April, 2017, Part 9, Political Class Insanity: Corruption and Economic Ignorance

It is the beginning of another month which means it is again time to review the latest political class insanity from Washington and around the world. Political class insanity takes many forms including the wasting of taxpayer wealth, criminal fraud within government programs, inane and stupid political quotes and actions, the inability to create and implement effective and efficient government programs, stupid and ill performing economic policies and strategies, and other forms of insanity that continue to evolve and surprise and shock us. 

Today and for all of the insanity posts this month, let’s start off with a welcome piece of honest political dialog. It comes from a State Department spokesperson. Mark Toner, who is about to start the daily State Department press briefing. In a joking matter, he makes the following quote: "Welcome to the State Department. I think we have some interns in the back. Welcome. Good to see you in this exercise in transparency and democracy." 

He then burst out laughing at his own quote, indicating he also knew what a joke the Obama administration has been, especially Mr. Toner’s State Department, when it comes to cover ups, lack of transparency, denial of Freedom of Information Act requests, the prosecution of whistleblowers, etc. But at least it was a little refreshing to finally hear some actual honesty out of Washington as we see from the actual clip of the news conference:

http://www.againstcronycapitalism.org/2016/08/when-even-the-state-department-spokesperson-cant-keep-a-straight-face-about-things-anymore-video/

With that context of honesty, let’s see what other insanity has been going down:

1) We have often pointed out how politicians are usually idiots when it comes to economic affairs. Their economic policies are usually useless, dangerous, and/or ignorant of economic theory and common sense. Such is the case in the state of New York that recently celebrated the raising the state’s minimum wage to $15 an hour.

But like every other location that raised the minimum wage to $15 an hour, the politicians involved never anticipated the consequences of their actions. If you raise a company’s wage expense budget line, then that company has to find other ways to compensate by lowering expenses and costs in other parts of their operations since they usually cannot make up the difference in expenses by increasing their revenues. The increasing of the minimum wage does nothing to increase demand and revenue.

And for most companies, the easiest place to reduce costs to offset increased wage rates is in the personnel area of their budget, i.e. fire workers. In this case, the good news is that if you had a job you would be making at least $15 an hour. The bad news, and reality, is that because the political class raised the minimum wage, you do not have any job at $15 an hour.

Such was the case in a recent NBC News report which reported on a New York college cafeteria operation that fired ALL of its employees because of the increase in the minimum wage. Instead, the cafeteria has installed “food-dispensing” machines that will take the place of the entire cafeteria staff at that college. Great, a raise in the minimum wage caused unemployment to go up, go figure.

Well, we have figured that any number of times in this blog. From Los Angeles to parts of the state of Washington, the raising of the minimum wage always results in higher unemployment as businesses, trying to stay profitable and in business, end up investing in technology that does not have to be paid a higher minimum wage. Always happens, but politicians are always too stupid to understand this basic economic principle. As a result, more people are now paid $0 an hour since they have been fired because of a higher minimum wage. Insane.

2) But it is not just in New York state where there is this economic insanity as it relates to the minimum wage. According to a recent article by Breitbart:

• An analysis of the San Diego restaurant industry has shown that just in that one California city, restaurant jobs have gone down by a whopping 4,000 position in the just the past year since the city raised the minimum wage.
• And San Diego raised the minimum to only $11.50 an hour, not the $15 an hour that other places have done, e.g. New York state.
• As always, raise the minimum wage and you end up raising the unemployment rate at the same time.
• “If job growth in the restaurant sector had just kept pace with the state’s performance … the industry could have created 5,200 jobs instead of the 1,300 that took place,” Lynn Reaser, chief economist of the Fermanian Business & Economic Institute at Point Loma Nazarene University.
• Forbes Tim Worstall’s article about what happened in Seattle was referenced in the Breitbart article, where that city also raised the minimum wage which also resulted in lost jobs, jobs that would have normally been staffed by less wealthy citizens, giving them no job and no wages at all.

When will politicians learn to stay out of economic affairs and let the market handle everything? Whenever politicians think they are economic geniuses they hurt the most vulnerable in the world, denying them jobs when their ill fated policies restrict economic growth. Idiots.

3) Alright, let’s get out of the economic realm and get back into just plain old political corruption. Consider some ethics and corruption problems that the American Outlook website reported on relative to a sitting Congressman:

• Congressmen Luis Gutierrez from Illinois is an open advocate of illegal immigration into America and it appears that there might be other illegal acts that he is into.
• According to a recent report from the Washington Free Beacon, Gutierrez paid both his wife and daughters hundreds of thousands of dollars from his election campaign funds over the past five or six years.
• While this is not strictly illegal, it is illegal for the candidate to personally gain from funds raised for an election campaign, meaning if not illegal, it is certainly unethical.
• His wife pulled down over $44,000 in his 2010 campaign, making her the top recipient of cash from that campaign, and then duplicated that feat in the 2012 campaign when she pocketed $93,000.
• Her $93,000 was a full 25% of what his campaign committee disbursed for the whole campaign.
• In his next two campaigns his wife pocketed $175,000.
• His daughters also got paid during these campaigns.

Must be nice to take money from people under one pretense and then give it out to family members. Outside of Congress I believe this is a felony. Must be good to be a member of the protected political class.

4) But Gutierrez is not the only unethical person in Congress. According to reporting by the Constitution website:

• Congressman Alcee Hasting recently got exposed when it came to light that he had given his long time girlfriend over $2.5 million over the past 20 years, keeping her on his payroll as his highest paid employee even though she was not anywhere close to being his most important staffer.
• But he and Gutierrez are not alone in this type of unethical behavior since the Washington Free Beacon recently reported that Congresswoman Maxine Walters has paid her daughter over $600,000 since 2006 from campaign funds.
• Her daughter served as employee on her mother’s campaign committees.
• But this is not the first time she has dabbled in unethical and/or illegal activities since in 2010 Waters was brought up on three separate charges by her peers in the House, even after Congressman Barney Frank told her not to get involved in advocating for a bank in which she had financial interest, breaking an important ethics rule that requires Congressional “members to behave in a way that reflects creditably on the chamber.”
• The bank she advocated for, OneUnited, was in financial trouble and Walters' husband owned a sizable amount of OneUnited stock that would have been worthless if the bank went bankrupt.
• Waters also violated a House rule prohibiting lawmakers from using their positions for financial gain, as well as a government ethics statute banning the dispensing of “special favors.”
• But again, we should not be surprised since various government watchdog groups have often cited her as one of the most corrupt politicians in Washington.

Just another set of examples where the concept of term limits becomes more and more attractive every day and with every unethical and corrupt act of the American political class.

That will do it for today’s and this month’s political class insanity review. Today we see that existing members of the political class in Washington know nothing about economic and everything about enriching themselves. Insanity. More of the same next month, guaranteed.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:


http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w

Retro 4: Who Really Caused The Great Recession? Part 1 - "Duped America" Highlights

Note: Given the Thanksgiving holiday this week and the resultant preparations, family visitors, and other commitments, we will be rerunning the top rated and most popular blog posts from the past five years. These posts cover a wide variety of political class insanity, wasteful spending, inane quotes, and other idiocy and are the discussions that most resonated with our readers. We will be back next week with fresh material, starting with our monthly update on "Political Class Insanity."

MONDAY, MAY 14, 2012

Who Really Caused The Great Recession? Part 1 - "Duped America" Highlights

One character flaw about President Obama that constantly bugs me and which we have discussed many times before in this blog (see:http://loathemygovernment.blogspot.com/2009/08/blame-game-part-2.html), is his refusal to accept any responsibility for the failures of his administration. In his mind, the mostly non-existent accomplishments of his Presidency are due to a variety of external forces including:

- His favorite whipping boy excuse, the Bush administration. Never mind that the country's economy really started to come apart (soaring unemployment and soaring national debt and budget deficits when the Democrats, Nancy Pelosi, and Harry Reid took over Congress in 2007 after the 2006 midterm elections), as the following graphs illustrate (double click on the graphs to get a bigger picture): 

- The Japanese tsunami.
- ATM machines.
- Europe's financial woes.
- The Arab spring, which increased oil prices.
- Wall Street
- Banks
- Congress.
- Republicans, even though from 2007 through the end of 2011 the Democrats controlled 80% of the Federal government:

There is any old saying that goes as follows: "Don’t tell me how rocky the sea is, just bring the darn ship in." Obama has never understood this concept. No one forced him to be President. Any good manager coming into a new job should assess what the situation is and then try to progress from that point. 

