January, 2014, Political Class Insanity, Part 6: 83 Depressing Facts About Reality, Courtesy Of American Political Class (1-40)

I used to work for a boss who had a favorite saying: “Nothing is as devastating to an opinion than the right number.” Everybody has opinions and perceptions of reality and usually, those perceptions differ from person to person. However, reality never changes as does the proper and accurate numerical description of that reality. 

I keep that in mind when someone declares without hesitation what reality is. Usually, the people that are most sure of reality are either looking through the so-called rose tinted glasses to make their position in life and opinion seem better than it is or they are trying to convince others that things are much better than they are. I can usually burst either of their reality bubbles with the right number delivered in a calm, calculated voice.

This quote came to mind recently because of two articles I read. The first article from my local newspaper, the Tampa Bay Times, proclaimed that the upcoming year of 2014 was going to be quite good, that trends in the country were looking up. As proof of their insight, they laid out five or so trends, with little or no numerical proof, that proved that good times were ahead for the country.

The second article proclaimed a similar upbeat trend, proposing that recent upticks, not surges, in hiring was a precursor to good times for the country in 2014. The writer and his style of writing of that article was an obvious attempt to portray President Obama’s economic policies in a good light, trying to show that he has executed a deft economic strategy to turn the country around.

However, he left out some key numbers, namely that there are about 23 million Americans who are unemployed or under employed, the number of Americans on food assistance are at an all time high (almost 50 million), and that many of the newly created jobs were low paying or temporary jobs. Nothing is as devastating to an opinion than the right number.

In order to really devastate these false positive opinions and perceptions of reality, consider 83 numbers that have recently been put together by the Freedom Outpost website. We will cover the insanity of these numbers of the next two days as part of our monthly political class insanity habit. These 83 numbers have been created by the 500 or so members of Congress and the high ranking members of this Presidential administration. 

After reading them, you will be devastated, guaranteed. We have a lot of work to do in this country before it is too late and I doubt that the insanity the current political class in Washington has dropped on us and our families make them the right people to fix these 83 numbers. However,  until we recognize and acknowledge these 83 facts, we will never be able to eliminate them. And that, would truly be devastating.

The following 83 points of insanity can also be reviewed at the following link:

http://freedomoutpost.com/2013/12/america-serious-trouble-83-examples-2013-prove/#2sb1Qz31MHBTkkjB.99

The nice thing about this link is that they provide a backup link to every one of their depressing 83 numbers so that you can check for their truthfulness of their assertions yourself.

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The United States is in a massive amount of trouble, and it is time that we all started facing the truth. The following are 83 numbers from 2013 that are almost too crazy to believe…

#1 Most people that hear this statistic do not believe that it is actually true, but right now an all-time record 102 million working age Americans do not have a job. That number has risen by about 27 million since the year 2000.

#2 Because of the lack of jobs, poverty is spreading like wildfire in the United States. According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.

#3 As society breaks down, the government feels a greater need than ever before to watch, monitor and track the population. For example, every single day the NSA intercepts and permanently stores close to 2 billion emails and phone calls in addition to a whole host of other data.

#4 The Bank for International Settlements says that total public and private debt levels around the globe are now 30 percent higher than they were back during the financial crisis of 2008.

#5 According to a recent World Bank report, private domestic debt in China has grown from 9 trillion dollars in 2008 to 23 trillion dollars today.

#6 In 1985, there were more than 18,000 banks in the United States. Today, there are only 6,891 left.

#7 The six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.

#8 The U.S. banking system has 14.4 trillion dollars in total assets. The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.

#9 JPMorgan Chase is roughly the size of the entire British economy.

#10 The five largest banks now account for 42 percent of all loans in the United States.

#11 Right now, four of the “too big to fail” banks each have total exposure to derivatives that is well in excess of 40 trillion dollars.

#12 The total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.

#13 According to the Bank for International Settlements, the global financial system has a total of 441 trillion dollars worth of exposure to interest rate derivatives.

#14 Through the end of November, approximately 365,000 Americans had signed up for Obamacare but approximately 4 million Americans had already lost their current health insurance policies because of Obamacare.

#15 It is being projected that up to 100 million more Americans could have their health insurance policies canceled by the time Obamacare is fully rolled out.

