Barry K Moritz

KEEP YOUR NOSES OUT OF WHERE THEY DON’T BELONG

Congress has NEVER run a successful business and had absolutely no excuse for sticking its nose into a housing market about which it had no understanding whatsoever. What they THOUGHT they were doing was making housing available to the less economically advantaged citizens. What they actually DID was to trigger a recession.

Here’s how it started: The poor record of many low income public housing projects in the past led Congress to try to achieve its goal by making mortgages overly cheap. This created the artificial housing demand that caused the huge escalations in the price of housing (supply and demand, right?). Thanks to the natural law of unintended consequences, Congress actually ensured that the price of housing was once again beyond the reach of those who they believed their actions would benefit.

This is only the beginning of the full story, which has been reported extensively, and which ended with the collapse of the housing market. But in case you don’t know the facts, here’s a brief summary:

Most of the large number of new risky mortgages were ‘packaged’ into “mortgage-backed securities” by two government-sponsored organizations – Fannie Mae and Freddie Mac. These securities were then sold in the financial marketplace. The Congressional committees responsible for overseeing the operation were the Senate Banking Committee and the House Financial Services Committee. These committees were headed by Congressman Barney Frank and Senator Chris Dodd after the Democrats took over Congress in 2006. Because of the risk perceived by investors in buying these securities, a whole new financial product – the ‘credit default swap’ came into being. This derivative product served to allow buyers of the packaged mortgages to ‘hedge’ their investment by essentially buying insurance for the market price of the mortgage packages. They were highly profitable because of the huge leverage they provided. In case you forgot, one of the prime reasons for the magnitude of the great depression was the overleveraging of investments on Wall Street.

Several people – particularly Senator John Sununu, Senator John McCain, and President George W. Bush – warned for years about the excesses of the unregulated mortgage derivative market and the operations at Fannie and Freddie. They were ignored by Dodd and Frank. Frank specifically denied the potential of any financial risk right up to the housing bubble collapse and personally derailed efforts to introduce the suggested regulations.  In fact, Frank and his cohorts pushed Fannie and Freddie to take on even greater risk – urging even more loans be made to people who wouldn’t qualify for traditional bank financing. As the Wall Street Journal noted, Frank and Co. pressured regulators to ease the banks’ capital requirements. With the aid of the so-called ‘community organizing’ outfit ACORN , banks were similarly coerced to make riskier loans. Taxpayers were now responsible for any capital shortfall.

Then the spit hit the fan. Defaults began accumulating on the risky mortgages. Fannie and Freddie were bailed out with taxpayer money. Regulations requiring banks to value their assets at current market value (known as ‘mark to market’) resulted in huge bank PAPER losses and those that underwrote the credit default swaps (e.g., AIG) didn’t have the free capital to cover the policy payouts. The whole house of over-leveraged and unregulated instruments (thanks to Congressional sleeze-balls like Frank and Dodd and the inexplicable lack of attention by the SEC) teetered, and the taxpayer was suddenly faced with having to come up with more than $700 BILLION just to avoid complete economic collapse.

Of course, NOBODY in Congress accepted any responsibility. Instead, the party of Frank, Dodd, and Schumer accused President Bush of being responsible for the lack of regulation. The public, which obviously lacks a basic education about its own Constitution, bought the fairy tale – despite the fact that the Constitution clearly proscribes that regulation must be based upon and derived from law. It is Congress who creates law, not the President. Unfortunately, nobody in candidate John McCain’s political party was able to communicate this fact to the electorate. That was one reason why the party lost virtually all power in Washington. Thank you, major media!

