuation. A prime cause here is also a lack of managerial staff to properly process and analyze investments, with such staff being inadequate and/or poorly paid.

  4. Inadequate macro policies and adverse macroeconomic developments - This created lending booms, excessive capital inflows, changes in the tax code to incentivize this. This lead to real estate/equity price bubble markets, a slowdown of exports, failing profitability in real estate markets, rising deficits for those institutions, current pricing accountability for institutions and the markets they were in, lower investment, weakening of the public to sustain the growing debt, and sharp exchange rate changes. As noted not all of these *can* be regulated. And then premature liberalization of lending practice rules.

  5. Contagion - The weakness and decay in one bank spreading rapidly throughout the banking sector.

The US has seen some of this going on, of course, but it is telling that in the Nordic crisis, as in the US, there was a government involvement in all of these areas that led to those problems. There are some underlying causes in the Nordic countries in the 1990's that are specific to them, however, and without understanding those, the generic 'problems' area cannot be properly assessed. Some of these are marked dissimilarities and others are very close to the current US crisis, so paying attention to them means being able to weight those differences against our current problems.

Mr. Ingves looks at those as follows:

  1. Bad bank management - Banks run by small groups of individuals or families, who treat the bank as a 'personal piggy bank' for themselves. That makes both bank managers and the owners problematical in having oversight capability as it is highly biased to the personal interests of the owners. Some owners sought to conceal these problems via off-shore institutions owned by their banks, very much like how the BNL scandal of the early 1980's had separate accounts to give regulators one set of numbers and hide a complete 'bank within a bank'. State owned banks (those licensed or run by governments) had this from the directional side of those governments, with implicit and explicit instructions to run poor lending practices to the benefit of politicians. State run or regulated institutions often do not have the level of accountability or scrutiny applied to them that private institutions have. "The clean up cost is often very large measured as a percentage of GDP."

  2. Macroeconomic sustainability constraints - Larger, better capitalized nations fare better than smaller ones in banking problems. While the Asian and Nordic crises would shock their respective regions, the economies, though hard hit, would remain without collapsing. Smaller countries have to put their creditability of their nation behind such bad banking so as to not have a full collapse of their systems. Thus the Nordic Crisis was, for all its pain, mild in comparison to something like what happened in Argentina or Turkey. The Nordic countries were already used to 'micro-managing' and were able to utilize those skills to address the crisis well and quickly, as they had practice in things going wrong with larger institutions.

  3. Ability of political systems to make decisions in the public interest - That is in the interest of the public, not public officials. Politicians need to absorb the losses equally across the political spectrum when such a crisis happens, and not politicize it. Banking ownership and structures in many countries prevent this from happening, and government representatives are willing to take a 'do nothing' approach rather than act in the public interest. Supervisors often lack legal protection to allow them to help bring the problems to light and to identify the problem areas involved, thus making the ability to understand what is going on harder. Again, the Nordic countries have a good cultural system which helped here.

  4. Access to well-trained staff, with personal integrity - When the Nordic countries couldn't find good, local help, they hired from the outside from reputable organizations or individuals with skills necessary to address the problems. Again the cultural requirement for high degrees of personal honesty and integrity play heavily into this area for being able to manage the crisis.

  5. Size and economic importance of banking system - The banking crisis was small in comparison to overall GDP. Many Asian countries had banking systems with a size of over valuated assets equal to 200% of GDP. The very small size of the banking sector in comparison to productivity helped the Nordic countries out immensely and caused very little exposure to deeper losses and long term economic stagnation.

So the US does have some fundamental equivalencies, but also some very stark contrasts with the Nordic banking crisis.

First up is the very nature of the institutions involved. Unlike the Nordic countries, the US does not have banks treated like personal piggy banks by families and small groups. That was the S&L scandal of the 1980's. So that is put by the side as a major causative factor.

Second up is federal influence in lending practices. Here this is more than just a mild equivalence, but a strong one and the primary cause. Fannie Mae and Freddie Mac are explicitly backed federal organs with 'private ownership' which boils down to private investment with the actual lending institutions being led by political cronies appointed by Presidents without oversight. In the atmosphere of increased home ownership lending spurred on by Congress, and then pressured by Congress by seeking to ease monetary policy, these quasi-federal organs then lobbied Congress to remove more constraints on bad lending practices so they could do more of them. Today there are Congressmen who are *still* pushing for allowing borrowers to keep their homes, even though they cannot pay the rates they agreed to... rates pushed on the industry by Congress reducing the amount a borrower had to put down to get FHA mortgage backing.

Third is weakness in oversight. Here, again, it is mostly federally backed institutions with the exception of AIG that made imprudent decisions based on the expected continuation of bad lending practices pushed by Congress. The idea of a bailout in one sector with a bunch of bad loans now gets another sector, those backing auto loans, to seek the exact, same protection and expectation of a bailout for *their* poor lending practices that depended heavily on the flow of easy money for home loans to then allow consumers to live well outside their financial capability and add a new car to the mix.

Fourth is the cultural attitude of responsibility and honesty that saved the Nordic countries. It is wholly absent from the federal side, after having pushed *in* those with political agendas to Fannie and Freddie: these individuals have no want nor need to hold themselves accountable, to point out crony loans or to even worry about the fact that these are public funds they are backed by. Lobbying Congress for politically targeted loans for those who cannot afford them as a way to garner political support then gets Congressional pressure *not* to be honest and uphold accounting standards when reviewing these organizations by other Federal organs, like the Federal Reserve. This becomes a multi-party, multi-President problem going back decades to slowly remove honesty and accountability from the system, not add it in.

Fifth is the size of the economy and the effect of boom/busts in various sectors. Starting in 2000 a large bust cycle in technology stocks was rocking the Nation and that would further be rocked by the 9/11 attacks that would severely hit the real estate market in NYC and the global insurance underwriting market for all the claims that came in due to those private structures coming down. The vast size of the US economy in 2001 weathered that and even showed a small GDP *increase*. With a market bust and a massive terrorist attack that hit the financial center of the US and the world, the United States *still* managed to grow. Those two, combined, would lose more value to the economy in an infrastructure way than the Fannie and Freddie mess will do in a personal way, and yet it is the violins trotted out for those personal losses that seek to get public underwriting for them. After 9/11 some insurance institutions would go 'critical' and either be absorbed or given some help to restructure, but a massive investment into the private underwriting sector of the economy wasn't done and the entire US economy would benefit from having a realistic risk re-assessment take place after 9/11 to properly valuate property and commercial risk to terrorist attacks.

Sixth the ability of public institutions to make good decisions in the public interest. Those institutions are the CAUSE of this problem along with the Congressional system that put them in place and the lack of oversight on Presidential picks to the boards of these institutions. This is a huge problem as these public institutions have been run for long-term political advantage and not on a sound monetary basis, and the two are in direct conflict. While some regulation for upholding such things as accounting and reporting standards are necessary, the 'public good' has been in pressing those economically unable to sustain home ownership and other purchases with public backed loans to assume an unhealthy risk financially for themselves at public expense. It is now the smart thing to take the keys to that overvalued house and drop them on the banks desk and 'walk away' from your responsibilities and there has been no political repercussions because some of those self-same politicians are doing the exact, same thing. That 'public good' has eroded basic honesty and integrity in financial responsibility by individuals, not supported it, which is part of the cultural problem now made worse by direct public support to abuse lending institutions and the public backing of them.

Seventh is the regulatory framework. They are not 'weak' but are operating in a way contrary to sound fiscal policy based on individual accountability. They are 'strong' in their support of political goals. Public institutions that do not have the acumen to understand this nor are willing to hire onto their staffs those that DO are a major and main cause of this problem. Because politicians seek political goals, they hire those with political motivations and ideas which are not in direct concordance with sound fiscal and monetary ideas. If Congress gets the blame in backing such institutions, it is each and every Congresscritter who refuses to take wise counsel from those who are well versed in the non-political requirements of sound fiscal and monetary accountability that are to be held at fault for pushing such unsound regulatory, legal and cultural attitudes out the door. And private institution that follows that lead and disregards its OWN wise counsel deserves the pain it will get as they are aiding and abetting unsound practice in search of political goals.

