FT175: “Illegal US immigration tells us that the people of the world want more American imperialism.” —Old Pithy

Posted by PITHOCRATES - June 21st, 2013

Fundamental Truth

The Communists built the Berlin Wall to keep her People from Fleeing their Communist Utopia

The West is the best.  Based on history.  The Cold War was East versus West.  The Soviet Union and communist Eastern Europe faced off with NATO forces on the other side of the Iron Curtain.  And all during the Cold War people tried to escape from behind the Iron Curtain into the West.  Where there was no secret police.  And a life of plenty.  Instead of the life of poverty and perpetual want of the most basic of necessities behind the Iron Curtain.  Which is why these people wanted to escape to the West.

Of course, that posed a problem for countries behind the Iron Curtain.  If too many of their best and brightest escaped to the West the resulting brain drain would hurt their economies.  Reduce the quality of their health care systems.  Retard their scientific research.  Diminish innovation.  Leaving these countries frozen in time.  While the West went on to create the modern world.  If you visited East Germany in 1950 and again in 1960 and again in 1970 you would not have noticed great change.  At least not anything near the kind of change you saw in West Germany.

This was a problem in Berlin.  For although Berlin was wholly within East Germany the city itself was divided between East and West.  And life was so much better across the street in West Berlin than it was in East Berlin.  There were blue jeans.  Transistor radios.  Televisions.  People just had to walk across the street and claim asylum.  Board an airplane and fly away from the soul-sucking life of East Germany.  And they, too, could have all of those wonderful things.  As well as a full tummy.  For the West could feed their people far better than they could behind the Iron Curtain.  Which is why the communists built the Berlin Wall.  Not to keep people out of their communist utopia.  But to keep their people from fleeing it.

If Teddy Roosevelt didn’t give Cuba back to the Cubans there would have been no ‘Boat People’

The Soviet Union and their satellite countries behind the Iron Curtain are no more.  For the East lost the Cold War.  Thanks to Ronald Reagan.  And Margaret Thatcher.  Who decided to no longer accommodate the East’s belligerence.  Instead of detente they chose to win the Cold War.  For they saw what communism was.  An economic system on life support.  The Soviet Union could not even feed her people without U.S. grain.  Despite having Europe’s breadbasket on their side of the Iron Curtain.  The Ukraine.  So they pushed.  Hard.  Spent more money on defense that the Soviet economy simply couldn’t match.  Ultimately breaking the back of the Soviet economy.

That’s right.  The West won the Cold War by living well.  The economies of the West, in particular of the United States, were so strong that it could build the Strategic Defense Initiative (i.e., Star Wars) and still provide a life of plenty for their people.  Which is why whenever someone living behind the Iron Curtain had a chance to defect to the West they did.  It’s the dream of oppressed people everywhere to escape to the West.  Especially to the United States.  For when it comes to freedom and a high quality of life this is the ultimate destination.  The United States.

When Fidel Castro turned Cuba communist people made ramshackle rafts to escape Cuba.  Hoping to get to the United States.  Where life was so much better.  These ‘boat people’ no doubt wished the United States had kept Cuba when Spain ceded Puerto Rico, the Philippines and Guam to the U.S.  For a large sum of money after losing the Spanish-American War.  Spain left Cuba to the Americans, too, at the same time.  But Teddy Roosevelt gave Cuba back to the Cubans.  Which ultimately brought Fidel Castro to power.  Creating those ‘boat people’ trying to escape his rule.  Whereas had the United States kept Cuba it could be more like Puerto Rico or Guam today.  Western.  Where people wouldn’t board ramshackle rafts to get to the West.  Because they would have already been living in the West.

The Ideas of the Enlightenment took Root in America and Flourished better than in all other Countries

Prior to the Spanish-American War there was the Mexican-American War.  Where the Americans fought the Mexicans who had just recently won their independence from Spain.  What started out as a war over Texas ended with a treaty (and a cash payment to Mexico as well as assumption of some of her debt) giving the United States not only Texas but California and what is approximately today the southeast United States.  Moving the southern border of the U.S. south.  But apparently not far enough south.  At least, based on the illegal immigration from Mexico into the United States.