That is what leaders do, they look forward. Obama continues to look back to blame anyone or any organization for the failures and inadequacies of his administration. Rather than focus on the future and how to get there, he wastes time and energy to cover his own shortcomings. Blaming others in the past does not calm the seas he inherited and does not bring in the darn ship. 

But if he honestly did look into the past, which I doubt he is capable of doing, he would not like what he sees. In the next two days we will present an argument that says the Great Recession was not caused by the following factors:

• The Bush administration
• The Japanese tsunami
• ATM Machines
• Europe's financial woes
• The Arab Spring
• Republicans in Congress
• Republicans in general
• Wall Street
• Banks

What really caused the Great Recession and the destruction of wealth, high unemployment, and general economic malaise that still haunts us today, were Washington Democrats. It was not Wall Street, it was not greedy banks, it was not Bush, it was not Republicans, etc. 

It was purely and simply the insistence of Democrats in Washington that home ownership in predominantly Democratic voting areas be made easier to accommodate. That was the single root cause of all of our current economic troubles. Sure, Wall Street banks took advantage of the situation for a while to make big profits. Sure, mortgage lenders made shady deals to close mortgages and make their money upfront. 

But as we will try to prove over the next two days, based on experts in the industry, none of this happens without the aiding and abetting by Obama's fellow Democrats and Obama himself. His career profited politically by allowing the malfeasance to continue until the crash, an economic crash that wiped out banks, mortgage dealers, construction jobs, home building companies, housing equity wealth, stock market wealth, job growth, etc.

Today we will review the work of Richard Bernstein who has written a book called "Duped America." According to his bio on his website:


Author Richard Bernstein, a former lifelong Democrat, has organized this masterpiece into 31 short easy-to-read chapters. In each and every chapter Bernstein explains how the Democrat Party and their allies in the Mainstream Media have repeatedly attempted to dupe Americans. Each chapter is filled with enough facts to allow you to become more than just knowledgeable about each subject. Duped America is so thoroughly researched it has almost 1,000 footnotes.

Included below is a chapter from the book that he allows anyone to download from his website and thus, I am pretty sure he would not have a problem with me including it here. I am referencing his work since many of the statistics and historical facts he refers to I have already confirmed in previous posts in this blog, making me feel comfortable enough that he has his sources and statistics correct.

The chapter he allows people to download concerns the decades of housing policy abuses by Democrats in Washington that eventually led to the Great Recession. Let me list a few highlights/excerpts from the chapter before you read it in total and let me know what common thread Mr. Obama would realize if he read the chapter himself (the link to Mr. Berstein's website can be accessed viahttp://www.dupedamerica.com/):

• Democrats created the lax mortgage policies that precipitated the crisis while simultaneously stifling Republican efforts to prevent it.
• The history of the crisis started with the Community Reinvestment Act (CRA), signed into law by Democrat President Jimmy Carter in 1977.
• When Democrat Bill Clinton became President in 1992, he broadened the Community Reinvestment Act in ways Congress had never intended.
• When the Republicans attempted to restore fiscal sanity by paring back the CRA, they were stymied by Democrats.
• Democrats such as Barney Frank (D-MA), Ted Kennedy (D-MA) and Maxine Waters (D-CA) allied with the Clinton administration to broaden the acceptability of these risky mortgage loans.
• In 1995, an unrestrained Clinton Democratic administration announced a comprehensive strategy to push home ownership in America to new heights – regardless of the compromise in credit standards that this would require.
• Democrat Clinton legalized the securitization of these mortgages, which allowed Fannie and Freddie to finance everything by buying loans from banks, then repackaging and securitizing them for resale on the open market.
• Fannie Mae and Freddie Mac were big campaign donors, with the bulk of their money going to Democrats.
• Between 1989 and 2008, the leading recipient of Fannie/Freddie campaign money was Connecticut Democrat Chris Dodd, the Senate Banking Committee Chairman, who collected more than $165,000. In second place was then-Democrat Senator Barack Obama, who, in just three years in the U.S. Senate, took in $126,000. Third, was MassachusettsDemocrat John Kerry, who received $110,000.
• Since the 1990s, Fannie Mae and Freddie Mac have been run by Democrat appointees.
• From 1991 to 1998, Fannie Mae was led by James Johnson, a long-time aide to formerDemocrat Vice President Walter Mondale.
• Johnson’s successor as head of Fannie Mae, Franklin Raines, had previously served as a budget director to Democrat President Bill Clinton.
• In July 2003, Senators Chuck Hagel (R-NE), Elizabeth Dole (R-NC) and John Sununu (R-NH) introduced legislation to address regulation of them [Fannie Mae and Freddie Mac]. The bill was blocked by theDemocrats.
• But the legislation [which was reintroduced in 2005] didn’t become law for a single reason:Democrats opposed it on a party-line vote in the Senate Banking Committee.
• Rep. Artur Davis (D-AL) now admitsDemocrats were in error.

Obviously, the common theme is that the seeds for the destruction of the housing market which led to the destruction in the banking industry which led to high unemployment was planted long ago and tended to fruition by Democratic Presidents, Congressmen, and bureaucrats.

But these are just the headlines. If you really want to be depressed, please read the following downloaded chapter from Mr. Bernstein. The details are far worst according to his research and writings. The political class selfishness, personal enrichment, and abuses of power make their duping of us even more egregious.

****************************
MORTGAGE CRISIS…

Americans wondering who was responsible for the mortgage crisis should ask themselves a question: is owning a home a privilege or a right? Despite the meltdown in 2008, the seeds for the mortgage crisis were sown much earlier by a Democrat Party long convinced home ownership was an entitlement.

As this chapter shows, once that basic premise became conventional wisdom, it was all downhill from there. If one listens to the mainstream media and many Democrats, the blame for the mortgage crisis rests with the Republicans and the Bush administration. They’ve convinced the public that Democrats had nothing whatsoever to do with our current financial woes.

Precisely the opposite is true: Democrats created the lax mortgage policies that precipitated the crisis while simultaneously stifling Republican efforts to prevent it. The history of the crisis started with the Community Reinvestment Act (CRA), signed into law by Democrat President Jimmy Carter in 1977.

The law was designed to foster home ownership in low-income communities by pushing banks to aggressively lend to low and moderate income people. At first, it was easy to comply with the CRA. Banks merely had to demonstrate that they did not discriminate in making loans in poor and black neighborhoods.

When Democrat Bill Clinton became President in 1992, he broadened the Community Reinvestment Act in ways Congress had never intended. In 1995, rather than submit legislation that the Republican-led Congress was certain to reject, Clinton bypassed Congress entirely, ordering the TreasuryDepartment to rewrite the CRA rules.

 As a result, banks were forced to fulfill loan “quotas” in low income neighborhoods. That wasn’t the only problem. CRA also allowed community activist groups such as ACORN (Association of Community Organizations for Reform Now), for whom Barack Obama once worked in Chicago, and NACA (Neighborhood Assistance Corporation of America) to file complaints that could affect a bank’s CRA rating.

Failure to comply with CRA or a bad rating meant a bank might not be allowed to expand lending, add new branches or merge with other companies. Banks with poor CRA ratings were also hit with stiff fines. This rewrite of CRA gave activist groups like ACORN and NACA unprecedented power. Protests often held in bank lobbies or in front of the homes of bank officials, coupled with threats of litigation, allowed these groups to extort huge sums of money from financial institutions.

In response, financial institutions began allocating more funds to low-income, high risk borrowers.Loans started being funded on the basis of race and often little else. CRA became an excuse for lowering credit standards.