For all the cursory similarities with the Nordic banking crisis, we cannot and should not follow any path set by them as they have a different underlying basis for culture and the resultant economy of the 1990's than the US does today, in 2008. Those pathways are not an option to the US for those reasons. Until the American people can elect individuals who will eschew monetary and fiscal policy in search of political ends, that will remain the case as long as those elected representatives are in the majority control of both houses of Congress. Individual accountability not only rests with those who asked for such loans, those who gave such loans, but also those who pushed this environment and culture out the door via enacting legislation over the last 70 years to get us to this point in time. We can and should let those institutions *fail* as the economic shock, while large to the public, will be small to the overall economy and will enforce basic practices of accountability for those who have unwisely sought to live beyond their means. No matter the size of the Nation or its economic vibrancy, that will come to a bad and crashing end if it continues, and if our elected representatives cannot understand that, then it is up to the wheels of the economy to do their job for them and to teach them some humility that good politics in push a bad economic ideal comes to bad ends. It is a tiny minority of loans that are exposed in this and the vast majority of US households will only be at risk of having slightly over-valued loans and lower real estate taxes due to that for a period of some years until the bad loans and bad lenders are cleared off the boards.

That requires Fannie and Freddie to bite the dust along with all of the political appointees in them.

Don't I have any sympathy for those who got such loans and their impact to the economy?

No. Get it done and over with so we can learn, as a public, that we are required to recognize the basics of personal responsibility to each other and *not* involve the Nation in ill-conceived ideas about what we are 'due' as citizens. Because we currently don't have the culture to get accountability back into politics. Otherwise the fiscally sane and solvent will be dishing up lots of hard earned cash to bail out those who are neither and who will never have any incentive to GET fiscally sane and solvent.

Otherwise you will slowly lose the population that is fiscally sane and solvent, and that will bring down the Nation in the long run.

And abrogate our responsibility to hand the Blessings of Liberty to our Posterity.

Accountability is part of that.

19 September 2008

Your friendly, authoritarian bailouts

My thanks to Instapundit for pointing out this post by Todd Zywicki at The Volokh Conspiracy on the irrelevance of Congress in the recent bailouts being done by the SEC and Federal Reserve. Both of these institutions were created as 'Progressive' ones by Presidents getting them from Congressional legislation. The Executive, by having both of these organs of government under the control of the Executive can then act to intervene in the US economy at will. On any thing the resident of that Office wants. This did not come about over night, and I first looked at some of the changes in power structure of the US government in The 10 years that changed the path of America (and here, also). Before delving into the past, let me see if I can extract the basic thesis of Mr. Zywicki from his post (bolding mine):

Congressional Irrelevance:

One interesting aspect of the recent government bailouts has been the complete irrelevance of Congress. The operation and decision-making seems to be run almost entirely by the Secretary of Treasury and Federal Reserve. Congress appears to lack the ability, the will, and the decisiveness to play any role except spectator, as a handful of senior executive branch officials have nationalized major portions of Wall Street.

What is further interesting is that Congress is not missed in the slightest. No one is clamoring for a greater role for our elected representatives in dealing with these problems. I haven't heard anyone saying, "We really need to get Congress more involved in this. They'll know what to do."


Put more generally, Congress's ridiculousness has increasingly caused it to forfeit its status a co-equal branch of government. 40 or 50 years ago it might have been plausible to imagine Congress addressing important public policy issues like entitlement reform or health care reform (I'm not saying they would have done it, but it seems like it was more plausible then). Serious people were in the Senate then--Taft, Johnson, etc. Today, however, the idea that serious solutions to pressing social problems might originate in Congress is hard to suggest with a straight face.

The shift of the stance of the federal government to be 'interventionist' and 'activist' in the economy and lives of the people of the US can be traced back to Jefferson who put himself up as 'for the common man' but lived on an estate. Mind you he did live in a rural area which makes his claim to being close to the common man far more plausible than those of latter day 'populists' or 'liberals' coming from large urban enclaves. However, the era of when the Executive changed from its traditional role of limited powers to those of expansive ones comes from President Theodore Roosevelt. He did not start the great legislative process that would create these huge and interventionist institutions in the federal government, indeed he spoke out *against* them in his autobiography. We can, however, see how this started... and for those wanting to point at President Lincoln, the case could be made that an internal Civil War gave large powers to the federal government as given in the Constitution. That argument can be made that he was the first 'interventionist' President, but he had a Civil War to deal with and CinC at home during such times has a full suite of powers by the Law of Nations that is normally not operative due to geographic location of the actual fighting. As the Presidency embodies those powers as given in the Constitution, when operative at war, at home during a Civil War or Insurrection, the President gets powers to act that are a confluence of those things. The first President to do *that* was the First President George Washington and the Whisky Rebellion, so President Lincoln had precedent for exercising martial controls inside the US during an insurrection and definitely in a Civil War.

Back to President Theodore Roosevelt and his views on the Presidency. For that I will look to his autobiography (at Project Gutenberg) and Chapter X gives his account of his view of the Nation and how it runs and some conservatives may get a cold sweat when reading this:

For the reasons I have already given in my chapter on the Governorship of New York, the Republican party, which in the days of Abraham Lincoln was founded as the radical progressive party of the Nation, had been obliged during the last decade of the nineteenth century to uphold the interests of popular government against a foolish and illjudged mock-radicalism. It remained the Nationalist as against the particularist or State's rights party, and in so far it remained absolutely sound; for little permanent good can be done by any party which worships the State's rights fetish or which fails to regard the State, like the county or the municipality, as merely a convenient unit for local self-government, while in all National matters, of importance to the whole people, the Nation is to be supreme over State, county, and town alike. But the State's rights fetish, although still effectively used at certain times by both courts and Congress to block needed National legislation directed against the huge corporations or in the interests of workingmen, was not a prime issue at the time of which I speak.

First off, Theodore Roosevelt breaks with the founding in putting forth the exact idea that was warned about by the 'Anti-Federalists' back in 1787-88: that the States would be denigrated or dissolved in favor of National government. Theodore Roosevelt agrees that the Nation must do this and that those holding the idea that the States can hold the Federal Government to account have a 'fetish' that is unsound. That flies in the face of what democracy was seen to be at the Founding: diverse, complex and local. I've looked at many of those views in previous articles (here, here, here, here, here, here) and would have to say that this is not a 'fetish', but the view that the powers of the States to appoint Senators and recall their Congressmen is a form of veto power over the federal government that is generally inactive in modern times. Indeed it was the States not sending Senators to Washington, DC that gave the Progressivists a stand to shift that power of selection directly to the population and, thus, leave the negative power of recall as the only one remaining to the States. The Progressivists would then argue for individual taxation of unequal basis and require an amendment to do that, against all warnings of *both* 'Federalists' and 'Anti-Federalists' at the founding who pointed to that as an illiberal mode of taxation. Prior to that the federal government took its financial burden, divided it up equally amongst all citizens and then handed that out based on population for the States to collect. Thus unequal apportionment was done at a local, not national level as that was seen as the best way to deal with the common debt necessary to run national government. Those two structural changes would come into being during the Progressivist era and Theodore Roosevelt was at the heart of that re-definition of the federal system.

Second off, Theodore Roosevelt would use the war time powers President Lincoln utilized as the Head of State, Commander in Chief and Head of Government as something to be emulated at ALL TIMES:

This had, regrettably but perhaps inevitably, tended to throw the party into the hands not merely of the conservatives but of the reactionaries; of men who, sometimes for personal and improper reasons, but more often with entire sincerity and uprightness of purpose, distrusted anything that was progressive and dreaded radicalism. These men still from force of habit applauded what Lincoln had done in the way of radical dealing with the abuses of his day; but they did not apply the spirit in which Lincoln worked to the abuses of their own day. Both houses of Congress were controlled by these men.


I made a resolute effort to get on with all three and with their followers, and I have no question that they made an equally resolute effort to get on with me. We succeeded in working together, although with increasing friction, for some years, I pushing forward and they hanging back. Gradually, however, I was forced to abandon the effort to persuade them to come my way, and then I achieved results only by appealing over the heads of the Senate and House leaders to the people, who were the masters of both of us. I continued in this way to get results until almost the close of my term; and the Republican party became once more the progressive and indeed the fairly radical progressive party of the Nation. When my successor was chosen, however, the leaders of the House and Senate, or most of them, felt that it was safe to come to a break with me, and the last or short session of Congress, held between the election of my successor and his inauguration four months later, saw a series of contests between the majorities in the two houses of Congress and the President,—myself,—quite as bitter as if they and I had belonged to opposite political parties. However, I held my own. I was not able to push through the legislation I desired during these four months, but I was able to prevent them doing anything I did not desire, or undoing anything that I had already succeeded in getting done.

Radical Progressivist Republican Party.

Makes your head swim, doesn't it?

This was utilizing the Progressivist ideal that had grown up to counter that temporary war-time powers should really be given to government at all possible times to counter all possible threats and to run a Nation. That is an illiberal concept, hearkening back to French Revolution and, before that, to Chinese Empires that may had a willing and servile bureaucracy that would enact the power of the Emperor completely and without question. That was absolute dictatorial power of a totalitarian State and, of course, it ran into obstacles with a federal republic that was set up to be none of those things although had the cracks in it as pointed out from 1787-88 to allow all of them, when corrupt individuals got into power.