Life across the border in the United States is better than it is in Mexico.  Based on those who leave Mexico and cross into the United States illegally.  Who wouldn’t be doing this if life was better in Mexico than in the United States.  Suggesting that these immigrants would have been happier had the United States pushed their southern border all the way to Mexico’s southern border at the conclusion of the Mexican-American War.  So that Mexico would have been part of the U.S.  Allowing them to enjoy living in the United States.  Without being in the country illegally.

So while people speak out against American imperialism what this immigration tells us is that there was not enough American imperialism.  For if the United States had made most of the world a part of the United States then these people would not have to immigrate here.  For they would already be here.  For whatever reason the ideas of the Enlightenment took root here in America and flourished.  Better than in all other countries.  Making her the leader of the Western World.  And the ultimate destination of oppressed and impoverished people everywhere.

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Texas turns to Gas-Fired Power Plants to meet Peak Electric Demand their Wind Power cannot Meet

Posted by PITHOCRATES - June 30th, 2012

Week in Review

Texas has more wind-generated electricity than any other state in the country.  According to the American Wind Energy Association’s U.S. Wind Industry Fourth Quarter 2011 Market Report Texas has a total installed nameplate capacity of 10,377 Mega Watts (MW).  Meaning these wind turbines can produce 10, 377 MW under ideal wind conditions.  But as wind conditions are rarely ideal these Texas wind farms will struggle to produce half of that nameplate capacity.

Wind power has a capacity factor of about 20-40%.  Wind turbines will only produce electricity for a range of winds.  They have to spin fast enough to produce electric power at 60 cycles per second so they can connect this power to the electric grid.  But not so fast that they could damage the turbines.  For that range of winds variable pitch blades on the ‘propeller’ adjust their angle of attack to produce 60 cycles per second in that wind range.  The ‘propellers’ won’t spin that fast.  But a gear box will gear up that constant rotational motion to spin an electric generator (or alternator) at 60 cycles per second.  Thus creating electric power that we can connect to the grid.

So, of that 10,377 Mega Watts Texas nameplate capacity it will provide at most 4,151 MW (40% capacity factor) of power to add to the electric grid.  Which explains why the state with the greatest amount of wind-generated electric power is turning to coal and natural gas to meet peak electric loads (see Texas prepares for soaring power demand, urges conservation by Eileen O’Grady and Scott DiSavino posted 6/25/2012 on Reuters).

Power demand reached 65,047 megawatts in the hour between 4 p.m. and 5 p.m. CDT (2200 GMT), surpassing the June record of 63,102 MW set last year, according to preliminary grid data…

ERCOT [Electric Reliability Council of Texas] said demand may top 66,000 MW on Tuesday. The state’s all-time peak use of 68,379 MW was set in August of last summer during a protracted heat wave and drought…

ERCOT warned that rolling outages could occur this summer given the state’s limited amount of surplus generation…

Several idled power plants have been returned to service to bolster the summer supply after a new coal-fired plant expected to be operational was delayed.

NRG Energy (NRG.N), the state’s second-largest power company, has more generation available this summer than last, after restarting a half dozen older, natural gas-fired units totaling 1,100 MW that were previously in mothball status.

The one thing conspicuous by its absence in the entire Reuter’s article is the mention of all that wind power in Texas.

Texas is the number one wind-power state.  Still, the useable power from all those windmills (about 4,000 turbines in total) is only 6.38% of that peak demand.  Some 4,000 wind turbines to produce about 4,151 MW.  The same amount of electric power some 23 older, moth-balled, gas-fired power plants can produce.  Which is probably why they’re talking about rolling outages.  Because they’ve been building wind farms instead of useful power generation plants.  Fueled by natural gas.  And coal. 

