While listening to Obama's closing arguments, one can hear his answer answer to the accusations that he is a socialist: Republicans want to make a virtue of selfishness.  Perhaps it's worth observing that many people who will vote for him pay no federal taxes; indeed, they are and will be further subsidized by an Obama administration.  This in itself seems selfish on their part.  
   In fact, Obama hasn't given nearly as much as he is planning to take for those who have done well in America.  On this point, I'd love to ask him only one question: "On the 1040, assuming that's the tax form you fill out, the IRS allows you to make a 'donation' - have you ever made a donation, since you think the government needs more money?"

   Inasmuch as we can guess his answer, we see that the real indictment of Republicans is clear: that they want to make a virtue of merit, hardwork, and choosing how spend one's own resources. 

   Let's assume that the government had provided better regulation of GSEs: would that have made the difference?  Surely, it would have to some extent; however, it wouldn't have solved the problem altogether.  

   I suggest a deeper problem and it's one that most people won't be too well pleased to hear: willful ignorance on the part of many, many Americans.  Allow me to explain. 

First, many of our neighbors have been complicit in so-called 'no-doc' loans.  These neighbors lied about their income at the behest of mortgage brokers and loan officers.  

   The second issue is a bit more complicated.  It begins with the age-old paradigm of investment: diversify.  Doubtless, this is true; but it misses a very important point.  In order to diversify well, one must know something about that in which they are investing.  Far too many people left the entire savings, 401K, and other holdings in the hands of their financial advisor (with no oversight).  While advisors aren't bad in and of themselves, complete and utter dependence on them is a perilous.  Rather than leaving one's financial future in the hands of someone else, perhaps knowing something about the companies in which one invests and the industies in which these conpanies participate.  Here's a good example: Surely everyone who took basic economics understands leveraging as it applies to banks.  When a bank or investment house has exceeded healthy limits, an investor should be wary of such an institution.  In addition, an investor who has some basic idea of company processes would also be beneficial; for example, a company who orginates or buys 'no-doc' loans or securities based on these loans.  Beyond this sort of first-hand financial information, indepedent analysis is available.  The key here is to investigate all the companies in which you own stock.  Doublessly, this is a lot to ask of most people, but let's be clear - their life savings depends on it!  Who shouldn't guard preciously that for which they've toiled for 30 years or more, that which will allow them age with dignity and relative ease, that which will help their families in the years to come?

In a recent article on rollcall.com, Erin Billings and John Stanton layout the Senate leadership's strategy for passing bail-out legislation.  Interestingly enough, the authors of this article explain that both Reid and Mcconnel's strategy is nearly identical.  It consists of two main points: 1) talk about how 'inaction' will have dire consequences - give examples, &c - 2) rebrand it: try to overcome the initial sale of this plan to the public.  The second part of the plan is most interesting.  In essence, it implies that if senators talk about this as a 'main-street rescue' rather than a 'wall-street bail-out' that the public will collectively bend over and grab its ankles.

Underlying this plan is a perncious assumption - that citizens of the United States can be swindled into doing something they don't want to do.  Recall that constituents were contacting their representation in both houses of congress - the people's ire was in concert against this plan.  To overcome this strong sentiment, their plan it to rebrand this sucker? 

While I don't typically applaud the American public's ability to grasp issues, this one cuts across nearly all demographics into which people are placed.  In keeping with this, I suggest that our leaders in both houses of congress forget about rebranding and try a completely new idea.  Let the SEC tweek mark-to-market, slash the capital gains and corporate tax rates - take artifical risk out of the market.  This will immediately 'inject liquidity' (as many talking-heads are wont to say).

One more point: John F(ing) Kerry tells leaders of both parties and the media to "connect the dots" for the common person - will somebody please vote this dunder-head out of office???

Quickly, I would like to note that the price of oil fell to its lowest since February of this year on the news of the bail-out failure.  Also, the dollar gained a bit also.  It couldn't be that these three things have anything to do with one another...

Many brilliant people made the point that this bail-out would have real consequences vis-a-vis the international perception of the dollar.  If yesterday's events can be considered evidence, then it's clear the failed legislation would have done a great bit of harm.  Whether the harm would have out-weighed the possible 'good' is hard to know.

 

On to the next issue: since Palin's interview with Couric, many people have been criticizing Palin as being a bit to green (I don't mean eco-freindly) for the VP post.  Will those same people exclaim with similar vigor and veracity the complete lack of self-control displayed by Speaker Nancy Pelosi yesterday?  We all know that she's nothing more than a rich, persistent partisan; but what the hell?  Is she really no better than the heroine addict that knowlingly shoots-up in front of the police?  Yesterday was perhaps one of the only times she needed to zip it.  Indeed, after all the shreiking about the need for bipartisanship - she polishes her leftist credentials in front of the whole country? 