Many Democrats have claimed that banks subject to the CRA represented few of the mortgages that led to our current problems. Not true. Nearly 4 in 10 subprime loans made between 2004 and 2007 were funded by CRA-covered banks such as Washington Mutual and Indy Mac. Many other subprime lenders not covered by the Act were, in effect, beholden to CRA mandates because they were owned by banks that were subject to it.

Since CRA only covered banks, the Clinton administration created a separate department at Housing and Urban Development to police “fair lending” policies at other institutions such as Countrywide and lending behemoths, Fannie Mae and Freddie Mac.

The result? Countrywide made more loans to minorities than any other lender, and not surprisingly, was one of the first lenders overwhelmed by loan defaults. As groups like ACORN ran their intimidation campaigns against local banks, they eventually hit a roadblock. Banks told them they could afford to reduce their credit standards by only a little – since Fannie Mae and Freddie Mac refused to buy up these risky loans for resale on the secondary market.

ACORN realized that unless Fannie and Freddie were willing to relax their credit standards as well, local banks wouldn’t make enough loans to individuals with bad credit histories or with very little money for a down payment. Democrats such as Barney Frank (D-MA), Ted Kennedy (D-MA) and Maxine Waters (D-CA) allied with the Clinton administration to broaden the acceptability of these risky mortgage loans. When the Republicansattempted to restore fiscal sanity by paring back the CRA, they were stymied by Democrats — and by ACORN.

In 1995, an unrestrained Clinton administration announced a comprehensive strategy to push home ownership in America to new heights – regardless of the compromise in credit standards that this would require. Fannie and Freddie were given massive subprime lending quotas, which would increase to about half of their total business by the end of the decade.

Then came the single most catastrophic decision leading to the housing crisis: Clinton legalized the securitization of these mortgages, which allowedFannie and Freddie to finance everything by buying loans from banks, then repackaging and securitizing them for resale on the open market.

Thus, began the meltdown. In 1997, Bear Stearns handled the first securitization of CRA loans — $385 million worth — all guaranteed by Freddie Mac. Subsequently, a subprime market that had been a relatively modest part of the mortgage business with $35 billion in loans in 1994 soared to $1 trillion by 2008.

Regrettably, this massive bundling of subprime mortgages wound up poisoning the entire mortgage industry. Fannie and Freddie used their “affordable housing mission” to avoid restrictions on their accumulation of mortgage portfolios. They arguedthat if they were constrained, they wouldn’t be able to adequately subsidize affordable housing. As a result, by 1997, Fannie was offering mortgages witha down payment of only 3 percent. By 2001, it was purchasing mortgages with “no down payment at all.”

 By 2007, Fannie and Freddie were required by Housing and Urban
Development to show that 55 percent of their mortgage purchases were to low and moderate income borrowers, and, within that goal, 38 percent of all purchases were to come from underserved areas (usually inner cities).

Meeting these goals almost certainly required them to purchase loans with low down payments and other deficiencies that would characterize them assubprime or Alt-A. The decline in lending standards was also facilitated by competition. Fannie and Freddie were now competing with private-label mortgage lenders such as investment and commercial banks to fulfill the affordable housing requirements imposed by Congress.

The inevitable result? Everyone was scraping the bottom of the mortgage barrel in search of new borrowers. Once the looser lending standards were offered to low and middle income buyers, it was naïve to believe that they wouldn’t lead to more relaxed standards for higher-income and prime borrowers as well. This spreading of looserstandards to the prime market greatly increased the availability of credit for mortgages, and ultimately led to the bubble in housing prices.

Unsurprisingly, Fannie Mae and Freddie Mac were huge campaign
contributors to Congress, spending millions to ensure no reform would be implemented to restrict them. In all, 354 members of Congress receivedfunds. The bulk of the money went to Democrats.

Between 1989 and 2008, the leading recipient of Fannie/Freddie campaign money was ConnecticutDemocrat Chris Dodd, the Senate Banking Committee Chairman, who collected more than $165,000. Dodd opposed restrictions on Fannie and Freddie and pushed hard for the continuance of subprime loans. In second place was then-Senator Barack Obama, who, in just three years in the U.S. Senate, took in $126,000. Third, was Massachusetts Democrat John Kerry, who received $110,000.

Since the 1990s, Fannie Mae and Freddie Mac have been run by Democrats. From 1991 to 1998, Fannie Mae was led by James Johnson, a long-time aide to former Democrat Vice President Walter Mondale. Johnson made headlines in 2008 when Barack Obama picked him to chair his vice presidential selection committee. He had to resign in disgrace when it was revealed he had taken out at least five below-market real estate loans totaling more than $7 million from Countrywide Financial Corporation.

Johnson’s successor as head of Fannie Mae, Franklin Raines, had previously served as a budget director to President Bill Clinton. From 1995 to 2005, Raines pocketed nearly $100 million in compensation before leaving because of a scandal involving profit and loss reports manipulated to increase his annual bonuses.

Another well-known Democrat, Jamie Gorelick, served as vice chair of Fannie from 1998 to 2003. Prior to that, she was Janet Reno’s Deputy Attorney General during the Clinton years, when the Clinton Justice Department was aggressively compelling banks to make subprime loans to unworthy borrowers.

And Rahm Emanuel, current White House Chief of Staff, also served as a director at Freddie Mac. Most Americans are not aware that Fannie and Freddie, while lining the pockets of politicians, also funnels hundreds of millions of dollars to a host of leftist groups and causes promoting the Democrat agenda.

The grantmaking arms of Fannie and Freddie – specifically the Fannie Mae Foundation and the Freddie Mac Foundation – gives tens of millions of dollars each year to predominantly left-wing organizations such as the American Civil LibertiesUnion; the NAACP and National Urban League;pro-illegal immigration groups like the Mexican American Legal Defense and Education Fund, and the National Council of La Raza; pro-Democrat community activist groups like ACORN; and former president Jimmy Carter’s Carter Center.

The Republicans were not oblivious to Fannie and Freddie’s problems. Bush’s 2001 budget called runaway subprime lending a “potential problem”and warned of “strong repercussions in financial markets.” In July 2003, Senators Chuck Hagel (R-NE), Elizabeth Dole (R-NC) and John Sununu (R-NH) introduced legislation to address regulation of them.

The bill was blocked by the Democrats. 30 In September 2003 Bush’s Treasury Secretary, John Snow, proposed what The New York Times called “the most significant regulatory overhaul (of Fannie and Freddie) in the housing finance industry since the savings and loan crisis a decade ago.”

Did the Democrats in Congress welcome reform? Here’s how Barney Frank (D-MA), the ranking Democrat on the Financial Services Committee,responded:

“I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored entities we are talking about here, Fannie Mae and Freddie Mac, are not in crisis…. I do not think at this point there is a problem with a threat to the Treasury…. I believe that we, as the FederalGovernment, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals.”

In 2005, Republican Senators Hagel, Sununu, Dole, and later John McCain reintroduced legislation to once again address regulation of Fannie and Freddie. In essence, the bill would have required Fannie and Freddie to eliminate their investments in risky subprime loans. According to Kevin Hassett, writing in Bloomberg.com, “if that bill had become law, then the world today would be different.”

But the legislation didn’t become law for a single reason: Democrats opposed it on a party-line vote in the Senate Banking Committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democrat opposition, couldn’t even get the Senate to vote on the bill.

Had the bill passed in 2005, the mortgage meltdown would have been far less intense. In 2005, 2006 and 2007, approximately $1 trillion of these terrible mortgage loans were funded by Fannie and Freddie at a time when housing prices were at their highest. When housing prices fell dramatically, losses from those mortgages turned out to be tremendous.

Bottom line: if Fannie Mae and Freddie Mac weren’t buying these subprime loans, the market for them would likely not have existed. Rep. Artur Davis (D-AL) now admits Democrats were in error:

“Like a lot of my Democratic colleagues, I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourageaffordable home ownership when in retrospect I should have heeded the concerns raised by the regulator in 2004. Frankly, I wish my Democraticcolleagues would admit when it comes to Fannie and Freddie, we were wrong.”