#16 At this point, 82.4 million Americans live in a home where at least one person is enrolled in the Medicaid program.

#17 It is has been estimated that Obamacare will add 21 million more Americans to the Medicaid rolls.

#18 It is being projected that health insurance premiums for healthy 30-year-old men will rise by an average of 260 percent under Obamacare.

#19 One couple down in Texas received a letter from their health insurance company that informed them that they were being hit with a 539 percent rate increase because of Obamacare.

#20 Back in 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 54.9 percent of all Americans are covered by employment-based health insurance.

#21 The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.

#22 Incredibly, 74 percent of all the wealth in the United States is owned by the wealthiest 10 percent of all Americans.

#23 According to Consumer Reports, the number of children in the United States taking antipsychotic drugs has nearly tripled over the past 15 years.

#24 The marriage rate in the United States has fallen to an all-time low. Right now it is sitting at a yearly rate of just 6.8 marriages per 1000 people.

#25 According to a shocking new study, the average American that turned 65 this year will receive $327,500 more in federal benefits than they paid in taxes over the course of their lifetimes.

#26 In just one week in December, a combined total of more than 2000 new cold temperature and snowfall records were set in the United States.

#27 According to the U.S. Census Bureau, median household income in the United States has fallen for five years in a row.

#28 The rate of homeownership in the United States has fallen for eight years in a row.

#29 Only 47 percent of all adults in America have a full-time job at this point.

#30 The unemployment rate in the eurozone recently hit a new all-time high of 12.2 percent.

#31 If you assume that the labor force participation rate in the U.S. is at the long-term average, the unemployment rate in the United States would actually be 11.5 percent instead of 7 percent.

#32 In November 2000, 64.3 percent of all working age Americans had a job. When Barack Obama first entered the White House, 60.6 percent of all working age Americans had a job. Today, only 58.6 percent of all working age Americans have a job.

#33 There are 1,148,000 fewer Americans working today than there was in November 2006. Meanwhile, our population has grown by more than 16 million people during that time frame.

#34 Only 19 percent of all Americans believe that the job market is better than it was a year ago.

#35 Just 14 percent of all Americans believe that the stock market will rise next year.

#36 According to CNBC, Pinterest is currently valued at more than 3 billion dollars even though it has never earned a profit.

#37 Twitter is a seven-year-old company that has never made a profit. It actually lost 64.6 million dollars last quarter. But according to the financial markets it is currently worth about 22 billion dollars.

#38 Right now, Facebook is trading at a valuation that is equivalent to approximately 100 years of earnings, and it is currently supposedly worth about 115 billion dollars.

#39 Total consumer credit has risen by a whopping 22 percent over the past three years.

#40 Student loans are up by an astounding 61 percent over the past three years.

43 more points of devastation and insanity tomorrow, all courtesy of the American political class.

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

The Obama/Buffet Relationship: Conspiracy or Coincidence?

The following is strictly hypothetical. It is not based on any hard core evidence or findings or investigations. It is strictly conjecture.
But it is logical conjecture, based on the coming together of a large set of circumstances. These circumstances could be strictly coincidental or just another instance of Obama administration cronyism and political maneuvering for political gain, not the best interests of the nation.

Let's start with Warren Buffet. We know that over the past month or so, he has come out strongly in support of President Obama's unhealthy and irrational fixation with increasing the tax burden of the wealthy in this country, claiming that on a percentage basis, he pays less in Federal income taxes than members of his staff.

This obviously has added some degree of credibility to the President's call for higher taxes in the midst of a recession with some voters. Never mind that this is a lame economic policy to pursue while on the brink of another recession and even if implemented, it would have an infinitesimally small impact on the nation's financial situation.

