Everybody is hysterical over the Obama endorsed senate fiscal cliff bill that passed the House on 1/1/13 in a 267-167 vote. The Democrats are unhappy because this bill will only raise $700 billion in new tax revenues instead of the $1.6 trillion that they sought. The Republicans are unhappy for a mixed bag of reasons because more House Republicans voted NO than voted YES. 85 House Republicans voted Yes but 151 voted NO. Conversely, 172 House Dems voted YES and only 16 voted NO.
As far as the federal debt ceiling is concerned, the outcomes of these media hyped up debates are always the same - there is no debt ceiling and it's borrow and print to infinity. There is no debate on borrowing and spending.
To understand what passed, you first have to understand what was at stake here: the Bush Tax cuts (scheduled to expire on 12/31/12)and and Obama's stimulus that reduced the payroll withholding tax by 2%.
On the payroll tax, the workers really got screwed because they will immediate incur a 2% tax hike. The payroll tax hike has been dubbed the $40 a week tax on wage earners because that is, on average, the amount their paychecks will be immediately reduced.
Before the 2010 deal, payroll taxes were 6.2 percent, deducted from the first $106,800 of workers’ paychecks. Inflation raised that ceiling to $110,100 in 2012.
But for the last two years, the payroll tax rate has been 4.2 percent.
Last December, the White House and Democrats staged a campaign to preserve the expiring payroll tax cut, asking individuals to detail what the average $40-per-paycheck tax hike would mean to them. Over the course of a year, that adds up to about $1,000 lost to taxes.
Obama and the Democrats really socked it to the poor and working class that they claim to love and represent, and with more than a little help from their Republican partners in crime. Congress did absolutely NOTHING to keep the lower payroll tax and neither the Republicans or Democrats even fought to prevent this draconian taxes that definitely will be taking a big chunk out of the paychecks of the poor and middle class. The working poor and middle class will suffer the brunt of this 2% payroll tax hike because the earnings ceiling is now $110,000. Rich folks or trust fund babies don't pay the payroll tax because it's a tax that only applies to wage earners and not unearned income. Unearned income isn't subject to FICA or Medicare payroll taxes. The year that John Kerry ran for president, his mega wealthy heiress ketchup queen wife paid an effective federal tax rate of about 12% on unearned income of over $5 million (mostly dividends and interest income).
Astoundingly, the Washington Post admitted that half of the new taxes will come from the payroll tax increase, in addition to being one of the largest tax hikes in US history.
....a little over half of the tax hike next year will come from the expiration of the payroll tax cut, which affects every American worker. That tax cut has been in place for two years, replacing a similar tax cut that was in effect in 2008 and 2009.
Because of the expiration of the payroll tax cut, all workers will pay 2 percent more in tax on their salary next year. A worker earning $50,000, for instance, would pay $1,000 more in taxes in 2013 than in 2011 or 2012.
Payroll taxes haven’t gone up since the late 1980s.....
What does Congress do with all those Social Security taxes it collects? It doesn't save the money to pay Social Security benefits because Congress has actually plundered the Social Security Trust Fund over a period of decades to the tune of over $2.5 trillion bucks to fund wars, pork and other slop. That's a side issue covered here: Yes My Fellow Americans, Congress Really Did Steal Your Social Security.
Moving on to the Bush tax cuts, they were really two tax cutting pieces of legislation.
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA)
The Bush tax cuts were scheduled to sunset in 2010 but Obama extended them to 12/31/12 as part of a stimulus that also included the payroll tax cuts.
Effectively, the Bush tax cuts lowered the top tax rate from 39.6% to 35%. When the fight commenced over the tax rates as well as the income threshold for the restoration of the high tax rates, President Obama and Speaker Boehner were at loggerheads in the negotiations because Obama wanted taxes raised on all income over $250,000 while Boehner was willing to let the tax cuts expire on all income under $1,000,000. While the Obama/Boehner negotiations fell apart, they were close - letting tax cuts expire for everyone under an income threshold of $400-500 a year. Then Harry Reid and Mitch McConnell tried to cut a deal and failed. Finally, Vice President Joe Biden and Mitch McConnell struck a deal that was passed in the Senate 89-8. The Biden/McConnell deal is the deal that passed in the House and set the income threshold at $450,000.
How crappy is the Biden/McConnell deal? It doesn't include any spending cuts and Bloomberg is reporting that 77% of American households will pay higher taxes.
The budget deal passed by the U.S. Senate today would raise taxes on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut, according to preliminary estimates from the nonpartisan Tax Policy Center in Washington.
More than 80 percent of households with incomes between $50,000 and $200,000 would pay higher taxes. Among the households facing higher taxes, the average increase would be $1,635, the policy center said. A 2 percent payroll tax cut, enacted during the economic slowdown, is being allowed to expire as of yesterday.
A tax increase for 77% of American households is what Congress call the "American Taxpayer Relief Act of 2012".
Can you stop laughing? But it gets worse. A trillion dollar Obamacare tax also hit the American people January 1, 2013.
On January 1, regardless of the outcome of fiscal cliff negotiations, Americans will be hit with a $1 trillion Obamacare tax hike.
Obamacare contains twenty new or higher taxes. Five of the taxes hit for the first time on January 1. In total, Americans face a net $1 trillion tax hike for the years 2013-2022, according to the Congressional Budget Office.
The five major Obamacare taxes taking effect on January 1 are as follows:
The Obamacare Medical Device Tax... The Obamacare Flex Account Tax... The Obamacare Surtax on Investment Income: This is a new, 3.8 percentage point surtax on investment income... The Obamacare “Haircut” for Medical Itemized Deductions... The Obamacare Medicare Payroll Tax Hike...
Is there anything good in the deal struck by Biden and McConnell? Actually, there is and especially on the estate tax front.
The Bush tax cuts had a $5 million dollar exemption on the estate tax before an estate tax rate of 35% kicked in. When the Bush tax cuts expired, the floor for the estate tax drops to $1 million and the tax rate jumps to 55%. The estate tax will have a devastating impact on small family businesses who simply don't have the cash to pay the tax.
Currently, there is a $5 million estate tax exemption, and only those who stand to inherit an estate that exceeds that amount have to pay a tax rate of 35%. In January, 2013, many liberals have been celebrating what they consider to be a fair tax on the rich person. What they don’t realize is that the$ 1 million exemption and 55% taxation for those whose estate exceeds 1 million, will affect many Americans who could hardly be considered as wealthy. In this day and age, it doesn’t take much for an estate to add up to a million dollars. If you consider house, 401(k), savings, and other investments and assets, many people will fall into the new tax category.
What Will Happen To The Average Small Farmer When The New Inheritance Tax Is Imposed
97% of farms, small ranches, and small businesses will be affected by this tax. The problem is, the recipients of the inheritance are small-time people who barely make enough each year to scrape by. Individuals like this will have no option but to come up with the 55% tax to give to Uncle Sam, or they will be forced to sell the family farm or business that has been in the family for generations. Most farmers don’t just have $500k just sitting around as a tax fee for a property worth 1 million dollars.
The new inheritance tax could represent the end of an era. The death of the “family farm” as we know it to be today. Even if you are not a farmer or a business owner, your inheritance may be at stake.
Fortunately, small businesses and farms who would have been hit the hardest by the estate tax escaped the tax collector's noose. According to Politico "The estate tax will have a $10 million exemption per a couple with additional inheritance taxed at 40 percent", here.
Although the Democrats couldn't wait to sink their carnivorous fangs into those productive and entrepreneurial bourgeois that they hold in the highest contempt, the Democrats lost on this issue and probably because reasonably astute Dems understood that ballot box blowback would be potentially severe. A farmer really doesn't have anything of value except his dirt and small family farms and entrepreneurs aren't swimming in cash like trust fund babies.
I was expecting even worse, so this deal....almost seems like a relief.
Sort of like knowing that you were going to have your arm amputated, but then finding out that at least you’ll get some anesthetic. You’re not happy about the outcome, but you’re relieved that it won’t be as bad as you thought it would be.
But let’s not delude ourselves. This deal is not good for the economy. It doesn’t do anything to cap the burden of government spending. It doesn’t reform entitlement programs.
And we may even lose the sequester, the provision that was included in the 2011 debt limit that would have slightly reduced the growth of government over the next 10 years.
What a dismal ending to 2012.
The Democrats didn't get all the tax increases they lusted for during this round of negotiations. They wanted $1.6 trillion in new taxes on top of the $1 trillion in Obamacare taxes. They ended up with $700 billion in new taxes plus the Obamacare taxes.
Nobody, Republican or Democrat, cut one cent in spending and in fact the deceptively titled American Taxpayer Relief Act of 2012 also contains typical big spending pork because absolutely nothing passes in congress without doling out taxpayer dollars to their crony capitalist pals who fill campaign coffers. ABC reported a few corporate welfare highlights.
$430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects.
$331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.
$222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.
$70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”
$59 million for algae growers through tax credits
to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.
$4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.
Moving along, the American Taxpayers Relief Act did offer some relief to tens of millions of middle class taxpayers who would have been ensnared in the Alternative Minimum Tax (ATM), a nasty piece of legislation that's been around since the 1960-70's as a measure to close tax loopholes for high income earners. However, inflation has now pushed many middle class wage earners into the ATM so Congress has been patching the ATM for many years.
Finally, the Congressional Budget Office (CBO) estimated that the American Taxpayers Relief Act will add $4 trillion to the $16 trillion pile of debt, here. The CBO is notorious for underestimating the cost of everything and overestimating anticipated revenues. Spending always escalates and reductions in spending never materialize.
According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts....
In 1982, President Reagan was promised $3 in spending cuts for every $1 in tax hikes,” Americans for Tax Reform says of those two incidents. “The tax hikes went through, but the spending cuts did not materialize. President Reagan later said that signing onto this deal was the biggest mistake of his presidency.
In 1990, President George H.W. Bush agreed to $2 in spending cuts for every $1 in tax hikes. The tax hikes went through, and we are still paying them today. Not a single penny of the promised spending cuts actually happened.
Meanwhile, Obama and the Democrats have vowed to continue their crusade to raise new taxes and new revenues, even if the entire US economy is nuked into impotency and America is blasted back to the Stone Age. The Republicans have vowed to help the Democrats, so long as their precious and endless wars are protected from the budget scalpel.
