LESSONS LEARNED #36: “Politicians oppose across the board tax cuts because they are not politically expedient.” -Old Pithy

Posted by PITHOCRATES - October 21st, 2010

No King Ever Ruled Without the Consent of Money

There were kings.  And there were wealthy landowners.  Kings may have been sovereign.  But the wealth lies with, as you may guess, the wealthy landowners.  Kings needed money.  Because doing king ‘things’ got expensive.  War, armies, navies, festivals, feasts, castles, palaces, churches, etc., were very expensive.  So kings taxed their subjects to raise the money they needed to be king.  And when it came to money, the vast majority (i.e., the peasants) had little.  It was the peasants’ landlords who had the money.  And it was they who paid the bulk of the taxes.

But it was a two-way street.  Because it was their money, they, the wealthy landowners, had a say in how the king spent that money.  This was a restraint on the king’s power.  There were laws to protect the property rights of these landlords.  Now.  And in the future.  Property owners could pass their property on to their heirs.  As well as their political standing with the king.  Thus the rich and landed aristocracy passed on both their property and their nobility through inheritance.  Thus kings and Nobility lived by the consent of the other.  And they each lived by the consent of money.

The Roman emperors spent so much money near the end of the Roman Empire that they brought their advanced civilization to an end.  The landed aristocracy survived, though.  They just served a different sovereign.  The masses (i.e., the poor peasants) still worked the land.  The landlords still held the wealth.  Kings would come and go but this way of life (feudalism) remained.  Kings ruled as long as the landed aristocracy didn’t object too much.  Which they did in England in 1215.  The landed aristocracy met King John on the field of Runnymede.  Seeing his power was not absolute, the king reluctantly set his seal to the Magna Charter.  Constitutional monarchy would reign in England.  And England would reign supreme in the Old World.  And in the New World.

No Taxation Without Representation

The constitutional monarchy that developed consisted of the Crown and a bicameral Parliament.  The two houses of Parliament represented the needs of the few (the House of Lords) and the many (the House of Commons).  Thus the needs of the one (the sovereign), the few (the rich) and the many (the not rich) were balanced against each other.  It was a pretty good system.  The best in its time.  An English citizen had a better and more comfortable life with greater liberty than citizens of most other countries.

This liberalism unleashed a flurry of economic activity.  It created an empire.  International trade exploded.  England became a leader in farming and agriculture.  This knowhow spread throughout her empire.  As did her representative government.  Which they established in their North American colonies.  Perhaps a bit too firmly.  With the costs of world war came the need for higher taxes.  The British had just defeated the French and took possession of all their possessions in North America.  Her English subjects there were now free from French aggression.  And Parliament wanted these subjects to pick up a large part of that war tab.

Well, this didn’t go over well in the colonies.  For they had no representation in Parliament.  They had their own representative governing bodies in the colonies.  But they were subject to royal governors appointed by Parliament.  Without a vote in Parliament, they had no say in matters of taxation.  This was very un-English.  For the English nobility consented to taxation in exchange for having a say in how the king would spend those taxes.  As the landed aristocracy protested in 1215, the Americans protested this taxation without representation.  Eight war years later and America left the mother country.  Another few years later they ratified the Constitution and created the United States of America.  Which came to be because a governing body violated the sacred covenant between a king and his subjects.  A king may only rule as those who pay the kingdom’s taxes approve.

Universal Suffrage Increases Our Suffering

Because the new American government taxed property owners, property ownership was a requirement to vote.  In other words, those with the most to lose (those paying the taxes) had a say in how the government spent their taxes.  It kept the government honest.   By limiting the vote to those who had ‘skin in the game’ it made it hard for government to build palaces for themselves.  Because there was a direct connection between the source of funding and what that funding was used for.  The government may persuade the tax-paying voter for the need for a national postal system.  But a palatial palace was a much harder sell to the one footing the bill.  Especially when that person would never enjoy its benefit.

Such a system led to responsible government.  It minimized political corruption.  And if there is anything a politician doesn’t like it’s this.  They like corruption.  They thrive on it.  It’s their raison d’être.  And this responsibility thing just didn’t cut it.  They need people to vote who have no skin in the game.  People they can buy.  So they can live the good life.  Like in days of old.  Enter universal suffrage.  Where a politician can promise people other people’s money.

Wait a minute, you mean I can have a say in how other people spend their money?  Sweet.  Gimme gimme gimme.  I me mine.  Tax the rich.  Health care is an entitlement.  I mean, as long as someone else is paying, I’m for sale.  Promise me whatever I want and I will vote for you.  And forget what Benjamin Franklin warned us about: 

When the people find they can vote themselves money, that will herald the end of the republic.

Money Talks; Egalitarianism Walks

It probably started with Martin Van Buren.  Creator of the Democrat Party.  He created the party machine.  Patronage.  Payoffs.  And buying votes.  Dirty, filthy politics began with him.  And the Democrat Party.  Beginning with the campaign for Andrew Jackson, politics have gotten worse ever since.

It’s about the money now more than ever.  With the power to tax, government has a near unlimited source of money.  And with it they can get power.  By promising money to people that don’t have money.  Lots of it.  Thanks to universal suffrage, they can bus as many poor, indigent and government-depended people to the polls as possible.  And the more of them the better.  For they will vote for whoever promises to give them the most free stuff.  And why not?  They have no skin in the game.

And by voting themselves a permanent entitlement, they will make themselves a permanent underclass.  Where they will remain poor, indigent and government-depended.  As government spending continues to grow unchecked, it will push people down the economic ladder until the middle class disappears.  There will be only the rich (the government and the government-connected).  And the poor.  Just like in days of old.  Which is the goal of our tax policy.  You see, across the board tax cuts do not enhance the dependency-power relationship.  But targeted tax cuts do.  That’s why Big Government favors a complicated tax code.  It enhances the dependency-power relationship.  That empowers Big Government.  Throws egalitarianism out the window.  And makes life good for the ruling elite.

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Barack Obama Outspends George W. Bush and Ronald Reagan Combined

Posted by PITHOCRATES - October 20th, 2010

Spend Baby Spend

President Obama is the most liberal president ever to occupy the Oval Office.  Spending records have been set on his watch.  And he’s only been president for about 2 years.  This is quite the testament to his insatiable lust to spend.  The Left bitterly attacked Ronald Reagan for his $200 billion deficits.  Compared to Obama, though, that’s chump change.  He measures his deficits in a different kind of dollars.  He prefers trillions.  For billions are just too small.  See the sobering numbers in the Political Hotsheet blog article National Debt Up $3 Trillion on Obama’s Watch by Mark Knoller on www.cbsnews.com.

New numbers posted today on the Treasury Department website show the National Debt has increased by more than $3 trillion since President Obama took office.

If you divide this by the 2 years in office, that comes to about a $1.5 trillion deficit each year.  Or, to compare with Regan’s $200, billion, that would be $1,500 billion.  That about 8 times the deficit spending of Ronald Reagan.  All you hear from the Left about the Reagan deficits was that they were bankrupting the country.  Now that they are doing the spending, it’s spend baby spend.

Read My Lips – It’s George W. Bush’s Fault

And the numbers just keep getting bigger.