Also, within the past month, late August, Warren Buffet announced that his company would invest $5 billion in Bank Of America. There was universal consensus in the press that this was a sweet financial deal for Buffet, given the terms of the deal, as highlighted in a New York Times article on August 25, 2011:

• Buffet's company, Berkshire Hathaway, will get special preferred stock for its $5 billion investment.
• This special stock will pay a guaranteed annual 6% dividend, a great/impossible return in these difficult economic times for most individual Americans and companies.
• This 6% is guaranteed forever, until Bank Of America goes out of business, or until Bank of America decides to buy back the shares at a 5% premium.
• If Bank Of America does go out of business, Buffet's company would be first in line in any bankruptcy proceedings, ahead of all other creditors, in retrieving part of its investment back.
• Berkshire Hathaway also received warrants for 700 million common shares of Bank Of America stock at  $7.14 per share, good for the next ten years. I believe this means that anytime in the next ten years, Buffet's company can buy up to 700 million common shares of Bank of America for $7.14 even if the market price of the price of these common shares are substantially higher. For example, if the stock price is $14.14 in two years, Buffet can buy 700 million shares at only $7.14 and instantly be almost $5 billion ahead on his investment, exclusive of the 6% annual dividend.
• In fact, an online article from a local Charlotte, North Carolina business journal, the hometown of Bank Of America, estimated that if Bank of America stayed in business for three years and attained a stock price level that it had as recently as 2010, then Buffet's $5 billion investment would grow to $9.9 billion in three years. This comes out to an annualized return of just over 25%, not too bad in these dire economic times.

Obviously a sweetheart deal for Buffet's Berkshire Hathaway company.

But why would Bank Of America do such a deal? Probably because Bank of America is not doing well financially, again as reported in the New York Times article cited above and other news sources:

• Bank Of America's common stock price was down over 30% just in the month before this deal was done, is down more than 50% in 2010, and down almost two thirds since 2010.
• The bank is under intense investigations over its foreclosure practices.
• Its mortgage division has run up billions of dollars in legal fees and defaults on all mortgages are not expected to let up anytime soon.
• The whole mortgage mess was the main reason behind the bank's $8.8 billion loss in its financials in the second quarter of this year.
• The financial losses have caused bank management to focus on selling assets such as some of its international credit card divisions and to downsizing its workforce, including 3,500 job cuts it announced in late August.

This is obviously a company under duress. However, an investment from an investor as widely respected and followed as Buffet adds a tremendous amount of credibility to Bank Of America's public assertions that it is moving in the right direction and that it will survive as a viable financial institution going forward. Short term, the strategy seemed to work in late August as the stock price initially jumped 25% and then settled down to an 8% increase. This move also juiced other financial stocks.

Thus, in the short term, Bank Of America got a positive jolt of confidence and share price increase by Buffet's investment.

Now, where does Obama fit in? Obviously, the only thing that this President is currently focused on is how to get himself re-elected in November, 2012, the rest of the nation's problems be damned. Imagine what would happen if Bank of America continued to free fall financially, so much so that its collapse was imminent:

• As the largest, or one of the largest banks in the nation, and world, depending on how you measure, a collapse of Bank Of America would have catastrophic economic implications, no doubt throwing the country and the world into another deep recession.
• Its collapse would bring into doubt the viability and stability of all financial institutions.
• This situation would surely freeze up credit markets, making business expansion and growth next to impossible.
• No business expansion means stagnant or deteriorating unemployment rates and increasing mortgage defaults.
• The effectiveness of one of Obama's big legislative victories, the Dodd-Franks financial reform law, would be called into doubt if such a catastrophic bank crisis could arise within a year or so of the legislation being passed.
• Citizens, and voters, would have no appetite for another round of bank bailouts even though too big to fail has become even a bigger problem under Obama's watch.

In other words, the economy would be imploding just months before the Presidential elections, certainly dooming his overarching need to get re-elected.

Thus, is it all coincidental or is it, in fact, all related? From a conspiracy perspective, was there a mutual beneficial society troika (troika - any group of three persons, nations, etc., acting equally in unison to exert influence, control, or the like) formed between Buffet-Obama-Bank Of America:

• Obama has to prevent Bank of America from going under at all costs from an election year perspective.
• He calls Bank of America's leaders and says he can get them both a cash infusion and a credibility infusion but it has to be made worthwhile, financially, for that investor to come forward.
• He then calls Warren Buffet up and says he can get Buffet a sweetheart deal down at Bank Of America, a deal that would guarantee a sweet annual rate of return, would hold the promise to make billions more, and would minimize his downsize risk by moving Buffet's company to the head of the line of creditors in case of a bank default.
• In return for some easy, low risk money, Buffet needs to do a little politicking for the President's irrational "tax the rich more" platform and maybe host a few re-election fund raising dinners with Buffet's rich friends.
• Everybody involved in the troika is a winner. Buffet gets a great financial deal, Bank of America gets at least some temporary relief, financially and confidence wise, and the President averts an economic disaster and gets some PR help on his tax plan.