But make no mistake. At the end of the day, many folks will be paying higher taxes, 77% of American households to be precise according to Bloomberg. The rich won't feel the pinch nearly as bad as the working class wage earners because for the working class the pinch turns into a big painful bite when these folks loose $40 bucks a week while struggling to house and feed their families in a statist run economy that sucks and offers them nothing in the way of job opportunities or upward mobility.
Neocons are a most peculiar group of folks and they dominate the Republican Party. They worship the empire, the wars, the military and and all the inhumane evil that accompanies our brutal and barbarous foreign policy. Their lust for empire is so great that they would gladly sacrifice the constitution and even economic prosperity on the alter of empire. While the Democrats claim to have the humanitarian moral high ground, they too worship the state, its wars and the empire.
In fact, it was the progressives, liberals and Democrats got us into WW I, WW II, the Korean War, Vietnam War and the Balkan Wars. Woodrow Wilson, Franklin Roosevelt, Harry Truman, Lyndon Johnson and Bill Clinton were all empire building militarists as well as highly revered Democrats and progressives.
Except for a handful of liberty activists, anti-war folks, Ron Paul supporters and a few decent Democrats in the mold of Dennis Kucinich, America has literally morphed into some horror that is beginning to resemble Nazi Germany.
As the economy continues to plunge into the dark abyss and profound human suffering escalates in America, few Americans understand that the root cause of our misery is directly attributable to military spending and endless wars. Yet, the government is somehow always successful in selling the propaganda that wars and murder are good for the US economy.
What most Americans cannot grasp is the simple fact that the US military is morphing into the global governance military of the United Nations.
TomDispatch.com has an interesting piece on the US empire.
We built, for example, 505 bases at the cost of billions of dollars in Iraq (without a single reporter uncovering anything close to that number until we abandoned all of them in 2011). Over the years, millions of soldiers, private contractors, spies, civilian employees of the U.S. government, special ops types, and who knows who else spent time on them, as undoubtedly did hundreds of reporters, and yet news of those American ziggurats was rare to vanishing. On the whole, reporters on bases so large that one had a 27-mile fortified perimeter, multiple bus lines, and its own electricity grid and water-bottling plant generally looked elsewhere for their “news.”
Our latest base-building mania: Washington’s expanding "empire of bases" for its secret CIA and Special Forces drone wars in the Greater Middle East goes almost unnoticed (except at sites like this). We now, for instance, have a drone base in the Seychelles, an archipelago that evidently needs an infusion of money. Unless you had the dough for a high-end wedding in the middle of the Indian Ocean or a vacation in “paradise,” you’ve probably never heard of the place.
No matter. You’re still paying for the deployment of 82 people to those islands to fly and land crash-prone drones in our now endless “covert” robotic air wars in the Greater Middle East and Africa. With the so-called fiscal cliff now eternally on the media horizon, there’s been reporting recently on how your tax dollars are being spent, but do you have the faintest idea what it actually costs you to garrison the globe? No? Then you’re in good company, and the Pentagon certainly isn’t interested in telling you either.
Fortunately, basing expert and TomDispatch regular David Vine decided to make sense of what garrisoning the planet means to our pocketbooks. Read this piece and you’ll know what it costs all of us to build and support that Baseworld and more generally the American global military presence. Think about it: at the cost of possibly $2 trillion since 9/11, it should be one of the stories of the century. If it were, maybe by now we would be starting to pull back from the “military cliff.”
It may be a tragic irony that Republican and Democrat Americans willingly drink the poisonous neocon Koolaid but history is always the great vindicator. It's practically a law of physics that every empire in human history ultimately bites the dust and always through currency devaluation/debasement and bankruptcy. America is already there and it's only a matter of time before the full impact of our obsession with empire finally reduces us to a pathetic and poverty stricken nation.
$2 trillion spent on the wars since 9/11? Soon enough, we'll be choking on the empire and its ashes as the freest and most prosperous nation in human history joins the trash heap of history and empire.
How free are Americans? While some states have more freedom than other states, no American can easily escape Federal taxation, the Federal regulatory state and its expansive and growing power grabs. But to figure out what is wrong at the Federal level, it's a darn good idea to analyze liberty at the state level and learn why some states fail and some states succeed.
One thing is certain. For folks to be free and prosperous, power must be diffused as far and wide as possible because optimum liberty is only achieved when We the People are heavily involved in the decision making process. With so much raw and absolute power concentrated in DC, the states are now literally at the mercy of the federal government as they beg for handouts. In many states, especially big states, power is highly concentrated into small legislative bodies. Such situations do not bode well for the future of freedom
The Mercatus Center of George Mason University does a state by state liberty ranking, here. The rankings include the following ratings:
Fiscal Policy
1. State and Local Taxation as a Percentage of Personal Income, Excluding Severance and Motor Fuel Taxes 2. State and Local Debt as a Percentage of Personal Income 3. State and Local Government Spending as a Percentage of Personal Income 4. State and Local Government Employment Divided by Private Employment
Regulatory Policies
1. State Hourly Minimum Wage (If Higher than Federal) Divided by Annual Earnings Per Capita, in Hundreds of Dollars 2. Health Insurance Mandates, Estimated Percentage Cost Added to Premiums 3. Estimated Percentage of the Workforce Covered by a State-Level Occupational License 4. Eminent Domain Index
Paternalist Policies
1. Strictness of Gun Control Index 2. Same-Sex Civil Unions or Marriages 3. Cigarette Tax Per Pack of 20, Including Maximum Local Taxes, in 2007 Dollars 4. Home School Standardized Testing or Other Evaluation Requirements
Which state is No. 1 in freedom? New Hampshire.
Top 10 Freest States 1. New Hampshire 2. South Dakota 3. Indiana 4. Idaho 5. Missouri 6. Nevada 7. Colorado 8. Oregon 9. Virginia 10. North Dakota
Bottom States in Freedom Rankings
40. Washington 41. Illinois 42. Ohio 43. Maryland 44. Alaska 45. Rhode Island 46. Massachusetts 47. Hawaii 48. California 49. New Jersey 50. New York
Why is New Hampshire consistently rated the freest state in America? What makes New Hampshire so unique is its legislative representation. Not only does the state of New Hampshire have the largest state legislative body in America, it's got the 4th largest bicameral legislative body in the world, behind Britain's Parliament, the US Congress and India.
New Hampshire's bicameral legislative body (an upper house and a lower house) consists of 400 in the New Hampshire House and 24 in the New Hampshire Senate. New Hampshire has a population of 1.3 million folks which translates to one elected House member for every 3,250 citizens.
Also, New Hampshire legislators are paid $200 per two year term and they do not get their expenses paid for by the state. In fact, some folks in other states raised the issue of the compensation of New Hampshire legislators and it was fact checked.
Most of us complain about our salaries and lack of raises, but New Hampshire legislators might have a legitimate gripe. They have been paid $200 for a two-year term since 1889.
The presiding officers of both houses of the legislature — called the General Court — receive a salary of $250, while all other members get $200 plus mileage for 45 legislative days, according to the state Constitution.
Members really clean up for a special session, during which all legislators receive an additional compensation of $3 per day “for a period not exceeding 15 days and the usual mileage.”
Before the Constitution was modified, Snopes.com reports, legislators were paid a whopping $3 a day.
In New Hampshire, they do not have a political professional class that is bankrupting the state with spending, debt, public pensions and costly benefits. Compare the New Hampshire Legislature to other state legislatures.
New York: $79,500/year plus $171/per full day and $61 per half day
California: $95,291/year plus $141.86 per day for each day they are in session. Illinois: $67,836/year plus $111/per session day The above cited compensation packages do not include other benefits like healthcare, pensions and other perks that frequently include automobile allowances. Illinois and California are the two most bankrupt states in America.In fact, Illinois admits that it's a fiscal disaster.
New York continues to suffer from way too much public spending and it's economic climate is hostile to taxpayers and businesses which is why New York is ranked dead last in the Mercatus state freedom rankings.
Let's look at representation in New York, California and Illinois, summarized here for all 50 states..
New York: 150 lower chamber representatives, 19 million folks, one representative for every 130,000 people.
California: 80 lower chamber representatives, 37 million folks, one representative for every 460,000 people.
Illinois: 99 lower chamber representatives, 13 million folks, one representative for every 109,000 people.
Only 8 states have one state representative for 100,000 or more citizens but California representation is so far out of whack compared with other states that it's becoming an issue. There are movements brewing in California to increase representation, here. However, increased representation will not necessarily solve the huge problems facing California because of the huge cost associated with its legislature.
Increased representation does not always translate into more fiscally responsible state government simply because many states tend to lean big spending Democrat. Rhode Island, a tiny state with 1 million folks, is a fiscal basket case and several of its cities are already bankrupt or nearly bankrupt despite ranking 8th in representation with 75 legislatures for every 14,000 citizens. States controlled by Democrats tend to have powerful public sector unions that literally bleed states and taxpayers dry.
Moving along, let's do representation at the federal level. When our founding fathers created the Constitution they literally envisioned one congressional representative for every 30,000 citizens or representation to never exceed 50-60,000 according to thirtythousand.org.
The framers of the Constitution and the Bill of Rights intended that the total population of Congressional districts never exceed 50 to 60 thousand. Currently, the average population size of the districts is nearly 700,000 and, consequently, the principle of proportionally equitable representation has been abandoned.
What went wrong? Congressional representation has been fixed at 435 for a century, since at least 1911 when Congress just stopped increasing representation despite increases in the census population and 1929 when Congress passed a law permanently fixing the House of Representatives at 435, here and here. The Constitution doesn't mandate how many representatives there should be and only states that "the Number of Representatives shall not exceed one for every thirty Thousand, but each State shall have at Least one Representative.".
Members of Congress are paid $174,000 a year and they collect extraordinary benefits. Turnover is low for members of Congress and most have been there a very long time and have accrued very costly lifetime pension and health benefits. The notion of sacrificing for a few years to perform a civic duty is no longer a component of our political process and we have spawned a permanent class of very expensive to maintain lifetime politicians with an insatiable quest for power and money. Many have grown rich while in office because of political connections; some leave office and/or retire but hire themselves out as lobbyists to earn millions.
Our founders envisioned federal and state legislative bodies consisting of citizen legislator and certainly not a permanent class of professional politicians. Politics has definitely grown into a serious high risk, high stakes expensive business. In many way, politics has grown beyond the grasp of the average citizen simply because so much power and wealth have been concentrated into damn few hands (banksters, military industrial complex, prison industrial complex, fascist rent seeking crony capitalists).
