God is Like...

A fifth grade teacher in a Christian school asked her class to look at TV commercials and see if they could use them in some way to communicate ideas about God. Here are some of the results: scroll down.
God is like
BAYER ASPIRIN, He works miracles. God is like a FORD,He's got a better idea.God is like COKE,
He's the real thing. (This is great)

God is like HALLMARK CARDS, He cares enough to send His very best. God is like TIDE, He gets the stains out that others leave behind. God is like GENERAL ELECTRIC,He brings good things to life. God is like SEARS,He has everything.God is like ALKA-SELTZER,Try Him, you'll like Him.God is like SCOTCH TAPE ,You can't see Him, but you know He's there. God is likeDELTA,He's ready when you are.
God is like ALLSTATE,You're in good hands with Him. God is likeVO-5 Hair Spray, He holds through all kinds of weather. God is like DIAL SOAP,Aren't you glad you have Him? Don't you wish everybody did? (that one is my favorite)

God is like the U.S. POST OFFICE,Neither rain, nor snow, nor sleet nor ice will keep Him from His appointed destination.

God is likeChevrolet. . . .the heart beat of America

God is like Maxwell House, Good to the very last drop
God is like Bounty. . . . He is the quicker picker upper. . can handle the tough jobs. . .and He won't fall apart on you BLESSINGS FROM MY HOUSE TO YOUR HOUSE

A Quiet Windfall For U.S. Banks With Attention on Bailout Debate, Treasury Made Change to Tax Policy

A Quiet Windfall For U.S. Banks With Attention on Bailout Debate, Treasury Made Change to Tax Policy
By Amit R. PaleyWashington Post Staff WriterMonday, November 10, 2008; A01
The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.
But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.
The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.
"Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."
The story of the obscure provision underscores what critics in Congress, academia and the legal profession warn are the dangers of the broad authority being exercised by Treasury Secretary Henry M. Paulson Jr. in addressing the financial crisis. Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers.
The change to Section 382 of the tax code -- a provision that limited a kind of tax shelter arising in corporate mergers -- came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.
Andrew C. DeSouza, a Treasury spokesman, said the administration had the legal authority to issue the notice as part of its power to interpret the tax code and provide legal guidance to companies. He described the Sept. 30 notice, which allows some banks to keep more money by lowering their taxes, as a way to help financial institutions during a time of economic crisis. "This is part of our overall effort to provide relief," he said.
The Treasury itself did not estimate how much the tax change would cost, DeSouza said.
A Tax Law 'Shock'
The guidance issued from the IRS caught even some of the closest followers of tax law off guard because it seemed to come out of the blue when Treasury's work seemed focused almost exclusively on the bailout.
"It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops," said Candace A. Ridgway, a partner at Jones Day, a law firm that represents banks that could benefit from the notice. "I've been in tax law for 20 years, and I've never seen anything like this."
More than a dozen tax lawyers interviewed for this story -- including several representing banks that stand to reap billions from the change -- said the Treasury had no authority to issue the notice.
Several other tax lawyers, all of whom represent banks, said the change was legal. Like DeSouza, they said the legal authority came from Section 382 itself, which says the secretary can write regulations to "carry out the purposes of this section."
Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoid paying taxes.
Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes.
But from the beginning, some conservative economists and Republican administration officials criticized the new law as unwieldy and unnecessary meddling by the government in the business world.
"This has never been a good economic policy," said Kenneth W. Gideon, an assistant Treasury secretary for tax policy under President George H.W. Bush and now a partner at Skadden, Arps, Slate, Meagher & Flom, a law firm that represents banks.
The opposition to Section 382 is part of a broader ideological battle over how the tax code deals with a company's losses. Some conservative economists argue that not only should a firm be able to use losses to offset gains, but that in a year when a company only loses money, it should be entitled to a cash refund from the government.
During the current Bush administration, senior officials considered ways to implement some version of the policy. A Treasury paper in December 2007 -- issued under the names of Eric Solomon, the top tax policy official in the department, and his deputy, Robert Carroll -- criticized limits on the use of losses and suggested that they be relaxed. A logical extension of that argument would be an overhaul of 382, according to Carroll, who left his position as deputy assistant secretary in the Treasury's office of tax policy earlier this year.
Yet lobbyists trying to modify the obscure section found that they could get no traction in Congress or with the Treasury.
"It's really been the third rail of tax policy to touch 382," said Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute.
'The Wells Fargo Ruling'
As turmoil swept financial markets, banking officials stepped up their efforts to change the law.