Just a conspiracy theory but not a far fetched conspiracy theory, based on the Obama administration's past relationships with other corporations to further the President's personal political needs at the expense of the taxpayer:

- Most people should be familiar with the disaster that is Solyndra, the California solar panel company that went out of business and took over half a billion dollars of taxpayer money with it. This money came out of the President's economic stimulus program, a program that legally required the U.S. taxpayer be first in line to recover assets and money if a company which received stimulus funds went out of business.

However, it now appears that the Obama administration moved a private investor in Solyndra ahead of the U.S. taxpayer in bankruptcy arrangements. This private investor has been a big contributor and fund raiser for Obama in the past. Conspiracy or coincidence?

- LightSquared is a communications company that wants to build out a satellite wireless communications system. However, there is concern that its technology will have a severe interference impact on civilian and military GPS signals. Thus, Congress scheduled hearings to determine if this was the case and whether the LightSquared effort should be blocked.

A Pentagon general was set to testify in front of a Congressional committee and was to testify that yes, indeed, LightSquared's technology would interfere with Defense Department communications. However, it is alleged, and the General testified to the fact, that the White House tried to get the General to falsely testify that military communications would not be impaired. Turns out that the owner of LightSquared was also a big donator and fund raiser of President Obama's past elections efforts. Conspiracy or conincidence?

- According to a September 23, 2011 article from Politico, in early October, Tom Carnahan will host a $25,000 per person fundraiser for the President's re-election campaign. The Carnahan family has long been a Democratic Party power in the state of Missouri. The article also explains that Carnahan is the owner of an energy development firm, Wind Capital Group, which has received a $107 million Federal tax credit from the Obama administration to develop a wind power facility in Missouri.

Even if no quid pro quo was involved, the appearance of conflict of interest is just as bad as an actual conflict of interest. It just smells bad that someone who gets free Federal tax treatment turns around to host fund raisers for the administration that granted the tax credit. Just a smelly affair. Conspiracy or coincidence, or in this case, a severe conflict of interest?

- And finally, our favorite conspiracy or coincidence company, General Electric. Jeffery Immelt, the Chairman of General Electric always seems to be with the President. He is the chairman of the President's economic council and gives the President credibility that he is a friend of business. Immelt has been a big fund raiser and contributor to previous Obama campaigns.

However, General Electric gets benefits also. The President has not moved to change the tax laws that specifically benefit GE, which allowed the company to generate billions in profits, pay no Federal income taxes, and receive a multi-billion dollar Federal income tax credit in 2010. When GE received TARP funds a few years ago, the program that was supposed to bail out financial firms, GE executives did not have to abide by executive pay restrictions like all other TARP recipient firms.

If it has not already, it would not be a surprise of GE's wind turbine division received some kind of favorable tax treatment, to the American taxpayer's detriment, from the Obama administration in the future. Conspiracy or coincidence?

Even if there are no conspiracies involved, the whole situation just smells. The relationship between politicians, elections, and Federal taxpayer money is way too entangled to avoid even the appearance of conflict of interest.

That is why Step 1, Step 6 and Step 39 from "Love My Country" are so important. Step 1 would reduce Federal government spending by 10% a year for five years. This would reduce our debilitating national debt and reduce the amount of money floating around that politicians can misdirect to their favorite re-election supporters, at the expense of ordinary taxpayers.

Step 6 would prohibit anyone or any organization from contributing to an election campaign unless it was an individual American. No more corporations, PACs, or unions contributing to politicians' campaigns in hope of getting taxpayer wealth, in whatever form possible, in return.

Step 39 would impose term limits on all Federal politicians. Most of these shenanigans occur when a politician wants to get re-elected. By restricting them to one term and on term only, much of the conspiracy, coincidence, and conflicts of interest would disappear, helping to purify the original intend of our election system.