The Debt increased $4.9 trillion during President Bush’s two terms. The Administration has projected the National Debt will soar in Mr. Obama’s fourth year in office to nearly $16.5-trillion in 2012. That’s more than 100 percent of the value of the nation’s economy and $5.9-trillion above what it was his first day on the job.

Dividing Bush’s $4.9 trillion by his 8 years in office comes to about an annual $800 billion deficit.  Dividing Obama’s $16.5 trillion by the 4 years in his term ending in 2012, that comes to about an annual $4,125 billion deficit.  Holy crap!  That’s 5 times the Bush deficit.  And 20 times the Reagan deficit!  If Reagan was reckless and irresponsible with his spending, than so must be Obama.  All the bad the Left said about Reagan, then, must apply to Obama.  For his spending is 20 times worse.  Either that or the Left was wrong about Reagan.  Or lying.

Mr. Obama frequently lays blame for soaring federal deficits on his predecessor.

“By the time I got into office we already had a $1.3 trillion deficit and we had exploded the national debt,” he said last month during one of his backyard chats with Americans.

The blame George W. Bush argument doesn’t work here.  You’d have to be pretty blind, stupid or in denial if you can’t see that Obama will add another $3 trillion (or $3,000 billion) to what he ‘inherited’ from George W. Bush.  Such comments are either insincere.  Or deceitful.

Here Comes the Middle Class Tax Hike

And once again, the Left opposes those ‘unfunded’ tax cuts.  Yes, they look at a tax cut as a government benefit.  As if it wasn’t even our money in the first place.  But it’s our money.  And letting us keep our money is not a benefit.  So they don’t have to fund them.  But that’s the way the Left looks at it.  If they don’t take our money, the deficit will grow.  It’s never their out of control spending that grows the deficit.

The soaring deficit and Debt is one of the reasons Mr. Obama is adamantly opposed to extending tax cuts for Americans earning over $250,000 a year.

The ten year cost would total $700-billion and Mr. Obama says it would needlessly add to the deficit and Debt.

The ten year cost comes to $70 billion per year.  Or approximately 1.7% of his projected deficit.  This isn’t even chump change.  This is statistically insignificant.  Now, Obama denies being a socialist.  Says he believes in free-market capitalism.  But all of these numbers say otherwise.  A free-market capitalist knows that tax cuts stimulate the economy.  A free-market capitalist is against massive government spending.  Therefore, Barack Obama is not a free-market capitalist.  He’ll spend trillions on stimulus spending that doesn’t stimulate anything in our economy.  But he won’t approve tax cuts that have always stimulated economies whenever we’ve tried them.

President Obama and Congress await recommendations on ways to reduce federal deficits from the National Commission on Fiscal Responsibility and Reform.

The 18-member panel will report December 1st – after the midterm election.

And here comes the tax hikes.  The ‘bipartisan’ committee will report that there is no choice but to increase taxes.  This bombshell (Obama reneging on his no new taxes for anyone earning less than $250,000) won’t affect the midterm election result.  And they are no doubt hoping that 2 years will be enough time for the American people to forget this broken promise before Obama runs for reelection.  But I doubt anyone will forget in 2012 who gave us the 2nd Great Depression.  And that is exactly what he’s giving us with this out of control spending and massive tax hikes (coming sometime after November 2010).

There will be a middle class tax hike.  The rich just aren’t rich enough to pay for all of their spending.

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FUNDAMENTAL TRUTH #36: “Politicians oppose across the board tax cuts because they are not politically expedient.” -Old Pithy

Posted by PITHOCRATES - October 19th, 2010

Pay Raise or Christmas Bonus – Which is Better?

If times are tough and the boss has to cut costs, which would you rather see cut?  The annual pay raise?  Or the Christmas bonus?  You, the employee, should pick to cut the Christmas bonus.  You, the employer, should pick to cut the pay raise.  The reason is the same for both.  A bonus is a onetime thing.  A pay raise is forever.

If you chose a Christmas bonus this year over a pay raise there is a very good chance you will take a pay cut the following year.  For if you got a $1,000 bonus this year but get nothing the following year, your annual earnings next year will be $1,000 less than they were this year.  However, if you chose the pay raise over the Christmas bonus this year and you get neither a pay raise nor a bonus the following year, you’ll at least make the same amount next year as you did this year.  Because that pay raise is still there.

The allure of a big check, though, is tough to beat.  Getting a 4-figure bonus check for the holidays may make the difference between a truly merry holiday and a not so merry holiday.  That’s why some people have more income tax withheld from their paychecks.  They want to get a big, sexy check after the holidays to help pay off their holiday debt.  Another $20 or $30 in a weekly paycheck just isn’t as sexy.  But it’ll do a whole lot more for you.  Perhaps even being just enough additional income to get you approved for that mortgage.

The Mortgage Interest Deduction

Big Government likes to spend money.  Their money.  When it comes to spending, they operate under the premise that it’s all their money.  Your net pay is only the portion of their money that they let you keep.  For you to spend as it pleases them. 

Affordable housing is important on both sides of the aisle.  The Left likes it primarily for putting people into houses who can’t afford to buy houses.  This makes for grateful voters at election time.  The Right likes it primarily for the economic dividend.  New housing drives a host of other economic activity to furnish those new houses.

Now Big Government is not very generous with their money.  Hence their pervasive taxes.  They don’t want to lower taxes too much.  If they did, we would be able to keep more of their money.  And they just won’t have that.  But on the other hand, they want us to buy houses.  So they came up with the mortgage interest deduction (MID).  If we buy what they want us to buy, they’ll let us keep a little more of their money via this income tax deduction.  Their little way of saying thank you for going into debt up to our eyeballs.  Of course, if they would just cut our taxes we could probably buy those houses without the MID.  But we must remember whose money it is.  It’s not about us enjoying our life as much as we can.  It’s about them giving us as little of their money as possible.

What Have You Done for Me Lately?

They give us (for the time being, at least) the mortgage interest deduction because they get something for it.  Housing sales.  Which gives the Left more grateful voters.  And the Right a more bustling economy.  In other words, Big Government received a sufficient payment on this gift of money they gave us.  This to them is a sensible tax cut.  It’s not general.  It’s not across the board.  It’s specific and targeted to the people they want something from.

This is how they measure the value of any projected tax cut.  They ask themselves how will this tax cut benefit us, Big Government.  And if that benefit is sufficient, that they will gain real value for it, then they grant us this sensible tax cut.  It’s basic accounting fundamentals, matching the costs to the benefits. Which is why they really eschew across the board tax cuts.  With those there’s no matching of costs to benefits.  Sure, everyone may win, but that ‘everyone’ doesn’t include them the way they see it.

They’ll provide a tax credit to buy a ‘green’ car because they can match the cost to the benefit.  They get campaign contributions (and votes) from the Left for promoting ‘green’ technology.  And they get kickbacks from ‘green’ industries the more green technology is used.  They can match the costs of these ‘green’ tax credits to the benefits they receive in exchange.  These tax credits make sense to them.  Across the board tax cuts, on the other hand, don’t.  It’s a lot of money thrown away without anything specific to show for it.  Sure the economy may be better off, but what demographic did it buy?  What specific graft can they count on?  Big Government operates on props.  And if they don’t feel the love (and the money), you better watch your back.