**********************************
Edward R, Murrow once eloquently stated: "Our major obligation is not to mistake slogans for solutions." I do not intend to tell anyone who to vote for in November. However, I do ask that any voter fulfill their major obligation to be as informed as possible and not be easily swayed by shallow slogans like Hope, Change, Winning The Future, Forward, etc.

Understand the root causes of our problems like Mr. Bernstein does above relative to the current economic situation we are stuck in. It takes some work but both our personal and national futures depend on understanding the motives of our usually selfish politicians and how their actions have caused so much pain and agony. Unless you understand the root causes and causers of our problems, we will never find the solutions to resolve them.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org

http://www.conventionofstates.com

http://www.youtube.com/watch?v=08j0sYUOb5w

Amgen: A Classic Example of Lobbying Washington At Taxpayer Expense

We have covered political class corruption many, many times in this blog. It has gotten so bad that it seems that finding, creating, and profiting from government corruption is more important to our Washington politicians than actually doing their Constitutional jobs, e.g. developing and living up to sane budgets, researching, developing, READING, and voting on legislation, etc.

Just a very small handful of political class corruption that we have covered include the following examples:

• The Obama administration gave out billions of taxpayer dollars to its crony capitalists partners and political fundraisers and donors in the alternative energy industry. All of which provided no societal benefit and many of whom went out into bankruptcy and out of business. The almost endless list of failures included Solyndra, Spectra, Beacon, Evergreen, Ecotality, A123, and many others.
• The Obama administration also gave out hundreds and hundreds of millions of dollars to its crony capitalist partners and political fundraisers and donors in the alternative transportation industry with no societal benefit in return. The major companies that received taxpayer wealth because they were Obama fundraisers for his elections include Tesla and Fisker Motors.
• Barney Frank used to be the chairman of a powerful House of Representatives committee that oversaw the financial industry. However, that did not prevent him from accepting massive reelection campaign donations from the various companies his committee was responsible for regulating along with top executives from those companies. Blatant conflicts of interest.
• Former Speaker of The House Nancy Pelosi participated in about nine company IPOs, one of which was the VISA IPO that happened after the House mysteriously postponed legislation that would have been detrimental to the company and its IPO. Within a matter of days, Ms. Pelosi, who was then responsible for scheduling the House’s legislative schedule, made a hundred thousands dollars from her IPO access.
• A number of Congressional people made investment decisions and choices shortly after being briefed by Treasury Department people in the run up to the Great Recession, trying to leverage this insider information in their personal financial portfolios before the deteriorating condition of the economy was pubic knowledge.
• Many Congressional members and members of their staffs got sweetheart mortgage deals from Countrywide Financial, one of the prime reasons for the housing and economic collapse.

We could go on and on about Washington political class corruption. However, today we will look at the latest, classic example of corporate interests being used to leverage and basically bribe politicians to get what both need, financial rewards, all at the expense to the American taxpayer.

What makes this instance of corruption classic is that it was done as part of the fiscal cliff deal, a deal that was supposed to prevent the economy from crashing on January 1, 2013. This was a very important piece of legislation, the failure of which would have caused economic harm to most Americans. However, the prideless Washington political class viewed it as just another legislative opportunity to enrich themselves and take care of their business cronies.

The details of this latest classic of political class corruption was outlined in a January 19, 2013 New York Times article:

• In early January, Amgen, which is the world’s biggest biotech company, pleaded guilty in a major Federal fraud case.
• However, that did not prevent the Washington political class from presenting the company with a belated Christmas gift, buried deep within the fiscal cliff deal.
• In that deal, Congressional members insisted on a paragraph that while it did not mention Amgen explicitly, the paragraph was very financially friendly to one of Amgen’s major drug products.
• The paragraph was inserted into Section 632 fiscal cliff final legislation and it delays a set of Medicare price restraints on a particular type of drugs.
• That category of drugs includes Sensipar, a top performing Amgen pill used for dialysis patients.
• This giveaway allows Amgen an additional two years to sell Sensipar without government price and cost controls.
• It must have been a big deal since according to the Times article, “the company’s chief executive quickly relayed it to investment analysts.”
• Good news for Amgen and its investors but bad news for Medicare since its cost for the product will not go down and save the American taxpayer up to $500 million over the next two years.
• Congressional aides were reported surprised by the inclusion of the delay since Amgen was the only company to lobby for the delay, leveraging its 74 Washington lobbyists for the effort, and this was on top of a previous two year delay that critics found unnecessary to extend another two years.
• Supporters of the delay and the legislative paragraph, mostly leaders of the Senate Finance Committee who, according to the Times, “ have long benefited from Amgen’s political largess,“ defended the action, saying it was necessary to allow regulators to prepare properly for the pricing change, even though no one expected the pricing change to be delayed and the pricing changed had already been delayed two years previously.

Okay, that is “what” happened, political cronyism results in an unneeded relief package to political donors, costing the American taxpayer about half a billion dollars. Before we get into the “how” of this disgrace, keep in mind that just before this deal was passed, Amgen pleaded guilty to marketing one of its drugs illegally. It had to pay criminal and civil penalties totaling $762 million, a record settlement for a biotechnology company. Thus, not only are the politicians dealing away taxpayer money, they are dealing it away with a company that just pleaded guilty to massive fraud.
The following summarizes the “how” of the corruption, taken right out of the lobbyists’ playbook:

• Amgen has deep historical, financial and political ties to lawmakers like Senate Minority Leader Mitch McConnell Kentucky, and Senators Max Baucus, of Montana, and Orrin G. Hatch, of Utah. who hold serious power over Medicare payment policy as the leaders of the Finance Committee.
• Amgen also has extensive ties with the Obama administration, with its lobbyists visiting the White House more than a dozen times since 2009.
• Amgen’s employees and political action committee have donated almost nearly $5 million to political candidates and committees since 2007.
• Not surprisingly, these donations include $67,750 to Baucus and $59,000 to Hatch.
• An additional $73,000 went to McConnell, some of it at a fund-raising event for him that Amgen helped sponsor in December while the debate over the fiscal legislation was under way.
• More than $141,000 was also donated from Amgen employees to President Obama’s reelection campaigns.
• Additionally Amgen and its foundation have given hundreds of thousands of dollars in charitable contributions to powerful organizations like the Congressional Black Caucus and groups like the Utah Families Foundation, which, surprise, surprise, was founded by Senator Hatch, an organization that provides positive coverage to the Utah news media.
• Amgen has also contributed to Glacier PAC, a PAC sponsored by Baucus in Montana, and OrrinPAC, a Hatch PAC in Utah.
• When Hatch was facing difficulties in his reelection bid in 2012, group called Freedom Path paid for advertisements in Utah that attacked his opponent. The group was backed and financed by Pharmaceutical Research and Manufacturers of America, a trade group that includes, wait for it,….. Amgen.
• And finally, one of Mr. Hatch’s top Finance Committee staff members on health and Medicare policy, Dan Todd, actually worked as a health policy analyst for Amgen’s government affairs office from 2005 to 2009.

Now, all of this could have been a coincidence. The Senators and the rest of the politicians that stood by when this piece of legislation was introduced might actually be truly thinking that this was a good deal for the taxpayer…but probably not. The money goes round and round and when the music stops, the American taxpayer is the one without a seat even though we funded the whole party.

That is why two steps from “Love My Country, Loathe My Government” need to be implemented right away:

1. Step 5 would allow only individual American citizens to contribute to election campaigns. No more PAC, union, corporate, or lobbyist money could be used to bribe political figures.
2. Step 39 would impose term limits on all Federally elected officials. If you review the corruption cases over the past few years, the ones listed above and others, it is usually the longest serving politicians who are the most ingrained to the culture of corruption. Pelosi, Frank, Baucus, Hatch, etc. have been around for decades. They have not resolved any of the major issues facing American during that time so how much worse could be without them, ousted from office because of term limits.