Conspiracy or coincidence? It would make for a good political thriller but it makes for a lousy way to run a country and a government.



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

The Conflicts Of Interest and The Lies That Are Our Political Class When It Comes To Banks

Consider the sleazy, conflict of interest behavior of our political class that has occurred over the past year or so:


- In the middle of the TARP bank bailout discussion and debate, the Associated Press reported that Congresswoman Ginny Waite Brown from Florida was actively trading stocks of the very banks she was helping determine if and how much taxpayer bailout money those very banks would be receiving. She obviously had insider information since she knew what banks would be getting a government bailout boost and which ones would not. In real life this is called insider trading and is generally a felony. In the political class reality, this is business as usual. When called out on this obviously conflict of interest, her staff tried to justify these actions by revealing that she had actually lost money on these trades. How ridiculous is this justification? It was alright to participate in insider trading and have a gross conflict of interest since she was an incompetent stock trader? Don't think that argument would hold up in court. Conflict of interest, insider trading style.

- A Bloomberg.com report, that was reprinted recently in an October issue of The Week magazine, reported that six dozen Congressional staffers had traded in stocks of companies that their political bosses were actively involved in. One staffer heavily traded in Bank Of American stock when he found out early, before the rest of the world, that Bank of America had successfully passed its so-called "stress test," i.e. it was deemed a healthy company. Conflict of interest, being a parasite off of a politician style.


- Congresswoman Maxine Walters is likely to go on trial before the House Of Representatives after the midterm elections, accused of allegedly using her influence in Congress to get the Treasury Department to change their minds on a specific bank and to allow it to get bailout funds. Apparently, according to the investigators. Ms. Walters' husband stood to lose a substantial investment he had made in the failing bank unless it was bailed out with taxpayer money. Conflict of interest, family style.


- It is interesting that Ms Walters will be facing charges while Senator Daniel Inouye of Hawaii will not. The Associated Press reported some time ago that Mr Inouye's staff had encouraged those in charge of bailouts to funnel some taxpayer bailout money to a local Hawaiian that was initially not going to receive any government funds. The reason his staff was allegedly involved: the Senator had invested a substantial amount of his personal funds in the bank, which would be lost if the bank was not bailed out by the Treasury Department. Conflict of interest, personal wealth style.


- A December, 2008 Associated Press article reported that earlier in the year many of the big banks and financial institutions that received taxpayer bailout money were also heavy contributors to the implementation of both the Democratic and Republican national conventions. AIG, Goldman Sachs, Citibank, and Freddie Mac (a government entity!) had themselves contributed $3.1 million to the parties and celebrations that are also known as political conventions (other banks had also contributed more). Several months after the conventions, these same companies received tens of billions of dollars in unwarranted taxpayer funds. Not a bad deal, give the political class millions, have the political class give them back billions in taxpayer dollars. Conflict of interest, corporate welfare style.


- And now the latest in sleazy political class behavior. According to an October 22, 2010 article in the Boston Herald by Dave Wedge, Massachusetts Congressman, Barney Frank, has accepted $40,000 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 and article:

• 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 form 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.

I guess the pledge had a time limit or expiration date. It was good for as long as Mr. Frank did not need the money. Makes you wonder why we ever believe what the politicians tell us. They never seem to really mean it and have no problem justifying their behavior in their own minds, hypocrisy and conflict of interest be damned.

These are just a few examples of how the political class is so much more concerned about their own wealth, their own welfare, and their own future and not the wealth, welfare, and future of ordinary Americans and the country as a whole. That is why systematic changes are needed to structurally change how politicians behave, they have proven time and again that when left to their own devices and integrity, they cannot do the right and ethical thing. Several steps from "Love My Country, Loathe My Government" would be a good start to this structural change:

• Step 39 - implement term limits so that re-election campaigns and their financing become a thing of the past since re-elections would no longer exist.
• Step 40 - prohibit any politicians to go to work for a company or lobbying firm or other entity that the politicians had responsibility for during their tenure in office for at least ten years after they leave office.
• Step 7 - implement election financing rules and laws that allow only individual citizens to contribute to election campaigns. The Bill of Rights guarantees freedom of speech for individual Americans, not freedom of speech for corporations, unions, PACs, etc., they should not be protected by this individual freedom and should not be allowe to flood the election process with funding. Only individual American should be allowed to contribute to election campaigns.
• Step 38 - require all politicians to sign off on an annual shared values commitment pledge which includes enhanced anti-conflict of interest rules that result in stronger penalties for personal wealth, family welfare, insider information, insider trading, and other conflict of interest situations which could result in stiffer penalties including dismissal from office and criminal prosecution.