A Crisis is a Terrible Thing to Waste

Pay raises and Christmas bonuses.  Targeted tax cuts and across the board tax cuts.  They have something in common.   Two of them benefit us in the short term (bonuses and targeted tax cuts).  Two of them benefit us in the long term (raises and across the board tax cuts).  Tax credits and the MID are nice, but you have to spend a lot of money to get them.  And they’re short lived.  A pay raise and an across the board tax cut, though, gives you more money to spend with every paycheck.  And the more money you have, the less you have to borrow.  The less interest you will pay on your credit cards.  And the smaller your mortgage will be (and the less interest you will pay on that mortgage).

But, of course, letting us keep more of our money doesn’t help them.  Big Government.  It won’t help reelect them.  And it won’t help them get rich.  (And who hasn’t left Washington rich?)  And that’s what it’s all about.  At least, based on history.    And so what if they crash our economy in the process?  A bad economy is good for them.  A bad economy calls for stimulus spending.  It calls for reform.  It calls for Big Government to step in and do something.  Anything.  Because the people are desperate.  And a crisis is a terrible thing to waste.

And the people will willingly suffer for a couple of years.  They’ll make their sacrifices.  Suffer unemployment.  To help build a better tomorrow.  But when that tomorrow never comes, they will grow impatient.  They’ll stop giving them their props.  They will stop loving them.  Believing in them.  Which may back Big Government into a corner.  Where they will either move to the center and govern according to the will of the people.  Or rule by executive order against the will of the people.  Should they choose the former, we better all watch our backs.

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The Rules of Supply and Demand Apply to Gasoline, Too

Posted by PITHOCRATES - October 18th, 2010

What’s the Difference Between Underwear and Gasoline?

Go through your wife’s or girlfriend’s underwear drawer.  What do you see?  What kind of underwear does she have?  Silk?  Nylon?  Satin?  Cotton?  Chances are you’re not going to see only one type.  There’ll be a little variety.  If you don’t see her get dressed, can you tell what she’s wearing?  Probably not.  The underwear she’s wearing will have no impact on her life.  Whatever she does on any given day will probably be the same regardless of her choice of underwear on that day.

All right, now think about what kind of fuel she puts into her car.  What are her choices?  At best, maybe two.  Far fewer than her underwear choices.  Chances are that she’ll be running her car on gasoline.  If it’s a late model car and she’s a hardcore environmentalist she may be using E85 (an alcohol-based fuel made from food).  However, if she finds herself having to refuel in a bad part of town late at night she’ll probably be switching back to gasoline pretty darn quick.  You see, you just can’t drive as far on a tank of E85 as you can on gasoline.  For when it comes to fuel, gasoline is king.  It packs a lot of energy per gallon.  It’ll let most people refuel on the weekend at that safe gas station close to home.

So what’s the difference between underwear and gasoline?  Choice.  If the price of gasoline goes up, we have but two choices.  Pay more.  Or drive less.  If the price of cotton goes up, we can pay more or wear less cotton.  And when there’s other fabric available (silk, nylon, satin, etc.), wearing less cotton is a whole lot easier.  And that choice will never put anyone in danger.  Like stopping to refuel in a bad part of town late at night.

Market Forces Driving Market Prices

Well, cotton prices are going up (see Flashback to 1870 as Cotton Hits Peak in the Wall Street Journal on line by Adam Cancryn and Carolyn Cui).  Floods in Pakistan and heavy rains in China have significantly reduced the supply of cotton.  And when supply goes down, what happens to prices?  They go up.  How much?

The sudden surge in prices—cotton has risen as much as 56% in three months—has alarmed manufacturers and retailers, who worry they may be forced to pass on higher costs to recession-weary consumers.

Ouch.  56%.  Even gasoline doesn’t go up that much in three months.  But will we, the consumers, absorb that increase? 

For the apparel industry, rising prices have upended roughly two decades of cheap cotton. Consumers have become used to relatively low prices, making it hard for garment producers to pass on the rising costs, especially as the economy struggles to recover.

Probably not.  Why?  Because we have fabric choices.  Wearing something other than cotton is no big deal.  It’s easy to do.  And life will go on just as it did when we were wearing cotton.  We won’t notice the difference.  Which is why it’s hard to pass these price increases on to us.  It’s not the same with gasoline.  With gasoline, we don’t have other choices.  Maybe E85.  But we’ll have to buy more of that to drive just as far so we might as well pay the higher gasoline prices.  At least our wife/girlfriend won’t have to stop to refuel in questionable parts of town.  But cotton isn’t gasoline.  People will buy other fabrics if cotton prices go up.  So manufacturers will look at ways to keep from passing on these costs

The most at risk are discount retailers that compete on price and sell large quantities of cotton-based basic items, such as T-shirts. But clothing manufacturers of all price levels may be forced to decide between absorbing the costs or passing them on. Some say they also are exploring different materials, including synthetic blends.

Because consumers have clothing choices, clothing manufacturers will switch to less expensive fabrics to offer what the consumer will choose.  Gasoline producers can’t do this.  There’s only gasoline.  Sure, there’s E85.  But E85 is not gasoline.  When you choose E85, you get less.  It’s not the same with fabric.  There may be a difference in the feel of cotton and a synthetic blend, but you’re not going to incur additional costs with a synthetic blend (i.e., you won’t have to buy more of the synthetic blend clothing for the same amount of ‘wear-time’ of the cotton).  So the consumer won’t just whistle a happy tune and pay these higher prices.   

Compounding this problem of supply pressure on prices is the demand pressure.

Meanwhile, demand from Chinese cotton mills has shown no signs of slowing. The U.S. Department of Agriculture said China bought 267,700 running bales of U.S. upland cotton last week, more than half of the total bales exported and more than the country usually takes.

The clothing manufacturers may be suffering, but, surely, the cotton farmers must be loving this.  Just like Big Oil must love those high oil prices, right?  Sure.  As long as someone is buying at these prices. 

However, the lofty prices are making some cotton farmers worry.

“I hope it won’t go too high. If you can’t put it into clothes and clothes become too expensive, prices will come down,” Mr. Wilkins said.

And that’s the problem.  As prices go up, we buy less.  When we have choices, we just won’t pay high prices.  And in free-market capitalism, there are always choices.

Drill Baby Drill – If You Want Affordable Gasoline

There are no other fuels to compete with gasoline like there is with fabrics.  But we still have a choice.  We just drive less.  That’s a choice.  Before the great recession resulting from the subprime mortgage crisis of 2008, gasoline had peaked around $4/gallon.  It doesn’t cost that much now.  Prices came down because a lot of people bought less $4/gallon gasoline than they did $2.75/gallon gasoline.  But that price will go up again.  Not because of Big Oil’s price fixing (if they could fix prices gasoline would not have come down from those $4/gallon prices).  But for the same reason cotton prices are going up.  Exploding demand in China. 

Until there is a viable alternative to gasoline, gasoline prices will always be more volatile than clothing prices.  But the laws of supply and demand will have similar affects on each.  A reduction in supply (a poor cotton harvest or a lack of new oil drilling) will raise prices.  An increase in demand (hungry Chinese cotton mills or a growing Chinese middle class buying and driving cars) will increase prices.  Both of these together will really increase prices.  It’s not Big Oil.  It’s not Big Cotton.  It’s simple economics.