Incidentally the capacity factor for a coal-fired plant is about 90%.  Where the only thing limiting its output is maintenance or low demand.  A nuclear power plant can have a capacity factor exceeding 100%.  For these reasons coal and nuclear power provide a large percentage of reliable power.  During peak demands natural gas-fired ‘peaker plants’ come on line quickly to provide for the extra demand when people come home from work and turn up their air conditioners.  While wind and sun add into the mix as more a novelty than a reliable power source.  With the capacity factor of solar power coming in on average around 12-15%.  In the south they may attain as high a capacity factor as 20%.  Like wind.  Making both of these a poor choice to provide additional power during peak demand.  Which is why Texas is firing up gas-fired ‘peaker plants’ to meet that peak demand.  Because they can.  While they have no way to make the wind blow or the sun shine on demand.

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LESSONS LEARNED #86: “Smug, all-knowing condescension camouflages a vacuous philosophical basis.” –Old Pithy

Posted by PITHOCRATES - October 6th, 2011

Ronald Reagan had a B.A. in Economics, Served in the Army, was President of SAG and Served Two Terms as California Governor

The Left hated Ronald Reagan.  They belittled him.  Made snarky comments like ‘he’s just an actor’.  That he wasn’t smart enough to be president.  And not qualified.  For all he could do was give a good speech.  Because he was just an actor.

Yes, he was an actor.  But he did go to college.  Had a B.A. in economics and sociology.   Enlisted in the Army and served in the cavalry.  Earned a commission in the Reserve Officer Corps just before World War II.  Served stateside during World War II making training films for the army.  Severely nearsighted, the Army classified him for limited service only.  Which meant he couldn’t serve overseas.  He served 8 years as president of the Screen Actors Guild (SAG).  During the height of the Red Scare.  Which cemented his anti-communist credentials.  (Yes, there were communists in Hollywood.  As well as in the FDR administration.)  Hosted General Electric Theater for 8 years.  He visited General Electric R&D facilities.  About 135.  Saw job creation up close during his tenure with GE.  Helping to hone his economic views.  He served two terms as California governor.  During the peak of the Vietnam anti-war protests.  When he gave his concession speak at the 1976 Republican Convention, delegates mumbled that they had nominated the wrong man (Gerald Ford).  At the age of 69, Reagan became president.  Despite snarky comments like ‘he’s too old to be president’.

So Reagan had the education.  And a long list of experience on his resume.  Experience that took him through some of the most defining moments of American history.  And spent 8 years as governor of the most populous state.  Eight years of solid executive experience.  So he was every bit qualified for office.  The people who attacked him just didn’t like his ideology.  And the fact that he was very good in elected office.  So they used smug, all-knowing condescension to belittle him.  And it worked well.  For they did not like Reagan on American college campuses.  Where kids parroted what they heard in the media.  And on their favorite shows.  But didn’t have an original thought in their heads.

Incidentally, Barack Obama got a B.S. in political science from Columbia.  And a law degree from Harvard.  He served 3 terms as Illinois state senator.  And 2/3 of a term as U.S. senator.  He had no military experience.  No executive experience.  And his only other experience was confined to academe.  Or law.  Yet those who said Ronald Reagan was not qualified to be president had no problem with Barack Obama.  Go figure.

George W. Bush had an M.B.A. from Harvard, served in the Texas ANG, ran businesses and served two terms as Texas Governor

But compared to George W. Bush, they held Ronald Reagan in great esteem.  For the Left just flat out called Bush an idiot.  And simply too stupid to be president.

For being stupid Bush was pretty well educated.  He had an B.A. in history from Yale.  A good thing for presidents to know.  History.  And he earned an M.B.A. from Harvard.  The only president to have one.  He served stateside in the Texas Air National Guard during Vietnam.  He then worked in the oil industry.  Started up some oil exploration companies.  Bush Exploration, for one.   This merged with Spectrum 7.  Where he served as chairman.  The oil glut of the Eighties hit that company hard.  It later merged with Harken Energy.   Where he served on the board.  He helped Dad run for president.  Bought a piece of the Texas Rangers after that.  Spent five years there as the managing general partner.  Built the value of the team so well that when he sold his chunk he got uber rich.  Then he served about one and a half terms as Texas governor.