It is unfortunate that those Americans who were the recipients of taxpayer gifts no longer have their homes. But it is criminal that the tumbling real estate values and job losses cost many perfectly innocent homeowners their homes too. And it is criminal that nearly every taxpayer (i.e., the 60% of the Americans who pay income taxes) and especially retirees (and near retirees), who had worked a lifetime to build retirement nest eggs, took huge financial loses – some to the point where they are no longer able to provide for themselves. Dodd, Frank, and Co. got off Scott-free. Even better. Look up the major contributors to Dodd’s and Frank’s campaigns (hint: you’ll see Freddie and Fannie). And while the private sector is shedding jobs at an alarming rate, the government is increasing its payroll (up 15% in the last three months, with an AVERAGE pay of $75,000 should the anticipated pay raise be passed in the near future). Socialism anybody?

All this happened because of a government that serves only its own members’ interests; a government that dabbles in finance and industry and markets about which they know nothing; and one that passes laws that almost never accomplish their stated intent. And now, the new administration has placed its hands in the cookie jar of the automotive industry and left the taxpayer holding the bag for $TRILLIONS! All for securing votes and because the public lacks understanding of the Constitution – thanks to a poor educational system controlled by the new President’s party. But this time the government is running roughshod over existing law on bankruptcies – overturning decades of laws that would allow investors to estimate the risks of their investments. Is this the death of capitalism in America? Or will the law prevail to punish those officials who have over-reached the limits of their Constitutional powers?

More insight to follow at a later date. Use the interim wisely by studying up on the Constitution. And DO NOT let ANY of those incumbents return to office!

The Congress of the United States of America has proven many times over that it is incapable of running the affairs of this nation as laid out by its Constitution.

You think this is hyperbole? The following four examples may be old news, but they are perfect reasons why you would be wrong to think that the premise is invalid:

1. The Constitution of the United States specifically precludes a voting representative from the District of Columbia in the House of Delegates. That didn’t stop the House from drafting a bill that created two new seats: one for Utah (presumably Republican) and one for the District of Columbia (most decidedly Democratic).
2. Article 1, Paragraph 3 of Section 9 of the Constitution (Powers forbidden to Congress) SPECIFICALLY forbids the passing of any “bill of attainder” or “ex post facto law.”   Article 1, Section 10 Paragraph 1 forbids the states similarly, making it patently clear that no government at the federal or state level is allowed to pass either a bill of attainder or an ex post facto law.   Yet, On March 19, 2009, the Senate passed a bill which specifically violated both prohibitions. First it addressed bonuses paid to AIG employees BEFORE March 19, 2009. That would make the law retroactive and prohibited under the ex post facto law. Secondly, it specifically punishes companies by assessing huge tax increases on bonuses over a specified amount paid by companies who have received “TARP” funds. Punishment without a trial is the definition of a ‘bill of attainder.’
3. Congress passed a $700+ BILLION dollar “Stimulus Bill” without reading its content. Even worse than that, the bill was ENTIRELY written by Nancy Pelosi and her minions in the Democratic Party without incorporating a single word from the Republican members of the House or Senate. Among the other things those Democrats made into law was a paragraph, explicitly introduced by Senator Chris Dodd, that SPECIFICALLY made AIG’s payment of its bonuses legal! Congress showed yet again that it was illogical, irresponsible, and illegal, not to mention clinically ‘insane’ on March 19^th. Speaking of March madnes!
4. Congress spent untold hundreds or thousands of person hours addressing the AIG bonus which amounted to about $160 Million. By the time the bill passes through the House and the Courts, the Congress will probably spend more for its idiotic knee-jerk behavior than they would collect by any increased revenues from the new taxes (should they somehow prove Constitutional despite the obvious climate in which the bill was created). Maybe even more than the total amount of bonuses paid. And would somebody please explain why more than $3 BILLION in bonuses paid to executives in Merrill Lynch just before they were purchased by Bank of America receive no similar attention? The money is more than an order of magnitude larger than that in the AIG debacle, and the terms of the Senate bill ignore it. Yet the Bank of America is one of the LARGEST RECEIVERS of TARP money. And why has nobody questioned why the Bank of America paid an approximately 40% PREMIUM for the purchase of Merrill Lynch over its market-priced value? Speaking of a funnel down which Congress allowed taxpayer’s money to drain….