While this was a stupid move on her part, it's not a particularly bold or brilliant more for Boehner & Co. to claim that her words changed votes.

Nevertheless, I can't wait to see SNL's depiction of her... Not. 

   Though the answer may be obvious, it is far from representative of conservatism.  Indeed, both of the reasons are our recent and current standard-bearers.  In the case of Pres. Bush, this was clear from the moment he used the words 'compassionate conservatism' in his 2000 campaign.  Indeed, I doubt anyone could have imagined how 'compassionate' he was going to be with other people's money.

   Similarly, the question on economic literacy was answered years ago for Mccain as well.  Recall Pres. Bush first pushing his tax-cuts: Mccain referred to them as 'class warfare'.  Since then, he's tried to reposition himself as a true conservative in this respect.  Unfortunately, his true beliefs come out when he is even slightly off-script - and sometimes when he's 'on-script'...

   Ofcourse, some may argue that his record on spending supports his free-market credentials.  That's probably true.  But, he hasn't ever given a coherent account of how government spending causes loss of capital, inflation, debt, devaluation of currency, and crowding-out.  If hasn't ever, then it plausible than he can't or even that doesn't really believe in truly free markets.  If either of these possibilities are true, he simply won't be able to muster both the courage and gumption necessary to say 'no'.  Indeed, saying 'no' to so many industries, people, and institutions which are used to quasi-socialism requires a person with true conviction.  Not only will Mccain fail as conservative leader in tough times, he won't be able to convince the electorate why we can't afford Sen. Obama.   

Jim DeMint, SC's Jr. Senator, has made some very elegant arguments against the Paulson-Bush bail-out.  He made three points that are worth considering.  First, along with many economists, he questions whether this action is merely a band-aid that will bear ill effects in the long-run(1). 

   Second, he explains how this bail-out is largely politically motivated: he said that the China, the US's biggest banker, contacted the Bush administration and told them that if this crisis continues they will turn the spighot off.  If you take DeMint at his word, this would be quite alarming to many beaurocrats. 

   Third, DeMint proposed another way to stimulate the economy - deeply cut the corporate and capital-gains rate.  To this point, there is much objection; critics say that it's this 'voo-doo', supply-side economics that created this situation in the first place (which is utterly false).  To them, I make one simple point: an investment that yields 3% APR would end up yielding over 25%+ if both taxes were suspended.  Similarly, if an investment was losing 3% of its value per year, that would be conmpletely turned around to the tune of a 19%+ gain.  Imagine what that would do for jobs, expeditures, etc

   Of all our federal representatives, he has been most clear-minded and honest that I've heard on this matter.  This is one man about whom South Carolinians can be proud.

 

 

 

1- http://online.wsj.com/article/SB122238888884077341.html

To move beyond less purchasing power relative to gas, there is also another sense in which many of us will be left with another economic disadvantage.  This disadvantage is a direct result of the bail-out.  Consider the purpose of the bail-out: 1) Take 'bad mortgages' off the books of investment bankers and 2) keep house values from tanking.  The second consequence can be discerned from considering the consequences of not bailing out Fannie, Freddie, AIG; if these companies were forced to liquidate, imagine how cheap the paper on these houses would be. It would have a massive effect on housing prices.  This effect would be really bad for homeowners in the short-term and really great for people who want to buy a home. 

Consider the irony of this: the federal government wanted to let low-income earners buy houses.  Indeed, this whole mess was started for that cause.  Now, if Congress does nothing, low-income earners would be able to buy houses.  Shakespeare couldn't write this sh#t. 

When the government decides to take on a $1T dollar expenditure, they have to print money.  When they print money, they make both your money and mine worth less.  Indeed, even before they put ink to paper - as a bill or a bill - the price of a barrel of crude rose over $25 - Your purchasing power is 25% less than it was just yesterday!  This is a direct effect of this bail-out, not less supply, greater demand, or evil oil companies. 
Yes, you have Chris Dodd, Barney Frank, Jim Johnson, Franklin Raines, Bill Clinton, Janet Reno, Jimmy Carter, every person with a mortgage who didn't understand their adjustable-rate mortgage, every person who had a retirment account and knows nothing about personal finance, and too many more.

If the supposed reason for the bail-out is to help the little-guy, it's not off to a good start.

   To focus more clearly on this 'root', recall the poor state of the economy before Alexander Hamilton's national bank. Hamilton believed in, worked for, and finally created our national bank because he knew that ideas like that quoted above were, and are, poppycock. Hamilton understood the need to both bring large amounts of capital together and unlock its potential by extending credit for both public and (mostly) private sector ventures[ii]. What Hamilton so presciently understood can be summed up in an oft-spoken, time-tested maxim: it takes money to make money. It was true then, it is just as true now.

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