This is the man the Left said was too stupid to be president.  This man who had an M.B.A. from Harvard.  One of the most pretentious Ivy League schools.  A man who worked in the energy industry.  And understood it.  Who knew how to run a business.  And did.  Even ran a Major League baseball team.  And had some 6 years of solid executive experience as the governor of the second most populous state.  So he, too, was every bit qualified for office.  The people who attacked him just didn’t like his ideology.  And the fact that he was very good in elected office.  And in the business world.  So they used smug, all-knowing condescension to belittle him.  And it worked well.  For they did not like Bush on American college campuses either.  Where kids parroted what they heard in the media.  And on their favorite shows.  But they didn’t have an original thought in their heads.  Some things just never change.

Incidentally, Barack Obama got a B.S. in political science from Columbia.  And a law degree from Harvard.  He served 3 terms as Illinois state senator.  And 2/3 of a term as U.S. senator.  He had no military experience.  No executive experience.  And his only other experience was confined to academe.  Or law.  Yet those who said George W. Bush was not qualified to be president had no problem with Barack Obama.  Go figure.

They make their Snarky Little Comments about the Greed of Corporations while Greedily Demanding more Government Benefits

And speaking of these college geniuses, you can hear a lot of them doing what they do best.  Whining.  They’re protesting up on Wall Street.  Cause they hate capitalism.  Because their tens of thousands of dollars in student loan debt hasn’t given them a high paying job.  And because they hate capitalism you know they don’t have a business degree.  Or anything that can be used in the business world.  Further, if they don’t want to be a toady to corporate America, they probably don’t have a degree that would help them gain employment with a corporation.  Like a chemistry degree.  An engineering degree.  Or a physics degree.  No.  These would have been too corporate.  And possibly too harmful to the environment.  Not to mention hard.

These protestors are living the protest life of the Sixties.  Complete with free love.  And drugs.  Which, incidentally, is why they went to college.  Not to sit in some boring-ass lectures and take exams with math on them.  And that’s why they’re so angry.  Because during difficult economic times corporations don’t have the money to waste on wasteful degrees like women’s studies.  Art.  Poetry.  French.  Anthropology.  Or some other liberal art or social science.  No.  The only high paying job opportunities for these are in academe.  Or in government.  When they are flush with taxpayer cash.  Thanks to corporations providing real jobs for taxpayers.  But when there are no real jobs, there are no tax dollars to pay for these phony baloney jobs.

So they make their snarky little comments about the greed of corporations.  About the greed of the bankers.  About the greed of Republicans.  All the while they are greedily demanding more government benefits.  Paid for by the very people they are protesting against.  While enjoying the very things these greedy corporations have given them.  They are using wireless technology to live-tweet their latest list of whines.  All technology created by the very corporations they hate.  Produced under the system they want to purge from America.  Capitalism.

If it wasn’t for Capitalism they’d be Working in a Field Somewhere for Subsistence Right Now

Look at Apple.  And Steve Jobs.  Look at what he created.  And ask yourself this.  Why Steve Jobs and not someone in Cuba?  Someone in North Korea?  Someone in the former Soviet Union?  These are three hardcore socialist regimes these protestors admire.  Who have egalitarian systems of government.  Where there is fair-shared misery.  No one lives better than anyone else.  Except those within the party apparatchik.  Which these protestors naturally assume they would be part of.  Once America became fair.  And they stripped the rich of all their wealth.  For the benefit of mankind.  And by mankind I mean these protestors.