Without these two steps, the corruption train keeps on rolling and we are not longer a government by the people and for the people, we are a government by the lobbyists for the lobbyists.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.reason.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com
http://www.youtube.com/watch?v=08j0sYUOb5w

It's Now Official: Political Campaign Donors More Important Than Constituents, Part 1

Many Americans had long suspected that Congress and other Washington politicians were not working very hard for the good of the country and the good of their constituents. The war on drugs was declared over forty years and is still a lost cause. In the early 1980s, a Reagan commission on pubic education showed how poorly our schools were educating our kids. Three decades later that situation has gotten even worse. In the 1970s, the nation’s economy was shocked any number of times by oil shortages, exposing the fact that the country did not have a long term strategic plan for energy independence and stability. Almost four decades later we still have no such plan.

What the heck has Congress and the politicians in it been doing for the past four or five decades? We know that they do not work 40 hour weeks, 50 weeks a year. In fact, Congress will only be in session about 115 days this year. What do they do during these less than robust working hours.? They obviously are not coming up with solutions to the major issues facing the nation.

Well, thanks to a January 8, 2013 Huffington Post article, it is pretty obvious why they have not resolved any major issue: they really are not working on them, being far more concerned with raising money for their next election and their political party. Details from the article include the following details and disgraces:

• The two writers of the Huffington Post article got their hands on a PowerPoint presentation that was given to freshmen Congressmen and women by the Democratic Congressional Campaign Committee.
• The presentation outlined how a typical member of Congress should spend their days when actually in Washington.
• This prototype daily schedule laid out by the Democratic leadership expects a nine or 10-hour day while in Washington, of which four hours are to be spent in “call time,“ i.e. calling people in order to get them make a political campaign donation.
• Another hour is supposed to be dedicated to "strategic outreach," which includes fundraisers and press work, i.e. more fundraising time and effort.
• Another hour is to be blocked off for "recharge."
• And finally, three to four hours a day are to be used for the actual work of being a member of Congress -- hearings, votes, and meetings with constituents.
• It is especially good if these constituents are also high potential donors, kind of like killing two birds with one shot.
• In addition to these daily fund raising activities, the presentation also made sure that Congressional members knew that they had to take time to compile quarterly fundraising reports for the Federal Election Commission, more time and energy taken away from actually doing real work and solving real problems.

So, not only do members of Congress not do a lot of real work, i.e. solving problems, there is an actual formal process that discourages that type of problem solving behavior in favor of raising money to keep incumbents in office. No wonder nothing ever gets resolved or real budgets developed and lived up to or fraud and waste wrung out of government operations, the political class is off taking care of themselves and their political careers.

Let’s do some simple math:

1. The average American works about 250 days a year, 50 weeks by five days a week.
2. Congress will be in session about 115 days this year. Let’s assume that they will work another 25 days a year back in their home state or Congressional district, giving them a work year of 140 days.
3. Thus, relative to the average American, Congressional members work only 64% as long (140/250).
4. During the average workday, the average American works about 8 hours a day.
5. During an average workday, we now know from Hufffington Post that the average Congressional members only works about four hours a day on real work.
6. Thus, the average politician works half as hard on real work than the average American (4 hours a day/8 hours a day).
7. Since a member of Congress earns about $170,000 a year, given their work load and what we now know they spend their time on, their annual pay should be reduced to $54,400:

$54,400 = $170,000 X .64 (ratio of working days) X .5 (ratio of working hours per day)

This would be a truer measure of their value, not $170,000. And at $54,400, given their poor productivity, they still might be overpaid.

Consider some quotes from the article that prove how ludicrous and shameful this behavior is:

• "What’s my experience with it? You might as well be putting bamboo shoots under my fingernails. It’s the most painful thing, and they’re no sooner elected and they’re down there making phone calls for the election in 2014." said Congressman. John Larson , a high-ranking Democrat.
• According to former Congressman Tom Perriello, who now works at the Center for American Progress, the four hours allocated to fundraising may even be "low-balling the figure so as not to scare the new Members too much."
• "It bites into your private life. It bites into your leisure time. You shouldn't only do what you have to do, you should be able to read. ... It cuts into time members spend with each other," said former Congressman Barney Frank.
• "It really does affect how members of Congress behave if the most important thing they think about is fundraising. You end up being nice to people that probably somebody needs to be questioning skeptically. It's a fairly disturbing suggested schedule. You won't ask tough questions in hearings that might displease potential contributors, won't support amendments that might anger them, will tend to vote the way contributors want you to vote,” said former Congressman Brad Miller.
• "One thing that's always been striking to me is even the members playing a leading role on specific issues actually could not talk about the issues. They didn't have enough knowledge on their own issues to talk about them at length. I'm probably guilty of that," said a current member of Congress who wished to remained anonymous.

So we end up with distracted members of Congress, members of Congress that do not ask the tough questions or make the tough calls because it could affect fundraising, and we have members of Congress that do not know the details and ramifications of what they are voting on and sponsoring. Great, no wonder nothing ever gets resolved.

This article alone justifies Step 39 from “Love My Country, Loathe My Government.” Step 39 would impose term limits on all Federally elected officials. Maybe if all of these members of Congress knew that they could not run for office for a second term, they would focus more and doing the right thing and not hitting up the right political donor. How much worse could it get with term limits compared to the current process laid out in the Huffington Post article?

If we implement Step 39, which would remove the word “incumbent” from our political vocabulary, and combine it with Step 6, which would allow only individual American citizens to contribute to political campaigns, we might finally get back to representative government that is for the people and by the people as opposed to the current government which is by the political donor and for the political donor.

Two final thoughts:

1. The article also exposes the seedy underside of committee assignments. We will cover this other disgrace and insult to democracy tomorrow.
2. Second, consider a paragraph from the article and visualize the writers’ description of “call time.” It reminds me of a prison work detail, I picture these Congressional people marching off in a straight line to the hard labor work of making fundraising calls, chained together in striped prison garb, based on the writers’ vivid description of the process:

Congress members make the dreaded calls from a room in the office of the Democratic Congressional Campaign Committee, or a similar one at the headquarters of the National Republican Congressional Committee. After votes in the House, a stream of congressmen and women can be seen filing out of the Capitol and, rather than returning to their offices, heading to rowhouses nearby on First Street for call time, or directly to the parties' headquarters. The rowhouses, where Larson said he prefers to make calls, are typically owned by lobbyists, fundraisers or members themselves, and are used for call time because it's illegal to solicit campaign cash from the official congressional office. Former Rep. Walt Minnick's (D-Idaho) career in finance enabled him to buy a Capitol Hill rowhouse that he allows Democrats to use for call time. "There's less turmoil and background noise" in the rowhouses compared with the DCCC call center, said Rep. Brad Miller (D-N.C.), who retired from office this year.

Again, disgraceful and certainly not worth $170,000 per year per Congressional member.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.reason.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com
http://www.youtube.com/watch?v=08j0sYUOb5w

The Selling and Buying Of America, Part 3: The Gangs That Control America

This is the third post on the topic and insult of the “Buying and Selling Of America.” Two days ago we reviewed the recent history of politicians helping themselves to taxpayer wealth to enrich themselves, enrich their families and friends, and continuing to finance their reelection campaigns with taxpayer dollars.

Yesterday, we reviewed the disgrace of the Washington political class asking for/demanding citizens and businesses contribute to Obama’s inauguration festivities and parties and how taxpayers will likely pay over $150 million to support the inauguration parties for the politicians in D.C.

Today’s examples come from a new book written by Jeffrey Sachs, a highly respected economist from Columbia University. The book is titled "The Price of Civilisation" and Mr. Sachs says the US economy is caught in a feedback loop: ''Corporate wealth translates into political power through campaign financing, corporate lobbying and the revolving door of jobs between government and industry; and political power translates into further wealth through tax cuts, deregulation and sweetheart contracts between government and industry. Wealth begets power, and power begets wealth,''

Well said. In about fifty words Mr. Sachs has summarized how the buying and selling of America works. We no longer live in a democracy, we live below a tier of elitists that trade taxpayer wealth and freedoms for their own reward, greed, and enrichment. That is why no major issue ever gets resolved in this country. There are powers and “gangs” that do not want them solved, it would upset the cozy arrangements that these elitists have established.