How do you make these prices go down?  Well, with little control over the Chinese economy, our only choice is to increase supply.  And when it comes to gasoline, that means we need to drill more.  The more oil we pull from the ground the more we can refine.  It’s just simple economics.

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The Anatomy of a Subprime Mortgage Crisis

Posted by PITHOCRATES - October 17th, 2010

Old Time Politics – Buying Votes

There’s a lot of lying going on about the subprime mortgage crisis.  How it happened.  Who was responsible for it.  Was it the banks and their predatory lending?  That’s who Barney Frank blames.  Well, them and Republicans.  Or was it some more of that irrational exuberance that led to a real estate bubble?  It created a dot-com bubble in the 1990s.  Which in turn caused a recession.  Was it just a little history repeating itself?  Perhaps they both played a part.  But if they did, they were minor supporting roles.  They weren’t the star of the crisis.  For neither could have done anything had it not been for their enabler.

The Boston Globe’s Donovan Slack writes about one of the enablers backpedaling on his previous rosy statements about the two companies at ground zero of the crisis (see Stance on Fannie and Freddie dogs Frank on boston.com).  Fannie Mae.  And Freddie Mac.  Frank is running for reelection.  And his words are coming back to haunt him.

America is a center-right nation.  To counter that, the Left courts a coalition of special interests and single-issue voters.  Federal workers, teachers, unions, gays & lesbians, pro-choice feminists, environmentalists, socialists, minorities, etc.  Each taken by themselves is a very small percentage of the voting population.  But taken together it’s a sizeable percentage.  Then add in one more very important Democrat constituency.  The poor.  Now with all of these firmly in the Democrat’s camp, it’s just a matter of getting enough of the moderate and independent vote to win an election.  Of course, this is a moot point if they DON’T lock in the Democrat base.  And they do this by giving away as much free stuff and favorable legislation as possible. 

Give Me Your Tired, Your Poor, Your Huddled Masses Yearning for a House They Can’t Afford

The key to locking in the base is, of course, the poor.  There are a lot of them.  So the Left courts them.  Engages in class warfare.  They paint the Republicans as rich fat-cats who want to take their welfare, social security, food stamps, etc., away from them.  That they want to keep them in slums or throw them onto the street.  In contrast, they, the Democrats, want to provide for them.  To help them.  And they give them a lot of things.  To earn their gratitude.  And their votes at the election booth.  And the grandest of all the things given to them?  Affordable housing.

Poor people don’t have a lot of money.  That’s pretty straight forward but it needs to be said.  Because people who don’t have a lot of money can’t afford to buy a house.  Again, that’s pretty straight forward.  But it needs to be said.  Now, when these people apply for a mortgage and get denied, why do you think they got denied?  Here’s a hint.  Re-read this paragraph.  They get denied because they don’t have a lot of money.  You see, if you don’t have a lot of money, you can’t buy expensive things.  Again, straight forward.  But it needs to be said.  Again.  And often.

Now, what do you think a politician thinks the reason was for these poor people getting their mortgage applications denied?  Red-lining.  Racism.  Classism.  Unfairism.  (Yeah, that isn’t a word.  But it works.)  A large percentage of those denied mortgages are from the inner city poor.  And because of previous white-flight, that inner-city poor also happens to be primarily minority.  Hence the charges of racism.  And that’s just gold to a political party who needs poor minorities to vote for them.

The Siren Song of Affordable Housing

Now Barney Frank is running for reelection.  His Republican challenger is using Frank’s own words in his campaign.   And they’re causing some damage.  For Frank sat on the House’s Financial Services Committee (the oversight committee for Fannie Mae and Freddie Mac) throughout the time the crisis built.  And now he’s answering some very uncomfortable questions (this and all quotes are from Stance on Fannie and Freddie dogs Frank).

Frank, in his most detailed explanation to date about his actions, said in an interview he missed the warning signs because he was wearing ideological blinders. He said he had worried that Republican lawmakers and the Bush administration were going after Fannie and Freddie for their own ideological reasons and would curtail the lenders’ mission of providing affordable housing.

Ideology trumped responsibility.  The Left cries foul when the Right doesn’t reach across the aisle, but the Left never reaches out when they have power.  It’s us against them.  Pure partisanship.  Even when there’s great danger brewing.  It’s their interests first.  Then the country’s.  So he protected Freddie and Fannie.  And enabled them to cause greater harm.

Freddie and Fannie are in the secondary mortgage market.  They don’t write mortgages.  They guarantee them (so banks are more willing to take risks with less credit-worthy people).  And they buy these risky mortgages from the banks.  This further reduces a bank’s risk in approving very risky loans to people who are not credit-worthy.  Which is what the Democrats want.  More affordable housing for people who can’t afford to buy houses.  Frank’s committee sets the rules Freddie and Fannie must follow to keep them from approving mortgages that are crazy-stupid.  But that’s exactly what they encouraged.  Subprime loans.  Adjustable Rate Mortgages (ARMs).  Interest only mortgages.  No documentation approvals.  Any bank that didn’t have enough of these mortgages on their books (i.e., risky loans to poor people who couldn’t afford to buy houses) was in trouble.  The federal government would investigate them for red-lining, racism, classism, etc.

The more mortgages Freddie and Fannie bought, the more cash banks had to make more risky loans.  They then dumped these risky loans onto Wall Street.  You see, before the day of subprime loans, ARMs, interest only mortgages and no documentation approvals, mortgages were very safe loans.  But these subprime loans weren’t.  But they looked safe when Wall Street sold them.  I mean, buyers didn’t see the mortgage applications.  They had no idea what a credit risk these people were.  They just knew mortgages were traditionally safe investments.  So they just bought them.  And Freddie and Fannie made it all possible.

Known as government-sponsored enterprises, they didn’t provide mortgages themselves, but rather bought loans from banks and mortgage brokers, freeing up cash so the lenders could make more loans. Fannie and Freddie held or bundled the loans and sold them to investors as mortgage-backed securities.

Investors bought these very ‘profitable’ securities.  This demand just fueled the crisis in waiting.  Because Freddie and Fannie could dump these on Wall Street, they wrote more and more risky loans.  This made everyone happy.  Everyone was making money.  And more people who couldn’t afford to buy houses were buying houses.  And this was, after all, Freddie and Fannie’s mission.  Affordable housing.

In an effort to increase homeownership, the Clinton administration in the late 1990s and the Bush administration in the 2000s pushed Fannie and Freddie to meet growing quotas for buying affordable home loans. Those pushes, combined with a drive for more profits at the enterprises, drove Fannie and Freddie to take on more risk and more debt. They backed subprime and other risky loans, including mortgages for borrowers without proof of steady income.

Even the Republicans got on the band wagon.  New homes sales drive the economy (because of the stuff people have to buy to put into those houses that they can’t afford).  And you make points with the poor and the minorities.  There was just no down side in affordable housing.  Or was there?

But the director of the federal office responsible for overseeing Fannie and Freddie, Armando Falcon, began noticing their expanding portfolios and increasing reliance on risky investments. In early 2003, Falcon warned Congress in a 118-page report of the companies’ potential for a catastrophic failure that could jeopardize the economy.

Okay.  Five years before the crash someone was taking notice.  And he warned Congress.  Thank god someone was looking out for America’s best interests.