Our politicians have proven that they cannot prevent the conflict of interest sleaze that follows them around. We will have to do it for them with the above steps and an ever vigilant watch that requires us to identify subtlee and overt conflicts of interest and demand that they be eliminated. It is time for America and its citizens to retake the central focus of the government, not the individual welfare of the political class.


Our new 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 folloiwng sites for freedom:



http://www.cato.org/

http://www.robertringer.com/

http://www.realpolichick.blogspot.com/

http://www.flipcongress2010.com/

http://www.reason.com/

Why TARP Was A Taxpayer Failure But A Political Class Success

Almost two years ago, the political class was in a tizzy, claiming that if the Congress and the President did not immediately pass the massive TARP program to bailout out the country's financial institutions, the entire world banking and economic system would collapse. And when I say immediately, I do not mean in a few months. I still recall the politicians of the time frantically claiming that the bill had to be passed in a few days, weeks at most, to avoid financial catastrophy.

At the time, I recall I was also in a tizzy for two reasons. First, if this disaster was so large and so imminent, how could the political class have been so blind and ignornant not to see it coming?
Second, even when the political class has years to study a problem, they rarely get the solutions right so the odds were definitely stacked at them getting TARP right, both from a waste and fraud persepctive.

Now that we are almost two years removed from the TARP implementation, I thought it might be a good time to see if the program actually did any good and whether or not the hundreds of billions of dollars involved were well spent. Now, I am not an expert on sophisticated financial and government Treasury concepts, I am ignorant of what the warrants were that the Treasury Department purchased, and other high finance tools. However, I do understand the following facts:

• According to Wikipedia, the TARP legislation was signed on October 3, 2008.
• Fortune magazine reported on October 29, 2008, that the biggest financial institutions received their first TARP payments.
• On June 17, 2009, a New York Times article reported that JP Morgan and nine other banks had already repaid their TARP money.
• In that article, JP Morgan chief executive, Jamie Dimon, said that his bank never needed the money in the first place.
• A similar article on CNNMoney.com reported that Chicago based bank, Northern Trust, also confirmed it was going to pay back the Treasury Department the $10 billion TARP payment it received. However, contrast this action with a recent article in the August 16, 2010 issue of Fortune Magazine which stated that Northern Trust has had twenty two consecutive years of profits (including the years of "The Great Recession"), it's savings deposits were up 50% in 2009 vs. 2008, and during the financial crisis, Northern Trust customers waited in long lines to deposit about $90 million a day that those customers were bringing in from other financial institutions.
• This CNNMoney.com article also reported that the larger lenders had been working hard to get out from under the TARP requirements and restrictions for several months and that many had raised billions of dollars in fresh capital ands had issued debt without government backing.
• Several months prior to the onset of the TARP payments, the Associated Press reported that many of the big financial institutions that received government bailout money had made big contributions to each political party's Presidential convention. Four of these companies alone , AIG, Citigroup, Goldman Sachs, and Freddie Mac donated a combined $3.1 million. Note that three of these four, the exception being Goldman Sachs, turned out to be in the most dire financial straits when the the bailout money became available.
• The Center For Responsive Politics posted an interesting article on its website on February 4, 2009 which listed out how much money each financial institution received from the TARP fund and how much money those companies had spent in lobbyist expenses and campaign contributions, contributions that were made to the very same people in Congress who would decide how much taxpayer bailout money those companies would receive. According to the website, "members of Congress were able to specify to some extent where the money should go, and they have lobbied regulators to urge them to inject funds into specific banks and financial institutions including those in their own districts." In other words, taxpayer money was not distributed on need and merits but on political considerations.
• The article goes on to say that some of the top recipients of campaign donations from those companies were the people in the most powerful positions in Congress to decide where TARP money went.
• The articles' analysis shows that, with some exceptions, those companies with the highest amount of money spent on campaign donations and lobbying received the most TARP money.
• We have already reported on this blog that at least two members of Congress, a Hawaiian and a California Congresswoman, allegedly and personally lobbied the Treasury Department to save local banks in which these two members of Congress held considerable personal financial stakes.
• A Huffington Post article from November, 2009 reported that the TARP Inspector general was actively investigating 65 cases of fraud regarding TARP payments.
• And finally, an article in the August 16, 2010 issue of Fortune magazine wrote about how "upstart investment banks are taking business and bankers from battered larger competitors." In other words, new financial institutions have sprung up to fill the void left by the demise of failed financial institutions. It's called the free market.