Therefore, it's extremely difficult to get folks interested in the issue of representation because folks literally freak out and immediately think that more representation at the state and federal level automatically translates to even bigger more costly government.
The issue of representation needs to be brought out of the closet and put on the table for a real debate because when the concentration of power combines with high paid professional politicians, the entire concept of citizen legislator is shattered as is liberty, accountability and sane fiscal policies.
Governance is no longer a We the People initiative but a corrupt and insidious racketeering game where politicians are bought and paid for by special interests.
In California, a state with extremely poor representation, a corrupt 'very expensive to maintain' legislature and monstrous fiscal problems, there is a grassroots movement to address the issue of the need for increased representation.
Project: Represent Me aspires to ignite a movement to restore representation so that government acts on behalf of the people as originally intended by our founding fathers. Our mission will be accomplished through in-depth research & analysis, eduction, and advocacy. Our goal is to instill meaningful change in the way government operates at all levels, and to create a framework that empowers people to make their voice heard.
It's a good start on an issue that that been ignored for way too long.
Republican Speaker of the House John Boehner is symbolic of everything that is wrong the the Republican Party. He's corrupt to the core, lobbyist owned, an advocate for big spending and debt, plus a staunch defender of the militarized police state and endless wars of empire.
That Boehner is atrocious is only mildly relevant and what is significantly more relevant is that Republicans overwhelmingly supported Boehner as Speaker. Boehner was elected Speaker and not selected. That alone speaks volumes about the integrity and character of Republicans in the House of Representatives.
Boehner is suddenly in the news because the House Republican Leadership under Boehner removed several conservative representatives from key committees for refusing to toe the party line on spending and debt which, of course, translates to genuflecting before and licking the boots of Boehner and the GOP/RNC machine. But the arrogant, corrupt and autocratic Boehner is taking his threats to new heights.
House Speaker John Boehner (R-OH) warned his conference that GOP leaders are "watching" how the rank-and-file vote to determine committee assignments, The Hill reports.
This is no veiled threat. In fact, it's explicit, overt and even reeks of Nazi styled authoritarianism. That such despicable tactics are now routine in the Republican Party is deeply disturbing on many levels. Meanwhile, the conservative base has been extremely irate with the Republican Party and its leadership for years. In fact, they were sufficiently irate to NOT vote Republican in the general election.
What do we know about Boehner? Former Representative Joe Scarborough let loose with his thoughts on Boehner.
According to Joe Scarborough, House minority leader John Boehner is a lazy bar fly, and maybe worse. On Wednesday's "Morning Joe" Scarborough went off on Boehner, a fellow Republican, leaving many viewers wondering if the Republican congressman suffers from alcoholism.
On MSNBC's "Morning Joe" Scarborough said:
"I hear it on the Hill, I'm sure you hear it on the Hill all the time, it's not reported. But so many Republicans tell me that this is a guy that is not the hardest worker in the world."
"After five o'clock, six o'clock at night he's disengaged -- at best," Scarborough continued. "You can see him around town. He does not have, let's say, the work hours of Newt Gingrich. ... Every Republican I talk to says that John Boehner, by five or six at night, you can see him at bars."
Scarborough is not the first to notice Boehner's taste for the sauce. Boehner is well known to Washington insiders for his drinking.
The Raw Story reports:
When he was chosen House minority leader in 2006, the San Francisco Chronicle reported, "Boehner is famous for the lavish parties he throws, including an annual 'Boehner Beach Party' fundraiser. At the GOP's 2004 convention in New York, Boehner hosted a party that raged all four nights of the convention at Tunnel, a West Side nightclub."
In 2007, Politico took a more pointed dig, in an item headlined "Boehner cries again, getting a rep as a 'weeper,'" which pointed out, "This is getting to be something of a habit for the Ohio Republican. One of his GOP colleagues noted that Boehner cries more often later in the day. Go figure, eh."
Perhaps it is time Republican colleagues staged an intervention for House minority leader John Boehner. Watch the video. What do you think - is Boehner a lazy drunk - or just another good time Charlie?
Boehner being a lazy, partying drunk is only part of the Boehner story. That Boehner is wired into lobbyists and serves their exclusive interest is well known in the DC District of Crime.
Boehner's primary residence is in West Chester, Ohio, but for $1,600 a month, he rents a two-bedroom basement apartment near the House office buildings on Capitol Hill owned by Milne, Boehner spokesman Don Seymour said yesterday.... In the weeks preceding last week's GOP leadership elections, Boehner acknowledged his close ties to the lobbying community...
Boehner isn't just a lazy drunk with close ties to the lobbying industry, it's been reported that this married Republican Congress Critter even sleeps with lobbyists.
"Everyone" (but the voters) knew Mark Foley (R-FL) was molesting underage boys and "everyone" (but the voters) knew Larry Craig (R-ID) was trolling the Washington, DC public toilets looking for love and "everyone" (but the voters) knew John Boehner was an inveterate skirt-chaser who's had numerous affairs. His poor wife, Debbie, never leaves the gated community of McMansions he has her stashed away in. But what makes the Boehner sex scandal more compelling is that he's doing it with a lobbyist-- and everyone, even the voters know he's one politician infamous for his shady relations with lobbyists-- and that he had warned Republican caucus members back in July that they weren't allowed to screw the whores attractive young female "lobbyists" that the big K Street firms hire specifically to get on the good side of legislators-- at least not until after the elections.
How about John Boehner's congressional voting record? Boehner's voting record would rival that of any big spending Democrat.
On 5/1/2008 Republican Congressman John Boehner voted for the Student Loan Provision Changes. HR 5715 was a Democrat introduced Bill that significantly increased government loan guarantees for student debt, yet Boehner and most of the Republicans voted for this anti-free market big Government bill.....
On 2/7/2008 Congressman John Boehner voted with the majority of Congress (380-34) for HR 5140, the Economic Stimulus Plan. No fiscal conservative pro-free market politician would vote for this bill as it not only provides a certain demographic with a welfare check but in addition this bill increased the FHA loan limits. By increasing the FHA loan limits for certain real estate to $633,500 and the GSE loan limit to $729,750 the Federal Government guarantees more debt and therefore puts itself at even greater financial risk of loan defaults. Not only is this fiscally irresponsible but it is also anti-free market as the government guarantees non-sense loans that the private market would not even make without such guarantees in place. This type of market interference greatly contributed to the Real Estate Bubble.
Congressman and Presidential Candidate Ron Paul who warned about the Housing Bubble in 2002 was one of only 34 Congressman voting against the Economic Stimulus Plan.
On 06/28/2002 Congressman John Bohener voted to massively increase government spending with his Yes vote on the Medicare Modernization and Prescription Drug Act which authorized $350 billion in spending for the Medicare program....
On 5/23/2001 Boehner sponsored the No Child Left Behind bill. This bill was passed 384-45 with the support of most of Congress. “Limited Government” Republican Boehner sponsored this bill that increased not only the size of the Federal Government but with that increased the cost of it by hundreds of billions of dollars.
Throughout his political career in Washington D.C., John Boehner also voted for hundreds of billions in foreign aid. Being the “limited Government conservative” that he is, Congressman John Boehner also voted for billions of dollars for socialist programs. In 1997 Boehner voted for $54.42 billion in mostly socialist spending, with $25 billion going to the Food Stamp Program, $7.77 billion for Child Nutrition Programs, $3.92 billion for Nutrition programs for women and children. In 2002, with his Yes vote on HR 4743 John Boehner voted for an additional $16.6 billion in socialist spending through Temporary Aid for Needy Families and hundreds of millions of dollars to promote marriages. These are hardly votes that are fiscally conservative and in the interest of limited Government…
Not surprisingly, limited Government Hypocrite Boehner joined the GOP and many Democrats with their bailout for Wall Street with a Yes vote for HR 1424, the Financial Asset Purchase Authority and Tax Law Amendments which authorized $700 billion in bailout spending.
The fraud known as the Republican Party is downright laughable as well as pathetic and immoral. The GOP has become a grotesque caricature of the remnants of the conservative movement that was hijacked by neocons, theocrats, commies, statists, oligarchs and Nazis.
That a man like John Boehner was elected Speaker of the House attests to the moral bankruptcy of the Republican Party, its leadership and its insidious corruption.
Really! The Party of Family Values elects as Speaker a man who is a well known drunken partying cad about town, a man with notorious deep ties to the DC lobbyist establishment, a man who cheats on his wife and sleeps around, a man who spends taxpayer dough like a drunken sailor (sorry, didn't mean to insult sailors) and man whose personal and professional morals are lower than whale dung.
Hollywood and the realm of fiction couldn't concoct a more bizarre plot.
Tow the party line?
Yeah baby, hook, line sinker.
This GOP and its arrogant elites must be sunk if conservatism stands any chance whatsoever of surviving.
Farewell Dear Doctor. You were the last remaining patriot. I salute you for your wisdom, courage, and honesty. You alone were the shining light during this dark time. You are no longer alone in your fight for freedom, liberty, and truth.
By Ron Paul | Delivered on the House Floor, November 14, 2012
Farewell to Congress
This may well be the last time I speak on the House Floor. At the end of the year I’ll leave Congress after 23 years in office over a 36 year period. My goals in 1976 were the same as they are today: promote peace and prosperity by a strict adherence to the principles of individual liberty.
It was my opinion, that the course the U.S. embarked on in the latter part of the 20th Century would bring us a major financial crisis and engulf us in a foreign policy that would overextend us and undermine our national security.
To achieve the goals I sought, government would have had to shrink in size and scope, reduce spending, change the monetary system, and reject the unsustainable costs of policing the world and expanding the American Empire.
The problems seemed to be overwhelming and impossible to solve, yet from my view point, just following the constraints placed on the federal government by the Constitution would have been a good place to start.
How Much Did I Accomplish?
In many ways, according to conventional wisdom, my off-and-on career in Congress, from 1976 to 2012, accomplished very little. No named legislation, no named federal buildings or highways—thank goodness. In spite of my efforts, the government has grown exponentially, taxes remain excessive, and the prolific increase of incomprehensible regulations continues. Wars are constant and pursued without Congressional declaration, deficits rise to the sky, poverty is rampant and dependency on the federal government is now worse than any time in our history.
All this with minimal concerns for the deficits and unfunded liabilities that common sense tells us cannot go on much longer. A grand, but never mentioned, bipartisan agreement allows for the well-kept secret that keeps the spending going. One side doesn’t give up one penny on military spending, the other side doesn’t give up one penny on welfare spending, while both sides support the bailouts and subsidies for the banking and corporate elite. And the spending continues as the economy weakens and the downward spiral continues. As the government continues fiddling around, our liberties and our wealth burn in the flames of a foreign policy that makes us less safe.