Senior executives from the banking industry told top Treasury officials at the beginning of the year that Section 382 was bad for businesses because it was preventing mergers, according to Scott E. Talbott, senior vice president for the Financial Services Roundtable, which lobbies for some of the country's largest financial institutions. He declined to identify the executives and said the discussions were not a concerted lobbying effort. Lobbyists for the biotechnology industry also raised concerns about the provision at an April meeting with Solomon, the assistant secretary for tax policy, according to talking points prepared for the session.
DeSouza, the Treasury spokesman, said department officials in August began internal discussions about the tax change. "We received absolutely no requests from any bank or financial institution to do this," he said.
Although the department's action was prompted by spreading troubles in the financial markets, Carroll said, it was consistent with what the Treasury had deemed in the December report to be good tax policy.
The notice was released on a momentous day in the banking industry. It not only came 24 hours after the House of Representatives initially defeated the bailout bill, but also one day after Wachovia agreed to be acquired by Citigroup in a government-brokered deal.
The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.
The Jones Day law firm said the tax change, which some analysts soon dubbed "the Wells Fargo Ruling," could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment for this article.
The tax world, meanwhile, was rushing to figure out the full impact of the notice and who was responsible for the change.
Jones Day released a widely circulated commentary that concluded that the change could cost taxpayers about $140 billion. Robert L. Willens, a prominent corporate tax expert in New York City, said the price is more likely to be $105 billion to $110 billion.
Over the next month, two more bank mergers took place with the benefit of the new tax guidance. PNC, which took over National City, saved about $5.1 billion from the modification, about the total amount that it spent to acquire the bank, Willens said. Banco Santander, which took over Sovereign Bancorp, netted an extra $2 billion because of the change, he said. A spokesman for PNC said Willens's estimate was too high but declined to provide an alternate one; Santander declined to comment.
Attorneys representing banks celebrated the notice. The week after it was issued, former Treasury officials now in private practice met with Solomon, the department's top tax policy official. They asked him to relax the limitations on banks even further, so that foreign banks could benefit from the tax break, too.
Congress Looks for Answers
No one in the Treasury informed the tax-writing committees of Congress about this move, which could reduce revenue by tens of billions of dollars. Legislators learned about the notice only days later.
DeSouza, the Treasury spokesman, said Congress is not normally consulted about administrative guidance.
Sen. Charles E. Grassley (R-Iowa), ranking member on the Finance Committee, was particularly outraged and had his staff push for an explanation from the Bush administration, according to congressional aides.
In an off-the-record conference call on Oct. 7, nearly a dozen Capitol Hill staffers demanded answers from Solomon for about an hour. Several of the participants left the call even more convinced that the administration had overstepped its authority, according to people familiar with the conversation.
But lawmakers worried about discussing their concerns publicly. The staff of Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, had asked that the entire conference call be kept secret, according to a person with knowledge of the call.
"We're all nervous about saying that this was illegal because of our fears about the marketplace," said one congressional aide, who like others spoke on condition of anonymity because of the sensitivity of the matter. "To the extent we want to try to publicly stop this, we're going to be gumming up some important deals."
Grassley and Sen. Charles E. Schumer (D-N.Y.) have publicly expressed concerns about the notice but have so far avoided saying that it is illegal. "Congress wants to help," Grassley said. "We also have a responsibility to make sure power isn't abused and that the sensibilities of Main Street aren't left in the dust as Treasury works to inject remedies into the financial system."
Carol Guthrie, spokeswoman for the Democrats on the Finance Committee, said it is in frequent contact with the Treasury about the financial rescue efforts, including how it exercises authority over tax policy.
Lawmakers are considering legislation to undo the change. According to tax attorneys, no one would have legal standing to file a lawsuit challenging the Treasury notice, so only Congress or Treasury could reverse it. Such action could undo the notice going forward or make it clear that it was never legal, a move that experts say would be unlikely.
But several aides said they were still torn between their belief that the change is illegal and fear of further destabilizing the economy.
"None of us wants to be blamed for ruining these mergers and creating a new Great Depression," one said.
Some legal experts said these under-the-radar objections mirror the objections to the congressional resolution authorizing the war in Iraq.
"It's just like after September 11. Back then no one wanted to be seen as not patriotic, and now no one wants to be seen as not doing all they can to save the financial system," said Lee A. Sheppard, a tax attorney who is a contributing editor at the trade publication Tax Analysts. "We're left now with congressional Democrats that have spines like overcooked spaghetti. So who is going to stop the Treasury secretary from doing whatever he wants?"

