Truth in economics

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Carriage

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US taxpayers are being enrolled in an economic chain gang Jeff Randall, Telegraph, September 27, 2008

"To preserve their [the people's] independence, we must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty, or profusion and servitude" - Thomas Jefferson

President George Bush addresses the nation on the financial crisis

There was a time, early in America's history, when its leaders believed in financial discipline. No more. Perpetual debt, which Jefferson feared would enslave future generations, is clamped on Uncle Sam's undercarriage like a ball and chain. US public borrowing is $9.8 trillion - and rising.

Jefferson, America's third president (1801-09), is widely regarded as the White House's most intellectually gifted occupant. He believed that "banking institutions are more dangerous to our liberties than standing armies", and that "the principle of spending money to be paid by posterity . is but swindling futurity on a large scale."

If Congress approves the Treasury Secretary's $700 billion bail-out of dysfunctional banks, it would be hard to invent a better example of what Jefferson foresaw: authorised "swindling". Tomorrow's Americans and those who come after them will pay and pay for the grotesque excesses and self-indulgence of today's flim-flam merchants.

As Jefferson put it: "If we run into such debt, as we must be taxed in our meat and in our drink, in our necessaries and our comforts . [we will have] no means of calling our mis-managers to account but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow sufferers."

Having failed to deliver victory in the War on Terror, President Bush is hoping for better luck in the War on Error. His goal is to limit damage from the egregious mistakes of sub-prime mortgages; his tactics are to carpet-bomb the banking system with federal funds. The upshot, in Jeffersonian terms, is that US taxpayers are about to be enrolled in an economic chain gang.

The prospect is unappealing, but, we are told, there's no alternative. Hank Paulson's plan offers fewer details than his weekly milk bill, but now, it seems, is no time for nit-picking. Having collected sacks of gold at Goldman Sachs, this former champion of free markets wants to nationalise assets at a pace not seen since Che Guevara was lighting cigars with Batista's legacy.

No wonder so many Congressmen look queasy. They must persuade constituents, many of whom are losing jobs and homes in the credit crunch, that it is a bright idea to rescue those who profited hugely from the creation of dark instruments. Not for the first time, Wall Street is bilking Main Street.

For those who work in the fast lane of finance, the speed of decline has been ear-popping. Less than a year ago, America's investment banks were wallowing in record bonuses, totalling almost $38 billion. Yes, billion.

Their pool of monopoly money was greater than the GDP of Bulgaria. Split among 186,000 workers at Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns, it equated to an average of more than $200,000 per person, about four times the median US household income.

Goldman's chairman, Lloyd Blankfein set a new standard in executive gluttony, collecting $68 million (about one third in cash), but at least his bank is still standing. Richard Fuld, Lehman's chief executive, trousered $41 million. Nice work, except that he took the lot in the bank's shares. Nine months later, when Lehman went bust, Fuld's bonus joined his reputation, in the trash-can.

Banking's bacchanalia has morphed into a therapy group for manic depressives. Those still in work look around the room and wonder how many will be flipping burgers by Christmas. In an interview with Fortune magazine, Mr Paulson admits: "Raw capitalism is a dead end. I've seen it."

Now I have heard it all. What next?

In place of rip-roaring markets, according to a Wall Street trader, America has embraced "trickle-down communism". This system involves the state paying "cash for trash" to benefit a few miscreants, and then hoping that some of the taxpayers' largesse will trickle down to the masses.

Toxic rubbish will not be made to disappear by Mr Paulson's proposals. All that will be different is ownership. It will be like removing nuclear waste from a failing business and parking it in a government building. The risk moves from private to public.

It is this form of regressive redistribution that Messrs Bush and Paulson are peddling as the road to redemption for Western finance. Excuse my cynicism, but would you buy a used derivative from either of them?

After Hurricane Katrina and the flooding of New Orleans, Mr Bush's record on rescue missions does not inspire confidence. As for Mr Paulson, if he's so insightful, why, when he was earning an $18 million bonus at Goldman in 2006, did he not spot the radio-active dump piling up in his industry's back-yard?