What do I conclude from these know facts? With all due respect to those that think TARP saved the world, I would conclude that TARP was an unnecessary waste of taxpayer money. Consider my following conclusions:

1. Within three or four months of receiving the billions of dollars from the government, most financial institutions were already working on ways to give it back, mostly succeeding for by June, 2009, barely seven months after the program began. If these financial institutions were in such bad shape, how were they able to pay back the money so quickly? I think the Jamie Dimon quote above says it all, many of the financial institutions really did not need the money. I believe they thought they were getting a free lunch and belatedly found out how many restrictions came with the bailout, including the all important executive compensations limits, and quickly decided that this was not a free lunch after all. This conclusion is confirmed by Northern Trust's performance through the past few years, they continued to thrive despite the recession, maintaining their two decade run of profitability. They also could not wait to return the unnecessary money.
2. The cynic in me concludes that the political class saw an opportunity in two areas. First, they could use taxpayer money to both pay back those banks that had helped them celebrate and party at their Presidential conventions and and also provide themselves a new source of slush fund campaign donations, directing TARP money to those companies that donated the most to their re-election campaigns. Second, some politicians saw an opportunity to bailout local banks to the politicians' personal benefit. Neither of these factors were to save the world's financial markets, it was to benefit the political class.
3. The free market advocate in me steps back from the tizzies and realizes that there were just a few financial institutions that actually were in deep, deep trouble. Nowhere above to you see where Bank of America and Citigroup were first in line to pay back their TARP money. These two banks probably were in serious danger of bankruptcy but their horrendous business performance was saved by the American taxpayer, i.e. they and their shareholders were rewarded for the incompetence of their management. If you believe my first conclusion above, most banks did not need the bailout, then we should have allowed Citi and Bank of America to crumble and fail, it's a natural process in the free market. Or, they could have taken drastic steps that other companies take when in financial straits (e.g. lay off employees, cut dividends, sell more stock, sell off assets, etc.) in order to raise money to get out of debt. At least them the shareholders would have suffered the pain, not the taxpayer. They made bad business decisions they should have went out of business, and allowing for more efficient and smarter competitors to take over their business or for new competitors, as listed in the Fortune article mentioned above, to arise from the ashes to start doing business. There would have been plenty of healthy financial institutions, new and old, to take up the slack if Citi or Bank of America failed.
4. Given that there are dozens of cases of fraud being investigated, it is also probably a safe bet that many of the smaller TARP recipients did not need the bailout money from a bank operations perspective but the owners of those smaller banks so the opportunity to defraud the government and its taxpayers.

Fraud, lack of respect for the free market to take care of the strong businesses and punish the weak ones, a new source of campaign funding for politicians, and a potential source of free money, courtesy of the American taxpayer, were the reasons for TARP's existence, not the saving of the world's banking system. A lot of this waste from TARP is driven by insipid relationship between campaign donations, politicians, and companies.

That is why Step 6 from "Love My Country, Loathe My Government" is so important. It would not allow any entity except a private American citizen to donate to campaign re-election campaigns. In doing so, it would remove the incentive for politicians to use taxpayer money to fund their re-election campaigns, at the detriment of the American taxpayer. Of course, if Step 39 was also instituted, term limits, there would be no need for companies, unions, PACs, and lobbyists to contribute to re-election campaigns since they would become a thing of the past.

TARP: just another example where Americans lose and politicians profit.



Our new 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.