An Open Letter to my Friends on the Left

An Open Letter to my Friends on the Left
Steven Horwitz
Department of EconomicsSt. Lawrence Universitysghorwitz@stlawu.edu
September 28, 2008
My friends,
In the last week or two, I have heard frequently from you that the current financial mess has been caused by the failures of free markets and deregulation. I have heard from you that the lust after profits, any profits, that is central to free markets is at the core of our problems. And I have heard from you that only significant government intervention into financial markets can cure these problems, perhaps once and for all. I ask of you for the next few minutes to, in the words of Oliver Cromwell, consider that you may be mistaken. Consider that both the diagnosis and the cure might be equally mistaken.
Consider instead that the problems of this mess were caused by the very kinds of government regulation that you now propose. Consider instead that effects of the profit motive that you decry depend upon the incentives that institutions, regulations, and policies create, which in this case led profit-seekers to do great damage. Consider instead that the regulations that may have been the cause were supported by, as they have often been throughout US history, the very firms being regulated, mostly because they worked to said firms' benefit, even as they screwed the rest of us. Consider all of this as you ask for more of the same in the name of fixing the problem. And finally, consider why you would ever imagine that those with wealth and power wouldn't rig a new regulatory process in their favor.
One of the biggest confusions in the current mess is the claim that it is the result of greed. The problem with that explanation is that greed is always a feature of human interaction. It always has been. Why, all of a sudden, has greed produced so much harm? And why only in one sector of the economy? After all, isn't there plenty of greed elsewhere? Firms are indeed profit seekers. And they will seek after profit where the institutional incentives are such that profit is available. In a free market, firms profit by providing the goods that consumers want at prices they are willing to pay. (My friends, don't stop reading there even if you disagree - now you know how I feel when you claim this mess is a failure of free markets - at least finish this paragraph.) However, regulations and policies and even the rhetoric of powerful political actors can change the incentives to profit. Regulations can make it harder for firms to minimize their risk by requiring that they make loans to marginal borrowers. Government institutions can encourage banks to take on extra risk by offering an implicit government guarantee if those risks fail. Policies can direct self-interest into activities that only serve corporate profits, not the public.
Many of you have rightly criticized the ethanol mandate, which made it profitable for corn growers to switch from growing corn for food to corn for fuel, leading to higher food prices worldwide. What's interesting is that you rightly blamed the policy and did not blame greed and the profit motive! The current financial mess is precisely analogous.
No free market economist thinks "greed is always good." What we think is good are institutions that play to the self-interest of private actors by rewarding them for serving the public, not just themselves. We believe that's what genuinely free markets do. Market exchanges are mutually beneficial. When the law messes up by either poorly defining the rules of the game or trying to override them through regulation, self-interested behavior is no longer economically mutually beneficial. The private sector then profits by serving narrow political ends rather than serving the public. In such cases, greed leads to bad consequences. But it's bad not because it's greed/self-interest rather because the institutional context within which it operates channels self-interest in socially unproductive ways.
This, my friends, is exactly what has brought us to the mess we are now in.
To call the housing and credit crisis a failure of the free market or the product of unregulated greed is to overlook the myriad government regulations, policies, and political pronouncements that have both reduced the "freedom" of this market and channeled self-interest in ways that have produced disastrous consequences, both intended and unintended. Let me briefly recap goverment's starring role in our little drama.
For starters, Fannie Mae and Freddie Mac are "government sponsored enterprises". Though technically privately owned, they have particular privileges granted by the government, they are overseen by Congress, and, most importantly, they have operated with a clear promise that if they failed, they would be bailed out. Hardly a "free market." All the players in the mortgage market knew this from early on. In the early 1990s, Congress eased Fannie and Freddie's lending requirements (to 1/4th the capital required by regular commercial banks) so as to increase their ability to lend to poor areas. Congress also created a regulatory agency to oversee them, but this agency also had to reapply to Congress for its budget each year (no other financial regulator must do so), assuring that it would tell Congress exactly what it wanted to hear: "things are fine." In 1995, Fannie and Freddie were given permission to enter the subprime market and regulators began to crack down on banks who were not lending enough to distressed areas. Several attempts were made to rein in Fannie and Freddie, but Congress didn't have the votes to do so, especially with both organizations making significant campaign contributions to members of both parties. Even the New York Times as far back as 1999 saw exactly what might happen thanks to this very unfree market, warning of a need to bailout Fannie and Freddie if the housing market dropped.
Complicating matters further was the 1994 renewal/revision of the Community Reinvestment Act of 1977. The CRA requires banks to to make a certain percentage of their loans within their local communities, especially when those communities are economically disadvantaged. In addition, Congress explicitly directed Fannie and Freddie to expand their lending to borrowers with marginal credit as a way of expanding homeownership. What all of these did together was to create an enormous profit and political incentives for banks and Fannie and Freddie to lend more to riskier low-income borrowers. However well-intentioned the attempts were to extend homeownership to more Americans, forcing banks to do so and artificially lowering the costs of doing so are a huge part of the problem we now find ourselves in.
At the same time, home prices were rising making those who had taken on large mortgages with small down payments feel as though they could handle them and inspiring a whole variety of new mortagage instruments. What's interesting is that the rise in prices affected most strongly cities with stricter land-use regulations, which also explains the fact that not every city was affected to the same degree by the rising home values. These regulations prevented certain kinds of land from being used for homes, pushing the rising demand for housing (fueled by the considerations above) into a slowly responding supply of land. The result was rapidly rising prices. In those areas with less stringent land-use regulations, the housing price boom's effect was much smaller. Again, it was regulation, not free markets, that drove the search for profits and was a key contributor to the rising home prices that fueled the lending spree.
While all of this was happpening, the Federal Reserve, nominally private but granted enormous monopoly privileges by government, was pumping in the credit and driving interest rates lower and lower. This influx of credit further fueled the borrowing binge. With plenty of funds available, thanks to your friendly monopoly central bank (hardly the free market at work), banks could afford to continue to lend riskier and riskier.
The final chapter of the story is that in 2004 and 2005, following the accounting scandals at Freddie, both Freddie and Fannie paid penance to Congress by agreeing to expand their lending to low-income customers. Both agreed to acquire greater amounts of subprime and Alt-A loans, sending the green light to banks to originate them. From 2004 2003 [corrected on 10/19/08] to 2006, the percentage of loans in those riskier categories grew from 8% to 20% of all US mortgage originations. And the quality of these loans were dropping too: downpayments were getting progressively smaller and more and more loans carried low starter interest rates that would adjust upward later on. The banks were taking on riskier borrowers, but knew they had a guaranteed buyer for those loans in Fannie and Freddie, back, of course, by us taxpayers. Yes, banks were "greedy" for new customers and riskier loans, but they were responding to incentives created by well-intentioned but misguided government interventions. It is these interventions that are ultimately responsible for the risky loans gone bad that are at the center of the current crisis, not the "free market."