Mr Paulson's sales pitch is essentially: "American capitalism, I love you! But we only have 14 hours to save the Earth!" In return for a promise to head off financial obliteration, he is demanding a cheque of disturbing blankness. It is to be a bail-out with precious few strings, plus immunity from review "by any court of law or administrative agency". His legal team must have chuckled when they slipped in that one.

The scheme is under attack from right and left. George Soros, the investor who helped break the pound in 1992, is in favour of action to stem insolvencies, but insists that Paulson's plan falls short. Paul Krugman, professor of economics at Princeton, has little faith in Paulson as a fixer: "He's making it up as he goes along, just like the rest of us."

Outside Washington, in the real world, there is a growing clamour for something to be done. Ordinary voters are in pain. They want government to make it go away. But there is no magic powder.

Those who borrowed to buy assets at the wrong prices will have to suffer, as financial gravity re-asserts its downward pull. There is no policy yet invented that can make fifty cents worth two bucks forever.

Any long-term solution will have to recognise that contraction cannot be deferred in perpetuity. Having restored stability, it should punish those who created the mess. Where's the retribution in Paulson's package? It looks too much like a parachute for his chums at the back of a burning plane.

Finally, there needs to be an overhaul of banking governance. The rules of the game were, in effect, made redundant by the ingenuity of financial engineers. We do not need more regulation, but more appropriate regulation.

Which brings us back to Jefferson. Two hundred years ago, he demanded: "The issuing power should be taken from the banks and restored to the people to whom it properly belongs." Twas ever thus.
 

HGFarm

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It's all pretty scary and I dont think I like the fact that the folks who have allowed this country to get IN to this situation are going to find and effective method to get it OUT!!!

Why don't some of these big corporate CEO's that earn MILLIONS a year in bonuses, some of Hollywoods millionaires, etc... chip in here since they seem to have so much... this country is in deep doo doo and this is only putting a bandaid on an arterial wound. How is this going to fix the real issues- people here losing jobs because they continue to send more out of the country, people losing houses because they were allowed to finance them when they really couldnt afford to, people paying higher taxes when they can't afford to pay them now.. ??!!!

This is a temporary 'bailout' and is NOT doing anything to resolve the real issues and WHY this mess is the way it is!!
 

Pepipony

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Why cant millionaires or CEOs who caused this chip in and bail the US out? Because that would be socialist my dear. The only lesson learned is if a small business doesnt plan right and fails, oh well. If you are big enough dont plan right and fail, we'll bail you out. Socialism only works when it bails out the people who dont believe in socialism. Do as I say, not as I do
 

CyndiM

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I have a suggestion....

Why don't ALL of the people who have received contributions from Freddy and Fanny return them post haste. It won't fix it but it would be a start.

And the top dogs who received BIG bonuses should have to give those back also!

Then STOP giving loans to people who have no means of paying them back and yes this includes illegal aliens!!
 

Cathy_H

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Why can't the government divide this $700 billion evenly amongst every LEGAL American citizen. LOTS of mortgages could be paid off immediately & lots more people could buy a home? Mortgage crisis solved!
 
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Margo_C-T

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My MSN homepage offered the link below to an article in 'Newsweek' that I found very interesting...among other things, it claims that the 'financial instrument'(my term, for want of a better one) that brought us mainly to where we are now, was between private entities, and therefore, NOT SUBJECT TO Gov't. regulation...

http://www.newsweek.com/id/161199

Margo
 

Margo_C-T

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I am NO KIND of an 'economist', but here is something I have thought for awhile--since well before everything started going to H*ll in the financial area...FWIW....that our ecomomy was in many ways 'growing' on a foundation of shifting sands. Home prices, and other items, unduly INFLATED, and a fair number of people being 'overpaid--that is, making unbelieveable (to me, at least!) amounts of money, but not because they were performing in an extraordinary way. This, to me, is just an open invitation for disaster...when you go WAY OUT onto the end of a limb, you should understand that the further you go, the less stability you have, and the more likely that limb is to BREAK!