The major stumbling block to real change in Washington is the total resistance to admitting that the country is broke. This has made compromising, just to agree to increase spending, inevitable since neither side has any intention of cutting spending.
The country and the Congress will remain divisive since there’s no “loot left to divvy up.”
Without this recognition the spenders in Washington will continue the march toward a fiscal cliff much bigger than the one anticipated this coming January.
I have thought a lot about why those of us who believe in liberty, as a solution, have done so poorly in convincing others of its benefits. If liberty is what we claim it is- the principle that protects all personal, social and economic decisions necessary for maximum prosperity and the best chance for peace- it should be an easy sell. Yet, history has shown that the masses have been quite receptive to the promises of authoritarians which are rarely if ever fulfilled.
Authoritarianism vs. Liberty
If authoritarianism leads to poverty and war and less freedom for all individuals and is controlled by rich special interests, the people should be begging for liberty. There certainly was a strong enough sentiment for more freedom at the time of our founding that motivated those who were willing to fight in the revolution against the powerful British government.
During my time in Congress the appetite for liberty has been quite weak; the understanding of its significance negligible. Yet the good news is that compared to 1976 when I first came to Congress, the desire for more freedom and less government in 2012 is much greater and growing, especially in grassroots America. Tens of thousands of teenagers and college age students are, with great enthusiasm, welcoming the message of liberty.
I have a few thoughts as to why the people of a country like ours, once the freest and most prosperous, allowed the conditions to deteriorate to the degree that they have.
Freedom, private property, and enforceable voluntary contracts, generate wealth. In our early history we were very much aware of this. But in the early part of the 20th century our politicians promoted the notion that the tax and monetary systems had to change if we were to involve ourselves in excessive domestic and military spending. That is why Congress gave us the Federal Reserve and the income tax. The majority of Americans and many government officials agreed that sacrificing some liberty was necessary to carry out what some claimed to be “progressive” ideas. Pure democracy became acceptable.
They failed to recognized that what they were doing was exactly opposite of what the colonists were seeking when they broke away from the British.
Some complain that my arguments makes no sense, since great wealth and the standard of living improved for many Americans over the last 100 years, even with these new policies.
But the damage to the market economy, and the currency, has been insidious and steady. It took a long time to consume our wealth, destroy the currency and undermine productivity and get our financial obligations to a point of no return. Confidence sometimes lasts longer than deserved. Most of our wealth today depends on debt.
The wealth that we enjoyed and seemed to be endless, allowed concern for the principle of a free society to be neglected. As long as most people believed the material abundance would last forever, worrying about protecting a competitive productive economy and individual liberty seemed unnecessary.
The Age of Redistribution
This neglect ushered in an age of redistribution of wealth by government kowtowing to any and all special interests, except for those who just wanted to left alone. That is why today money in politics far surpasses money currently going into research and development and productive entrepreneurial efforts.
The material benefits became more important than the understanding and promoting the principles of liberty and a free market. It is good that material abundance is a result of liberty but if materialism is all that we care about, problems are guaranteed.
The crisis arrived because the illusion that wealth and prosperity would last forever has ended. Since it was based on debt and a pretense that debt can be papered over by an out-of-control fiat monetary system, it was doomed to fail. We have ended up with a system that doesn’t produce enough even to finance the debt and no fundamental understanding of why a free society is crucial to reversing these trends.
If this is not recognized, the recovery will linger for a long time. Bigger government, more spending, more debt, more poverty for the middle class, and a more intense scramble by the elite special interests will continue.
We Need an Intellectual Awakening
Without an intellectual awakening, the turning point will be driven by economic law. A dollar crisis will bring the current out-of-control system to its knees.
If it’s not accepted that big government, fiat money, ignoring liberty, central economic planning, welfarism, and warfarism caused our crisis we can expect a continuous and dangerous march toward corporatism and even fascism with even more loss of our liberties. Prosperity for a large middle class though will become an abstract dream.
This continuous move is no different than what we have seen in how our financial crisis of 2008 was handled. Congress first directed, with bipartisan support, bailouts for the wealthy. Then it was the Federal Reserve with its endless quantitative easing. If at first it doesn’t succeed try again; QE1, QE2, and QE3 and with no results we try QE indefinitely—that is until it too fails. There’s a cost to all of this and let me assure you delaying the payment is no longer an option. The rules of the market will extract its pound of flesh and it won’t be pretty.
The current crisis elicits a lot of pessimism. And the pessimism adds to less confidence in the future. The two feed on themselves, making our situation worse.
If the underlying cause of the crisis is not understood we cannot solve our problems. The issues of warfare, welfare, deficits, inflationism, corporatism, bailouts and authoritarianism cannot be ignored. By only expanding these policies we cannot expect good results.
Everyone claims support for freedom. But too often it’s for one’s own freedom and not for others. Too many believe that there must be limits on freedom. They argue that freedom must be directed and managed to achieve fairness and equality thus making it acceptable to curtail, through force, certain liberties.
Some decide what and whose freedoms are to be limited. These are the politicians whose goal in life is power. Their success depends on gaining support from special interests.
No More ‘isms’
The great news is the answer is not to be found in more “isms.” The answers are to be found in more liberty which cost so much less. Under these circumstances spending goes down, wealth production goes up, and the quality of life improves.
Just this recognition—especially if we move in this direction—increases optimism which in itself is beneficial. The follow through with sound policies are required which must be understood and supported by the people.
But there is good evidence that the generation coming of age at the present time is supportive of moving in the direction of more liberty and self-reliance. The more this change in direction and the solutions become known, the quicker will be the return of optimism.
Our job, for those of us who believe that a different system than the one that we have had for the last 100 years, has driven us to this unsustainable crisis, is to be more convincing that there is a wonderful, uncomplicated, and moral system that provides the answers. We had a taste of it in our early history. We need not give up on the notion of advancing this cause.
It worked, but we allowed our leaders to concentrate on the material abundance that freedom generates, while ignoring freedom itself. Now we have neither, but the door is open, out of necessity, for an answer. The answer available is based on the Constitution, individual liberty and prohibiting the use of government force to provide privileges and benefits to all special interests.
After over 100 years we face a society quite different from the one that was intended by the Founders. In many ways their efforts to protect future generations with the Constitution from this danger has failed. Skeptics, at the time the Constitution was written in 1787, warned us of today’s possible outcome. The insidious nature of the erosion of our liberties and the reassurance our great abundance gave us, allowed the process to evolve into the dangerous period in which we now live.
Dependency on Government Largesse
Today we face a dependency on government largesse for almost every need. Our liberties are restricted and government operates outside the rule of law, protecting and rewarding those who buy or coerce government into satisfying their demands. Here are a few examples:
Undeclared wars are commonplace. Welfare for the rich and poor is considered an entitlement. The economy is overregulated, overtaxed and grossly distorted by a deeply flawed monetary system. Debt is growing exponentially. The Patriot Act and FISA legislation passed without much debate have resulted in a steady erosion of our 4th Amendment rights. Tragically our government engages in preemptive war, otherwise known as aggression, with no complaints from the American people. The drone warfare we are pursuing worldwide is destined to end badly for us as the hatred builds for innocent lives lost and the international laws flaunted. Once we are financially weakened and militarily challenged, there will be a lot resentment thrown our way. It’s now the law of the land that the military can arrest American citizens, hold them indefinitely, without charges or a trial. Rampant hostility toward free trade is supported by a large number in Washington. Supporters of sanctions, currency manipulation and WTO trade retaliation, call the true free traders “isolationists.” Sanctions are used to punish countries that don’t follow our orders. Bailouts and guarantees for all kinds of misbehavior are routine. Central economic planning through monetary policy, regulations and legislative mandates has been an acceptable policy.
Questions
Excessive government has created such a mess it prompts many questions:
Why are sick people who use medical marijuana put in prison? Why does the federal government restrict the drinking of raw milk? Why can’t Americans manufacturer rope and other products from hemp? Why are Americans not allowed to use gold and silver as legal tender as mandated by the Constitution? Why is Germany concerned enough to consider repatriating their gold held by the FED for her in New York? Is it that the trust in the U.S. and dollar supremacy beginning to wane? Why do our political leaders believe it’s unnecessary to thoroughly audit our own gold? Why can’t Americans decide which type of light bulbs they can buy? Why is the TSA permitted to abuse the rights of any American traveling by air? Why should there be mandatory sentences—even up to life for crimes without victims—as our drug laws require? Why have we allowed the federal government to regulate commodes in our homes? Why is it political suicide for anyone to criticize AIPAC ? Why haven’t we given up on the drug war since it’s an obvious failure and violates the people’s rights? Has nobody noticed that the authorities can’t even keep drugs out of the prisons? How can making our entire society a prison solve the problem? Why do we sacrifice so much getting needlessly involved in border disputes and civil strife around the world and ignore the root cause of the most deadly border in the world-the one between Mexico and the US? Why does Congress willingly give up its prerogatives to the Executive Branch? Why does changing the party in power never change policy? Could it be that the views of both parties are essentially the same? Why did the big banks, the large corporations, and foreign banks and foreign central banks get bailed out in 2008 and the middle class lost their jobs and their homes? Why do so many in the government and the federal officials believe that creating money out of thin air creates wealth? Why do so many accept the deeply flawed principle that government bureaucrats and politicians can protect us from ourselves without totally destroying the principle of liberty? Why can’t people understand that war always destroys wealth and liberty? Why is there so little concern for the Executive Order that gives the President authority to establish a “kill list,” including American citizens, of those targeted for assassination? Why is patriotism thought to be blind loyalty to the government and the politicians who run it, rather than loyalty to the principles of liberty and support for the people? Real patriotism is a willingness to challenge the government when it’s wrong. Why is it is claimed that if people won’t or can’t take care of their own needs, that people in government can do it for them? Why did we ever give the government a safe haven for initiating violence against the people? Why do some members defend free markets, but not civil liberties? Why do some members defend civil liberties but not free markets? Aren’t they the same? Why don’t more defend both economic liberty and personal liberty? Why are there not more individuals who seek to intellectually influence others to bring about positive changes than those who seek power to force others to obey their commands? Why does the use of religion to support a social gospel and preemptive wars, both of which requires authoritarians to use violence, or the threat of violence, go unchallenged? Aggression and forced redistribution of wealth has nothing to do with the teachings of the world great religions. Why do we allow the government and the Federal Reserve to disseminate false information dealing with both economic and foreign policy? Why is democracy held in such high esteem when it’s the enemy of the minority and makes all rights relative to the dictates of the majority? Why should anyone be surprised that Congress has no credibility, since there’s such a disconnect between what politicians say and what they do? Is there any explanation for all the deception, the unhappiness, the fear of the future, the loss of confidence in our leaders, the distrust, the anger and frustration? Yes there is, and there’s a way to reverse these attitudes. The negative perceptions are logical and a consequence of bad policies bringing about our problems. Identification of the problems and recognizing the cause allow the proper changes to come easy.