What is interesting is that Theodore Roosevelt would point out some of the problems to this line of thought later in the autobiography, and I give him extremely high credit for telling us how he thought and why he came to the ideas he did. Rarely has such insight been put into a political autobiography. Thus when he gives us this passage, again from the same chapter, we find a startling admission of his pointed view of how he was changing things:

The most important factor in getting the right spirit in my Administration, next to the insistence upon courage, honesty, and a genuine democracy of desire to serve the plain people, was my insistence upon the theory that the executive power was limited only by specific restrictions and prohibitions appearing in the Constitution or imposed by the Congress under its Constitutional powers. My view was that every executive officer, and above all every executive officer in high position, was a steward of the people bound actively and affirmatively to do all he could for the people, and not to content himself with the negative merit of keeping his talents undamaged in a napkin. I declined to adopt the view that what was imperatively necessary for the Nation could not be done by the President unless he could find some specific authorization to do it. My belief was that it was not only his right but his duty to do anything that the needs of the Nation demanded unless such action was forbidden by the Constitution or by the laws. Under this interpretation of executive power I did and caused to be done many things not previously done by the President and the heads of the departments. I did not usurp power, but I did greatly broaden the use of executive power. In other words, I acted for the public welfare, I acted for the common well-being of all our people, whenever and in whatever manner was necessary, unless prevented by direct constitutional or legislative prohibition. I did not care a rap for the mere form and show of power; I cared immensely for the use that could be made of the substance. The Senate at one time objected to my communicating with them in printing, preferring the expensive, foolish, and laborious practice of writing out the messages by hand. It was not possible to return to the outworn archaism of hand writing; but we endeavored to have the printing made as pretty as possible. Whether I communicated with the Congress in writing or by word of mouth, and whether the writing was by a machine, or a pen, were equally, and absolutely, unimportant matters. The importance lay in what I said and in the heed paid to what I said. So as to my meeting and consulting Senators, Congressmen, politicians, financiers, and labor men. I consulted all who wished to see me; and if I wished to see any one, I sent for him; and where the consultation took place was a matter of supreme unimportance. I consulted every man with the sincere hope that I could profit by and follow his advice; I consulted every member of Congress who wished to be consulted, hoping to be able to come to an agreement of action with him; and I always finally acted as my conscience and common sense bade me act.

Point three, and the hard one for people to accept, is that Theodore Roosevelt rejected the restrictive language of the Bill of Rights in Amendments IX and X:

Amendment IX

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Amendment X

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Notice there is no 'higher duty' clause in the Constitution, although its formulation does follow the lines laid out for powers as seen in The Law of Nations, and the founders put a hard and fast restriction on 'broadening' powers with these two Amendments. It is the negative power construction of the document, itself, in regards to the federal government - if it is not given directly, by statement to the government, then the government doesn't get it. Some of the powers are, indeed, broad powers, but there is no way to 'broaden' them into other areas nor take the positivist approach given by Theodore Roosevelt.

While I have high esteem for Theodore Roosevelt as both President and Citizen, it is this Progressivist attitude that gives the strong footing to the 'living constitution' concept. It is not President Washington, Jefferson or Lincoln that takes this attitude, but it is that of President Theodore Roosevelt. While Roosevelt would be out of office, the Progressivists would continue to push through this approach to government, building on such things as the Shanghai Treaty for the first national laws to restrict medications. And then also use that Progressive stance to get Amendments passed to alter the federal system in a sharp direction that was contrary to the founding and only the LAST is the expansion of liberty by extending the franchise right to women.


Passed by Congress July 2, 1909. Ratified February 3, 1913.

Note: Article I, section 9, of the Constitution was modified by amendment 16.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.


Passed by Congress May 13, 1912. Ratified April 8, 1913.

Note: Article I, section 3, of the Constitution was modified by the 17th amendment.

The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures.

When vacancies happen in the representation of any State in the Senate, the executive authority of such State shall issue writs of election to fill such vacancies: Provided, That the legislature of any State may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct.

This amendment shall not be so construed as to affect the election or term of any Senator chosen before it becomes valid as part of the Constitution.


Passed by Congress December 18, 1917. Ratified January 16, 1919. Repealed by amendment 21.

Section 1.
After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

Section 2.
The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.

Section 3.
This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.


Passed by Congress June 4, 1919. Ratified August 18, 1920.

The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex.

Congress shall have power to enforce this article by appropriate legislation.

Considering the Shanghai Treaty and Harrison Stamp Act as the start of the Progressive era of change, the federal government's structure and power basis alters greatly in many areas. Moving away from the 'stewardship role' in which the food and drug purity acts were *already* lowering the use of addictive medications, the government would start on a long term quest for power in its ability to rule the lives of its citizens. These areas include: medication, taxation, use of alcohol, removing the State as the local guardian of liberty and freedom, and the regulatory powers that go with each of these things. The problem with the vision of Theodore Roosevelt on the Presidency is that when taken up by those who do not see themselves as supporters of democracy and liberty, they go to ill ends. Note that almost all of these were done under the term of President Woodrow Wilson, a Progressivist and rival to Theodore Roosevelt who did not have any of his inclinations on the use of power. If Theodore Roosevelt saw the worship of States rights as a 'fetish' and stumbling block, Woodrow Wilson would batter it into near oblivion at the federal level and have the federal government take up much of the powers that had only been the realm of the States.

That sets the stage for President Wilson to create the Federal Reserve system, which would be the first of its kind since the old National Bank was disestablished.... you did know that we once had a National Bank and that it was liquidated, right? No?

Well that story goes back to Hamilton and Jefferson who each would work towards a more structured banking system for the nation. It was President Jefferson that lobbied hard to get a National Bank created and give some ability of the federal government to have input into the economy of the US. Great, huh? Of course that Bank was soon in debt to overseas aristocrats, nobles and folks with just plain lots of money at home, and for that investment the interest payments went directly from the coffers of the Bank and into foreign hands and the rich. Plus a number of those folks got a vote in the Bank, including the ones who were foreigners: mind you the bank was a monopoly set up by Congress. The idea of having a large swath of the American economy controlled by outside interests was not one that set will with many people. And having so much foreign money and power so close to the federal government made more than a few folks wonder if monetary policy was being inordinately influenced by those outside the US. When the Bank came up for renewal, it was vetoed by the President. That was President Andrew Jackson on one of the most historic veto messages ever given from the Presidency. Parts of it have worked its way into the public conscience to the point that some who deride President Jackson actually state his beliefs and ideals and don't recognize it. It is fully given at The Avalon Project, and the Bank Veto Message of 10 JUL 1832, while lengthy, has so many fundamental ideas of governance and the economy in it, that it is a hard thing to read through as you move from one salient passage to the next.

Early on he looks towards expansive ownership in the Bank:

It is not conceivable how the present stockholders can have any claim to the special favor of the Government. The present corporation has enjoyed its monopoly during the period stipulated in the original contract. If we must have such a corporation, why should not the Government sell out the whole stock and thus secure to the people the full market value of the privileges granted? Why should not Congress create and sell twenty-eight millions of stock, incorporating the purchasers with all the powers and privileges secured in this act and putting the premium upon the sales into the Treasury?

But this act does not permit competition in the purchase of this monopoly. It seems to be predicated on the erroneous idea that the present stockholders have a prescriptive right not only to the favor but to the bounty of Government. It appears that more than a fourth part of the stock is held by foreigners and the residue is held by a few hundred of our own citizens, chiefly of the richest class. For their benefit does this act exclude the whole American people from competition in the purchase of this monopoly and dispose of it for many millions less than it is worth. This seems the less excusable because some of our citizens not now stockholders petitioned that the door of competition might be opened, and offered to take a charter on terms much more favorable to the Government and country.

We would call this 'privatization'. We would call it 'selling off government assets to benefit the people'. And under that concept a National Bank would only serve under the aegis of government allowed monopoly for distribution of currency held by private citizens who would be the ones to guide that structure. That would be a radical concept if applied *today* to the Federal Reserve: liquidate the control structure in government and allow the people of the US to run it under government auspices for the people. Unfortunately Congress, then, didn't want to do that.