The current mess is thus clearly shot through and through with government meddling with free markets, from the Fed-provided fuel to the CRA and land-use regulations to Fannie and Freddie creating an artificial market for risky mortgages in order to meet Congress's demands for more home-ownership opportunities for low-income families. Thanks to that intervention, many of those families have not only lost their homes, but also the savings they could have held onto for a few more years and perhaps used to acquire a less risky mortgage on a cheaper house. All of these interventions into the market created the incentive and the means for banks to profit by originating loans that never would have taken place in a genuinely free market.
It is worth noting that these regulations, policies, and interventions were often gladly supported by the private interests involved. Fannie and Freddie made billions while home prices rose, and their CEOs got paid lavishly. The same was true of the various banks and other mortgage market intermediaries who helped spread and price the risk that was in play, including those who developed all kinds of fancy new financial instruments all designed to deal with the heightened risk of default the intervention brought with it. This was a wonderful game they were playing and the financial markets were happy to have Fannie and Freddie as voracious buyers of their risky loans, knowing that US taxpayer dollars were always there if needed. The history of business regulation in the US is the history of firms using regulation for their own purposes, regardless of the public interest patina over the top of them. This is precisely what happened in the housing market. And it's also why calls for more regulation and more intervention are so misguided: they have failed before and will fail again because those with the profits on the line are the ones who have the resources and access to power to ensure that the game is rigged in their favor.
I know, my friends, that you are concerned about corporate power. So am I. So are many of my free-market economist colleagues. We simply believe, and we think history is on our side, that the best check against corporate power is the competitve marketplace and the power of the consumer dollar (framed, of course, by legal prohibitions on force and fraud). Competition plays mean, nasty corporations off against each other in a contest to serve us. Yes, they still have power, but its negative effects are lessened. It is when corporations can use the state to rig the rules in their favor that the negative effects of their power become magnified, precisely because it has the force of the state behind it. The current mess shows this as well as anything ever has, once you realize just what a large role the state played. If you really want to reduce the power of corporations, don't give them access to the state by expanding the state's regulatory powers. That's precisely what they want, as the current battle over the $700 billion booty amply demonstrates.
This is why so many of us committed to free markets oppose the bailout. It is yet another example of the long history of the private sector attempting to enrich itself via the state. When it does so, there are no benefits to the rest of us, unlike what happens when firms try to get rich in a competitive market. Moreover, these same firms benefited enormously from the regulatory interventions they supported and that harmed so many of us. The eventual bursting of the bubble and their subsequent losses are, to many of us, their just desserts for rigging the game and eventually getting caught. To reward them again for their rigging of the game is not just morally unconscionable, it is very bad econonmic policy, given that it sends a message to other would-be riggers that they too will get rewarded for wreaking havoc on the US economy. There will be short-term pain if we don't bailout these firms, but that is the hangover price we pay for 15 years or more of binge lending. The proposed bailout cannot prevent the pain of the hangover; it can only conceal it by shifting and dispersing it among the taxpayers and an economy weakened by the borrowing, taxing, and/or inflation needed to pay for that $700 billion. Better we should take our short-term pain straight up and clean out the mistakes of our binge and then get back to the business of free markets without creating an unchecked Executive branch monstrosity trying to "save" those who profited most from the binge and harming innocent taxpayers in the process.
What I ask of you my friends on the left is to not only continue to work with us to oppose this or any similar bailout, but to consider carefully whether you really want to entrust the same entity who is the predominant cause of this crisis with the power to attempt to cure it. New regulatory powers may look like the solution, but that's what people said when the CRA was passed, or when Fannie and Freddie were given new mandates. And the very firms who are going to be regulated will be first in line to determine how those regulations get written and enforced. You can bet which way that game is going to get rigged.
I know you are tempted to think that the problems with these regulations are the fault of the individuals doing the regulating. If only, you think, Obama can win and we can clean out the corrupt Republicans and put ethical, well-meaning folks in place. Think again. For one thing, almost every government intervention at the root of this crisis took place with a Democratic president or a Democratic-controlled Congress in place. Even when the Republicans controlled Congress, President Clinton worked around it to change the rules to allow Fannie and Freddie into the higher-risk loan market. My point here is not to pin the blame for the current crisis on the Democrats. That blame goes around equally. My point is that hoping that having the "right people" in power will avoid these problems is both naive and historically blind. As much as corporate interests were relevant, they were aided and abetted, if unintentionally, by well-meaning attempts by basically good people to do good things.The problem is that there were a large number of undesirable unintended consequences, most of which were predictable and predicted. It doesn't matter which party is captaining the ship: regulations come with unintended consequences and will always tend to be captured by the private interests with the most at stake. And history is full of cases where those with a moral or ideological agenda find themselves in political fellowship with those whose material interests are on the line, even if the two groups are usually on opposite sides. This is the famous "Baptists and Bootleggers" phenomenon.
If you've made it this far, I am most grateful. Whether or not you accept the whole argument I've laid out here, I do ask one thing of you: the story I told at the start of the role of government intervention in this mess is true, whatever your grander conclusions about the causes and cures are. Even if you don't buy my argument that more regulation isn't the cure, to blame this mess on "the free market" should now strike you as an obvious falsehood and I would hope, in the spirit of fair play, that you would stop making that claim as you speak and write about the ongoing events of the last two weeks. We can disagree in good faith about what to do next, and we can disagree in good faith about the degree to which government intervention caused the problems, but blaming a non-existent free market for a crisis that clearly was to some extent the result of government's extensive interventions in that market is unfair. So if I have persuaded you of nothing else, I hope deeply that I have persuaded you of that.
In the end, all I can ask of you is that you continue to think this through. Explaining this crisis by greed won't get you far as greed, like gravity, is a constant in our world. Explaining it as a failure of free markets faces the obvious truth that these markets were far from free of government. Consider that you may be mistaken. Consider that perhaps government intervention, not free markets, caused profit-seekers to undertake activities that harmed the economy. Consider that government intervention might have led banks and other organizations to take on risks that they never should have. Consider that government central banks are the only organizations capable of fueling this fire with excess credit. And consider that various regulations might have forced banks into bad loans and artificially pushed up home prices. Lastly, consider that private sector actors are quite happy to support such intervention and regulation because it is profitable.
Those of us who support free markets are not your enemies right now. The real problem here is the marriage of corporate and state power. That is the corporatism we both oppose. I ask of you only that you consider whether such corporatism isn't the real cause of this mess and that therefore you reconsider whether free markets are the cause and whether increased regulation is the solution.
Thanks for reading.
Steve