Trust Yourself, Not the Government
Too many people have for too long placed too much confidence and trust in government and not enough in themselves. Fortunately, many are now becoming aware of the seriousness of the gross mistakes of the past several decades. The blame is shared by both political parties. Many Americans now are demanding to hear the plain truth of things and want the demagoguing to stop. Without this first step, solutions are impossible.
Seeking the truth and finding the answers in liberty and self-reliance promotes the optimism necessary for restoring prosperity. The task is not that difficult if politics doesn’t get in the way.
We have allowed ourselves to get into such a mess for various reasons.
Politicians deceive themselves as to how wealth is produced. Excessive confidence is placed in the judgment of politicians and bureaucrats. This replaces the confidence in a free society. Too many in high places of authority became convinced that only they, armed with arbitrary government power, can bring about fairness, while facilitating wealth production. This always proves to be a utopian dream and destroys wealth and liberty. It impoverishes the people and rewards the special interests who end up controlling both political parties.
It’s no surprise then that much of what goes on in Washington is driven by aggressive partisanship and power seeking, with philosophic differences being minor.
Economic Ignorance
Economic ignorance is commonplace. Keynesianism continues to thrive, although today it is facing healthy and enthusiastic rebuttals. Believers in military Keynesianism and domestic Keynesianism continue to desperately promote their failed policies, as the economy languishes in a deep slumber.
Supporters of all government edicts use humanitarian arguments to justify them.
Humanitarian arguments are always used to justify government mandates related to the economy, monetary policy, foreign policy, and personal liberty. This is on purpose to make it more difficult to challenge. But, initiating violence for humanitarian reasons is still violence. Good intentions are no excuse and are just as harmful as when people use force with bad intentions. The results are always negative.
The immoral use of force is the source of man’s political problems. Sadly, many religious groups, secular organizations, and psychopathic authoritarians endorse government initiated force to change the world. Even when the desired goals are well-intentioned—or especially when well-intentioned—the results are dismal. The good results sought never materialize. The new problems created require even more government force as a solution. The net result is institutionalizing government initiated violence and morally justifying it on humanitarian grounds.
This is the same fundamental reason our government uses force for invading other countries at will, central economic planning at home, and the regulation of personal liberty and habits of our citizens.
It is rather strange, that unless one has a criminal mind and no respect for other people and their property, no one claims it’s permissible to go into one’s neighbor’s house and tell them how to behave, what they can eat, smoke and drink or how to spend their money.
Yet, rarely is it asked why it is morally acceptable that a stranger with a badge and a gun can do the same thing in the name of law and order. Any resistance is met with brute force, fines, taxes, arrests, and even imprisonment. This is done more frequently every day without a proper search warrant.
No Government Monopoly over Initiating Violence
Restraining aggressive behavior is one thing, but legalizing a government monopoly for initiating aggression can only lead to exhausting liberty associated with chaos, anger and the breakdown of civil society. Permitting such authority and expecting saintly behavior from the bureaucrats and the politicians is a pipe dream. We now have a standing army of armed bureaucrats in the TSA, CIA, FBI, Fish and Wildlife, FEMA, IRS, Corp of Engineers, etc. numbering over 100,000. Citizens are guilty until proven innocent in the unconstitutional administrative courts.
Government in a free society should have no authority to meddle in social activities or the economic transactions of individuals. Nor should government meddle in the affairs of other nations. All things peaceful, even when controversial, should be permitted.
We must reject the notion of prior restraint in economic activity just we do in the area of free speech and religious liberty. But even in these areas government is starting to use a backdoor approach of political correctness to regulate speech-a dangerous trend. Since 9/11 monitoring speech on the internet is now a problem since warrants are no longer required.
The Proliferation of Federal Crimes
The Constitution established four federal crimes. Today the experts can’t even agree on how many federal crimes are now on the books—they number into the thousands. No one person can comprehend the enormity of the legal system—especially the tax code. Due to the ill-advised drug war and the endless federal expansion of the criminal code we have over 6 million people under correctional suspension, more than the Soviets ever had, and more than any other nation today, including China. I don’t understand the complacency of the Congress and the willingness to continue their obsession with passing more Federal laws. Mandatory sentencing laws associated with drug laws have compounded our prison problems.
The federal register is now 75,000 pages long and the tax code has 72,000 pages, and expands every year. When will the people start shouting, “enough is enough,” and demand Congress cease and desist.
Achieving Liberty
Liberty can only be achieved when government is denied the aggressive use of force. If one seeks liberty, a precise type of government is needed. To achieve it, more than lip service is required.
Two choices are available.
1. A government designed to protect liberty—a natural right—as its sole objective. The people are expected to care for themselves and reject the use of any force for interfering with another person’s liberty. Government is given a strictly limited authority to enforce contracts, property ownership, settle disputes, and defend against foreign aggression.
2. A government that pretends to protect liberty but is granted power to arbitrarily use force over the people and foreign nations. Though the grant of power many times is meant to be small and limited, it inevitably metastasizes into an omnipotent political cancer. This is the problem for which the world has suffered throughout the ages. Though meant to be limited it nevertheless is a 100% sacrifice of a principle that would-be-tyrants find irresistible. It is used vigorously—though incrementally and insidiously. Granting power to government officials always proves the adage that: “power corrupts.”
Once government gets a limited concession for the use of force to mold people habits and plan the economy, it causes a steady move toward tyrannical government. Only a revolutionary spirit can reverse the process and deny to the government this arbitrary use of aggression. There’s no in-between. Sacrificing a little liberty for imaginary safety always ends badly.
Today’s mess is a result of Americans accepting option #2, even though the Founders attempted to give us Option #1.
The results are not good. As our liberties have been eroded our wealth has been consumed. The wealth we see today is based on debt and a foolish willingness on the part of foreigners to take our dollars for goods and services. They then loan them back to us to perpetuate our debt system. It’s amazing that it has worked for this long but the impasse in Washington, in solving our problems indicate that many are starting to understand the seriousness of the world -wide debt crisis and the dangers we face. The longer this process continues the harsher the outcome will be.
The Financial Crisis Is a Moral Crisis
Many are now acknowledging that a financial crisis looms but few understand it’s, in reality, a moral crisis. It’s the moral crisis that has allowed our liberties to be undermined and permits the exponential growth of illegal government power. Without a clear understanding of the nature of the crisis it will be difficult to prevent a steady march toward tyranny and the poverty that will accompany it.
Ultimately, the people have to decide which form of government they want; option #1 or option #2. There is no other choice. Claiming there is a choice of a “little” tyranny is like describing pregnancy as a “touch of pregnancy.” It is a myth to believe that a mixture of free markets and government central economic planning is a worthy compromise. What we see today is a result of that type of thinking. And the results speak for themselves.
A Culture of Violence
American now suffers from a culture of violence. It’s easy to reject the initiation of violence against one’s neighbor but it’s ironic that the people arbitrarily and freely anoint government officials with monopoly power to initiate violence against the American people—practically at will.
Because it’s the government that initiates force, most people accept it as being legitimate. Those who exert the force have no sense of guilt. It is believed by too many that governments are morally justified in initiating force supposedly to “do good.” They incorrectly believe that this authority has come from the “consent of the people.” The minority, or victims of government violence never consented to suffer the abuse of government mandates, even when dictated by the majority. Victims of TSA excesses never consented to this abuse.
This attitude has given us a policy of initiating war to “do good,” as well. It is claimed that war, to prevent war for noble purposes, is justified. This is similar to what we were once told that: “destroying a village to save a village” was justified. It was said by a US Secretary of State that the loss of 500,000 Iraqis, mostly children, in the 1990s, as a result of American bombs and sanctions, was “worth it” to achieve the “good” we brought to the Iraqi people. And look at the mess that Iraq is in today.
Government use of force to mold social and economic behavior at home and abroad has justified individuals using force on their own terms. The fact that violence by government is seen as morally justified, is the reason why violence will increase when the big financial crisis hits and becomes a political crisis as well.
First, we recognize that individuals shouldn’t initiate violence, then we give the authority to government. Eventually, the immoral use of government violence, when things goes badly, will be used to justify an individual’s “right” to do the same thing. Neither the government nor individuals have the moral right to initiate violence against another yet we are moving toward the day when both will claim this authority. If this cycle is not reversed society will break down.
When needs are pressing, conditions deteriorate and rights become relative to the demands and the whims of the majority. It’s then not a great leap for individuals to take it upon themselves to use violence to get what they claim is theirs. As the economy deteriorates and the wealth discrepancies increase—as are already occurring— violence increases as those in need take it in their own hands to get what they believe is theirs. They will not wait for a government rescue program.
When government officials wield power over others to bail out the special interests, even with disastrous results to the average citizen, they feel no guilt for the harm they do. Those who take us into undeclared wars with many casualties resulting, never lose sleep over the death and destruction their bad decisions caused. They are convinced that what they do is morally justified, and the fact that many suffer just can’t be helped.
When the street criminals do the same thing, they too have no remorse, believing they are only taking what is rightfully theirs. All moral standards become relative. Whether it’s bailouts, privileges, government subsidies or benefits for some from inflating a currency, it’s all part of a process justified by a philosophy of forced redistribution of wealth. Violence, or a threat of such, is the instrument required and unfortunately is of little concern of most members of Congress.
Some argue it’s only a matter of “fairness” that those in need are cared for. There are two problems with this. First, the principle is used to provide a greater amount of benefits to the rich than the poor. Second, no one seems to be concerned about whether or not it’s fair to those who end up paying for the benefits. The costs are usually placed on the backs of the middle class and are hidden from the public eye. Too many people believe government handouts are free, like printing money out of thin air, and there is no cost. That deception is coming to an end. The bills are coming due and that’s what the economic slowdown is all about.
Sadly, we have become accustomed to living with the illegitimate use of force by government. It is the tool for telling the people how to live, what to eat and drink, what to read and how to spend their money.