Despite a reputation for notoriously short memories, any American over the age of thirty (and probably many who are younger) knows these three words so well that they can complete the statement that began with them: “Read my lips! No new taxes!” The political statement ranks right up there with nuggets like “Speak softly and carry a big stick,” “Ich bin ein Berliner,” “Mr. Gorbachev, tear down this wall,” and “I didn’t inhale.”

It is interesting that those six words of George H.W. Bush live on, despite the fact that they became a lie a few months after they were spoken. Perhaps they are particularly interesting right now because, during the last election, We the People heard very similar words from candidate Obama: “I can make a firm pledge,” he said many times. “Under my plan, no family making less than $250,000 a year will see any form of tax increase.”

Yet the largest increase in tobacco taxes – 62 cents on a pack of cigarettes (an increase of 151%) – took effect this year. Other tobacco products saw similar or even higher increases in the Federal tax.  As noted by Calvin Woodward of the Associated Press, “This is one tax that disproportionately affects the poor, who are more likely to smoke than the rich.” A moderate smoker, who consumes about a half pack a day, would pay an additional $115 in Federal taxes per year.

Obama’s broken promises do not stop there. Not too long after his inauguration, Lawrence Summers, the President’s chief economic adviser, reminded us of his boss’ pledge: “Let’s be very clear,” he exclaimed. “There are no, no tax increases next year.” As those words were spoken on March 31, 2009, it is assumed that they apply to the year 2010.

It is difficult to believe that Mr. Summers was unaware of  footnote 1 on page 127 of President Obama’s budget, which reads: “The estate tax is maintained at its 2009 parameters.” According to the Wall Street Journal, this means that the ‘death tax’ will not fall to zero next year as scheduled under current law. Estates in excess of $3.5 million will instead be taxed at up to 45 percent. No tax increases next year?  There is a bridge in Brooklyn I wish to sell….

Both of the above quoted statements that involve pledges not to increase taxes have become lies in the ignominious tradition of American politics. Either American’s memories are truly extraordinarily short (which might be occasionally questionable, as they do remember George H.W. Bush’s broken promise), or we are among the most gullible people to ever walk the face of the earth.

Hasn’t anybody considered the full consequences of these tax increases?  In the case of tobacco, it discourages US farmers from growing it.  This, in turn, lowers the amount of tobacco we are able to export, which is, in turn, detrimental to our international balance of trade.   The huge deficits in international trade we continue to rack up have changed us from a creditor nation to a debtor nation.  Our wealth is not just leaking overseas; the flow is massive.  Higher taxes on our products and businesses (which are already taxed at the second highest rate in the world, and which the President intends to further increase)  can do nothing except exacerbate the problem.

It is time to stop the spin, the broken promises, the misdirections, payoffs, kickbacks, and similar immoral activities by the politicians in office from the local level to the top of the Federal government. It is time to vote honest, intelligent, and educated people who know how to listen AFTER they get into office.  Furthermore, send the message that We the People will not tolerate dishonorable elected officials and their appointees who know in advance that they intend to break their word to us. To show those officials how serious we really are:

LET NO INCUMBENT RETURN!

Background:

It is a matter of record that the United States Congress, in 1980, decreed a moratorium on offshore drilling for oil and gas. As this prohibition was also mandated by a separate presidential directive issued by George H.W. Bush, the politicians were isolating the United States from potential sources of energy despite the fact that they were spending billions of dollars on the US Department of Energy every year – an agency with the mandate, at the time of its creation, to free the United States from dependence on foreign oil. This seemingly illogical behavior arose from an attempt to avoid more incidents of severe environmental damage from drilling operations – in particular the as-much-as 3 million gallon Santa Barbara oil spill of 1969.