The 10 Big Lies About America

The 10 Big Lies About America
By Michael Medved

A quick look at the first 5 lies and the approach the book takes to answering them.1. America's founding brought genocide to Native AmericansDisease, not massacres, caused 95% of the population reduction associated with European contact -- and the claims of deliberate infection (those pesky "small pox blankets") are unsubstantiated, sensationalized and profoundly misleading. The recent explosion of U.S. citizens claiming trendy Indian ancestry indicates that intermarriage and assimilation also claimed far more losses to native numbers than any non-existent program of deliberate extermination. 2. U.S. bears unique and lasting guilt for the crime of slaverySlavery was an evil, eternal and universal institution; the U.S. played no unique role in establishing it or benefiting from it, but did play a major, disproportionate part in achieving its abolition. Less than 5% of all African captives transported across the Atlantic were ever bound for British North America or the new United States. American wealth also stemmed from industrialization and immigrant labor far more than slavery; that's why the Northern States enjoyed every economic advantage over the South on the eve of the War Between the States.3. The Founders intended a secular, not Christian, nationColonists didn't come to the New World to escape religion, but to establish their own religious utopias, in which faith and government inevitably intertwined. Anyone doubting the deeply religious nature of early America should consider the patriotic songs our citizens have always sung -- from "Chester," the real marching song of the Revolution ("New England's God Forever Reigns"), to "America the Beautiful" ("God Shed His Grace on Thee"), to "The Star Spangeld Banner" (last verse: "And This Be Our Motto: In God is Our Trust"), to "The Battle Hymn of the Republic" ("In the beauty of the lilies Christ was born across the sea"). For the first three hundred years since Plymouth Rock, no one ever confused a secular government (which the First Amendment demands) with a secular society.

4. America has always been a multicultural society, strengthened by diversityFrom the beginning, our founders hailed a new American identity ("this new man") that involved leaving past cultures and traditions behind. Until the 1960's, virtually all national leaders understood that assimilation (or, more proudly, "Americanization") strengthened the country, while honoring old-loyalties (Teddy Roosevelt's dreaded "hyphenated American") undermined the society's ideals. The term "The Melting Pot" came from a hit Broadway play that can still inspire and referred to the forging of unbreakable metal -- not a style of cooking.5. Corporate America oppresses ordinary citizensThere's nothing "Un-American" about corporations -- in fact, these economic organizations (like "The Virginia Company") actually launched our first colonies in Jamestown, Plymouth and elsewhere. Every aspect of U.S. power, prosperity and comfort depends on the economic progress of big business. The public reverence for "small business" and resentment of "big business" makes no sense, since all the most successful small businesses eventually get big. Corporations brought hope and advancement to far more Americans than politicians, social workers or even community organizers.