But Frank and other Democrats still opposed tighter regulation, Frank most notably in his public statements saying there was nothing wrong with Fannie and Freddie. He and other House Democrats also sent a letter to President George W. Bush in June 2004, saying the proposed crackdown could “weaken affordable housing performance . . . by emphasizing only safety and soundness.’’

Frank and the Democrats were saying that it was more important to put people who couldn’t afford houses into houses than it was to provide oversight.

So he initially supported a Republican measure in 2005 that would have imposed stricter standards on the lenders. But he voted against it in the full chamber because it did not include funding for affordable housing, he said. The bill passed the House.

Frank came around.  He supported a Republican measure to provide stricter oversight.  But he changed his mind.  Once again, affordable housing was more important than the oversight he was supposed to provide.  Then, in the summer of 2008, Treasury Secretary Henry Paulson warned Frank again.  Now Frank chaired the House’s Financial Services Committee.  Now, more than ever, it was his responsibility to reign in Freddie and Fannie.  To provide the oversight that was his committee’s responsibility.  But he still didn’t.  Like Nero, he fiddled as the crisis burned out of control.

In July 2008, then-Treasury Secretary Henry Paulson called Frank and told him the government would need to spend “billions of taxpayer dollars to backstop the institutions from catastrophic failure,’’ according to Paulson’s recent book. Frank, despite that conversation, appeared on national television two days later and said the companies were “fundamentally sound, not in danger of going under.’’

A few months later, Freddie and Fannie would cause the worst recession since the Great Depression.  On Frank’s watch.  And he kept denying that there was any problem until the very end.

Lots of Blame to Go Around – On the Left Side of the Aisle

Barney Frank is not the sole cause of the subprime mortgage crisis.  He was just one of the leading players.  Ultimately, it was an ideology.  Affordable housing.  Putting people into houses who couldn’t afford to buy houses.  This is what caused the worst recession since the Great Depression.  And, yes, the Bush administration did partake in the affordable housing mania.  But if you want to assign real responsibility, ask yourself this question.  Which party do you think of when it comes to affordable housing for the poor and minorities?

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The Left Is Doing What They Do Best – Bankrupting the Nation

Posted by PITHOCRATES - October 16th, 2010

Ronald Reagan Knew How to End a Recession

The Left hates Ronald Reagan.  Perhaps hate is too weak of a word.  If the Left wasn’t so ‘separation of church and state’, a stronger and more accurate description of their sentiment would be to call Reagan their Antichrist.  In the last century or so, Reagan had to be Democrat enemy #1.  For he stood against what they hold most dear.  Big Government.  And big spending.

Reagan dared to say the unspeakable.  Government isn’t the answer; government is the problem.  The Left could not believe their ears.  This was heresy.  They must destroy this man.  They did everything within their power then.  And they continue to do so today.

Their favorite tactic is to lie.  Sure, the 1980s were prosperous, but at what cost?  An exploding deficit?  A mounting national debt?  That’s what they say.  They said his reckless defense spending and tax cuts impoverished our future generations.  But they left out one inconvenient truth.  Cuts in the tax rates INCREASED tax receipts.  And the Democrat controlled congress exploded non-defense spending.  (Okay, two inconvenient truths.)  The Republican in the White House brought more money into Washington with his fiscal policies.  But the Democrats in the House just spent more.  The deficit in Reagan’s last year?  About $150 billion.  And it was the apocalypse if you listened to the Democrats.

Jimmy Carter Knew How to Prolong a Recession

Well, that was then.  What about now?  Associated Press Writers Martin Crutsinger and Andrew Taylor note that the government reports the deficit for the just completed fiscal year at a staggering $1.3 trillion (see Government reports $1.3 trillion budget deficit on Yahoo! News).  That’s about a 750% increase from the apocalyptical Reagan deficit.  And what do the Democrats say?  It’s really not that bad.

Apparently, deficits are okay if Democrats are doing the spending.  A few bailouts/stimulus later, they’re still spending.  Why, it’s as if they have completely forgotten how they once excoriated Reagan for his measly little deficit of $150 billion.  Funny.  Their selective memory.  Crutsinger and Taylor note:

Outside of the bailout, the federal budget went up by 9 percent in the 2010 budget year to $3.5 trillion, the Congressional Budget Office reported last week. Food stamp payments rose 27 percent as record numbers of people took advantage of the programs, while unemployment benefits rose 34 percent as Congress extended benefits for the long-term jobless.

Even after all the ‘one-time’ expenditures to fix the worst recession since the Great Depression, they still increased the regular federal budget by 9%.  And if you count huge increases in food stamps and unemployment benefits as positive economic indicators, then their ‘fix’ fixed the worst recession since the Great Depression.  So then that money was money well spent.  So what if it will run up the national debt to record levels?

Leading officials with the National Association for Business Economics forecast this week that the 2011 deficit will total $1.2 trillion, only slightly better than the administration’s estimate. They cited excessive federal debt as their single greatest concern, even more so than high unemployment.

Oh, that’s what.  Servicing that debt could kill business.  Higher taxes.  Or, worse, monetization (i.e., printing money).  Either way the cost of business goes up.  Which means they can hire fewer people.  Which means more will be on unemployment.  Or collecting food stamps.  Humph.  This economic stuff is trickier than it seems.  So we’ll have to reduce that debt.  Simple.  We just cut spending.  Or raise taxes.  Well, we know what affect higher taxes will have on business (more people will be on unemployment and collecting food stamps).  So the answer seems clear.  We cut spending.

The recommendations of the commission need the backing of 14 of its 18 members to trigger a congressional vote. Building that level of consensus will be difficult. Republicans are strongly opposed to a plan that includes tax increases to chip away at the deficit. Democrats are less inclined to move a package that relies solely on spending cuts.

Well, maybe not so clear.  But we could keep the taxes at their current rates.  Extend the Bush tax cuts.  It may not help a lot, but it sure will prevent a lot of harm by avoiding a massive tax rate hike.  Surely we can agree to this.  Put aside partisan politics.  For the good of the people.  But no.  The Republicans want to extend them all.  The Democrats want to extend them only for those earning less than $250,000.  This will hurt small business, the largest job creator in America.  Yeah, $250,000 sounds like a lot, but it’s not when you’re running a business.  An increase in their tax rate may require that they lay off someone to afford those new taxes.  And it will be unlikely that they would be able to hire anyone anytime soon.  How can this NOT be clear?

The difference between the two parties amounts to $700 billion that would be added to projected deficits over the next decade if the tax cuts for the wealthy were extended along with the other tax cuts.

Oh, boy, here we go again.  Zero-sum Keynesian economics.  Economic activity is finite.  If businesses can keep more then the government must get less.  Right?  WRONG!  Lower taxes stimulate.  Entrepreneurs create wealth.  And jobs.  When Reagan cut the tax rates the amount of money the IRS collected almost doubled.   You’d think that if the Democrats were just spend-happy they’d put party politics aside.  But no.  The thought that government isn’t needed to make business hum is anathema to them.  They’d rather see the economy go into depression than admit that.  So, if they get their way, what’s likely to happen?

“If we get to 2013 and policymakers don’t look like they have a credible plan to deal with the deficit, then interest rates are likely to rise significantly and that will jeopardize the recovery we have under way at that time,” said Mark Zandi, chief economist at Moody’s Analytics.