Cuba even has a national health care system that is so impressive that Michael Moore made a movie about it.  While condemning the inferior American system.  Cuba is great.  They care about their people there.  So much so that they don’t let them leave.  For fear of the substandard love they’ll get in another nation.  Still some of these fools try to escape their utopia.  By crossing shark-infested water in some of the most unseaworthy boats.  To get to Florida.  In the USA.  To the country that the Wall Street protestors say is worse than Cuba.  If only they had iPhones in Cuba they could get their live-tweet feed from Wall Street so they would know that things are better there.  So they can stay there.  In their utopia.

Of course, it’s not better there.  And Steve Jobs wasn’t a Cuban.  He wasn’t a North Korean.  He wasn’t a Soviet.  He was an American.  An entrepreneur.  And a capitalist.  Who made Apple a rich corporation by giving us things we can’t live without.  Things we never asked for.  Things we didn’t even know about.  Until after he created them.  And he told us how cool they were.

They can make snarky, all-knowing, condescending remarks all day long about corporate greed and the evil of capitalism.  But if it wasn’t for capitalism they’d be working in a field somewhere for subsistence right now.  And the fact that they don’t know this shows how empty headed and brainwashed they are.  And what a piss-poor job our public schools and colleges are doing.

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LESSONS LEARNED #24: “You cannot lobby a politician unless he or she is for sale.” -Old Pithy

Posted by PITHOCRATES - July 29th, 2010

BUILDING A RAILROAD ain’t cheap.  It needs dump trucks of money.  Especially if it’s transcontinental.  And that’s what the Union Pacific and the Central Pacific were building.  Starting during the Civil War in 1863 (the year Vicksburg fell and Lee retreated from Gettysburg).  The Union Pacific was building west from Iowa.  And the Central pacific was building east from California. 

For the most part, Protestant, English-speaking Americans settled Texas.  Mexico had encouraged the American colonists to settle this region.  Because few Mexicans were moving north to do so.   The deal was that the colonists conduct official business in Spanish and convert to Catholicism.  They didn’t.  These and other issues soured relations between Mexico and the American Texans.  The Republic of Texas proclaimed their independence from Mexico.  America annexed Texas.  Mexico tried to get it back.  The Mexican-American War followed.  America won.  Texas became a state in 1845.  And that other Spanish/Mexican territory that America was especially interested in, California, became a state in 1850.  Hence the desire for a transcontinental railroad.

The U.S. government was very eager to connect the new state of California to the rest of America.  So they acted aggressively.  They would provide the dump trucks of money.  As America expanded, the U.S. government became the owner of more and more public land.  The sale of new lands provided a large amount of revenue for the federal government.  (Other forms of taxation (income taxes, excise taxes, etc.) grew as the amount of public lands to sell decreased.)  Land is valuable.  So they would grant the railroad companies some 44 million acres of land (i.e., land grants) for their use.  The railroad companies, then, would sell the land to raise the capital to build their railroads.  The government also provided some $60 million in federal loans.

But it didn’t end there.  The federal government came up with incentives to speed things up.  They based the amount of loans upon the miles of track laid.  The more difficult the ground, the more cash.  So, what you got from these incentives was the wrong incentive.  To lay as much track as possible on the most difficult ground they could find.  And then there were mineral rights.  The railroad would own the property they built on.  And any minerals located underneath.  So the tracks wandered and meandered to maximize these benefits.  And speed was key.  Not longevity.  Wherever possible they used wood instead of masonry.  The used the cheapest iron for track.  They even laid track on ice.   (They had to rebuild large chunks of the line before any trains would roll.)  And when the Union Pacific and Central Pacific met, they kept building, parallel to each other.  To lay more miles of track.  And get more cash from the government.

PAR FOR THE COURSE.  When government gets involved they can really mess things up.  But it gets worse.  Not only was government throwing dump trucks of American money down the toilet, they were also profiting from this hemorrhaging of public money.  As shareholders in Crédit Mobilier.