To develop a truly free society, the issue of initiating force must be understood and rejected. Granting to government even a small amount of force is a dangerous concession.
Limiting Government Excesses vs. a Virtuous Moral People
Our Constitution, which was intended to limit government power and abuse, has failed. The Founders warned that a free society depends on a virtuous and moral people. The current crisis reflects that their concerns were justified.
Most politicians and pundits are aware of the problems we face but spend all their time in trying to reform government. The sad part is that the suggested reforms almost always lead to less freedom and the importance of a virtuous and moral people is either ignored, or not understood. The new reforms serve only to further undermine liberty. The compounding effect has given us this steady erosion of liberty and the massive expansion of debt. The real question is: if it is liberty we seek, should most of the emphasis be placed on government reform or trying to understand what “a virtuous and moral people” means and how to promote it. The Constitution has not prevented the people from demanding handouts for both rich and poor in their efforts to reform the government, while ignoring the principles of a free society. All branches of our government today are controlled by individuals who use their power to undermine liberty and enhance the welfare/warfare state-and frequently their own wealth and power.
If the people are unhappy with the government performance it must be recognized that government is merely a reflection of an immoral society that rejected a moral government of constitutional limitations of power and love of freedom.
If this is the problem all the tinkering with thousands of pages of new laws and regulations will do nothing to solve the problem.
It is self-evident that our freedoms have been severely limited and the apparent prosperity we still have, is nothing more than leftover wealth from a previous time. This fictitious wealth based on debt and benefits from a false trust in our currency and credit, will play havoc with our society when the bills come due. This means that the full consequence of our lost liberties is yet to be felt.
But that illusion is now ending. Reversing a downward spiral depends on accepting a new approach.
Expect the rapidly expanding homeschooling movement to play a significant role in the revolutionary reforms needed to build a free society with Constitutional protections. We cannot expect a Federal government controlled school system to provide the intellectual ammunition to combat the dangerous growth of government that threatens our liberties.
The internet will provide the alternative to the government/media complex that controls the news and most political propaganda. This is why it’s essential that the internet remains free of government regulation.
Many of our religious institutions and secular organizations support greater dependency on the state by supporting war, welfare and corporatism and ignore the need for a virtuous people.
I never believed that the world or our country could be made more free by politicians, if the people had no desire for freedom.
Under the current circumstances the most we can hope to achieve in the political process is to use it as a podium to reach the people to alert them of the nature of the crisis and the importance of their need to assume responsibility for themselves, if it is liberty that they truly seek. Without this, a constitutionally protected free society is impossible.
If this is true, our individual goal in life ought to be for us to seek virtue and excellence and recognize that self-esteem and happiness only comes from using one’s natural ability, in the most productive manner possible, according to one’s own talents.
Productivity and creativity are the true source of personal satisfaction. Freedom, and not dependency, provides the environment needed to achieve these goals. Government cannot do this for us; it only gets in the way. When the government gets involved, the goal becomes a bailout or a subsidy and these cannot provide a sense of personal achievement.
Achieving legislative power and political influence should not be our goal. Most of the change, if it is to come, will not come from the politicians, but rather from individuals, family, friends, intellectual leaders and our religious institutions. The solution can only come from rejecting the use of coercion, compulsion, government commands, and aggressive force, to mold social and economic behavior. Without accepting these restraints, inevitably the consensus will be to allow the government to mandate economic equality and obedience to the politicians who gain power and promote an environment that smothers the freedoms of everyone. It is then that the responsible individuals who seek excellence and self-esteem by being self-reliance and productive, become the true victims.
Conclusion
What are the greatest dangers that the American people face today and impede the goal of a free society? There are five.
1. The continuous attack on our civil liberties which threatens the rule of law and our ability to resist the onrush of tyranny. 2. Violent anti-Americanism that has engulfed the world. Because the phenomenon of “blow-back” is not understood or denied, our foreign policy is destined to keep us involved in many wars that we have no business being in. National bankruptcy and a greater threat to our national security will result. 3. The ease in which we go to war, without a declaration by Congress, but accepting international authority from the UN or NATO even for preemptive wars, otherwise known as aggression. 4. A financial political crisis as a consequence of excessive debt, unfunded liabilities, spending, bailouts, and gross discrepancy in wealth distribution going from the middle class to the rich. The danger of central economic planning, by the Federal Reserve must be understood. 5. World government taking over local and US sovereignty by getting involved in the issues of war, welfare, trade, banking, a world currency, taxes, property ownership, and private ownership of guns.
Happily, there is an answer for these very dangerous trends.
What a wonderful world it would be if everyone accepted the simple moral premise of rejecting all acts of aggression. The retort to such a suggestion is always: it’s too simplistic, too idealistic, impractical, naïve, utopian, dangerous, and unrealistic to strive for such an ideal.
The answer to that is that for thousands of years the acceptance of government force, to rule over the people, at the sacrifice of liberty, was considered moral and the only available option for achieving peace and prosperity.
What could be more utopian than that myth—considering the results especially looking at the state sponsored killing, by nearly every government during the 20th Century, estimated to be in the hundreds of millions. It’s time to reconsider this grant of authority to the state.
No good has ever come from granting monopoly power to the state to use aggression against the people to arbitrarily mold human behavior. Such power, when left unchecked, becomes the seed of an ugly tyranny. This method of governance has been adequately tested, and the results are in: reality dictates we try liberty.
The idealism of non-aggression and rejecting all offensive use of force should be tried. The idealism of government sanctioned violence has been abused throughout history and is the primary source of poverty and war. The theory of a society being based on individual freedom has been around for a long time. It’s time to take a bold step and actually permit it by advancing this cause, rather than taking a step backwards as some would like us to do.
Today the principle of habeas corpus, established when King John signed the Magna Carta in 1215, is under attack. There’s every reason to believe that a renewed effort with the use of the internet that we can instead advance the cause of liberty by spreading an uncensored message that will serve to rein in government authority and challenge the obsession with war and welfare.
What I’m talking about is a system of government guided by the moral principles of peace and tolerance.
The Founders were convinced that a free society could not exist without a moral people. Just writing rules won’t work if the people choose to ignore them. Today the rule of law written in the Constitution has little meaning for most Americans, especially those who work in Washington DC.
Benjamin Franklin claimed “only a virtuous people are capable of freedom.” John Adams concurred: “Our Constitution was made for a moral and religious people. It is wholly inadequate to the government of any other.”
A moral people must reject all violence in an effort to mold people’s beliefs or habits.
A society that boos or ridicules the Golden Rule is not a moral society. All great religions endorse the Golden Rule. The same moral standards that individuals are required to follow should apply to all government officials. They cannot be exempt.
The ultimate solution is not in the hands of the government.
The solution falls on each and every individual, with guidance from family, friends and community.
The #1 responsibility for each of us is to change ourselves with hope that others will follow. This is of greater importance than working on changing the government; that is secondary to promoting a virtuous society. If we can achieve this, then the government will change.
It doesn’t mean that political action or holding office has no value. At times it does nudge policy in the right direction. But what is true is that when seeking office is done for personal aggrandizement, money or power, it becomes useless if not harmful. When political action is taken for the right reasons it’s easy to understand why compromise should be avoided. It also becomes clear why progress is best achieved by working with coalitions, which bring people together, without anyone sacrificing his principles.
Political action, to be truly beneficial, must be directed toward changing the hearts and minds of the people, recognizing that it’s the virtue and morality of the people that allow liberty to flourish.
The Constitution or more laws per se, have no value if the people’s attitudes aren’t changed.
To achieve liberty and peace, two powerful human emotions have to be overcome. Number one is “envy” which leads to hate and class warfare. Number two is “intolerance” which leads to bigoted and judgemental policies. These emotions must be replaced with a much better understanding of love, compassion, tolerance and free market economics. Freedom, when understood, brings people together. When tried, freedom is popular.
The problem we have faced over the years has been that economic interventionists are swayed by envy, whereas social interventionists are swayed by intolerance of habits and lifestyles. The misunderstanding that tolerance is an endorsement of certain activities, motivates many to legislate moral standards which should only be set by individuals making their own choices. Both sides use force to deal with these misplaced emotions. Both are authoritarians. Neither endorses voluntarism. Both views ought to be rejected.
I have come to one firm conviction after these many years of trying to figure out “the plain truth of things.” The best chance for achieving peace and prosperity, for the maximum number of people world-wide, is to pursue the cause of LIBERTY.
If you find this to be a worthwhile message, spread it throughout the land.
No real estate is permanently valuable but the grave. Mark Twain
In a bet there is a fool and a thief. Proverb
If there is one Boondoggle that everybody knows about it’s the Real Estate Boondoggle. It’s in all the papers, on TV and internet bloggers blog away day and night on the real estate quagmire of a nightmare. Of course, for some folks it truly is up close and personal. Those who lost their homes because of economic misery and job losses have experienced profound suffering.
Aside from the fact that the real estate bubble was spawned by the federal government and the Banksters who own the government, there was massive mortgage fraud, massive appraisal fraud, massive mortgage backed securities fraud, massive regulatory fraud and massive amounts of cheap fiat money – all key ingredients in a recipe for a Bernie Madoff styled Ponzi scheme with Madoff being a bungling petty thief compared to the grand larceny of the government and Banksters that toppled the global economy. As the carnage piles up, the Bankster and government solution is to just wait it out and re-inflate an already ruptured balloon, something that defies the laws of gravity. It’s not going to happen.
Just imagine going to a casino and attempting to gamble with Monopoly money from the board game. In the real world, the casino would toss you out on the street and call the nearest insane asylum to put you away. But in America the monopoly money created by the Federal Reserve is the cocaine of delusion – the delusion that freshly minted greenbacks is real wealth in what is increasingly being dubbed our crystal meth economy. The crack cocaine addicted economists and Congress Critters are firmly anchored in the cosmic belief that creating “money” out of thin air creates wealth because so long as folks have an unlimited supply of “free” fiat money, they will spend into oblivion and the spending will keep the economy roaring. So Americans voluntarily jumped on the spaceship to the nearest black hole in the universe and indebted themselves on a scale only witnessed in undiscovered parallel universes.
The Grand Delusion was fun for a while until the bitter day dawned when Americans woke up one day and acknowledged that there was no way they could ever pay back the consumer debt and the mortgage debt. Before arriving at financial Armageddon, Americans attempted to postpone the day of reckoning by endless cycles of refinancing their vastly overvalued homes to pay off debt to start another round of binge spending.