High inflation and recession?  Egad, it’ll be like Jimmy Carter is back in office.  Stagflation.  Misery.  As bad as that may seem, and, trust me, that’s really bad (as anyone who lived during the Carter years can attest to), it’s worse.  As of now, there’s no Ronald Reagan out there to fix another Carter malaise. 

Woe is us.

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Liberals are more Concerned with Poop, Pee and Booze than Jobs

Posted by PITHOCRATES - October 15th, 2010

Liberals Legislating How We Go to the Potty

President Obama talked about using a laser-like focus on creating jobs.  A year or so later, the economy is worse.  No surprise here.  It’s just not their forte.  Creating jobs.  The Left likes telling us how to live our lives.  Not getting out of the way and allowing business to do what they do best.  Create jobs.  No.  They’re more interested in other things.  In particular, what we do in the toilet.

When you talk about liberal cities, you can’t get more liberal than New York.  And they have spoken.  They have passed a new law that will police you in the toilet.  Apparently, giving us low-flow toilets wasn’t enough.  (And how did that work?  A single flush of a low-flow toilet just didn’t take care of business, if you know what I mean.)  We’re still wasting too much water when we tinkle.  With the new law, new toilets shall be dual-flush (see ‘Dual flush’ toilets among conservation proposals OK’d by Council by Peter N. Spencer on www.silive.com).  And god help you if you choose #2 to flush #1.  But it doesn’t end there.

The package of water conservation bills also requires water fountains have separate spouts for drinking and for filling water containers; commercial buildings install alarms and sub-meters to detect water leaks; and limits the use of “once-through” cooling systems, such as those used to cool ice-making machines, walk-in coolers and older medical x-ray and laser equipment.

Taxes and regulations are out of control in New York.  It’s exploding the cost of living in the city.  And the cost of business.  The city is on the brink of bankruptcy.  There is an exodus of rich people.  And other rich people take one look and say, “no thanks.”  Don’t believe me?  Ask LeBron James (who chose Miami over New York when he left the Cleveland Cavaliers).

Nancy Pelosi Gets her Marie Antoinette On

Meanwhile, liberals in high positions continue to tell us to do as they say and not as they do.  During the worst recession since the Great Depression, scores of people are out of a job.  Cutting back costs to the bare essentials.  While still paying their taxes.  Because if they don’t, they will go to jail.  And Nancy Pelosi couldn’t have that.  Because she wants your money.

In the height of hypocrisy, Pelosi is living like royalty.  Private military jets at her beckon call.  For her and her family.  And some of her friends.  And a kick-ass open bar.  Mark Tapscott (Editorial Page Editor) writes on www.washingtonexaminer.com (see New documents uncovered by Judicial Watch show Pelosi took 85 trips on military aircraft):

“For example, purchases for one Pelosi-led congressional delegation traveling from Washington, DC, through Tel Aviv, Israel to Baghdad, Iraq May 15-20, 2008 included: Johnny Walker Red scotch, Grey Goose vodka, E&J brandy, Bailey’s Irish Crème, Maker’s Mark whiskey, Courvoisier cognac, Bacardi Light rum, Jim Beam whiskey, Beefeater gin, Dewar’s scotch, Bombay Sapphire gin, Jack Daniels whiskey, Corona beer and several bottles of wine.”

You could almost hear her say referring to the unemployed and hungry, “Let them eat cake.”  (Shortly before her execution during the French Revolution, Queen Marie Antoinette allegedly said that the hungry could eat the scrapings & crumbs (i.e., cake) from the ovens.)

Jobs?  Don’t hold your breath.  But if you gotta pee, you best be sure which flush you chose.  Because if you flush a #1 with a #2 flush, they may just be coming after you.  For they care about the environment.  Not enough to cut down on their carbon footprint while they fly their private military jets across the globe.  But enough to take time in their busy day to take a closer look at what you do when you unzip your pants or lift up your skirt.  And the next time you do, remember, Big Government is watching you.

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LESSONS LEARNED #35: “Not only is ignorance bliss, but it’s a godsend to Big Government.” -Old Pithy

Posted by PITHOCRATES - October 14th, 2010

If Jefferson Could Talk from the Grave He’d Be Hoarse from Shouting by Now

Politicians.  They’re all the same.  Well, most of them.  They enter politics for one thing.  For a career.  And what do people want from a career?  Great success.  Great prestige.  Great wealth.  Great power.  And a little revenge.  The pencil-neck, computer-nerd geek takes great pleasure in seeing a jock from his high school days emptying his trash while boarding his private jet. “Those wedgies and swirlies were a bitch but look at us now.”  It’s true.  The best revenge is living well.

But some people lack any talent or ability.  Some of them will never amount to anything.  They’ll never know the joy of looking down on people better than them with sweet condescension.  So these people go into politics.  Where people with no talent or ability can live well.  It’s a simple formula.  Sell your soul.  Whore yourself out.  Shake down businesses with taxation and regulation (and get even with all those people who have far more talent and ability than you ever had).  Collect tribute.  Consolidate power.  Hold those you serve in contempt.

Lord Acton wrote in 1887, “Power tends to corrupt, and absolute power corrupts absolutely.”  A century earlier, Thomas Jefferson fought tirelessly to prevent great money and federal power from conjoining.  The Old World capitals consolidated money and power.  And this concentrated the money and power into fewer and fewer hands.  Kings ruled by whim.  And oppressed their hapless subjects.  It’s a story as old as time.  And is still true today.  To the great chagrin of Jefferson.

Go West, Young Man

The transcontinental railroad was making poor progress during the Civil War.  Because it was starved for capital.  No one would invest.  Few doubted that they could build it.  Even if they could, few doubted it would ever make money.  The West was mostly raw, unsettled land.  There was nothing to transport.  Nothing to earn revenue.  It was a huge investment with a huge risk.  Investors are smart when it comes to money.  And they saw the transcontinental railroad as a one-way road that their money would go down and never return.  They needed something.  Big Government.

When it comes to throwing money away on a losing investment there is but one place to go.  Uncle Sam.  With the power to tax, the federal government has huge piles of money to play with.  So here’s what happened to build that railroad.  Union Pacific (UP) created a shell company called Crédit Mobilier (CM) to finance and build the railroad.  These companies were one and the same.  Without getting too complicated, UP sold their ‘worthless’ stock to CM at par.  Now, CM being a finance and construction company, a train never had to run over the road they were building to make a profit.  Union Pacific, on the other hand, needed trains running on that new track.  They were a transportation company.  They earned a profit from transporting goods on their trains.  This meant it could take years before UP could even hope to earn a profit on the new transcontinental railroad.  CM, on the other hand, could start earning a profit with the first invoice they submitted for construction.  And they did.