Thomas Durant of Union Pacific concocted the Crédit Mobilier Scandal.  As part of the government requirements to build the transcontinental railroad, Union Pacific had to sell stock at $100 per share.  Problem was, few believed the railroad could be built.  So there were few takers to buy the stock at $100 per share.  So he created Crédit Mobilier to buy that stock.  Once they did, they then resold the stock on the open market at prevailing market prices.  Which were well below $100 per share.  Union Pacific met the government requirements thanks to the willingness of Crédit Mobilier to buy their stock.  The only thing was, both companies had the same stockholders.  Crédit Mobilier was a sham company.  Union Pacific WAS Crédit Mobilier.  And it gets worse.

Union Pacific chose Crédit Mobilier to build their railroad.  Crédit Mobilier submitted highly inflated bills to Union Pacific who promptly paid them.  They then submitted the bills to the federal government (plus a small administration fee) for reimbursement.  Which the federal government promptly paid.  Crédit Mobilier proved to be highly profitable.  This pleased their shareholders.  Which included members of Congress who approved the overbillings as wells as additional funding for cost overruns.  No doubt Union Pacific/Crédit Mobilier had very good friends in Washington.  Including members of the Grant administration.  Until the party ended.  The press exposed the scandal during the 1872 presidential campaign.  Outraged, the federal government conducted an investigation.  But when you investigate yourself for wrongdoing you can guess the outcome.  Oh, there were some slaps on the wrists, but government came out relatively unscathed.  But the public money was gone.  As is usually the case with political graft.  Politicians get rich while the public pays the bill.

(Incidentally, the investigation did not implicate Ulysses Grant.  However, because members of his administration were implicated, this scandal tarnished his presidency.  Grant, though, was not corrupt.  He was a great general.  But not a shrewd politician.  Where there was a code of honor in the military, he found no such code in politics.  Friends used his political naivety for personal profit.  If you read Grant’s personal memoirs you can get a sense of Grant’s character.  Many consider his memoirs among the finest ever written.  He was honest and humble.  A man of integrity.  An expert horseman, he was reduced to riding in a horse and buggy in his later years.  Once, while president, he was stopped for speeding through the streets of Washington.  When the young policeman saw who he had pulled over, he apologized profusely to the president and let him go.  Grant told the young man to write him the ticket.  Because it was his job.  And the right thing to do.  For no man, even the president, was above the law.)

THE FINANCIAL WORLD fell apart in 2007.  And this happened because someone changed the definition of the American Dream from individual liberty to owning a house.  Even if you couldn’t afford to buy one.  Even if you couldn’t qualify for a mortgage.  Even, if you should get a mortgage, you had no chance in hell of making your payments.

Home ownership would be the key to American prosperity.  Per the American government.  Build homes and grow the economy.   That was the official mantra.  So Washington designed American policy accordingly.  Lenders came up with clever financing schemes to put ever more people into new homes.  And they were clever.  But left out were the poorest of the poor.  Even a small down payment on the most modest of homes was out of their range.  Proponents of these poor said this was discriminatory.  Many of the inner city poor in the biggest of cities were minority.  People cried racism in mortgage lending.  Government heard.  They pressured lenders to lend to these poor people.  Or else.  Lenders were reluctant.  With no money for down payments and questionable employment to service these mortgages, they saw great financial risk.  So the government said not to worry.  We’ll take that risk.  Fannie Mae and Freddie Mac would guarantee certain ‘risky’ loans as long as they met minimum criteria.  And they would also buy risky mortgages and get them off their books.  Well, with no risk, the lenders would lend to anyone.  They made NINJA loans (loans to people with No Income, No Job, and no Assets).  And why not?  If any loan was likely to default it was a NINJA loan.  But if Freddie or Fannie bought before the default, what did a lender care?  And even they defaulted before, Fannie and Freddie guaranteed the loan.  How could a lender lose?