There was so much GREED---lenders who misled borrowers, and borrowers who didn't use ANY common sense, just wishful thinking--this especially in the home mortgage market, but also, I suspect, across the board in consumer borrowing. NOT all lending institutions, but many, participated....and of course, we have the credit card companies, always hoping to convince you that it is FINE to get whatever strikes your fancy, then and there...just put it on your card, or even, write one of those 'handy' 'checks' they are always sending you (in this house, they go STRAIGHT into the shredder).And worst--most of us just ignored these signs, believing, I guess, that it was some sort of 'natural progression'? We need to remember that 'old-fashioned values', WORKED.

I believe we might need to add REAL education in how to be a smart consumer to our public school system...of course, first THEY would need to get back to education, instead of just passing youngsters through whether they have learned anything or not....

If you view this as 'just a rant'--you might be right! I just needed to say it!

Flames to Joe Price.

Margo
 

nootka

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Carriage and Margo, Hear, hear!!!

Especially that last, Margo, on being too far out on a limb.

The limb breaks, let 'em fall, just don't let it land on US that didn't participate in those foolish practices!!! Please?

It's time for people to take a step back from their extravagant lifestyles (the ones where they are living entirely on credit, etc.) and live a little "less", most importantly those that got us "here."

Liz
 

Carriage

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Well said Margo.

The engineered "problem" is not singular in nature but multi-faceted. However, as I was discussing with a neat lady the other day, it does have a singular secular place from whence it springs: the international banker. In our case this would be the "federal reserve" which is neither federal nor does it have reserves.

I am reading from multiple sources that the fed is "insolvent" (even with the printing presses running at warp 8) and we are in the process of infusing American hard-earned wealth (liberated through "taxation" and financial enslavement of our progeny) to keep it propped up so it can continue with its' plan

This theft of our substance has been going on for eons. This is why they were booted out of Europe on no fewer than three occasions in centuries past. It is way past time that they "travel" again. No need for them to pack their bags as everything they have has been stolen from us.

We have also earned this fate by allowing ourselves to be distracted, dumbed down as to history and the federal constitution, and complacent in receiveing "benefit" from the servants. "They" have nothing of their own, only your stuff, the crumbs of which they use to pacify and benefit a very few. Now when the servants get uppity we give them whatever they want instead of what they deserve. The bankers and their mouth-agents saying we must do this are lying to you in order to perpetuate their financial rape of us and secure power to do FAR worse. The only reason the deal HAS to be done is for their enrichment NOT OUR WELFARE. And for some reason folks keep buying into the thought (cause thats all it is) that there is any significant difference twixt the two banker-managed parties. Buying into this banker propaganda is another major reason we are here. It is HIGH time that we ALL join the oldest party in this country. The party that brought this country forth with MUCH hardship and "the blood of patriots".

As Patrick Henry said and I say to you now, "WHY STAND WE HERE IDLE?"
 

littlesteppers

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I just cannot understand why President Bush supported the "original" 3 page bill..that would have given power over all the money to ONE person that could not have been touched by any court..

I am disgusted that a certain group tried to add on to the bailout to PROFIT from the mess.

And I am proud hat a certain group fought nails and tooth to change the bill
 
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OhHorsePee

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I am disgusted that a certain group tried to add on to the bailout to PROFIT from the mess.And I am proud hat a certain group fought nails and tooth to change the bill
I agree! Now lets see if this bailout gets voted on by the certain group of people that wanted ACORN to have our money.
 

Buckskin gal

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I think there are many very wise words here but what can "we" the taxpayer do about all this other than complain and continue to pay for the rich mans folly? Why bail out businesses who have had so little regard for the average person? It seems people have constantly been encouaged to borrow....when will they see that it is a horrible mistake and saving needs to take priority. If we could only all pay ourselves something from what we earned BEFORE handing it over to a wasteful government our country would be a far better shape. JMHO
 
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Charley

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It seems to me to be a well thought out ploy. Lets get money from the government that the public would say not a chance. Get all these blatant things attached. Let the politicians fight to remove these blatant hangar oners. Put the fear factor in that it will effect everyone, jobs will be lost, etc. And Magically, the public agrees to let the goverment finance our mistakes!