CM had strong revenues.  They submitted grossly inflated construction invoices to UP.  UP added a small construction management fee and submitted them to the government.  The government paid UP.  UP paid CM.  With revenues far exceeding their costs, CM made obscene profits.  CM stock took off into the stratosphere.  Some of which was sold to Congressmen at a deep discount who in turn realized obscene capital gains if they sold their stock.  Or collected obscene dividends if they held onto their stock.  In return for this sweetheart deal, they approved all cost overruns.  Killed any legislation unfavorable to UP/CM.  Provided lucrative incentives to build track on the worst ground in the most indirect path (to maximize the railroad’s mineral rights).  Provided little to no oversight on the construction of the road (some track was built on ice, with cheap steel and flimsy wooden trestles wherever possible).  When east met west the different railroads kept on building, parallel to each other to keep billing Uncle Sam.  All paid by the public treasury.  By the taxpayer.  The little guy.  Being raped and pillaged by their own representatives.

Affordable Housing for Those Who Vote Democrat

Politicians buy votes.  Pad the federal payroll.  Steal from the treasury.  Break the law.  Violate our trust.  You know, politician stuff.  Because of the inconvenience of elections, they can’t be too blatant about their rape and pillage.  So they do things that are in the best interest of the public.  Or so they say.  Like affordable housing.  You see, the Left buys the votes of the poor and minorities by throwing bones to them.  And there are a lot of minorities in the inner cities of the bluest of blue cities.  So they threw big bones to them.  Houses.

Despite their War on Poverty, the Left just can’t help these people.  The truth is, of course, that they don’t want to help them.  If they’re poor and dependent on the government, the Left can count on their vote.  If they escape poverty and don’t need Big Government to provide for them, these people are of no use to the Left.  Ergo, they never escape poverty.

Of course, the problem of remaining in abject poverty is that you can’t qualify for a mortgage.  Banks are funny that way.  They only loan money to people who can pay them back.  So they declined a lot of mortgages to these poor inner city minorities.  Well, this was just too good for Big Government to pass up.  A large group of minorities (i.e., a large Democrat voting bloc) being denied mortgages?  Why, that’s racism.  So they drafted a lot of legislation and unleashed their justice department with extreme prejudice.  The message?  Approve these loans.  Or face the consequences (revoking a bank’s charter, a federal lawsuit, a public demonstration headed by Jesse Jackson, Charlie Rangel, et al, etc.).  So they found creative ways to approve loans.  And they got a little help from Uncle Sam.

The Subprime Mortgage Crisis is a Lot Like the Crédit Mobilier Scandal

By a little I mean a lot.  Uncle Sam screwed the mortgage bankers by making them approve extremely risky loans.  So, to help the mortgage bankers, Uncle Sam screwed the American people.  They guaranteed those highly risky mortgages, thus transferring the risk from them to us, the taxpayer.  And to further mitigate the bankers’ risks, they purchased a lot of those highly risky mortgages to remove them from the banks’ balance sheets.  It’s called the secondary mortgage market.  And the primary players are none other than Fannie Mae and Freddie Mac, ground zero of the subprime mortgage crisis.

Once upon a time, a mortgage was one of the safest investments.  People saved up to pay a 20% down payment.  With their life savings invested, people paid their mortgage payment and they paid them on time.  And if you could afford a 20% down payment, mortgage bankers had a lot of confidence that you would be able to service your mortgage.  But in the day of 5%, 3% and 0% down, a person doesn’t have a whole lot to lose.  This makes the first few years of these mortgages especially risky.  The introduction of ‘no documentation’ mortgages meant people could lie about their income (or include overtime earnings).  Add to that the Adjustable Rate Mortgage (ARM) and the interest-only mortgage and you just made these especially risky mortgages even more risky.  Sure, these will get almost anyone into a home, but they get in by the skin of their teeth.  But if they lose their overtime due to a weakened economy, if their interest rate on their ARM resets at a higher rate or a balloon payment is due on their interest-only loan, guess what?  That stream of mortgage payments could very well stop.

Now that would be a BIG problem.  Because of what Freddie and Fannie did with those mortgages they bought.  They sliced them up and built creative investment vehicles.  Derivatives.  Mortgage backed securities called collateralized debt obligations.  Wall Street repackaged all these risky mortgages into highly profitable investments.  Everybody bought them.  Pension funds.  Trust funds.  In America.  And throughout the world.  Big gains with a low risk.  Or so it would seem.  You see, they never eliminated the risk.  They only transferred it to someone else.  And once people couldn’t pay their mortgage payments anymore, the house of cards came crashing down.  We call it the subprime mortgage crisis of 2008.  It caused a worldwide recession.  And cost the American taxpayer dearly.  Even those not born yet.

Yes We Can…Screw the American Taxpayer

The subprime mortgage crisis of 2008 is a government creation.  Their quest of affordable housing to buy votes put more and more people into houses they couldn’t afford.  They created legislation akin to extortion of the banking industry.  They used the Justice Department to apply the muscle for that extortion.  They had their friends in the media and the activists for racial equality to further pressure the banking industry.  Their lack of oversight of Fannie and Freddie (thank you Barney Frank and Chris Dodd) let them make extremely risky loans.  And their policies of buying extremely risky mortgages ultimately transferred all risk to the taxpayer.  Why?  Because like all good government scandals, the seekers of favors rewarded our representatives well for their complicity with sweetheart mortgage deals, vacation junkets, fat contributions to their campaign war chests, etc.  In other words, politics as usual.  But on a grand scale.

Why do they do it?  Because they can.  They count on you being ignorant of history.  And accepting every lie they tell you.  Because they hold you in contempt.  They look down on you with sweet condescension.  These pencil-neck geeks who could never amount to anything on their own merit or ability.  But some sold souls later and they have finally gotten even with those who were better than them.  And here they are.  Still living well.  Even during the worst recession since the Great Depression.

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Even Obama Can’t Make Them Stop Hating Us

Posted by PITHOCRATES - October 13th, 2010

This just in.  They still hate us. 

President Obama has been trying hard to make the Muslim world love us.  He bowed to a Saudi king.  He downplayed the Foot Hood attack.  He downplayed the Times Square bombing attempt.  He downplayed the underwear bombing attempt.  Gave a confessed terrorist combatant a civil trial.  He abandoned Israel to the point that they’re throwing shoes at his picture in Israel.  And yet they still don’t love us.

James Gordon Meek, Daily News Washington Bureau, writes that they are still plotting against us (see Terror threat to restaurants as Al Qaeda calls for attacks on government workers in D.C. on www.nydailynews.com).  He opens with:

The terror group tied to the Ft. Hood killings and the Christmas Day undies airbomber urge wannabe American jihadis to open fire on crowded restaurants in the nation’s capital to massacre U.S. government workers.

That’s pretty bad.  And scary.  Low tech.  Simple.  A guy and a gun.  Some kid gets dumped by his girlfriend and he’s ready to put a gun in his mouth.  Or go postal.  And what better ideology to be attracted to than a militant one that subjects women?  Of course, not every kid can get a gun.  But he probably can get a car.  Or a truck.  And a lawn mower or two.  For what?

The trucks can be fashioned into “the ultimate mowing machine,” with steel blades welded to the grill to “mow down the enemies of Allah” by running down Americans on crowded sidewalks “to achieve maximum carnage” in a “martyrdom operation.”

Now this is scary.  I mean, they make video games like this.  It would be a very short training curve.

Enemies are not Meant to be Loved

Bush has been gone for almost 2 years now.  And they still hate us.  Want to kill us.  Kill innocent women and children.  Why?  Because we’re Americans.  It doesn’t get easier than that.  They hate America.  They hate Americans.  And they kill what they hate.  Whether George W. Bush is president or not.