The fourth section provides " that the notes or bills of the said corporation, although the same be, on the faces thereof, respectively made payable at one place only, shall nevertheless be received by the said corporation at the bank or at any of the offices of discount and deposit thereof if tendered in liquidation or payment of any balance or balances due to said corporation or to such office of discount and deposit from any other incorporated bank." This provision secures to the State banks a legal privilege in the Bank of the United States which is withheld from all private citizens. If a State bank in Philadelphia owe the Bank of the United States and have notes issued by the St. Louis branch, it can pay the debt with those notes, but if a merchant, mechanic, or other private citizen be in like circumstances he can not by law pay his debt with those notes, but must sell them at a discount or send them to St. Louis to be cashed. This boon conceded to the State banks, though not unjust in itself, is most odious because it does not measure out equal justice to the high and the low, the rich and the poor. To the extent of its practical effect it is a bond of union among the banking establishments of the nation, erecting them into an interest separate from that of the people, and its necessary tendency is to unite the Bank of the United States and the State banks in any measure which may be thought conducive to their common interest.

Yes he is against a full bank monopoly, way back in 1832. Amazing, no? He has this strange belief that if it is US legal tender it should have the same value in all places and by allowing banks to do that with each other and *not* provide that to the citizenry, the banks gain in wealth by the discount rate of that currency due to distance. That is some of the damned most sophisticated economic analysis I have heard from ANY President. Hell, I can't find economists who could state that as well today. This next part is most telling and so often glossed over by those folks pushing for a fully integrated global economy after seeing a minimum of 1/3 of its controlling body being foreign owned.

Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? The president of the bank has told us that most of the State banks exist by its forbearance. Should its influence become concentered, as it may under the operation of such an act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the purity of our elections in peace and for the independence of our country in war? Their power would be great whenever they might choose to exert it; but if this monopoly were regularly renewed every fifteen or twenty years on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections or control the affairs of the nation. But if any private citizen or public functionary should interpose to curtail its powers or prevent a renewal of its privileges, it can not be doubted that he would be made to feel its influence.

Should the stock of the bank principally pass into the hands of the subjects of a foreign country, and we should unfortunately become involved in a war with that country, what would be our condition? Of the course which would be pursued by a bank almost wholly owned by the subjects of a foreign power, and managed by those whose interests, if not affections, would run in the same direction there can be no doubt. All its operations within would be in aid of the hostile fleets and armies without. Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than the naval and military power of the enemy.

If we must have a bank with private stockholders, every consideration of sound policy and every impulse of American feeling admonishes that it should be purely American. Its stockholders should be composed exclusively of our own citizens, who at least ought to be friendly to our Government and willing to support it in times of difficulty and danger. So abundant is domestic capital that competition in subscribing for the stock of local banks has recently led almost to riots. To a bank exclusively of American stockholders, possessing the powers and privileges granted by this act, subscriptions for $200,000,000 could be readily obtained. Instead of sending abroad the stock of the bank in which the Government must deposit its funds and on which it must rely to sustain its credit in times of emergency, it would rather seem to be expedient to prohibit its sale to aliens under penalty of absolute forfeiture.

War, economy, and public right to control their own future and their own fortune - those are truly radical themes that many would call 'isolationist'. Now, in the case of Fannie Mae and Freddie Mac, why is it that the bailout would help Russia and China? Have they no interest in causing turmoil in our domestic economy? For those lauding the Fed and the involvement of the federal government, do realize that the economy that President Jackson would put in place by this Veto would change the course of the Nation from agriculture to manufacturing, would spur external trade and internal growth, and would create a diverse economic environment for good and ill. If you decry the ills, then also acknowledge the robust growth and infrastructure advances that happened with such a woebegone and inadequate system in place. It was light years ahead of what we can do with nearly a century of government mismanagement in place. Also note that if you hold that Americans were drunk, addicted, etc. during that era, that they also appear to have achieved truly phenomenal things while having those problems as it was a 'no excuses nation' at that point in time. Enough so that after WWI the US would be a major nation on the world stage having the only fully equipped million man army *left* after that conflict.

The Government of the United States have no constitutional power to purchase lands within the States except "for the erection of forts, magazines, arsenals, dockyards, and other needful buildings," and even for these objects only "by the consent of the legislature of the State in which the same shall be." By making themselves stockholders in the bank and granting to the corporation the power to purchase lands for other purposes they assume a power not granted in the Constitution and grant to others what they do not themselves possess. It is not necessary to the receiving, safe-keeping, or transmission of the funds of the Government that the bank should possess this power, and it is not proper that Congress should thus enlarge the powers delegated to them in the Constitution.

Yeah, no earmarks for bridges, canals, water works, fountains, statuary, lawns, gardens... that is why the Defense appropriations bill gets so much pork fat, as it is Constitutional for those forts, magazines, etc. Somehow I doubt multi-billion dollar biathlon courses were expected. Or municipal bike paths. Somehow President Jackson doesn't see this 'broad view' concept of the Presidency or of federal government as a whole. And yet he is doing something extremely impressive within the confines of those powers. From there he goes into tax policy, SCOTUS decisions, what is and is not proper within the confines of the Constitution, the law, the power of the States, and speaks about them in a coherent way. When he comes to the role of the Executive it is telling, and a stark contrast to Theodore Roosevelt's:

If our power over means is so absolute that the Supreme Court will not call in question the constitutionality of an act of Congress the subject of which "is not prohibited, and is really calculated to effect any of the objects intrusted to the Government," although, as in the case before me, it takes away powers expressly granted to Congress and rights scrupulously reserved to the States, it becomes us to proceed in our legislation with the utmost caution. Though not directly, our own powers and the rights of the States may be indirectly legislated away in the use of means to execute substantive powers. We may not enact that Congress shall not have the power of exclusive legislation over the District of Columbia, but we may pledge the faith of the United States that as a means of executing other powers it shall not be exercised for twenty years or forever. We may not pass an act prohibiting the States to tax the banking business carried on within their limits, but we may, as a means of executing our powers over other objects, place that business in the hands of our agents and then declare it exempt from State taxation in their hands. Thus may our own powers and the rights of the States, which we can not directly curtail or invade, be frittered away and extinguished in the use of means employed by us to execute other powers. That a bank of the United States, competent to all the duties which may be required by the Government, might be so organized as not to infringe on our own delegated powers or the reserved rights of the States I do not entertain a doubt. Had the Executive been called upon to furnish the project of such an institution, the duty would have been cheerfully performed. In the absence of such a call it was obviously proper that he should confine himself to pointing out those prominent features in the act presented which in his opinion make it incompatible with the Constitution and sound policy. A general discussion will now take place, eliciting new light and settling important principles; and a new Congress, elected in the midst of such discussion, and furnishing an equal representation of the people according to the last census, will bear to the Capitol the verdict of public opinion, and, I doubt not, bring this important question to a satisfactory result.

Here is a careful, step-by-step analysis of SCOTUS decisions and then how the use of one power to diminish other powers indirectly can contravene the outlay of powers given in the Constitution. That is far more sophisticated an analysis than of any other piece of legislation I have read about recently, as it cuts to the heart of the role of Congress and the Executive in performing their duties and not infringing upon the rights of the States and the people. That is the 'fetish' that Theodore Roosevelt talks about - States Rights. Here President Jackson clearly identifies that it is possible for Congress to meet each and every single objection that he has raised before the bill was even finalized... yes, these complaints are, many of them, more than a year old... he would be more than happy as an Executive to enact such legislation for the government. Without such legislation with such provisions he *must* veto the legislation as against the duties set to the federal government. His job is not to run the economy, set fiscal policy or do any such thing, but to enact and administer the laws of Congress that do not infringe upon the rights of the States or the people. If you could thread all the needles, consider all the negatives and remove them, and then have a fully compatible bill with the Constitution that would do such a thing, then he would, indeed, have happily enacted it. Notice who has to do the heavy lifting to make sure it that the objections are met? Congress.

Does a President need an expanded view to do that? No.

Now for the famous passage, that everyone seems to have heard but no one knows where it comes from.

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.

Actually there are a few passages that we are attuned to in that. Amazing that many, today, consider President Jackson to be unsophisticated.

The man was a POW and our first President to have been a POW in a prior war. It was the Revolutionary War. He was 13 when captured. He would then become a General and in the War of 1812 defeat the British at New Orleans. In quelling foreign inspired Native American attacks he would 'take Florida' to the point where Spain would sell it to us. He did not have computers, the Internet, or a huge staff of advisors and followers through the years, but seems to have been one of the most politically astute and economically wise Presidents we have ever had. I am hard pressed to think of any President who had such in-depth understanding of the Constitution, laws, economy and foreign influence on the continent. He would also recognize a slew of other Nations, open up trade relations far and wide, and send the first US ship around the planet in pursuit of punishing pirates. Oh, he would also threaten his home State of North Carolina with the militia if it thought it could get away without paying its share of the taxes... nearly got the civil war a few decades early. Over taxes.