We are spoonfed what they want us to see, hear, get mad about, and in the end, they get what they want....Money! The Magical Cure!
 
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littlesteppers

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Anybody watching the hearings/vote on Cspan?? you can see it on tv or website
 

Carriage

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Some of the keys were in the note I posted. Stop drinking the devisive "party" kool-iad. Both parties are run by the same boys. Under our form of govt as originated there really can only be ONE party. It was the party what brung us to the party in the first place, fell into dis-use and now is coming back gang-busters! Dr. Paul tried to do it with-in the "republican" party and ran into a brick wall, much of which was due to an owned media. Why he did not take care of securing the honest and trackable vote FIRST is beyond me. He is not the first to make this critical mistake.

Don't allow yourself to buy into these divisional tactics. When we as a people are divided, we loose EVERY TIME! They know this and have instituted numerous laws to try and prevent the American people from uniting under a single banner against them in true Mafia fashion.

Know your constitution! You needn't be an expert in the law as the CONTRACT between the 13 Soveriegn NATIONS and their creation (the VERY limited fed. gov.) was written so that the "common, prudent man" could understand it. This follows one of the main pillars of common law that "Truth is simple, fraud is complex" There is another pillar as important, "No gain shall be had by fraud". While I know we live in backwards and up-side down world these days I still have much trouble with the created (fed. gov.) being greater than the creator(states)...... Don't dismiss this last sentance as it IS key! LISTEN! When even the smallest deviation from the federal constitution takes place it is VERY serious and of grave concern!!!!! Start acting like it.

We have vacillated between the two "parties" for decades now and no matter which side is in "power" (chortle) our road to ruination and slavery continues. At some point the saying about the definition of insanity HAS to run through your head if you still are in posession of two brain cells <G>. How long do you continue to believe in something that has been REPEATEDLY proven false and led to your destruction?

Starving the monster is the only way to win. One of the ways we do that is to stop putting the monster's servants back into power. The only reason a "third" party can't win as the mouth-pieces are want to say is because (better sit down as the simple truth can be a bit of a shock) YOU DON'T SUPPORT THEM. Dr. Paul (wether you likes him or not) was on a roll that scared the P out of the bankers, cause he was comin for them. They knew it and also knew that unless they stopped him before the fact they would have no chioce but to "prey" <G> for another Kennedy event. . That last inserted just for "Tag". But it is true. I was fully prepared to drop my life in order to serve on Dr. Pauls security staff as I stated that he would have to be the most protected and least travelled President of all time BECAUSE of the most horrible enemy within.

There is still the slimmest of chances but you must change the way you have been programed to think. C'mon over we gots lots o room. Dr. Pauls endorsement of the Constitution party is a significant hint....... Can it be done? Don't know, however I do know that it can't be done without trying!

C'mon folks, as an old drill instructor was fond of saying (minus expletives) They can only kill you, they can't eat you too........ My question was always what do I care if they do ifn ahm ded....

I know not what course others may take, but as for me............

Also Patrick Henry
 

littlesteppers

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Weeelll...voted down..Republicans Yeah, 66 Neah 132

Democrates Yeah 141..Neah 91..One NO vote

One member from ILLINOIS didn't vote..tell me it ain't so
 
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Adela

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Go Chuck Baldwin!! Carriage, you are awesome and so right. I am privileged to have a great guy(Steven Pratt) who lives close to me that has taught so many great classes on how history has been "white washed" and how many presidents have done more to further communism than if we had had an actual communist as president! Republican or Democrat doesn't matter because they are the same! If you truly want change, take a stand for liberty and vote for someone who can better our future! My husband is running for County Commissioner in Utah under the Constitution Party. We have personally met with Mr. Baldwin and he is the real deal. We just won a very similar battle locally. I think the tide is shifting, and as Americans we must be willing and able to self govern under the Constitution.
 

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