Release Date: November 18, 2008

Spending Our Way Into Oblivion

Spending Our Way Into Oblivion
By Harris R. Sherline
October 20, 2008
How much longer can the United States continue to spend more money than it takes in, and how much longer can we continue our spendthrift ways before something literally gives? The numbers are getting so big that they are beyond comprehension.
For example, billions and trillions of dollars are almost impossible to understand. Generally, we seem to know what a million dollars can buy. We see the number in the prices of real estate and homes, or perhaps the statistics about various businesses. But, we rarely see big numbers illustrated in terms that are easier to visualize. For example, a billion dollars is 1,000 times one million, and a trillion is a million times a million.
Considering a billion dollars in terms that may be easier to grasp, at an average of $1,000 per month, based on U.S. Social Security Administration statistics, it would cover the social security benefits for over 83,000 seniors (age 65 and over) for one year, and a trillion dollars could pay social security benefits for every senior in America, a total of about 36.8 million, for over two-and-a-quarter years.
America's politicians are rapidly spending our way into oblivion. Almost a trillion dollars for the Bailout package, including 25 billion for the auto industry, 150 billion for the Federal Deposit Insurance Corporation (FDIC), an 85 billion loan to insurance giant, A.I.G., along with millions of dollars of "pork" for Hollywood producers, stockcar race track owners, Caribbean rum producers, Alaskan fishermen, and who knows what else. Remember, this bill was about 450 pages of text, and since it was handed to Congress only about one day before it was approved, it's obvious that no one read it or really knew what was buried in it.
In addition, two bills sponsored by Barack Obama are currently working their way through Congress: the Jubilee Act (S. 2166) would cancel as much as another $75 billion worth of Third World Debt and the Global Poverty Act (S. 2433), at an estimated cost of $845 billion.
All this adds up to about two trillion dollars, enough to pay Social Security benefits to the entire senior population for more than four-and-a-half years. We are told the money comes from borrowing, which amounts to putting more currency into circulation.
The ultimate result is inflation. How much and how fast is anyone's guess, but history is clear about what happens to governments that increase the supply of their currency without appropriate controls and corresponding increases in production. It's simply a matter of too much money chasing too few goods.
Argentina experienced chronic inflation from 1949 through the 1980s. Hyperinflation exploded to almost 5,000 percent in1989, when government expenditures reached 35.6 percent of GDP (Gross Domestic Product) and subsequently topped out at over 20,000 percent.
A more contemporary example is Zimbabwe, where hyperinflation reached 12,000 percent in 2006, then increased to the point where a single Zimbabwean dollar was eventually denominated as about $10 trillion. The government was finally forced to lop ten zeros from their currency so the calculators could handle the numbers.
When this happens, people refuse to hold their own nation's currency and convert their money to other assets that they believe will hold their value as their currency continues to rapidly depreciate. In Argentina, wealthy citizens tried to deposit their money in American banks or they bought stock in American companies. The less wealthy attempted to hold U.S. $100 bills or bought houses or gold or commodities, such as rice -- anything to get rid of their pesos. They also tried to offset the consequences of unbridled inflation by indexing contracts, which adjusted payments to compensate for the rise in prices over time.
The bottom line is that the currency of a nation that is experiencing runaway inflation becomes worthless, productivity decreases, capital takes flight, and there are a variety of other consequences, such as the government refusing to redeem the bonds it has issued, etc.
The U.S. is rapidly headed down this track. Running continuous deficits and issuing bonds far in excess of our ability to pay is the beginning of the cycle. We've been doing this since WWII, and Americans instinctively know that it's not right. They may not be financial experts, but they know a con when they see one, and most of them seem to recognize what's happening now with the "$700 Billion Bailout" and have been protesting very vocally. Unfortunately, only a few members of Congress have been listening.
It's not too late to stop the train, if common sense is allowed to prevail. If not, we can only look forward to more and higher inflation, just as in Argentina or Zimbabwe, with all the consequences that go with it.
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NOTE: Read more of Harris Sherline's commentaries on his blog at "opinionfest.com.

Funny

The Lone Ranger and Tonto went camping in thedesert.
After they got their tent all set up, both men fell sound asleep.
Some hours later, Tonto wakes the Lone Ranger and says, Kemo Sabe, looktowards sky, what you see? The Lone Ranger replies, I see millions ofstars.
What that tell you, asked Tonto.
The Lone Ranger ponders for a minute then says, astronomically speaking, ittells me there are millions of galaxies and potentially billions of planets.
Astrologically, it tells me that Saturn is in Leo.
Time wise, it appears to be approximately a quarter past three in themorning.
Theologically, the Lord is all-powerful and we are small and insignificant.
Meteorologically, it seems we will have a beautiful day tomorrow. What doesit tell you, Tonto?
You dumber than buffalo snot. It means someone stole the tent.