I use the word “gangs” because that is what Mr. Sachs calls them, as outlined in an article by Ross Gittins of The Sydney Morning Herald. Mr. Sachs categorizes the gangs as follows:

1) The first gang is the military-industrial complex, i.e. the relationship between the Pentagon and the private businesses and contractors that live off of its massive annual budget. Here are is a famous quote from President Eisenhower from over fifty years ago: "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist."

As a result, Sachs concludes that “America has been condemned to militarization, useless wars and fiscal waste on a scale of many tens of trillions of dollars since then.'' I would say he has gotten that right:

• Useless wars: Vietnam, Granada, Yugoslovia, Lebanon, Iraq I, Iraq, II, Afghanistan, and probably a few I have forgotten.
• Fiscal waste: you cannot spend over $600 billion a year on a world wide operation and not have fiscal waste. Rather than run down the many examples that we could list, let me refer to our most popular blog post ever regarding the Navy nonchalantly wasting over $300 million of taxpayer wealth:

http://loathemygovernment.blogspot.com/2011/07/us-navy-ships-for-sale-cheap-never-used.html

Additionally, if you go to the website www.simplywired.com you will find that the average salary for an individual defense contractor is about $64,000. Since the average American household annual income is just under $50,000, you begin to see why defense contractors want the status quo to be maintained.

2) The second gang, according to Sachs, the Wall Street-Washington complex, a complex which has steered the nation’s financial system towards monopoly control by just a handful of politically connected Wall Street firms including Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley and a few other financial firms. Despite the financial meltdown of the Great Recession, despite the useless, but long and cumbersome, Dodd-Frank financial industry reform legislation, despite the public’s disgust with the banking industry in general, these few banks control as much or more of the financial industry than they did five years ago. These few banks control over 50% of banking deposits, banking assets, and just about any other measure of banking value.

How were they able to do this? Let’s look at just two examples of how the “gang” works:

- Congressman Barney Frank used to be a powerful chairman of a House banking committee. His committee was supposed to oversee and make sure banks did not get out of control. But how motivated was he in this role when:

• According to an October 22, 2010 article in the Boston Herald by Dave Wedge, Massachusetts Congressman, Barney Frank, accepted $40,000 in reelection campaign donations from financial institutions that received bailout/TARP from the government. Two things make this action so despicable. First, Congressman Frank was at the center of the whole taxpayer bank bailout activity since he was chairman of the lead House of Representatives committee that was determining which institutions got how much taxpayer money, if any.
• Second, in 2009, Mr. Frank told the Washington publication, Roll Call, that he "won't take any PAC money from banks that took TARP funds, nor would I take it from the top executive." However, according to Mr. Wedge's research he did not fulfill this statement.
• According to Mr Frank's own campaign disclosure reports, he accepted a campaign donation of $7,000 from top executives from Bank Of America. Bank of America received $45 billion in taxpayer bailout funds."
• He received $5,000 for Bank Of America's Federal PAC fund.
• He received $10,000 from the Bank Of New York Mellon Corporation which received $3 billion from the bailout fund.
• He received $2,000 from the Financial Services Roundtable PAC that includes representatives from TARP recipients Bank of America, JP Morgan, Chase, and Wells Fargo.
• He received $1,000 from U.S. Bancorp's PAC which received $6 billion in bailout funds.
• These details and further discussion of “gangster politics” can be found at:

http://loathemygovernment.blogspot.com/2010/10/conflicts-of-interest-and-lies-that-are.html

Let’s move on to another example, this one where Congressional members got sweetheart mortgage deals from Countrywide Financial, the poster child for the bad  mortgageloans that were the underlying cause of the Great Recession. The following members of Congress and their senior staffs received this preferential treatment, as outlined in an Associated Press report:

1. Former Senate Banking Committee Chairman Christopher Dodd, D-Conn.
2. Senate Budget Committee Chairman Kent Conrad, D-N.D.
3. Mary Jane Collipriest, who was communications director for former Sen. Robert Bennett, R-Utah, then a member of the Banking Committee.
4. The AP report said Dodd referred Collipriest to Countrywide's VIP unit. Dodd, when commenting on his own loans, has said he was unaware of the discount program.
5. Rep. Howard "Buck" McKeon, R-Calif., chairman of the House Armed Services Committee.
6. Rep. Edolphus Towns, D-N.Y., former chairman of the Oversight Committee. Towns issued the first subpoena to Bank of America for Countrywide documents, and current Chairman Darrell Issa, R-Calif., subpoenaed more documents. The committee said that in responding to the Towns subpoena, Bank of America left out documents related to Towns' loan.
7. Rep. Elton Gallegly, R-Calif.
8. Top staff members of the House Financial Services Committee.
9. A staff member of Rep. Ruben Hinojosa, D-Texas, a member of the Financial Services Committee.
10. Former Rep. Tom Campbell, R-Calif.
11. Former Housing and Urban Development SecretariesAlphonso Jackson and Henry Cisneros; and former Health and Human Services Secretary Donna Shalala. The VIP unit processed Cisneros' loan after he joined Fannie's board of directors
12. Former Fannie Mae heads James Johnson, Daniel Mudd and Franklin Raines. Countrywide took a loss on Mudd's loan. Fannie employees were the most frequent recipients of VIP loans. Johnson received a discount after Mozilo waived problems with his credit rating.

Details of this corruption and more can be found at the following link:

http://loathemygovernment.blogspot.com/2012/07/washington-corruption-train-keeps-on.html

Still do not believe the Wall Street/Washington gang exists? Consider the following graphic that shows the incest that exists between the Federal government and Wall Street banks (double click on the picture for a larger view):

The overlap is the incest of the government/Wall Street gang.
Maybe President Wilson had it right about a hundred years ago when he said: "The government, which was designed for the people, has got into the hands of the bosses and their employers, the special interests. An invisible empire has been set up above the forms of democracy."

Are you beginning to see how the feedback loop works? Corporations support incumbent politicians via financial donations and once back in office, incumbent politicians cut special deals for those same donors and their businesses and interests. Everybody gets wealthy and secure, the gang and their loop keeps rolling along, an invisible empire above the forms of democracy.

Unfortunately, it is all subsidized by American taxpayers, who are not getting wealthy and secure. In fact, if anything, they are getting less secure (high, chronic unemployment) and declining household income and wealth (less secure). That is why there is no urgency on any politicians to upset the process since they do not pay for the process, we do. And that is why our national debt is $16.4 TRILLION and climbing, and cuts in government spending would make the gang members less wealthy and less secure even if it helped save the country’s economy and democracy.

That’s enough bad news for today. We will continue with the selling and buying of America tomorrow when we reveal the identities of the last two gangs and provide some common sense suggestions on how to bring the gangs down, restore our freedom and bring some sanity to our out-of-control government spending and get it under control. In the meantime, see if you can name the other two gangs.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and
others everyday.

Please visit the following sites for freedom:

http://www.reason.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com
http://www.youtube.com/watch?v=08j0sYUOb5w

Who Really Caused The Great Recession? Part 1 - "Duped America" Highlights

One character flaw about President Obama that constantly bugs me and which we have discussed many times before in this blog (see: http://loathemygovernment.blogspot.com/2009/08/blame-game-part-2.html), is his refusal to accept any responsibility for the failures of his administration. In his mind, the mostly non-existent accomplishments of his Presidency are due to a variety of external forces including:

- His favorite whipping boy excuse, the Bush administration. Never mind that the country's economy really started to come apart (soaring unemployment and soaring national debt and budget deficits when the Democrats, Nancy Pelosi, and Harry Reid took over Congress in 2007 after the 2006 midterm elections), as the following graphs illustrate (double click on the graphs to get a bigger picture): 

- The Japanese tsunami.
- ATM machines.
- Europe's financial woes.
- The Arab spring, which increased oil prices.
- Wall Street
- Banks
- Congress.
- Republicans, even though from 2007 through the end of 2011 the Democrats controlled 80% of the Federal government:

There is any old saying that goes as follows: "Don’t tell me how rocky the sea is, just bring the darn ship in." Obama has never understood this concept. No one forced him to be President. Any good manager coming into a new job should assess what the situation is and then try to progress from that point.