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FUNDAMENTAL TRUTH #35: “Not only is ignorance bliss, but it’s a godsend to Big Government.” -Old Pithy

Posted by PITHOCRATES - October 12th, 2010

A Dumb Animal is a Content Animal

We had a customer once across from a slaughterhouse.  The customer is long gone.  But the slaughterhouse is still there.  I remember one cold December day.  It was close to the holidays.  A festive time.  Parked in the street were two cattle trucks.  You could see their breath puffing out through the slats.  They had no idea what was waiting for them once they left those trucks.  They just stood there.  Quiet.  And content.

I had a cat once that lived to a ripe old age.  In his old age, he suffered a stroke in his back end.  His rear legs weren’t that steady.  His feet kind of flopped around when he walked.  He spent most of his days in the basement on an old chair.  His water dish was underneath the chair.  And a litter box was only a few steps away.  We took food down to him.  But every hour or so he struggled up the steps to the food dish in my study.  He ate.  Then I picked him up and placed him on my lap for some petting.  He purred profusely.  After 10 minutes or so he squirmed to get down.  Ate some more.  Then limped back downstairs.  He was a shadow of his old nimble self.  But he was content.  To him, his life was normal.  He couldn’t dwell about what was.  Or what will be.  He just knew when his tummy was empty.  And when he craved affection.

In Gone with the Wind, when Atlanta was burning, Rhett Butler was helping Scarlet escape the city.  The fire panicked their horse, though.  It reared up and refused to move.  So Rhett covered the horse’s eyes and said something like, “You’ll like this better if you can’t see it.”  The horse calmed down.  The fire was still there all around them.  But the horse couldn’t see it.  And they made their escape with Rhett leading the blindfolded horse.

Dwelling on the Fear of the Unknown

Sure, they’re just dumb animals.  But are we really all that different?  Apart from having hands with opposable thumbs, consciousness, an advanced language, our use of tools and our farming and animal husbandry skills to provide an abundant food supply, no.  We prefer to not know unpleasant things.  Especially if there’s nothing we can do to prevent those unpleasant things from happening.  Or think too much about good things.  If there’s a chance we can spoil them.

A pitcher throwing a perfect game (27 up and 27 out) in the major leagues is rare.  It’s great when it happens.  And heart-breaking when batter 27 gets on base.  Whether by a base hit.  Or an error.  As a game moves ever closer to perfection, a deep dread and fear permeates everyone on that team.  They don’t want to be that guy that spoils the perfect game.  And they don’t talk about a perfect game lest they jinx it.  They try to act as if they don’t know what is about to happen.  To ignore the weight of the world crushing down on them.

Sometimes it’s not dwelling on the good that might not happen.  Sometimes it’s dwelling on the bad that may happen.  An infantry patrol going out behind enemy lines to snag some prisoners, for example.  It’s dangerous.  There’s a very good chance that some will not survive the patrol.  As your patrol waits for h-hour, you don’t look at your fellow soldiers and wonder who might die.  You don’t talk about it.  You just try to push it from your mind.  You go through the motions.  Machine-like.  Focus on the mission.  And your training.  And the next 5 minutes.  You try not to think too far beyond that because, well, you just don’t.  If something happens, it happens.  Thinking about it won’t make it not happen.  In fact, thinking about it may distract you a fraction of a second when the shooting starts and make it happen.

Sometimes it’s a cough that won’t go away.  Or a lump that wasn’t there before.  You get a sickening feeling when you think about what it may be.  So you try not to think about it.  You ignore it.  You get used to it.  Acclimate to it.  You don’t dwell on it.  Because the reality of it can be so unpleasant.  But resorting to pure animal ignorant bliss may very well kill you.  Sometimes we have to think about the unpleasant.  To dwell about what might be.  For if we do early enough, things don’t have to be as bad as they could be.

Have Food Will Bow

Life was pretty harsh until the British came around.  Their ideas about representative government and capitalism led to a freeing of the masses from a life of drudgery and suffering like no other people did.  From these ideals grew a new nation.  America.  And the Americans inspired an Old World nation.  France.

It is hard for people today to fully understand what life was like for the average person before the ideas of representative government and capitalism.  The average person was poor.  Not middle class.  But poor.  They lived in abject poverty.  They were overworked.  Under paid.  Oppressed.  Malnourished.  Emaciated.  They were miserable, wretched people living miserable, wretched lives.  Quite a difference from today where the average person is middle class and the poor are often overweight.  Even obese.

This life was commonplace when oppressive state powers were commonplace.  As the state’s power grew more limited, the average person’s life grew less miserable.  The poor in pre-revolutionary France, working some of Europe’s most arable soil under an absolute monarchy, suffered from recurring famine.  Meanwhile, over in the tiny island kingdom of Great Britain, a constitutional monarchy, they did not suffer recurring famines.  In fact, they were grain exporters.  That’s why there was no British Revolution to overthrow their monarchy as Europe trembled in the face of Napoleon’s advancing armies.  Life was pretty good on that tiny little island.

People are Just Dying to Get Out of their Socialist Utopias

There are great debates about which is better.  Capitalism or socialism.  People like to point to European socialism as the ideal.  These people are, in general, poor.  When the Beatles got obscenely rich, they fled that socialistic utopia.  As did others who struck it rich.  Why?  To keep what they had earned.

Because the vast majority is poor or middle class, we’ll never solve this debate.  The poor and middle class will feel little pity for the rich and approve of confiscatory taxation.  Until they become rich, that is.  But what about other countries?  Cuba?  North Korea?  The former Soviet Union?  The People’s Republic of China in the days of the great famines? 

Cubans boarded makeshift rafts and risked their lives to make it to Florida.  Those who could in North Korea, like pilots, defected and flew to South Korea.  The Soviet Union had to bribe and hold family members hostage to prevent their spies from defecting once they crossed over into the west.

The Soviet Union would eventually collapse and break out in capitalism.  Communist China allowed some capitalism to prevent a collapse.  Cuba was once a jewel in the Caribbean and now can’t even make a decent cigar.  The North Koreans are still suffering recurring famines and chronic energy shortages.  No, in these hardcore socialist states the message is clear.  Life for the average person is little better than it was in the Middle Ages.  And those who could escape their ‘utopias’ did.

Blinders are Okay if you’re a Horse

The scary thing is that these communist nations started out as people’s revolutions.  They attacked the rich.  Even the middle class.  They promised their people everything (more food, shorter working days, free universal health care, free universal education, etc.).  And, in most cases, failed to deliver.

These nations didn’t become totalitarian states overnight.  It was a process.  A process that went from good intentions to bad to worse.  And here we are in America.  Big Government promising us the same things.  Free food for the poor.  Shorter working days (by empowering unions).  Free universal health care (which is just one public option away).  And free college education for all. 

Should we be concerned?  Yes.  Because these stories always end the same.  After a people votes themselves the treasury, poverty and tyranny typically follow.  It’s like a cancer growing.  And we shouldn’t ignore it.  For if we do, it will only spread further.  And the further it spreads the harder it will be to get rid of it. 

America was the first republic not to collapse.  Can we continue to be that notable exception?  Not by wearing blinders.  As unpleasant it is, we must face this unpleasant truth.

www.PITHOCRATES.com

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