With fiat money more prevalent than all the stars in the universe, life in America was declared great. After all, America had defied the laws of financial, fiscal and monetary gravity or so we thought. As a nation, America ceased producing real and enduring wealth eons ago. This was only a minor setback as the makers of the money piñata declared “No money no problem, no job, no problem, bad credit, no problem”. Just spend, spend and spend and everything will be glorious as the accoutrements of prosperity ooze from every earthy crevice.
An economy born of the dust of cosmic illusions was declared real, tangible and eternal. The debt and the asset bubbles supporting the Grand Delusion just, well, upped and crashed one day, as predicted by a handful of sane observers.
Fiscal sanity requires that folks not borrow more than 2.5-3 times annual income for a mortgage depending on other outstanding debt. But as median housing prices exploded as a result of easy fiat money and the government/Bankster crime families approved loaning nearly 5 times annual income on an overpriced house, it’s clear that the real estate mess is not going to “clear” until housing prices are more in line with wage trends and in some areas of the nation that constitutes a lot more misery. With wages actually on the decline, fewer and fewer folks will find housing that they can afford even at today’s lower prices and low interest rates. Prices are nowhere near low enough and until median housing prices approach 3 times median income or less, the disaster will only fester. At one extreme, there were cities in California with average annual incomes of about $70,000 annually and average home prices of $770,000. Those folks got mortgages.
Case Study 1: One of the most notorious cases of mortgage insanity involved strawberry picker Alberto Ramirez who easily got a $720,000 mortgage on an annual income of $14,000, here. This Ramirez incident of mortgage insanity had gone media viral a few years back and he lost the house in foreclosure.
Case Study 2: 20 year old Denise Tejada bought a property with FHA financing using her congressional entitlement gift of an $8,000 tax credit. The price of the property was $155,000 and Tejada secured an FHA loan in the amount of $183,000 that included renovation costs based on an income derived from 1 full time job and 2 part time jobs. She walked away from the closing table with a big pile of taxpayer cash in her pocket. Apparently, she’s quite happy as she claims to have made a quick and easy $100,000. "I bought my house for $155,000. And now, after all the fixing, after all the remodeling, my house is worth $255,000. So just within a month period, I made a $100,000,". Her story is documented here but I don't know how her taxpayer funded road to riches ended.
Case Study 3: The Washington Post documented a “sob” story about Daverena White, a single mother with 3 children who never earned more than $15,000 a year and who at times was dependent on food stamps and Section 8 housing vouchers. Moreover, she had never paid more than $700 a month in rent. But White discovered the road to riches, or so she thought. White managed to buy a residential property in a DC suburb at a sales price of $698,00 on 11/8/06 from a couple who earned a living as a mortgage loan officer and a real estate agent. The sellers had purchased the property only 22 ½ months earlier and were earning a whopping profit by selling the property to Daverena for $203,000 more than they paid for it.
According to the Washington Post, White walked away from the closing table with nearly $40,000 that included, among other things, a seller paid $13,000 down payment and $11,200 in cash to make the first two mortgage payments that were $5,635 per month for a borrower never paid more than $700 a month in housing costs. The adjustable rate loan had a start rate of 8.6% that could have been raised to 15.1 within 2 years. The loan was funded by a General Electric subprime subsidiary, WMC Mortgage, who documented White’s annual income at $163,320 – very odd indeed for a woman who never earned more than $15,000 a year and was entitlement dependent. The sellers paid the first mortgage payment and White used the cash she got at the closing table to make the next 2 payments. Then she defaulted and ended up in a homeless shelter with her 3 children. Then the family ended up in a county subsidized motel for a while and eventually moved into a county subsidized apartment.
Interestingly, the Washington Post also reported in another article that “General Electric, the world's largest industrial company, has quietly become the biggest beneficiary of one of the government's key rescue programs for banks. At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government. The company did not initially qualify for the program… But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.”
Financial blogs and the NYT have reported that GE Capital secured $140 billion in federal bailout assistance. GE’s fraud artist mortgage lenders should be in jail but they are probably using their bailout bucks for big bonuses for pulling off such a lucrative heist.
Such stories are not at all unusual and during the go-go days mortgage lending mania, mortgage lenders and buyers literally went WILD. Unlike real gambling where the participants actually bring “real” money to the table, our government and insane financial system actually facilitates gambling with no money except for the fiat monopoly money created from something less tangible in value than cosmic dust.
Fannie Mae and Freddie Mac have cost taxpayers a bundle and at one time it was estimated that they would ultimately cost taxpayers several hundred billion. The WSJ reported in 10/11 that Fannie and Freddie bailouts had thus far cost taxpayers $141 billion, here. Obama got Congress to lift the $400 billion limit on Fannie/Freddie bailout so now the sky’s the limit.
Fannie Mae has a most interesting side story. Fannie Mae crimes proliferated under the leadership of a Bill Clinton pal, Franklin Raines, who ran Fannie from 1998 to 2004 but things got a whole lot worse as lending standards plummeted after Raines left Fannie amidst a financial scandal. Public service doesn’t come cheap and Raines raked in $90 million in compensation, of which $52 million was bonus money tied to earnings that never existed. Being on the public dole is the easiest money in town. For his $90 million worth of public service in helping folks move into houses they couldn’t afford or ever pay for, Raines was involved in an accounting scandal that overstated Fannie’s earning by over $10 billion. Fannie’s profits were pure fraud. Government accounting makes Enron accounting look like a paragon of integrity in financial disclosure.
Every now and then a government employee actually does their job or attempts to do their job. Armando Falcon, as Chief Regulator of the Office of the Federal Housing Oversight (OFHEO), was Fannie Mae’s auditor/regulator. Falcon fought like a tiger for years to expose Fannie fraud and require more audit oversight but Raines made sure through his network of high powered congressional and political contacts that he was untouchable. Falcon, an extraordinarily courageous and competent public servant, ended up being fired for the “crime” of trying to do his job.
Across the nation and long before the real estate crash became official many folks at the state level become very concerned. With so many bizarre mortgage products concocted by Wall Street, many state attorney generals were investigating what they deemed “predatory lending practices”. Also, some state legislatures attempted to rein in insane mortgage lending practices. However, the Bush Administration rabidly intervened and instructed the Justice Department to file lawsuits against such state initiatives. Most probably, the Bush gang was just taking orders from the Banksters who had no interest in anything except securing endless supplies of high risk mortgages to package and sell; the fee income generated by various mortgage products was an enormous source of bankster income. In the aftermath of the popped real estate balloon, journalists were trying to find out precisely what happened. Even the Washington Post took notice with a piece titled “Predatory Lenders' Partner in Crime, How the Bush Administration Stopped the States From Stepping In to Help Consumers” written by Elliott Spitzer in 2/08, here.
Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets….
What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge?...
Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.
It was common knowledge that lenders were giving folks mortgages that they knew they couldn't afford. The lenders didn't care because they weren't keeping the mortgages and all the lenders cared about was commission incomes and the fees generated from packaging and selling 'cash for trash' mortgage loans to unsuspecting investors.
In Seattle, WA a 90 year old stroke survivor, Barbara Simonson, lost a million dollar property through a series of 6 Washington Mutual mortgage deals in six years on a home she lived in for 50 years. Washington Mutual took advantage of an old woman who had no idea what she was signing. She ended up with a $680,000 option arm mortgage that she couldn’t afford on a deal that started out with her son conning her into mortgaging her home to give him $500,000 for a business venture. Mrs. Simonson had SS income of $1,270 a month, couldn’t afford the mortgage payments and though a series of refinances and cashing out to cover escalating mortgage payments, she lost her home. The Washington Mutual folks just filled out the paperwork and had her sign – she had no idea what she was signing including a document that listed her monthly income at $10,300. She denied ever reporting that level of income. But Simonson was among a lot of equity rich older folks who got stiffed in numerous mortgage scams. Had Washington Mutual just followed “old fashioned” lending standards of income verification and tax return reviews, the loan would have been denied as unaffordable. The Banksters didn’t give a hoot if the loans they made were affordable to Mrs. Simonson nor did they care if a 90 year old ended up homeless, here.
It’s not just the poor with bad credit and no money who are victims of mortgage fraud. While the poor get suckered into qualifying teaser rates and some have even actively participated in mortgage fraud, there isn’t much sympathy for folks who had “no skin” in the game. But a lot of folks did have their own skin in the game and got skinned alive. Senior citizens who worked a lifetime to be mortgage free got bamboozled. A lot of senior citizens swimming in equity have been specifically targeted by crooked Banksters and their schemes. The reverse annuity mortgage is a product that was devised to make payments to cash poor but equity rich seniors to supplement their income. These loans were secured with first mortgages and the mortgages were to be paid when the person died and the property was sold.
In March 2009, the FBI’s own website reported on equity theft crimes “FBI and Department of Housing and Urban Development-Office of Inspector General (HUD-OIG) reporting indicate that unscrupulous loan officers, mortgage companies, investors, loan counselors, appraisers, builders, developers, and real estate agents are exploiting Home Equity Conversion Mortgages (HECMs)—also known as reverse mortgages—to defraud senior citizens. They recruit seniors through local churches, investment seminars, and television, radio, billboard, and mailer advertisements, and commit the fraud primarily through equity theft, foreclosure rescue, and investment schemes.1 HECM-related fraud is occurring in every region of the United States, and reverse mortgage schemes have the potential to increase substantially as demand for these products rises in demographically dense senior citizen jurisdictions”. The link has since been scrubbed from the FBI's website.
All the banks ever wanted were an endless supply of garbage loans to package into mortgage backed securities. The Banksters made their money on fee income when the mortgages were closed and again on the sale of mortgage backed securities to victims all over the world. The Banksters had a lot of help and willing partners in their crimes – the government, Congress, the Federal Reserve and the rating agencies that they control like Moody’s, S & P and Fitch. Even the customarily staid Bloomberg chirped in and reported on the practice of the rating agencies to churn junk into stellar AAA rated securities.
Employees at Moody's Investors Service told executives that issuing dubious creditworthy ratings to mortgage-backed securities made it appear they were incompetent or ``sold our soul to the devil for revenue,'' according to e-mails obtained by U.S. House investigators… An e-mail that a S&P employee wrote to a co-worker in 2006, obtained by committee investigators, said, ``Let's hope we are all wealthy and retired by the time this house of cards falters.'', here.
The rating agencies did in fact play a key role in facilitating fraud and they were well paid by Wall Street for their crimes.