In many personal ways there are similarities between Jackson and Roosevelt, but their philosophy of government is at 180 degrees.

That Bank Veto stood until President Wilson decided that the federal government really did need to 'manage the economy'. That was more on the lines of 'making it up as you go along' about all the good things that government should do. The Fed would go through some morphing over the years, with Congress tinkering time and again with it, but that didn't stop the Great Depression, various recessions and 'stagflation', or other market crises that are part of the normal business cycle. The SEC, coming in under the later Progressive FDR would be put in place starting small, but would grow over the years, as government is wont to do when it finds that no one is stopping their power grabs. Neither did a damned thing to point out the problems of Fannie and Freddie, the first one another of those lovely ideas to waste money during the Depression when the country really needed liquid capital to get things moving again.

Say, just why is it we are told all these great things 'helped get us out of the Depression' when the Depression was substantially over by 1937 and most of these things hadn't even been stood up yet? That is what all the economic analysis shows: GDP not only having recovered but added on the expected amount after the 1928 drop-off... you did know the 'market crash' started in 1928, right? By 1933-34 the economy had hit rock bottom and was on a sharp and steep upwards slope to recovery. Luckily I covered that in a previous post, so I don't have to go through it all again here.

The Progressives in politics worked very hard to concentrate power into the federal government as that was seen as a 'modern' or 'advanced' way to do things. They had an influence of foreign groups looking at how this was being done and they expanded upon it in Italy, Germany, UK, France, and the Soviet Union. That would end up being varieties of Socialism: Communist, Fascist, National Socialist. If you want the future of US government expanding to 'regulate' more of the economy, you can get a feel for it by looking at the historical predecessors who did this. Note: they all failed, and badly. That is not, of necessity, predictive as history is not inevitable in this realm due to the lack of vibrant but non martial expansive authoritarian regimes. And an undermined representative democracy in the US may just be the first such regime to be both authoritarian and relatively stable. Something that Mark Steyn indicates as being called Incumbistan, which sums up a form of aristocracy that is perennially elected, has little change-over and becomes very unrepresentative of the population as it disenchants that population from voting.

That brings us to today and the movement as Mr. Zywicki points out, of the ability of the President and the Executive branch of government to operate autonomously in an area not given to it in the Constitution. Nor was it given to Congress which gets only to set some laws on coinage and currency, to go with its interstate commerce regulation power. It is that latter which has been abused beyond any original scope of the Constitution, even as the SCOTUS validates such moves via its strange concept of 'national market being influenced by local activities in the States'. That is one of the final blows to States Rights, and the concept that this is a federal system, as it destroys any final place where the federal government may *not* interfere. Change is not progress, especially when it endangers the ability of a federal system to BE a federal system with checks upon the national government not only by limited Constitutional language but by counter-balance from the States and the people. Today the Executive branch is operating autonomously (as Michelle Malkin is blogging on) to the tune of almost $1 trillion of public backing without any legislation to authorize it. That is the Congressional power, not the executive, and not one penny of the federal government's funds can be committed without an act of Congress to back it. It is the power of autonomous institutions to act against the public interest at the behest of the Executive that has these powers divided, as the concentration of such power without check and balance creates the ability for government to act without democratic oversight... that is small 'd' democratic, as in democracy and input from the common man via our elected representatives in Washington, DC.

To give a scale of that, it is the amount of financial shock sent into the real estate and global insurance market by the falling of the Twin Towers on 9/11. Those ripples went global in scope, and yet the economy weathered it out just fine, even eking out a small GDP gain in 2001 *with* the loss of 9/11 and the insurance liability that had to be absorbed into the private market. This has been caused by the confluence of events that starts in the time of Theodore Roosevelt and going beyond the President being a 'mere steward' of the Nation. By injecting an activist Presidency and then with Progressives shifting the balance of Constitutional checks via their removal, and with the action of Congress in that exact, same timeframe to limit its size, the idea of a growing democracy has been given a harsh blow. Bailouts of private lending institutions or private insurance groups are a failing of democratic system based on limited federal government and representative democracy to back a republican system. Representative democracy as seen at the founding, meant a diverse representation, with a number of State legislative bodies having *more* representatives than the federal system had. By giving Congress the power to set its own size without having any check on it, say by popular referendum, Congress has so limited the ability to be representative that the most numerous branch of government, that of the House of Representatives, has one Representative per every 550,000 people. Considering that the Constitution sets a maximum size limit at 1 per 30,000, we can get an idea of what was considered 'representative democracy' and if we have held close to that ideal over time. This distance between the people and their representatives is corrosive to the very concept of representative democracy and gives a ready pathway to authoritarian government that can act as it pleases for its own concerns without regards to the people.

Why is this important? Well consider where the Rasmussen Reports places the public favorability to a public bailout for financial firms: 7%.

That is hitting in the range of those who are favorably inclined towards Congress, these days.

Who is this set of bailouts going to help? Beyond Russia and China? In theory it helps the US market, but to get that positive you do have to start removing the ability of businesses TO fail in a capitalist system. And when public largesse is given to back such firms, just where is the accountability when done by an institution with no public backing?

There isn't any.

That said there is a way to work this so that accountability gets ploughed back into the system with a pointy stick, but you will not hear this from either of the two parties or any member of Incumbistan. That way takes a leaf from President Jackson, not from President T. Roosevelt, and the logic is one that works quite well as Jackson enunciated it.

Give each and every taxpaying American a share in the stakes directly, without the government holding ANY OF IT. If they are going to use our money, then give the people the piece of the action that will then require these awful institutions to directly repay the people, without any damned stinking intermediaries to screw around with it in the public coffers. Sure these organizations could default on that debt obligation, and get tied up for a few years with the federal government. What happens when they try to walk out on tens of millions of taxpayers who want a piece of their hide? Well the largest class action lawsuit the world has ever seen, not only against those institutions but against our intermediaries to show cause as to WHY the hell the American people's representatives who have something close to authority in this area were NOT consulted. Yeah, no one expects Congress to offer solutions: the bastards sit around on their butts unless they arise to pontificate on some issue.

Or pass gas.

Its about the same.

Because our government is representing you, me and every other American citizen and putting our tax dollars at risk in these institutions with no oversight worth talking about. Who walks out on debts to the federal government? Who doesn't these days, beyond law abiding citizens? We the harassed taxpayers of the United States. We are still paying off the S&L debacle and now we get this?

I'm surprised its at 7%, but then there is the margin for error which starts to let you get an idea of how low that can go.

The two Presidential campaigns are, almost in unison, acting in the interests of Incumbistan, to protect their interests and saying that its all about protecting you and me. They want to plough money into institutions that can't tell their butt from a hole in the ground, mostly because they paid off Congress to change the definitions. And that is both parties without any exception, as this covers two Presidents and something like 4 to 6 Congresses. The same Congresses that swore, up and down in 1986 that they would, Real Soon Now, fix the immigration problem after the Amnesty.

That was a lie.

The same Congresses that promised lovely oversight on the institutions in question.

That was a lie.

The same Congresses that were told about the economic warfare being waged on our domestic oil industry via foreign economic manipulation to damage our petroleum production, and Congress promised they would look into. Or try to understand it.

That was a lie.

Now we are told that this will bring all sorts of lovely oversight, regulation and all sorts of other fairy dust that was supposed to prevent Enron and Worldcom and the S&L crisis and...

Those are lies.

What is an authoritarian regime?

One that doesn't change much, vests its interests with power, backs its interests and then tries to mollify the population while it does those things.

Welcome to the era of authoritarianism in the US.

You, the taxpayer, get the bill for our aristocracy.

Because they don't give a good, hot damn about you.

Just their political hides and paying off their cronies.

But they won't tell you that, and say otherwise no matter what the party is they belong to.

And that, too, is a lie.


Yeah, I don't like what it has reformed into and don't like where the next bit of 'reform' will take it. Because we have seen where the lies of the past have gotten us. I don't trust our elected representatives in this, and would enjoy seeing my pound of flesh show up to be paid off by these institutions. And keep it out of the hands of the government that no longer requires us to operate, save for some nice shows of affection a few months before the election. And then work very hard to turn me off to representative democracy between elections.

So how about some of that luvin now, huh? A piece of the action for the American people? Isn't that what democracy is all about?

18 September 2008

Fed up with the bully pulpit and the Elites

Just who are the 'Elites' in America?

Mostly they self-identify into a few broad classes: Political, Media, Business and Military.

They are the self-important 'know-it-alls' who are willing to sacrifice liberty, freedom and the Nation to their beliefs that they are the best ones suited to run the world. They are the wannabe ruling class who are always ready to tell you what is good for you, and then use the power they have at hand to try and force that to come to pass. You see they 'know' things and are way smarter and more powerful than you, and they... they 'know' what you want... if you would just let them give it to you.