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I Am Not Conflicted So You Should Not Be Either

Conflict of interest (courtesy of The 'Lectric Law Library Lexicon)= Refers to a situation when someone, such as a lawyer or public official, has competing professional or personal obligations or personal or financial interests that would make it difficult to fulfill his duties fairly.

Note that the definition does not mean that something unethical or illegal actually happened, just that a person's interests would make it difficult. Sometimes it seems that the political class does not even know the definition of conflict of interest or chooses to ignore the part that says you do not have to have something illegal or unethical happen for a conflict to exist. In either case, consider the following short list of examples that fall under this definition and continue to undermine our belief that politicians do put themselves before their constituents and the country:

• According to an article in the St. Petersburg Times on June 30, 2009, Congresswoman Ginny Brown-Waite was very interested, both professionally and personally, in the massive taxpayer bailout of the banking industry. Not only did she sit on the House committee that oversaw the banking industry, she also personally invested in specific banks she was supposed to be regulating. The day before the bailout of Citigroup, she bought the company's stock. Eleven days later she bought stock in Bank Of America just as the administration announced another massive dose of taxpayer money going to banks like Bank Of America. The Congresswoman denied that there was any conflict of interest. Huh? You are sitting on a BANKING committee and have access to tons of information about specific banks, the industry as a whole, possible government actions, etc. and you are actively trading banking stocks. In the real world, if we did something like that we would probably by liable for insider trading violations. But as long you are a member of the political class, it seems as long as you vow no conflict of interest occurred, none did.
• On January 4, 2009, the St. Petersburg Times reported that Senator Hillary Clinton was able to get a New York developer special tax treatment and government road funding for his mall development project around the same time that the developer contributed $100,000 to husband Bill Clinton's foundation. When you are an elected official and your husband is getting money and your actions result in good things happening for that donor, it is a conflict of interest even if nothing illegal or unethical happened.
• The next example is Senator Dodd of Connecticut who, of course, has denied there was any conflict of interest in his dealing with Countrywide Financial. This past week the Senate Ethics Committee, consisting of members of the political class, cleared Dodd of any ethics violations. However, is this not a case of the foxes guarding the hen house? The pessimist in me says that if they had found Dodd violated ethics rules, they themselves might be cut off from similar deals in the future. Just my cynicism shining through I guess. Thus, I will leave it to you to decide if he had any conflicts of interest even if nothing illegal happened (source: Wikipedia):

1. Dodd is currently the chairman of the Senate Banking committee and thus, has tremendous influence and power in the entire housing and banking industry
2. In 2003, Dodd received favorable mortgage loans from Countrywide Financial on two properties
3. In 2008, Dodd proposed a program that would greatly benefit subprime lenders such as Countrywide Financial, the company that gave him the good mortgage deals
4. Countrywide Financial was bought by Bank Of America
5. Bank Of America also contributed $70,000 to Dodd's election committee
6. Dodd also received over $130,000 in campaign donations from Freddie Mac and Fannie Mae even though they are Federal housing programs, i.e. you paid taxes to the government, some of which found its way to these two government housing industry entities that turned around and took some of those dollars and gave it to a member of the political class. Thus, in essence, all of us subsided Dodd's reelection campaign.

• And one last example from the St. Petersburg Times on December 11, 2008. In mid-2008, many banks gave millions of dollars to both parties of the political class for the expense of their conventions. Several months later, the same political class throws untold billions of taxpayer dollars at this same banks . Coincidence? I do not think so. Just another example where competing obligations arose and the political class chose themselves over the interests of their districts, their states and the country.

These kinds of actions make it very difficult to believe anyone from the political class when they say they are supporting something or doing something for our own good, these examples and many other instances would indicate we are not at the top of their priority list. It undermines the very foundation of this country that the government is looking out for our individual self interests.

There is a very simple solution that would clear all of this up: during you tenure in office and for several years after your tenure ends, you are not allowed to personally deal with that industry or section of the economy that you are involved in through committee work. Sit on the Banking Committee, then you cannot invest or receive campaign donations from the banking industry. Sit on a Congressional energy committee, then you are not allowed to invest in or receive campaign donations form oil companies, electric companies etc. The fact that this simple yet bold rule is not part of our government processes indicates that the political class really does not care about conflicts of interest since it conflicts with their self interest.