Of course the technology to safely drill had already improved immensely, but a techno-illiterate Congress was more driven by fear than by fact. Over the 40 years since that incident, only 850 barrels of oil have been released into the marine environment from offshore drilling and pumping. As of today, natural (i.e., unrelated to human activity) seepage from the earth introduces more oil into the marine environment than human drilling and oil extraction.

As speculators sent the price of oil from the $40 per barrel range to more than $140 per barrel in 2008, and as the United States was importing 70% of the oil it used despite the documented mandate of the Department of Energy, the USA was sending up to $700 Billion a year to nations such as Saudi Arabia, which supports the terrorist organization Al Quaida; Venezuela, which supports FARQ terrorists in Columbia; and other ‘unfriendly nations’ such as Iran, which dirties its hands by sponsoring anti-Israel terrorist organizations such as Hamas . The price of gasoline quickly exceeded $4 per gallon, which immediately affected citizens’ disposable incomes and increased the cost of doing business. To add insult to injury, the President asked the oil-supplying nations (OPEC) to help ease the cost of oil by increasing production. They not only told us to pound salt, but they reduced their production! This combination promised a reduction of the Gross Domestic Product (GDP) and inflation at the same time.

Recognizing both the problem and the environmentally safe state of the art in drilling technology forty years after Santa Barbara, President George W. Bush decided he knew more than the eco-terrorists, and he bravely, at great political risk, rescinded his father’s presidential order. The price of crude oil immediately dropped by $10 per barrel, so the president then requested the democratic Congress to take similar action. A drilling bill, if passed by Congress, would likely have another benefit: the further reduction in the price of oil simply by introducing the element of risk to the out-of-control oil speculators.

Senselessness

Madame Speaker Nancy Pelosi  allowed her ideology and hatred of George W. Bush to rule over rationality.  She forcefully rejected the President’s request – even as Barack Obama (ahead in the polls, but not yet officially president) said he might be open to some drilling.

Read the rest of this entry »

If there were ever a question of which Washington legislator most deserves to be deprived of another term, one who most deserves recall for manufacturing defects and for ignoring time-between-overhaul checkups on sanity, there can be only one answer to that question:

Madame Pelosi

Speaker of the House Nancy Pelosi.

This radioactive ‘madame’ of the Congress is one of the most deserving. She would be a toxic asset except for the fact that she is no asset at all. And to think that she stands third in line behind the glib but substance-less President and the bozo who has perpetual foot-in-mouth disease…. Read the rest of this entry »

OUR QUOTE FOR THE DAY
From: Senator Patrick Leahy, D-Vt
As reported by: Douglass K. Daniel of the Associated Press

“Having only one woman on the Supreme Court does not reflect the makeup of the United States. I think we should have more women.”

Comment:

I certainly have absolutely no qualms whatsoever about placing a woman on the Supreme Court – IF, indeed, the woman is the most highly qualified, intelligent, and bias-free jurist for the office. As such may, indeed, be the case, I really shouldn’t have to say anything more. However, with today’s ‘PC’ thinking so prevalent in Congress, I think it important to note that the high court deals with Constitutional law – not family law or even criminal law. Is there some unique advantage, some insightful perspective in dealing with constitutional issues that only a woman might have? If that is the case, then a prospective appointee’s sex might be relevant. Otherwise, it should not be – as implicitly recognized by the passage of the nineteenth Amendment to the Constitution. We need the best legal minds on the highest bench – no matter the sex of the body in which the mind exists.

Senator Leahy is obviously among those who believe the Court’s makeup should reflect that of the nation’s citizens. Even if sex hadn’t been an issue when the Constitution was written, the makeup of the court NEVER reflected that of the people. Most people back then had no training in law, and many were actually illiterate. The court is not a jury chosen to ensure that the accused be judged by his or her peers. Therefore Senator Leahy is pandering to women for votes, not attending to the needs of our nation.   He is therefore very high on my list of those who must not be returned to office.