That is what leaders do, they look forward. Obama continues to look back to blame anyone or any organization for the failures and inadequacies of his administration. Rather than focus on the future and how to get there, he wastes time and energy to cover his own shortcomings. Blaming others in the past does not calm the seas he inherited and does not bring in the darn ship.

But if he honestly did look into the past, which I doubt he is capable of doing, he would not like what he sees. In the next two days we will present an argument that says the Great Recession was not caused by the following factors:

• The Bush administration
• The Japanese tsunami
• ATM Machines
• Europe's financial woes
• The Arab Spring
• Republicans in Congress
• Republicans in general
• Wall Street
• Banks

What really caused the Great Recession and the destruction of wealth, high unemployment, and general economic malaise that still haunts us today, were Washington Democrats. It was not Wall Street, it was not greedy banks, it was not Bush, it was not Republicans, etc.

It was purely and simply the insistence of Democrats in Washington that home ownership in predominantly Democratic voting areas be made easier to accommodate. That was the single root cause of all of our current economic troubles. Sure, Wall Street banks took advantage of the situation for a while to make big profits. Sure, mortgage lenders made shady deals to close mortgages and make their money upfront.

But as we will try to prove over the next two days, based on experts in the industry, none of this happens without the aiding and abetting by Obama's fellow Democrats and Obama himself. His career profited politically by allowing the malfeasance to continue until the crash, an economic crash that wiped out banks, mortgage dealers, construction jobs, home building companies, housing equity wealth, stock market wealth, job growth, etc.

Today we will review the work of Richard Bernstein who has written a book called "Duped America." According to his bio on his website:


Author Richard Bernstein, a former lifelong Democrat, has organized this masterpiece into 31 short easy-to-read chapters. In each and every chapter Bernstein explains how the Democrat Party and their allies in the Mainstream Media have repeatedly attempted to dupe Americans. Each chapter is filled with enough facts to allow you to become more than just knowledgeable about each subject. Duped America is so thoroughly researched it has almost 1,000 footnotes.


Included below is a chapter from the book that he allows anyone to download from his website and thus, I am pretty sure he would not have a problem with me including it here. I am referencing his work since many of the statistics and historical facts he refers to I have already confirmed in previous posts in this blog, making me feel comfortable enough that he has his sources and statistics correct.

The chapter he allows people to download concerns the decades of housing policy abuses by Democrats in Washington that eventually led to the Great Recession. Let me list a few highlights/excerpts from the chapter before you read it in total and let me know what common thread Mr. Obama would realize if he read the chapter himself (the link to Mr. Berstein's website can be accessed via http://www.dupedamerica.com/):

• Democrats created the lax mortgage policies that precipitated the crisis while simultaneously stifling Republican efforts to prevent it.
• The history of the crisis started with the Community Reinvestment Act (CRA), signed into law by Democrat President Jimmy Carter in 1977.
• When Democrat Bill Clinton became President in 1992, he broadened the Community Reinvestment Act in ways Congress had never intended.
• When the Republicans attempted to restore fiscal sanity by paring back the CRA, they were stymied by Democrats.
• Democrats such as Barney Frank (D-MA), Ted Kennedy (D-MA) and Maxine Waters (D-CA) allied with the Clinton administration to broaden the acceptability of these risky mortgage loans.
• In 1995, an unrestrained Clinton Democratic administration announced a comprehensive strategy to push home ownership in America to new heights – regardless of the compromise in credit standards that this would require.
• Democrat Clinton legalized the securitization of these mortgages, which allowed Fannie and Freddie to finance everything by buying loans from banks, then repackaging and securitizing them for resale on the open market.
• Fannie Mae and Freddie Mac were big campaign donors, with the bulk of their money going to Democrats.
• Between 1989 and 2008, the leading recipient of Fannie/Freddie campaign money was Connecticut Democrat Chris Dodd, the Senate Banking Committee Chairman, who collected more than $165,000. In second place was then-Democrat Senator Barack Obama, who, in just three years in the U.S. Senate, took in $126,000. Third, was Massachusetts Democrat John Kerry, who received $110,000.
• Since the 1990s, Fannie Mae and Freddie Mac have been run by Democrat appointees.
• From 1991 to 1998, Fannie Mae was led by James Johnson, a long-time aide to former Democrat Vice President Walter Mondale.
• Johnson’s successor as head of Fannie Mae, Franklin Raines, had previously served as a budget director to Democrat President Bill Clinton.
• In July 2003, Senators Chuck Hagel (R-NE), Elizabeth Dole (R-NC) and John Sununu (R-NH) introduced legislation to address regulation of them [Fannie Mae and Freddie Mac]. The bill was blocked by the Democrats.
• But the legislation [which was reintroduced in 2005] didn’t become law for a single reason: Democrats opposed it on a party-line vote in the Senate Banking Committee.
• Rep. Artur Davis (D-AL) now admits Democrats were in error.

Obviously, the common theme is that the seeds for the destruction of the housing market which led to the destruction in the banking industry which led to high unemployment was planted long ago and tended to fruition by Democratic Presidents, Congressmen, and bureaucrats.

But these are just the headlines. If you really want to be depressed, please read the following downloaded chapter from Mr. Bernstein. The details are far worst according to his research and writings. The political class selfishness, personal enrichment, and abuses of power make their duping of us even more egregious.

****************************
MORTGAGE CRISIS…

Americans wondering who was responsible for the mortgage crisis should ask themselves a question: is owning a home a privilege or a right? Despite the meltdown in 2008, the seeds for the mortgage crisis were sown much earlier by a Democrat Party long convinced home ownership was an entitlement.

As this chapter shows, once that basic premise became conventional wisdom, it was all downhill from there. If one listens to the mainstream media and many Democrats, the blame for the mortgage crisis rests with the Republicans and the Bush administration. They’ve convinced the public that Democrats had nothing whatsoever to do with our current financial woes.

Precisely the opposite is true: Democrats created the lax mortgage policies that precipitated the crisis while simultaneously stifling Republican efforts to prevent it. The history of the crisis started with the Community Reinvestment Act (CRA), signed into law by Democrat President Jimmy Carter in 1977.

The law was designed to foster home ownership in low-income communities by pushing banks to aggressively lend to low and moderate income people. At first, it was easy to comply with the CRA. Banks merely had to demonstrate that they did not discriminate in making loans in poor and black neighborhoods.

When Democrat Bill Clinton became President in 1992, he broadened the Community Reinvestment Act in ways Congress had never intended. In 1995, rather than submit legislation that the Republican-led Congress was certain to reject, Clinton bypassed Congress entirely, ordering the Treasury Department to rewrite the CRA rules.

 As a result, banks were forced to fulfill loan “quotas” in low income neighborhoods. That wasn’t the only problem. CRA also allowed community activist groups such as ACORN (Association of Community Organizations for Reform Now), for whom Barack Obama once worked in Chicago, and NACA (Neighborhood Assistance Corporation of America) to file complaints that could affect a bank’s CRA rating.

Failure to comply with CRA or a bad rating meant a bank might not be allowed to expand lending, add new branches or merge with other companies. Banks with poor CRA ratings were also hit with stiff fines. This rewrite of CRA gave activist groups like ACORN and NACA unprecedented power. Protests often held in bank lobbies or in front of the homes of bank officials, coupled with threats of litigation, allowed these groups to extort huge sums of money from financial institutions.

In response, financial institutions began allocating more funds to low-income, high risk borrowers. Loans started being funded on the basis of race and often little else. CRA became an excuse for lowering credit standards.

Many Democrats have claimed that banks subject to the CRA represented few of the mortgages that led to our current problems. Not true. Nearly 4 in 10 subprime loans made between 2004 and 2007 were funded by CRA-covered banks such as Washington Mutual and Indy Mac. Many other subprime lenders not covered by the Act were, in effect, beholden to CRA mandates because they were owned by banks that were subject to it.

Since CRA only covered banks, the Clinton administration created a separate department at Housing and Urban Development to police “fair lending” policies at other institutions such as Countrywide and lending behemoths, Fannie Mae and Freddie Mac.