Take Yuval Levin's link to ABC News and a video clip of Sen. Obama at a Planned Parenthood meeting answering a question on sexual education for children. I'll point out what struck Yuval at The Corner at NRO, and it is extremely telling about Sen. Obama in that portion of the video at about the 3:10 mark:

The one thing that I want to insist on is that, as I travel around the country, the American people are a decent people. Now they get confused sometimes. You know, they listen to the wrong talk radio shows or watch the wrong TV networks, um, but they’re, they’re basically decent, they’re basically sound.

- Sen. Barack Obama, 18 JUL 2007

What that leaves out are the appreciative audience twitters and scattered laughs after 'they get confused sometimes' and 'listen to the wrong talk radio shows'. The audience likes those remarks and do believe that *you* are confused and that *you* listen to the wrong talk radio programs. Way to be for the 'little guy'... the 'they' out there, Sen. Obama, that you talk about as if it is a microbial colony that you are not apart of. Come on in and join the gene pool, Senator. That passage is *not* something that demonstrates that he wants to reach out to the American people, and, just before that, he tells you how he sees the President's role in this just before that excerpt:

You know I... eh...eh... the longer I'm in this race for the Presidency, the more I realize that so much of leadership is about using the bully pulpit to frame the issues in a way that allows us to draw on the best impulses of the American people.

Now C-Span has the dating of that term back to President Theodore Roosevelt and he had a slightly different outlook on the American people than Sen. Obama has, to say the least. On 20 MAR 1912 he gave an address at Carnegie Hall on "The Right of the People to Rule", and it was captured by Thomas Edison and is provided as audio at Project Gutenberg, and I will use the transcribed text at the T.R. site, with the opening paragraph as follows:

THE great fundamental issue now before the Republican party and before our people can be stated briefly. It is, Are the American people fit to govern themselves, to rule themselves, to control themselves? I believe they are. My opponents do not. I believe in the right of the people to rule. I believe the majority of the plain people of the United States will, day in and day out, make fewer mistakes in governing themselves than any smaller class or body of men, no matter what their training, will make in trying to govern them. I believe, again, that the American people are, as a whole, capable of self-control and of learning by their mistakes. Our opponents pay lip-loyalty to this doctrine; but they show their real beliefs by the way in which they champion every device to make the nominal rule of the people a sham. I have scant patience with this talk of the tyranny of the majority. Wherever there is tyranny of the majority, I shall protest against it with all my heart and soul. But we are today suffering from the tyranny of minorities. It is a small minority that is grabbing our coal-deposits, our water-powers, and our harbor fronts. A small minority is battening on the sale of adulterated foods and drugs. It is a small minority that lies behind monopolies and trusts. It is a small minority that stands behind the present law of master and servant, the sweat-shops, and the whole calendar of social and industrial injustice. It is a small minority that is to-day using our convention system to defeat the will of a majority of the people in the choice of delegates to the Chicago Convention.

Yes, a minority that cannot get the most votes, games the system and then pays lip service to ideals of liberty and freedom and then go on to say how wrong-headed the American people can be. President Theodore Roosevelt did come from an Elite family, Elite upbringing and had an Elite stature. While going on safari may be considered an idle of the rich, he also went hunting through various parts of the US from desert sands to the rugged northwest to his trips in the Adirondacks near old familial haunts. He had the money to indulge himself, but that did not stop him from forming up the Rough Riders or becoming the Mayor of NYC to confront the Democratic political machine there. He did not want to be Vice President, but accepted it as a service to the American people. Of course, when in office he took a view that would offend many 'strict construction' views of the Constitution held today, and the attitude of the idea of States rights being a 'fetish' is on that would also be abhorrent to more than a few today... even with the federal government slowly marginalizing and removing duties from the States and the people contrary to Amendment IX and X. Those views he goes over in Chapter X of his autobiography, thus making President Theodore Roosevelt a man who would come to trust the power of the people to rule, only once he was out of office.

Having expanded that power base of the Executive branch, taking a 'if the Constitution doesn't prohibit it, I can do it' attitude contrary to the Constitutional proscriptions in Amendments IX and X, and then citing the problems that those wishing to restrict liberty and freedom will cause when THEY get a hold of that self-same power makes the warning all the more clear: he thought he could be trusted with this power in the office, and forgot that the office holds the power, not the individual temporarily occupying it. The 'bully puplpit' or wonderful speaking platform taken as an advocate for something, then morphs from explaining a President's position to one of telling the American people why they should support this or that legislation. Instead of explaining policy and implementing it within the bounds of the office we get Presidents pushing to change the political landscape to suit their whims. That is a change from the 'stewardship' approach of T. Roosevelt: no longer is the President just maintaining things, the President becomes an advocate of change and wishing to change or alter what should remain in stewardship to be passed on as little changed as possible.

That is Elitist.

President Theodore Roosevelt only learned the wisdom of the founders *after* he left office, not while he was in it. And the moment a candidate who would attack *him* shows up and seeks to utilize the power of the Presidency in ways that *he* doesn't like, does Theodore Roosevelt begin to need to announce the supremacy of the American people in the process of government. Apparently there is 'advocacy' that is 'good' in the mind of one man that may not like when 'advocacy' he considers 'bad' to use the same tools he created to work its ends. Of course he was also seeking office to make sure that his 'good' advocacy would win... and try to marginalize that 'bad' sort.... just like Sen. Obama wants to help those 'confused' American people.

The political Elites are the easiest to pick up: they so continually announce their Elite status that it is hard to miss. Do I have problems with Sen. Obama's opponent, Sen. McCain? You betchya! One of my earliest posts looked at the things that really points to Sen. McCain being at the bottom of his hole and not learning to stop digging. Took me a scant few minutes to put down the things I detested about his positions, his past political works and his Elitism. His anti-pork views? Say, when he was heading up the Armed Services Committee to draft expenditures, why didn't he do much to stop the porking up of those bills? That stuff got worse through the 1990's and then so bad that it would be a problem in the billions of dollars by 2004. The logistics and war reserves necessary for modern operations were inadequate when we needed to operate in Afghanistan and Iraq, and those problems date back over a full decade.

Pork in the budget is not *just* the granting of political favors and cronyism with the public's funds, although that is horrific enough to want it ended. No, all that pork requires programmatic oversight which is NOT added into such appropriations. So agencies not only have to care for their own projects, but then have to stretch their staff (legal, admin, financial, contract) thinner to cover for the pork. That means that the necessary jobs don't get proper oversight. That can run as much as 10% to 15% of the appropriation in necessary agency logistic support to ensure the funds are appropriately spent and accounted for. And that money comes from normal operations to meet the actual duties of the agency.

To be 'anti-pork' means far, far more than not asking for earmarks: it requires the recognition of the bad public policy they are and the threat to the public good by inadequate oversight that those funds cause.

The 'Maverick' stance is to take the 'I didn't ask for any' position, while not doing a damned thing to end the practice, so that you can still use those items being added in by others to grant political favors. Needless to say, I have problems with that. Sen. Obama is on the high pork fat diet and now points to the infrequent twinkies as his commitment against pork... that is after having the whole hog on the Luau. So your choice is: a man who wants to grant political favors by asking for them or one who wishes to grant them by denying a few.

Now I've gone over the larger theme of the status of Elites before, hitting the military Elites or pundits, before. Mostly that is from the outside, although of late there are a number of high ranking personnel who found themselves without backing for their jobs who left the Pentagon to complain about what they saw as wrong-headed policy. Mind you, many of these people left because their way of fighting war from the 1980's and 1990's couldn't address the needs of 2001 onwards. That internal political fight for this or that weapons system then moved from the Rings of the Pentagon to national television, with those who recently left being critics of policy. Because their pet projects went away. And if you look at their last active service deployments in the field, in combat, you begin to understand why they found themselves out of place: they were out of place. Of course a man like Gen. Wesley Clark was already out of place when he was in the field and deployed, and I'll take this from my previous article:

First up is this lovely little item from The Quarterly Journal, No. 1 March 2003 (p.103):

At this point, it is easy to foresee that casualty aversion is not only a governmental problem. Hence, as Weinberger states, fighting in the current context will require a high level of public support. This assumption, largely driven by the U.S. experience in the Vietnam War, directly involves the public as a major actor in this debate. Charles Reiss, in February 2001, related elements of the Future Strategic Context for Defence to this: "The armed forces, both in peacetime and on operations, will come under greater public and pressure group scrutiny." Through this type of attitude, governments seem to project casualty phobia onto the public, and treat it as if it is a weakness in the nation to be fought. The media are the other foci of attention for these concerns in governments. Reiss mentions "the pressure from public opinion and the media for minimum casualties" This is perfectly illustrated by the declaration of U.S. General Wesley Clark after the Kosovo campaign: "When you start to lose these expensive machines (aircraft), the countdown starts against you. The headlines begin to shout, `NATO loses a second aircraft,' and the people ask, `How long can this go on?' Therefore, although governments recognize casualty aversion, they tend to attribute the pressure behind the phenomenon to the media and the public.
Yes, governments and the media project a lack of will to fight on the public... not the other way around. Fun, isn't that? Say how do you like being told by the government and media what is or is not your will to fight? Remember that there are those that want 'zero casualty warfare' in which flowers are strewn instead of bullets, and everyone sits in the campfire and sings together... while someone else sneaks up and slits your throat, I guess. I never could fathom that. But at least they are HONEST in the fact that they are pacifists and that 'no war is just'... or at least semi-honest, since they want all those 'black, brown and other people of color' to be freed, but then complain when that freedom must be paid for. They probably thought the best way to disarm someone out to kill you is to sit down at a conference table with coffee and donuts and figure out exactly when and how harshly you will be killed.