Why were the rating agencies allowed to get away with facilitating the biggest financial fraud in human history? That’s easy. You can’t take down the rating agencies without taking down Wall Street and you can’t take down Wall Street without taking down Congress and the Bankster owned federal regulatory chiefs.
After the implosion of the mortgage fiasco, many investigative journalists began to delve into the real estate carnage and books started to appear that documented massive fraud and the head of the snake is always Wall Street. Businessweek reviewed a book titled Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis by award winning journalist Paul Muolo and business reporter for The Orange County Register Matthew Padilla. According to Businessweek, the Banksters raked in an astounding $26.6 billion in mortgage back securities scheme profits between 2002 and 2007. The factories established and funded by Wall Street to facilitate the fraud were called wholesale and warehousing shops. These operations were nothing more than “a massive commission scheme with everyone’s hand in the cookie jar”. The Banksters hired hot looking females, called “mortgage sluts”, who solicited business from mortgage brokers.
But the story get real seedy and salacious in another Businessweek piece titled “Sex, Lies, and Subprime Mortgages, The sexual favors, whistleblower intimidation, and routine fraud behind the fiasco that has triggered the global financial crisis”.
A high school dropout and manicurist named Sharmen Lane earned $1 million in 2002 and $1.2 million in 2003 in one of these Wall Street concocted mortgage shops. Sharmen refused to play the “sex for mortgage application” game and got out of the mortgage business just before it crashed in 2007. But besides hot looking babes prostituting themselves for fraudulent mortgage applications to approve in the Bankster created sweatshops, the internal fraud was so widespread and pervasive that folks at all levels were getting a cut. One insider said mortgage underwriters “demanded spiffs of $1,000 for the first 10 loans and $2,500 for the next 20 loans”. Many honest folks in the mortgage business were outright fired. Of course, after the real estate meltdown and the loss of big commissions and high incomes, the mortgage industry insiders started spilling the beans. .
Businessweek reported “The abuses went far beyond sexual dalliances. Court documents and interviews with scores of industry players suggest that wholesalers also offered bribes to fellow employees, fabricated documents, and coached brokers on how to break the rules. And they weren’t alone. Brokers, who work directly with borrowers, altered and shredded documents. Underwriters, the bank employees who actually approve mortgage loans, also skirted boundaries, demanding secret payments from the wholesalers to green-light loans they knew to be fraudulent. Some employees who reported misdeeds were harassed or fired…..In the end, the wholesalers were undone by the same people who allowed for their rise: Their Wall Street overlords”.
Wall Street has so much power and money sloshing around in its manure factories that it could easily afford to buy Congress and their blessings for Bankster schemes and scams. In 2000, the top ten Wall Street investment banks did $245 billion in the mortgage securitization business but by 2006 the mortgage backed securities business mushroomed to $1.5 trillion in one year alone.
But Wall Street wasn’t just content earning tens of billions from mortgage and securities fraud. These fraud artists managed to shift the financial risk of their scams to taxpayers who are covering their losses.
What about all those bond holders and pension funds who got stiffed on mortgage backed securities? After all, they didn’t buy junk rated securities and they paid high prices for supposedly high quality securities. They also threatened to file civil lawsuits for fraud and even demanded criminal investigations.
But in the end, they were silenced and quietly paid off. The Banksters were forced to buy back a lot of the slop they sold to avoid civil lawsuits and criminal prosecutions for fraud. The Federal Reserve, the greenback rainmaker, had spent a whopping $1.2 trillion to buy up the mortgage backed securities slop from the Banksters and the Government Sponsored Enterprises (GSE's like Fannie Mae and Freddie Mac) according to NPR, here.
Not only were the Banksters making bad mortgages and packaging mortgage backed securities, the Banksters were packaging everything in the fiat financial universe – home mortgages, commercial mortgages, credit cards, 2nd mortgages, auto loans - all during an era where sound lending principles were ditched as irrelevant. And the rating agencies and government were there to aid and abet them in their crimes and even cover up their crimes.
A long, long time ago, a worker would save a percentage of his earnings. These savings filled small and medium sized banks. Folks saved for a variety of reasons; they saved to buy a house, they saved for future consumption, they saved for vacations, they saved for their kid’s education and they saved for their retirement. Shocking as it might be, there was a time in America when folks saved for a down payment on a home and to get qualified for a mortgage, one had to actually have good credit and the ability to repay (a job).
But along comes Uncle Sam and the Banksters who singlehandedly abandoned as irrelevant every principle of sound lending practices. They said, no job – no problem, bad credit – no problem, no money – no problem. Instead of the time honored home purchasing method of working and saving, the government and the Banksters decided that working and saving was archaic and should be abolished.
It was a whopper of a stretch from the days when Teddy Roosevelt campaigned on “a chicken in every pot”. Filling a hungry belly is one thing but churning chickens into houses was quite an imaginary leap.
As incriminating and revolting as all the aforementioned facts are, by far the Big Smoking Gun in the whole scam is that Wall Street criminals betted against the very same securities these fraud hucksters underwrote that were peddled as AAA low risk, high quality securities. Although big mainstream media has the mega resources to investigate and unravel anything, it used their investigative journalists to disclose bits and pieces of the mess for the purpose of misleading the public into not having enough information to connect the dots on Wall Street’s schemes. Mainstream print and broadcast media generally covered up and/or ignored the truth, but bloggers, alternative media and smaller media did some outstanding reporting.
The rather obscure McClatchy Newspapers came out with a blockbuster of an investigative journalist piece on 11/1/09 that actually connects the dots on the biggest financial fraud in human history. “How Goldman secretly bet on the U.S. housing crash” does an outstanding job documenting the real truth of what happened and who made the money. More importantly, the article was just the beginning of a series of articles that culminated after 5 months of investigation. McClatchy even admits that its investigation barely scratches the surface and much of what went on is still largely hidden from public scrutiny. But here are some quotes that piece together the fraud.
In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting…..
Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.
Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws…..
To piece together Goldman's role in the subprime meltdown, McClatchy reviewed hundreds of documents, SEC filings, copies of secret investment circulars, lawsuits and interviewed numerous people familiar with the firm's activities.
Goldman has operated a virtual jobs conveyor belt to and from Washington: Paulson, as Treasury secretary, sent tens of billions of taxpayers' dollars to rescue Wall Street in 2008, and former Goldman employees populate some of the most demanding and powerful posts in Washington. Savvy federal regulators have migrated from their Washington jobs to Goldman.
The full extent of the losses from Goldman's mortgage securities isn't known… From 2001 to 2007, Goldman hawked at least $135 billion in bonds keyed to risky home loans, according to analyses by McClatchy and the industry newsletter Inside Mortgage Finance. In addition to selling about $39 billion of its own risky mortgage securities in 2006 and 2007, Goldman marketed at least $17 billion more for others.
It also was the lead firm in marketing about $83 billion in complex securities, many of them backed by subprime mortgages, via the Caymans and other offshore sites, according to an analysis of unpublished industry data by Gary Kopff, a securitization expert. In at least one of these offshore deals, Goldman exaggerated the quality of more than $75 million of risky securities, describing the underlying mortgages as "prime" or "midprime,"….
In early 2007, the firm's mortgage traders also bet heavily against the housing market….
The swaps contracts would pay off big…. Goldman sold off nearly $28 billion of risky mortgage securities it had issued in the U.S. in 2006….
…Goldman has made other bets with hundreds of unidentified counterparties to insure its own subprime risks and to take positions against the housing market…. Another question is whether, by keeping the trades secret, the company withheld material information that would enable investors to assess Goldman's motives for selling the bonds, said James Cox, a Duke University law professor who also has served on the NYSE advisory panel.
If Goldman had disclosed the contrary bets, he said, "One would have to believe that a rational investor would not only consider Goldman's conduct material, but likely compelling a decision to take a pass on the recommendation to purchase."
The last sentence is the heart and soul of the financial fraud and the article goes on to quote professors of securities law who can’t decide if Wall Street violated any securities laws. Above all, if securities laws are to be effective, they must be written to provide maximum disclosure of risks and all relevant facts. We have a situation where Wall Street sold securities and then reaped monster profits by betting against the very same securities they underwrote, packaged and sold. If that’s legal in America, then we really are a nation run by criminals and crime families.
Pension funds are among the biggest victims of Wall Street because millions of folks are dependent on their pension checks for survival. Pensions were already massively underfunded before Wall Street detonated itself and the world for fun, power and profit. The revolving door between Wall Street and Washington reeks of corruption and protectionism for crooks.
But not to worry, Wall Street has hatched a new scheme that is sure to give power mad Bankster owned Congress a dollar filled orgasm of even more campaign contributions. Just when you think that Wall Street couldn’t possibly sink any lower in its own manure pile, these shameless thieves are now going after old dying people. Matt Taibbi exposed this horror:
Goldman Sachs has developed a tradable index of life settlements, enabling investors to bet on whether people will live longer than expected or die sooner than planned. The index is similar to tradable stock market indices that allow investors to bet on the overall direction of the market without buying stocks.
…It looks like Wall Street is developing a new use for the securitization process – bungling life insurance policies and selling them as bonds to investors who would be betting, in essence, on when the policy holder will die.
The mechanism here is basically the same as the one used for mortgage-backed securities. Wall Street buys up life policies from elderly or ill people, who sell them for up-front cash that can be enjoyed before actual death (similar to those brokered arrangements with terminally ill HIV patients that received so much attention in the late eighties). They then take those policies and dump them into a securitized pool, where they can then be packaged as bonds and sold to investors who would get paid off when the policyholders die.
In other words, Wall Street will be seeking out seniors or dying folks desperate for cash and get them to make Wall Street the beneficiaries of their life insurance policies. These insurance policies will be packaged and sold to investors. Undoubtedly, the financial carnage and economic misery caused by Wall Street has created tons of desperate folks. And Wall Street is always there to cash-out on human misery – from your birth to your home to your deathbed.
In the end, it’s the Banksters who will end up making millions and billions off their schemes – they are lavishly compensated for their criminal behavior and exempted from criminal prosecution. Maybe that was the plan all along. The American people are the latest addition to Planet Serfs – a systematic and Stalinist styled fascist control over everything and everybody. This is not capitalism folks. This is government engineered greed, massive public corruption, wholesale theft and a total obliteration of sane markets.
In a sane world, the Banksters would have just gone bankrupt and to jail because that’s the price of failure and criminality, but not in America where the thieves rule and crime really does pay. .