Once upon a time, there was no safer loan than a home mortgage.  Why?  Because it would take someone’s lifesavings to pay for the down payment (20% of the home price in the common conventional mortgage).  And people lived in these houses.  In other words, these new home owners had a vested interested to service those mortgages.  Someone who doesn’t put up that 20% down payment with their own money, though, has less incentive to service that mortgage.  They can walk away with little financial loss.

ARE YOU GETTING the picture?  With this easy lending there was a housing boom.  Then a bubble.  With such easy money, housing demand went up.  As did prices.  So housing values soared.  Some poor people were buying these homes with creative financing (used to make the unqualified qualify for a mortgage).  We call these subprime mortgages.  They include Adjustable Rate Mortgages (ARMs).  These have adjustable interest rates.  This removes the risk of inflation.  So they have lower interest rates than fixed-rate mortgages.  If there is inflation (and interest rates go up), they adjust the interest rate on the mortgage up.  Other clever financing included interest only mortgages.  These include a balloon payment at the end of a set term of the full principal.  These and other clever instruments put people into houses who could only afford the smallest of monthly payments.  The idea was that they would refinance after an ‘introductory’ period.  And it would work as long as interest rates did not go up.  But they went up.  And house prices fell.  The bubble burst.  Mortgages went underwater (people owed more than the houses were worth).  Some people struggled to make their payments and simply couldn’t.  Others with little of their own money invested simply walked away.  The subprime industry imploded.  So what happened, then, to all those subprime mortgages?

Fannie and Freddie bought these risky mortgages.  And securitized them.  They chopped and diced them and created investment devices called Collateralized Debt Obligations (CDOs).  These are fancy bonds backed by those ‘safe’ home mortgages.  Especially safe with those Fannie and Freddie guarantees.  They were as safe as government bonds but more profitable.  As long as people kept making their mortgage payments.

But risk is a funny thing.  You can manage it.  But you can’t get rid of it.  Interest rates went up.  The ARMs reset their interest rates.  People defaulted.  The value of the subprime mortgages that backed those CDOs collapsed, making the value of the CDOs collapse.  And everyone who bought those CDOs took a hit.  Investors around the globe shared those losses. 

Those subprime loans were very risky.  Lenders would not make the loans unless someone else took that risk.  The government took that risk in the guise of Fannie and Freddie.  Who passed on that risk to the investors buying what they thought were safe investments.  Who saw large chunks of their investment portfolios go ‘puff’ into thin air.

SO WHAT ARE Freddie and Fannie exactly?  They are government-sponsored enterprises (GSEs).  They key word here is government.  Once again, you put huge piles of money and government together and the results are predictable.  In an effort to extend the ‘American Dream’ to as many Americans as possible, the federal oversight body for Freddie and Fannie lowered the minimum criteria for making those risky loans.  Even excluding an applicant’s credit worthiness from the application process (so called ‘no-doc’ loans were loans made without any documentation to prove the credit worthiness of the applicant.)  To encourage further reckless lending.  Ultimately causing the worst financial crisis since the Great Depression. 

And, of course, members of Congress did well during the good times of the subprime boom.  They got large campaign contributions.  Some sweetheart mortgagee deals.  A grateful voting bloc.  And other largess from the profitable subprime industry.  Government did well.  Just as they did during the Crédit Mobilier Scandal.  And the American taxpayer gets to pay the bill.  Some things never change.  Government created both of these scandals.  As government is wont to do whenever around huge piles of money.  For when it comes to stealing from the government, someone in the government has to let it happen.  For it takes a nod and a wink from someone in power to let such massive fraud to take place. 