The need for the MSM to fill air time drives news, that news acquisition cycle then presses public servants who are trying to supply information to the people to ask for those things the MSM is interested in and that gets supplied and hyped. Anything else that tries to be supplied gets filtered out: the MSM acts as 'gatekeeper' telling you what it wants you to know... and then asks pundits to pontificate on those things it wants you to know. And the rest of the information? Kept behind the gate, so that the public has to work to find out what our public servants are trying to tell us about. And when those exact, same servants actually can get a word out that discredits the MSM message?

Why that is 'showing political bias'!

And the 'gatekeeping' that advocates a position isn't?

Gen. Wesley Clark would have something far worse on his hands, however, as after having a 'death free' mission, and again I will excerpt and cut off a transition to the conclusion on the military/government/public interface:

Now, since the good General Wesley Clark was involved, lets take a bit of a look at some further things from that same study (pp.105-106):

At first, the public seems to be the favorite source to which to attribute casualty aversion. Nevertheless, this is an assumption that is too easy to make. For example, several studies exist stating that the public is not casualty averse at all. In The Myth of the Reactive Public, Kull and Ramsay conduct an in-depth analysis of surveys done during recent conflicts. The results of this study are simple: the public is much more robust regarding casualties than initially expected. In particular, they reach this conclusion for the Gulf War, the crisis in Mogadishu, and the attack against the U.S. Marines barracks in Lebanon in 1986. After the images of the incident in Somalia were seen, the public wanted more U.S. involvement and retaliation. Likewise, U.S. public support reached its peak when severe losses occurred in the Gulf War and in the days following the terrorist attack in Lebanon. Dealing with the Vietnam War, Jeffrey Record comes to this surprising conclusion: “In retrospect, it is amazing that public support remained as strong as long as it did, given the war's geographic remoteness and the predominantly abstract quality of declared U.S. war aims." Initially, the polls were clear: the public did not respond by demanding an immediate withdrawal. Furthermore, they describe the misperceptions of the public with regard to the number of casualties. Their starting point for this study was a PIPAsurvey in 1999, where American people estimated that 172 U.S. soldiers died in Bosnia, whereas the U.S. actually had no casualties. This survey envisaged different scenarios of degradation. Each time, the public responded with a large majority demonstrating a will to reinforce or to retaliate. A similar survey by PIPA, in 1999, leads to the same conclusions.

Ah, the American people not only think that freedom can be bought with casualties but EXPECT IT! Even when there are ZERO actual casualties, the common folk of the US think that we have paid a price for freedom in blood. And do note that the incidents in Somalia and Bosnia and Kosovo are AFTER the end of the Cold War. Fascinating stuff, isn't it?

All that hard work to cater to the MSM and its voracious news appetite for death during conflict, to stage a campaign that saw zero US deaths and the reward is: the public thinks people died, anyway. The public EXPECTS that actual military conflict will have a casualty toll on it and only the most far Left of individuals believe otherwise... right up to the point they want 'humanitarian missions' to do one thing or another. Deaths in the National interest are to be avoided, yes, but that civil sword cannot remain unbloodied to that end... which is why the far Left is so ready to expend lives in things not to the National interest, because that furthers their anti-Nationalist ends. Incidents like Blackhawk Down in Mogadishu, or the Marine deployment in Lebanon show that when the Nation expends lives in places of questionable National interest, the Nation comes to take a dim view of them. That is because the Presidents involved did not believe in their commitment and to assuage their 'good faith' they expended lives to no good end and diminished the public's respect for them and the armed forces, while emboldening our adversaries. If either of those Presidents had committed to going after those involved, Hezbollah in Lebanon or al Qaeda with warlord support in Somalia, then we would not BE in Iraq or Afghanistan. And Hezbollah would be a footnote of a nasty group that got hunted down until they fled to Syria crying about 'being oppressed' by the US, which would be a lovely Leftist talking point, like what is happening to FARC these days.

This problem with 'peacekeeping' is glossed over by the military pundits and the MSM, both in the Elite structure pushing a worldview where these things are supposed to 'help', while actually rewarding those who caused the problems in the first place. And yet we hear a drone of 'peacekeeping missions' and 'humanitarian missions' and rarely, if ever, the cost in lives of those missions that would require the full commitment of not only the President and Congress, but the American people, as well. And that 'bully pulpit'? Worked great in Yugoslavia for President Reagan, no? So wonderful for President Clinton in the Balkans that those hard problems that have been there for centuries have been fully resolved, right? How about President Bush (41) and that grand coalition with National backing against Iraq, that solved everything by 1992, right? And, say, since nearly every President since Woodrow Wilson has been dabbling in Haiti, just how close is that poor Nation to having things worked out there? That 'bully pulpit' has been so often deployed it is on castors and sits in the wings to be wheeled out every few years...

What comes with the pulpit, however, is the vision of a Priest, most often celibate, talking about the evils of fornication and how you really shouldn't be doing it, except to provide children which is your duty. It is all 'fire and brimstone' the first time through, but by the tenth time it is a polite yawn and check your watch and just what is on for dinner tonight? That 'bully pulpit' has the same problem: it is effective when utilized rarely. But it has seen so many sermons on the same subject that, really, we pay more attention to commercials on the need to floss daily than we do to Presidents on just *why* this or that program or project is vital to the Nation, and you'll get higher taxes to get it, too. The commercials, at least, are short and often pithy, when we don't hit the 'mute' button for them. Sort of like you do with Sen. McCain preaching about the low pork diet, and then making sure the bacon is properly distributed at the pot luck dinner after the anti-pork sermon.

'Fireside chats' with the American people were all well and good from FDR, but he had the novelty of the technology to play upon and showing that he was 'modern' by using that means to effectively communicate. Sen. Obama by hosting a number of anti-American, bigoted blogs loses his ability to show that he understands the medium and that by opening the floodgates you can expect the raw sewage to come out with the rainwater. And if he can't learn to Google 'McCain AND disabilities', then just what the hell is so hip and modern about the guy? Not that the MSM won't eat up that drivel. Sen. Obama is no modern day FDR, nor is Sen. McCain a latter day TR: neither are willing to address the extreme problem of an activist Presidency that the American people don't want.

Gov. Palin does address that, to a degree, but she is on the VP side of things. So, unless she has a stout cluebat to batter Sen. McCain about the head and shoulders with, you can expect him to do asinine things to give up his 'principled positions' to get 'bipartisan support' in which he gives up 90% of his loaf to get 90% of their loaf, which then becomes law. See, he stood for 10% of something he believed in! So 'maverick'.

While politics isn't the cure to many things, it can be the cause of them. Take the latest 'sub prime crisis' du jour of the crisis brigade. Dean Barnett does a lovely job rounding up the mess at The Weekly Standard, and we get to see the heady mix of irrational regulators pushing asinine policy leading to bad loans to NINJAs. That is a term that does not refer to black-clad martial artists stealthily killing those that oppose them... we should be so lucky! No this refers to the class of people who were getting sub-prime loans at the urging of politicians being paid money from the political arms of Fannie Mae and Freddie Mac. It is a wonderful term! Here are the NINJA loan seekers:

No Income, No Job or Assets

That was the 'new class' of potential homeowners who would benefit by easy money policy backing insane lending practices pushed by wealthy political machines by both Fannie and Freddie which are backed by Federal funds and get political appointees who have no other qualification than a President likes them. Gotta love that oversight, no? While Sen. Obama has been a beneficiary of the political largesse of Fannie and Freddie, being #2 on the recipient parade for them after Sen. Chris Dodd, who was sitting in the Senate when these awful rules were drafted to allow for Presidents to put plum jobs in those institutions to political cronies? And not complain about it, save in the Pork upon the Pulpit way? It is a part of the 'broken culture of Washington' and who hasn't done a damned thing to fix it? If you said Sen. McCain, then grab some bacon!