The result? Countrywide made more loans to minorities than any other lender, and not surprisingly, was one of the first lenders overwhelmed by loan defaults. As groups like ACORN ran their intimidation campaigns against local banks, they eventually hit a roadblock. Banks told them they could afford to reduce their credit standards by only a little – since Fannie Mae and Freddie Mac refused to buy up these risky loans for resale on the secondary market.

ACORN realized that unless Fannie and Freddie were willing to relax their credit standards as well, local banks wouldn’t make enough loans to individuals with bad credit histories or with very little money for a down payment. Democrats such as Barney Frank (D-MA), Ted Kennedy (D-MA) and Maxine Waters (D-CA) allied with the Clinton administration to broaden the acceptability of these risky mortgage loans. When the Republicans attempted to restore fiscal sanity by paring back the CRA, they were stymied by Democrats — and by ACORN.

In 1995, an unrestrained Clinton administration announced a comprehensive strategy to push home ownership in America to new heights – regardless of the compromise in credit standards that this would require. Fannie and Freddie were given massive subprime lending quotas, which would increase to about half of their total business by the end of the decade.

Then came the single most catastrophic decision leading to the housing crisis: Clinton legalized the securitization of these mortgages, which allowed Fannie and Freddie to finance everything by buying loans from banks, then repackaging and securitizing them for resale on the open market.

Thus, began the meltdown. In 1997, Bear Stearns handled the first securitization of CRA loans — $385 million worth — all guaranteed by Freddie Mac. Subsequently, a subprime market that had been a relatively modest part of the mortgage business with $35 billion in loans in 1994 soared to $1 trillion by 2008.

Regrettably, this massive bundling of subprime mortgages wound up poisoning the entire mortgage industry. Fannie and Freddie used their “affordable housing mission” to avoid restrictions on their accumulation of mortgage portfolios. They argued that if they were constrained, they wouldn’t be able to adequately subsidize affordable housing. As a result, by 1997, Fannie was offering mortgages with a down payment of only 3 percent. By 2001, it was purchasing mortgages with “no down payment at all.”

 By 2007, Fannie and Freddie were required by Housing and Urban
Development to show that 55 percent of their mortgage purchases were to low and moderate income borrowers, and, within that goal, 38 percent of all purchases were to come from underserved areas (usually inner cities).

Meeting these goals almost certainly required them to purchase loans with low down payments and other deficiencies that would characterize them as subprime or Alt-A. The decline in lending standards was also facilitated by competition. Fannie and Freddie were now competing with private-label mortgage lenders such as investment and commercial banks to fulfill the affordable housing requirements imposed by Congress.

The inevitable result? Everyone was scraping the bottom of the mortgage barrel in search of new borrowers. Once the looser lending standards were offered to low and middle income buyers, it was naïve to believe that they wouldn’t lead to more relaxed standards for higher-income and prime borrowers as well. This spreading of looser standards to the prime market greatly increased the availability of credit for mortgages, and ultimately led to the bubble in housing prices.

Unsurprisingly, Fannie Mae and Freddie Mac were huge campaign
contributors to Congress, spending millions to ensure no reform would be implemented to restrict them. In all, 354 members of Congress received funds. The bulk of the money went to Democrats.

Between 1989 and 2008, the leading recipient of Fannie/Freddie campaign money was Connecticut Democrat Chris Dodd, the Senate Banking Committee Chairman, who collected more than $165,000. Dodd opposed restrictions on Fannie and Freddie and pushed hard for the continuance of subprime loans. In second place was then-Senator Barack Obama, who, in just three years in the U.S. Senate, took in $126,000. Third, was Massachusetts Democrat John Kerry, who received $110,000.

Since the 1990s, Fannie Mae and Freddie Mac have been run by Democrats. From 1991 to 1998, Fannie Mae was led by James Johnson, a long-time aide to former Democrat Vice President Walter Mondale. Johnson made headlines in 2008 when Barack Obama picked him to chair his vice presidential selection committee. He had to resign in disgrace when it was revealed he had taken out at least five below-market real estate loans totaling more than $7 million from Countrywide Financial Corporation.

Johnson’s successor as head of Fannie Mae, Franklin Raines, had previously served as a budget director to President Bill Clinton. From 1995 to 2005, Raines pocketed nearly $100 million in compensation before leaving because of a scandal involving profit and loss reports manipulated to increase his annual bonuses.

Another well-known Democrat, Jamie Gorelick, served as vice chair of Fannie from 1998 to 2003. Prior to that, she was Janet Reno’s Deputy Attorney General during the Clinton years, when the Clinton Justice Department was aggressively compelling banks to make subprime loans to unworthy borrowers.

And Rahm Emanuel, current White House Chief of Staff, also served as a director at Freddie Mac. Most Americans are not aware that Fannie and Freddie, while lining the pockets of politicians, also funnels hundreds of millions of dollars to a host of leftist groups and causes promoting the Democrat agenda.

The grantmaking arms of Fannie and Freddie – specifically the Fannie Mae Foundation and the Freddie Mac Foundation – gives tens of millions of dollars each year to predominantly left-wing organizations such as the American Civil Liberties Union; the NAACP and National Urban League; pro-illegal immigration groups like the Mexican American Legal Defense and Education Fund, and the National Council of La Raza; pro-Democrat community activist groups like ACORN; and former president Jimmy Carter’s Carter Center.

The Republicans were not oblivious to Fannie and Freddie’s problems. Bush’s 2001 budget called runaway subprime lending a “potential problem” and warned of “strong repercussions in financial markets.” In July 2003, Senators Chuck Hagel (R-NE), Elizabeth Dole (R-NC) and John Sununu (R-NH) introduced legislation to address regulation of them.

The bill was blocked by the Democrats. 30 In September 2003 Bush’s Treasury Secretary, John Snow, proposed what The New York Times called “the most significant regulatory overhaul (of Fannie and Freddie) in the housing finance industry since the savings and loan crisis a decade ago.”

Did the Democrats in Congress welcome reform? Here’s how Barney Frank (D-MA), the ranking Democrat on the Financial Services Committee, responded:

“I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored entities we are talking about here, Fannie Mae and Freddie Mac, are not in crisis…. I do not think at this point there is a problem with a threat to the Treasury…. I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals.”

In 2005, Republican Senators Hagel, Sununu, Dole, and later John McCain reintroduced legislation to once again address regulation of Fannie and Freddie. In essence, the bill would have required Fannie and Freddie to eliminate their investments in risky subprime loans. According to Kevin Hassett, writing in Bloomberg.com, “if that bill had become law, then the world today would be different.”

But the legislation didn’t become law for a single reason: Democrats opposed it on a party-line vote in the Senate Banking Committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democrat opposition, couldn’t even get the Senate to vote on the bill.

Had the bill passed in 2005, the mortgage meltdown would have been far less intense. In 2005, 2006 and 2007, approximately $1 trillion of these terrible mortgage loans were funded by Fannie and Freddie at a time when housing prices were at their highest. When housing prices fell dramatically, losses from those mortgages turned out to be tremendous.

Bottom line: if Fannie Mae and Freddie Mac weren’t buying these subprime loans, the market for them would likely not have existed. Rep. Artur Davis (D-AL) now admits Democrats were in error:

“Like a lot of my Democratic colleagues, I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable home ownership when in retrospect I should have heeded the concerns raised by the regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong.”

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Edward R, Murrow once eloquently stated: "Our major obligation is not to mistake slogans for solutions." I do not intend to tell anyone who to vote for in November. However, I do ask that any voter fulfill their major obligation to be as informed as possible and not be easily swayed by shallow slogans like Hope, Change, Winning The Future, Forward, etc.

Understand the root causes of our problems like Mr. Bernstein does above relative to the current economic situation we are stuck in. It takes some work but both our personal and national futures depend on understanding the motives of our usually selfish politicians and how their actions have caused so much pain and agony. Unless you understand the root causes and causers of our problems, we will never find the solutions to resolve them.

We invite all readers of this blog to visit our new website, "The United States Of Purple," at:


http://www.unitedstatesofpurple.com/


The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/

EVERYONE THINKS REPUBLICANS CAUSED THE