The Bailout: Round 1

Round 1 of the great $700 billion bailout scam goes to the voices of sanity. Wow! Big slap to Pres. Bush and the House Democrat leadership, all of which needed the slap desperately.

I applaud all those who voted against this package and defeated it. Keep up the good work!

America - the worst thing we could do is to take on these mortgages. We need to just hunker down and ride this out. We will be better off in the long run than passing this monstrosity of a bailout.

Bailout? Or Cover-up?

This message is not my own, but fully expresses my sentiments on the so-called "bailout" being bandied about Congress over this weekend. Make no mistake: whatever plan comes out that does anything but leave these organizations to fail will mean greater misery down the road.

Not that I think the fools in Congress will do the right thing...

Dear Friends:

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

To those who argue that more taxes are the answer to our national problems

...you are taking one piece of the pie (tax cuts), and saying that is the entire problem, thus ignoring the problem completely.

The problem is that as a nation we have gone from not trusting our government as far as we can throw it, to entrusting to it our lives, fortunes, and sacred honor.

Why, after all the evidence to the contrary, do we continue to let government (at all levels) run our infrastructure, educate (if you can even call it that) our children, provide our health care, fund our retirement (if you even believe that), and "fix" every little boo-boo we ever get. Not to mention providing mortgages to people who shouldn't have them in the first place, and giving tax money to "artists" who think crucifixes in jars of urine are somehow uplifting to the human spirit. And don't even get me started on elephant dung.

And what has all this governmental largesse gotten us? Beyond the obvious budget deficits that our great-grandchildren will still be paying off, it has gotten us self-centered, self-absorbed, self-indulgent, covetous, nincompoops as citizens, who see successful people as the enemy instead of someone to try to emulate, and who don't understand the simple fact that not everyone can be a billionaire, and there is no dishonor in being a farmer or a plumber or a garbage man, even though those people don't have a billion dollar net worth. But being lower on the income ladder doesn't give you the right to take (through your elected officials) one penny from anyone who is above you on it.

We have gotten here because of one hundred years of social engineering by people who thought they were smarter than everyone else who ever lived, and who thought they, through their own intellect and their own ideas, could change the laws of economics and of human nature by government decree (and oh, by the way, control). And now we are faced with the distinct possibility of a committed socialist and his sycophantic henchmen and henchwomen in Congress legislating out the last vestiges of what has made this country great. All because a few hundred thousand mindless knucklehead voters are willing to give up what has made them unique in the history of the world - their God-given liberty - and embrace the vision of a socialist utopia that never has been and never will be, because they think they will get lower taxes! To use the Biblical example - they are selling their birthright for a pot of stew.

Does this mean I think John McCain is the answer? Not at all. No Politician is the answer. A year ago I would not have voted for him, and I vote for him now reluctantly at best, because he isn't too far removed from what I have spent this post railing against. He makes me very nervous indeed. But in some of the most important areas of American life, he gets it. If he follows through on a fraction of what he promises about cleaning up the corruption in Washington, I will be happy. If he appoints another originalist justice to the Supreme Court, I will rejoice greatly! If he continues to cut taxes and reduce the size and scope of government, I will stand up and cheer.

But the change that really needs to happen is that the hearts of the citizens of this country need to change. They need to get over this need to punish success and reward mediocrity. We all need to cinch it up and make what we can out of ourselves without having the government pull down others to do it. We need to get back to the realization that government exists to protect our rights (as enumerated), and not to cater to special interests. It exists to prosecute wrongdoers, not make new laws and strain at gnats from the bench. It exists to be our servant, not our master. When we start electing representatives (not politicians!) who understand these things, then we will be getting somewhere.

So vote for Obama if you think you must, but understand what you will be getting if he is elected, and understand that your liberty is worth infinitely more than the few dollars more you might get on any tax return.

Detroit Lions - week 2

Warning! The Surgeon General has determined that watching, listening to, or reading about Detroit Lions Football will put your health (mental and physical) at serious risk.

Warning signs are nausea, vomiting, unexplained cursing, violent outbursts against tv, radio, or newspaper containing word of the Lions, and making effigies of W.C. Ford and Matt Millen. If you observe these signs in yourself or others, get medical help immediately.

This may well be my last Lions post of the year. I don't need the aggrivation right now.

Remembering WTC

Tomorrow is the 7th anniversary of the attack on the World Trade Center and the Pentagon. Even though Barack Obama wants to forget that it ever happened, this is what I remember most - people jumping to their deaths rather than burning to death inside their offices.

So Barack - you are wrong to forget what our enemies did to us, and you are wrong to give aid and comfort to them in your position in the US Senate. How can you look at these images and not want to eradicate from the earth those who caused so many deaths and so much heartache to so many?

You have no heart, and you have no sense of justice.

Detroit Lions Football 2008

Putting my sports blogger hat back on to comment on the Detroit Lions. I have been a Lions fan through thick and thin for at least 35 years, and I can't remember when I have been more disgusted by a team than this years version. I didn't expect a Super Bowl, or even playoffs this year, but I expected more than the pathetic effort displayed last Sunday in the season opener, especially after the supposed deadwood had been cleared from the mess Rod Marinelli inherited. I completely understand the anger and disgust being displayed by the fans, especially the longtime season ticket holders who have given up their tickets because they are fed up with the bad football they get to watch year after pathetic year.

Then, to hear the players say "we're not this bad, we can get this fixed" - boys, please...don't give us mindless optimism - GO OUT AND PLAY THE D**N GAME LIKE YOU'RE SUPPOSED TO. EARN YOUR D**N MONEY THAT YOU ARE EARNING GREAT HEAPING GOBS OF (MR. COREY REDDING). You lost to a rookie QB playing behind an inexperienced line and on a team that was 4-12 last year and is in rebuilding mode. You should have wiped the field with these guys!

So don't give us platitudes. Give us game. Give us something worth watching. Because none of us believe in now, and we don't believe in you either.