Now to forestall those that support Sen. McCain, may I point out that even he DID oppose that sort of thing and brought forth a bill or two on Fannie and Freddie, and that he has been ineffective in actually doing anything about it? That 'bipartisanship' is just how often Sen. McCain can compromise principles of his party and that of conservatives just so that *he* can say that he did that. That is not 'effective bipartisanship', but it is a huge problem in showing that his wanting to 'compromise' doesn't equate to actual and effective legislation or addressing the 'Washington culture'. Just like pork.

Whatever Sen. McCain's fixed principles are... yeah, he has written a lot about his background and experiences, but just what is it that he is following is anyone's guess. It isn't classical liberalism of the freedom and liberty for the individual sort. He answered that question years ago with McCain-Feingold. And McCain-Lieberman.

He isn't about economic conservatism, that would put forth that regulation stifles competition and ingenuity and makes it harder for small businesses to unseat large ones to create creative turmoil amongst companies. Sen. McCain loves regulation and talking about the crooked people on Wall Street so much that he has forgotten that the average American now has investments in stock and bond vehicles that were previously not open to the common man by the actions of a very few people leading a few companies to do that over three decades ago. Regulating Wall Street is telling you what you can do with your money within the limits set by the federal government. And its role from the Constitution in that area is...?

Really, when the US deregulated the telephone market prices plummeted, services increased and a plethora of new companies emerged. When the US deregulated the airline industry you got start-ups like SouthWest who could actually try new business models. And the cost of air travel dropped like a rock. And if you want to complain about Freddie, Fannie and AIG, then look to the self-same Congresscritters that have been courting lobbyists and taking cash to change the way loans are made. Hey, how about some regulations for Congress? Those members sure as hell ACT like they are a big business these days.

Sen. McCain brought the military conservatives over to him with his attitudes on Iraq and they have forgotten his votes in the 1990's to support military cuts, which harmed logistics and end-strength to the point of two US Army Divisions going to their lowest readiness levels since Vietnam in 1999. That same Senator then turns around and asks why we don't have more people in the Armed Forces in 2003? But so many just want to 'forgive' him or say that those things are 'unfair' because Sen. McCain has no crystal ball. Which is why you keep a robust military around: you don't know what the hell the future is going to bring and it costs far less to need it and have it than to need it and NOT have it.

So when someone figures out the guidebook that Sen. McCain is reading from, let me know. Remember, Teddy Roosevelt had a number of misgivings about the use and application of Presidential power when he was out of office. He did, indeed, go after Wall Street - monopolies and oligarchies. That is a good thing as it shook up the market and stopped it from having unassailable areas by start-ups. Too much regulation puts those fortifications back in place. Just look at how Big Media have lobbied Congress to make the copyright into near perpetuity via legislation enacted into law. Good job, that, stifling the content of creativity to the common man. And protecting Mickey Mouse and giving the Disney Company the right to erect barriers to creative entry into the marketplace.

My problems with Sen. Obama are fundamental - he takes money from crooks, associates with domestic terrorists and racists, and then bottles that in shiny, new authoritarian bottles of 'home and change'.

Got it?

Sen. McCain complains about the past vintages, but is more than willing to sign on to letting those be poured into the mouth of the body politic because he abstains, donchayknow? And when he wholeheartedly signs up to quota systems and supporting things like the Legal Services Corp. to expend public funds to bring suits against the government on behalf of Leftist interests? Or to stop low power FM broadcasting for local communities that get no service from those bands locally? Or to try to make free political opinion something that should be controlled by the FEC? Or the 'gunshow loophole' to keep track of who goes to gunshows? Or that the federal government has an interest in local cable right-of-ways doled out by local governments? Illegal alien amnesty? Why don't we just help those nice folks from MS-13 become all nice and legal with a sham 3-day 'processing period' for mountains of paperwork. They are 'all God's children' after all....

That is Sen. McCain's version of 'federalism', don't mind that it doesn't look like any form of 'federalism' under any definition of the term.

Sen. McCain loves to complain NOW about things he has been a part of for more than 20 years.

I have a problem with that.

What really gets me is the 13 month (or whatever the attention-deficit disorder length is for conservatives) or so cycle that conservatives have with Sen. McCain. He will join with the opposition, stab you in the back until we get the pitiful 'Et, tu, Brute?'

Then he will strut around, make merry for a few months, condescend to help you out, lift you up... and then join in a new backstabbing complete with 'Et, tu, Brute?' on the part of conservatives.

That has been going on since his first votes not to sustain President Reagan's vetoes on a number of bills. By the third time around it was pathetic. And now the co-dependency cycle works itself around, he puts Gov. Palin on the top spot and... well... I can feel it coming. Will it be immigration? Taxes? Backing out on his pro-drilling conversion and joing the Gang in the Senate? And he will do that just in time for the Feiler Faster Thesis to be in gear for Sen. Obama who will be on his upswing from the dregs and start to overhaul Sen. McCain who will be doing his strutting thing and trying to reach out, again, because, you know, 'he is the best we can do'.

If I don't vote Cthulhu it is because I will do something truly Evil.

I will write in Gov. Sarah Palin for President.

Because SHE is the best being offered this go-around, even where I disagree with her, and depending on the rules for the counting of these things in the States, that just *might* start to change the vote count for the Elector sent to the Electoral College. All it takes is a few of those and the actual election, in the EC. And then we will see *just* how dirty the 'maverick' will fight... to keep his VP out of the top spot.

Yeah, I'm willing to do that.

The hell of it is, that doesn't show up until the votes are counted.

And like President John Quincy Adams said, I will know that I voted for the RIGHT PERSON and to hell with the rest of those wanting me to be 'partisan', I will sleep well at night knowing I voted for the right person even if she LOSES. It is what my country asks of me.

Truly, only Cthulhu could inspire such Evil so that even if It loses, It wins.

Sounds like fun! Plus it is the right thing for me to do and uphold my end of the Constitutional bargain. Who would have thought that something pointed to by so many as a great good, could actually end up being an evil process? Oh, they are the 'partisans'... but then so am I. For my Nation.

Because I have had it with the tyranny of the Elitist minorities and the Big Business that is Congress.

And I distrust anyone with a Sen. or Rep. in front of their names save for a very, very, very few. You want the source of the problems in lending and Wall Street now showing up? Look for the Sen. or Rep. label and you will have hit the rotten fish in the rotting barrel. Remember that Hitler, Stalin, Mao, Mussolini, Pol Pot, and the rest of that crew had lovely controlled and regulated economies. And that those Western Nations getting over regulated, France, UK, Germany, Italy, Spain, Greece, Netherlands, Denmark, Sweden, Norway, et. al. all have declining populations, are importing north african and middle eastern islamic populations, face a dwindling work force and all have extremely well regulated economies. Where else can you get the doctors to all walk out for a month of paid vacation and let people die in the hospitals but in a well regulated economy?

I want the power basis of the US to shift to a more representative one and BREAK the power of Congress to act as a Big Business. You want to get rid of the bad fish? Get a bigger barrel and add in a lot of small predators. Soon it will be *all* small predators beholden to YOU. I support the 1:30,000 maximum House under the Constitution, as the best answer for corrupt democracy is lots more democracy and let the rotting extremities of government get chewed away by it. I can't get to there from here through Sen. Obama or Sen. McCain. But Gov. Palin just might understand that concept. She sure as hell has a better chance than anyone else in the race, that is for sure.

Let us join together to dilute the power of the Elites in our government.

You can't get that through reform.

You can get it through vital and diverse democracy.

Just like the founders wanted.

I like that vision of America, where our Congresscritters are beholden to the 30,000 adults in their district.

And more people will realize the power of their vote is not diluted and become deluded with the system, as is happening now with our Fascist and Communist trends towards regulation and diminution of liberty and freedom.

I want my fellow citizens to control this Nation for good or ill, and to take power from these Elites and their huge money supplies and face them with the inordinate task of having to try and bribe a good portion of 10,000 Members of the House. They couldn't hide that. And certainly not from local voters where each and every single vote counts.

You know, local democracy?

That is what the 'reformers' are against.

Accountability for everyone, save them.

And lets put the 'bully pulpit' in the storage attic for a few decades... and find some people who can govern, not rule the Nation.