The Bailaholics

The Bailaholics
Chuck Norris
Tuesday, October 07, 2008

Tombstone, Ariz., has nothing on Washington, D.C. Friday's financial OK Corral took place when federal politicians had a standoff over the mother of all bailout bills. Bullets called ballots were fired from both congressional houses and the White House. And when the smoke cleared, the bad guys appeared: Bush, Paulson, Barney Frank, Pelosi, Dodd and most of the other members of the House and the Senate, including Obama and even McCain.
The truth is most members of Congress voted to pass the bill but don't have a clue what is in this 500-plus-page legislation, which was birthed in the White House just two weeks ago as an infant of only three pages. Then it was voted down at the Capitol a week later in its adolescent-sized 100 pages. And of course, in good bureaucratic fashion, it met the criteria to be mature when it was more than five times that size and packed with governmental goodies. And the president signed it just an hour after receiving it from Capitol Hill Friday. I guess that speed-reading course paid off.
In the fine print, inserted between the lines of that 500-plus-page bill, are loads of fiscal additives and more financial toxic relief. H.R. 1424 -- the Emergency Economic Stabilization Act of 2008, which now has been signed into law -- officially includes more than $112 billion in political hors d'oeuvres and pork-barrel teasers and sweeteners that have absolutely no direct relation to the Wall Street bailout but were included to bribe congressional naysayers and others to get on the greed train:
--$6 million in tax breaks for wooden-arrow manufacturers in Oregon.
--$148 million in tax breaks for wool-producing companies.
--$128 million in tax breaks for the manufacturers of car-racing tracks.
--$10 million in tax breaks for small television and film producers.
--$223 million in tax breaks for Alaskan fishermen.
--$33 million in tax breaks for corporations operating in American Samoa.
--$192 million in tax breaks for rum producers in Puerto Rico and the Virgin Islands.
What the &$=/?! And that's just a drop in the bailout bucket. And we the taxpayers are just supposed to sit back and take it in the arrears?
Shockingly -- or maybe not so -- both Democratic and Republican nominees for president, self-professed agents of reform, followed the cattle call to back the bailout. Sen. Obama, who claims to be the messiah of change, sure is showing his true colors in two huge decisions: his appointment of politics-as-usual Joe Biden and his vote to pass this economic bailout bill and drive us deeper into debt. And quite frankly, Sen. McCain also is disappointing me at this point. At the Republican convention, John talked about bringing the power back to the people. So he chose Sarah Palin and finally gained my respect and vote by picking this Washington outsider. But when he had the perfect opportunity to side with the majority of Americans, who didn't want to incur a trillion dollars more in debt, he voted for not only the bilking bailout but also the earmarks and pork-barrel projects packed inside.
John, you gained my vote with your conservative choice in Gov. Palin; don't lose my vote (and others' votes) by your return to politics as usual. For many of us, you have one last chance in the debates. You must choose radical reformation. This is a time for maverette Sarah to stand up to maverick McCain and say, "Enough is enough!" Speak up, Gov. Palin. Please speak up!
All is not lost yet. We still have a voice in this bailout; it's at the ballot box in November's elections. The remedy for our country is clear. Congress doesn't need another bailout but a roundhouse kick right out the door. I plead with you to join me and millions of others in a voter revolution to oust political and congressional corruption and stalemate. If the members of Congress from your states or districts voted to pass this bailout bill and gamble nearly $1 trillion of our children's and grandchildren's money -- in addition to showing the reckless fiscal behavior of stuffing such a bill with perks and pork -- you must not re-elect them. If your representatives voted for this economically rotten (not rescue) bill, vote them out in November by voting for new blood that has a track record of fiscal prudence and consistently will vote for constitutional limitations of government, reductions of big government (deficits, budgets, spending and taxes), reformation of the tax code (by providing a "fair tax" or its equivalent) and a constitutional amendment for a mandated balanced federal budget.
Despite the heartbreaking passage of this bill, thank God 161 representatives and 25 senators opposed it and weren't enticed by the pseudo-urgent Wall Street panic, their own re-election pressures, or the Senate's pork-barrel schmoozing. For example, I commend Rep. Don Young, R-Alaska, who voted "no" for the emergency economic bill despite the fact that the tax break for Alaskan fishermen was inserted to sway him to bite at the bailout. Rep. Young is correct in a letter to his constituents: "This bill is nothing more than a slippery slope to socialism."
One thing is apparent: Alaska can produce some great Americans.
Copyright © 2008 Salem Web Network. All Rights Reserved.

Welfare State Failures Are At Bottom Of The Crisis

Welfare State Failures Are At Bottom Of The Crisis
By Star Parker
October 6, 2008
As our financial markets totter, as homes go into foreclosure, as Wall Street executives lose millions, as Americans have more and more difficulty getting loans, can anyone be happy?
Certainly. Those on the left who now, with unbounded glee, pen obituaries for the free market.
One can sense their joy as they have, they think, the last laugh.
Bernie Sanders, the far left senator from Vermont, was almost giddy on Larry Kudlow's TV show recently to hear free-marketer Kudlow endorse the bailout and tell Kudlow that he is glad to see he has become a socialist.
The Washington Post's Harold Meyerson writes, "The old order -- the Reagan-age institutions built on the premise that the market can do no wrong and the government no right -- is dying."
And, of course, there's the thrill in seeing greedy Wall Street capitalists laid bare for the heartless, exploitive monsters they are and see justice done as they fall by the free market sword by which they lived!
But, in fact, what we are watching is not a failure of markets, but the latest failure of the welfare state. The sad part is how few who wield political power seem to understand, or want to understand, that this is what's happened.
As the details behind the current debacle are unraveled, we see how government created one more entitlement -- the right to own a house -- and then devised an array of programs to subsidize in various ways "affordable housing." Like all welfare programs, the subsidies succeeded in influencing behavior, but the wrong behavior.
The greedy part, or, if one wishes to be forgiving, the confused part, of the Wall Street guys is their willingness to play ball with politicians over these years in turning our free country into a welfare state. Wall Street has regularly been a generous contributor to politicians who love to grow government and use it as a tool for social policy.
These smart investment bankers, commercial bankers, and traders could have gotten plenty rich, and stayed that way, by encouraging solid institutions to build our country properly. If anyone should appreciate the power of freedom and markets and want to encourage the proper role of government, the integrity of private property, and the care and nurturing of American families, you'd think it would be our financiers.
But instead of recognizing basics -- the principles of limited government and traditional values -- and fighting political pressures to undermine these basics, our financiers were happy to support the welfare state model.
They should have appreciated, as we must appreciate today, that the problem is not a failure of freedom and markets but of eroding the pillars and principles that make them possible and functional.
The best housing program this nation could have is for the government to stay out, let the price of real estate and credit reflect true realities of supply, demand, and risk, and let private people decide for themselves what they need to do and how hard they need to work to acquire what they want.
As the institution of government grows, we sadly watch the collapse of the institutions that really sustain growth of home ownership: American marriage and families.
According to the Census Bureau, the single largest incidence of homeownership, 86.3 percent, is among married-couple families. Yet, traditional families now amount to barely more than a quarter of our households.
And, sadly and ironically, the problem of family structure is most severe in low- income communities where government housing policy has been most targeted.
Social and economic policy are not separate universes but part of one fabric of institutions and laws that sustain freedom and prosperity.
Those who want to use the current crisis as an excuse to expand government and welfare state policies contribute to laying the foundation for our next crisis.
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Star Parker is president of CURE, Coalition on Urban Renewal and Education (www.urbancure.org) and author of three books. She can be reached at parker(at)urbancure.org. For more stories visit scrippsnews.com
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Note -- The opinions expressed in this column are those of the author and do not necessarily reflect the opinions, views, and/or philosophy of GOPUSA.

Pain & Fear

If pain is nature's way of saying "Stop!" then fear is natur's way saying "Be careful."

Market Directions

Market Directions
September 21, 2008
A Brief History of the Financial Crisis

The outlines of the financial and credit crisis are clear though the blame will be argued and discussed far into the future. Three primary causes played out over the past decade culminating in the tumultuous events of the past two weeks with the American Federal Government on Friday putting forth a plan to buy the housing based bad debt of the entire United States financial system.

In the early part of this decade the Federal Reserve held interest rates at historically low levels for three years. In the mortgage industry increasingly lax credit standards were encouraged by government pressure to lend to marginal customers. Finally Wall Street firms became enamored of the profitability and supposed safety of their securitized credit derivative instruments, not only originating many products but also stocking their balance sheets with them.

In the aftermath of the 9/11 attacks in 2001 the Federal Reserve cut the Fed Funds rate in half, to 1.75%. The rate would stay below 2.0% for almost three years. Those low nominal rates, negative in real inflation adjusted terms, stoked a building and buying boom in housing that developed into a huge speculative bubble.

When the Fed brought rates back to 5.25% at the end of June 2006, the bubble began to deflate; the housing based credit crisis began a little more than a year later. Market bubbles always burst. Perhaps the fall of the housing market now seems preordained. But at the time the risk of the dicey mortgages spread throughout the financial system was disguised by the financially engineered instruments that had repackaged the questionable bits with higher quality debt, supposedly insuring the whole against default.

Starting in the closing years of the Clinton Administration the Community Redevelopment Act, a Carter Era program, was used to force banks to lend to mortgage customers formerly considered ineligible for loans. In pursuit of a social goal, universal home ownership, banks either lowered credit standards and granted mortgages or faced fines and business penalties for 'redlining'. Banks by and large complied with government dictates.

Two of the government sponsored enterprises (GSEs) in the mortgage field, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) bought much of the bank mortgage debt and sold it back to the market with their implied government guarantee behind it. The banks and loan companies used the cash obtained to sponsor more loans and keep the housing bubble inflating. As with the banks, the GSEs also brought some of this debt onto their balance sheets. All in all these two GSEs held title to or guaranteed upwards of 70% of residential mortgages in the United States. Their mortgage paper is endemic on the balance sheets of the world's financial institutions.

The nozzle through which much of the air inflating the housing bubble passed was the asset backed collateralized debt obligation (CDO) fashioned by Wall Street's leading investment houses and banks. Combining different types and grades of debt in one instrument these complex securities were supposed to reduce risk of the whole below the level of the individual pieces. Their complexity often rendered them opaque to the rating agencies whose rankings customers buying the securities relied on for risk measurement. Usually sold with default insurance these securities had one major flaw, their balance sheet value was assessed not by the value of the underlying income streams but by their sale price in the secondary market. If there were no market, if no one were willing to buy these securities, the theoretical book value fell to zero.

As the housing market stagnated and then fell, the value of those securities with housing components dropped as default rates on mortgages rose. But housing prices in the US have only declined on average about 20%. How could such a large but not catastrophic decline threaten the very foundations of the financial system? The crux is the mark to market nature of the security. As the financial markets progressively lost faith in asset backed securities and as housing prices continued to fall bids for these securities became scarce. The lower the prices for the securities the more capital the firm had to set aside to meet regulatory limits. The firms that owned large amounts of these securities were caught in a downward spiral of devalued securities requiring ever large amounts of the firm’s capital for support which progressively undermined the worth of the firm’s stock and market confidence in the firm's solvency which in turn demanded more capital support.

The United States has had market bubbles before, but none shook the financial system to its core and threatened the financial system. What has been different this time? The factor that levered a serious housing market bubble and collapse into a threat to the entire US and indeed world financial system was the asset-backed derivative. These new and poorly understood instruments were embraced by the financial world for their touted safety and for their high return. Yet their safety, the quality of their financial analysis and most importantly the underlying assumptions were completely untested.

Chief among the assumptions underpinning these derivative securities was the mark to market rule for valuation. Imposed by regulators in the aftermath of the failure of Enron it posits, natural enough in normal times, a functioning secondary market. Its purpose was to insure realistic pricing for securities. All is fine with the rule unless there is no market. As with the failure of Long Term Credit, it was the assumption that there will always be a functioning orderly market that was at fault. Markets are not always rational, they are voluntary and they are psychological. People and firms do not have to participate. When enough market participants choose abstinence the market collapses and all calculations that depend on market pricing are void.

Markets are reflections of the faith and credit of their participants. When that is lost no amount of financial engineering can make up for the loss of liquidity. In a panic the market vanishes. The asset backed derivative made the stability of the entire financial system beholden to its least stable component, the psychology of the market.


Joseph Trevisani
FX Solutions, LLC
Chief Market Analyst