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LESSONS LEARNED #23: “Those who seek a third party cede the election to the opposition.” -Old Pithy

Posted by PITHOCRATES - July 22nd, 2010

SLAVERY WAS ALWAYS a complicated issue.  Many of the Founding Fathers saw the contradiction with the ideals embodied in the Declaration of Independence.  And there were the economic costs.  George Washington wanted to transition to paid laborers as the generations of slaves he inherited were consuming an ever growing share of his harvest.  (You only pay paid-laborers; you didn’t have to house and feed them and their families.)  He had whole families that included babies and the elderly long past their working prime.  People would buy slaves in their working prime but wouldn’t take their parents and grandparents, too.  He didn’t want to break up the families.  And he couldn’t free them.  Someone had to take care of those who could no longer work.  So he would.  Even after death.  He freed his slaves in his will and directed his heirs to train and help them so they could integrate into the workforce.  (Not every slave-owner, though, was as caring as Washington).

So Washington, John Adams and some of the other Founding Fathers saw slavery as an institution that would eventually wither and die.  They saw it as immoral.  As well as an inefficient economic system.   It would just have to die out one day.  So they tabled the discussion to get the southern states to join the union.  But they did put an end date on the slave trade.  Twenty years should be enough time they thought.  And in those 20 years, the South would figure out what to do with the slaves they had.  Because no one in the north could figure that one out.  Who would compensate the slave owners for their emancipated ‘property’?  And there were no biracial societies at that time.  No one could imagine that a formerly enslaved majority will become peaceful neighbors with their former minority masters.  Especially in the South.

But the cotton gin changed all of that.  The one thing that slave labor was good for was big single-crop plantations.  And there was none better than King Cotton.  Separating the seed from the cotton was the one bottleneck in the cotton industry.  Ely Whitney changed that in 1791.  Cotton production exploded.  As did slavery.  The southern economy changed.  As did the political debate.  The southern economy was a cotton economy.  And cotton needed slaves.  The South, therefore, needed slavery.

CARVED OUT OF the new Louisiana Territory were territories that would organize into states and request admittance into the union.  But would they be free or slave?  The first test was resolved with the Missouri Compromise (1820).  Henry Clay (the Great Compromiser) kept the peace.  Saved the union.  For awhile.  The compromise forbade slavery north of Missouri’s southern border (approximately the 36th parallel) in the Louisiana Territory (except in Missouri, of course).  Martin Van Buren saw this as a temporary fix at best.  Any further discussion on the slavery issue could lead to secession.  Or war.  So he created the modern Democratic Party with but one goal.  To get power and to keep power.  With power he could control what they debated.  And, once he had power, they wouldn’t debate slavery again.

During the 1844 presidential campaign, the annexation of the Republic of Texas was an issue.  The secretary of state, Daniel Webster, opposed it.  It would expand slavery and likely give the Senate two new democratic senators.  Which was what John C. Calhoun wanted.  He succeeded Webster as secretary of state.  The new northern Whigs were antislavery.  The southern Whigs were pro-cotton.  The Whig presidential candidate in 1844 was Henry Clay (the Great Compromiser).  He wasn’t for it or against it.  Neither was Martin Van Buren, the Democrat frontrunner.  They wished to compromise and avoid this hot issue all together.

Well, Clay wasn’t ‘anti’ enough for the antislavery Whigs.  So they left and formed the Liberty Party and nominated James. G. Birney as their candidate.  Meanwhile, the Democrats weren’t all that happy with Van Buren.  Enter James Knox Polk.  He didn’t vacillate.  He pledged to annex Texas.  And the Oregon territory.  The Democrats nominated him and said goodbye to Van Buren.

The Whig and Liberty parties shared the northern antislavery votes, no doubt costing Clay the election.  A fait accompli, President Tyler signed off on the annexation of Texas before Polk took the oath of office.

BUT ALL WAS not well.  Those sectional differences continued to simmer just below the boiling point.  The Fugitive Slave Law now made the ‘southern’ problem a northern one, too.  Federal law now required that they help return this southern ‘property’.  It got ugly.  And costly.  Harriet Ward Beecher’s Uncle Tom’s Cabin only inflamed the abolitionist fires in the North.  And then Stephen Douglas saw a proposed transcontinental railroad that could take him to the Whitehouse. 

The railroad would go through the unorganized Nebraskan territory (the northern part of the Louisiana Purchase).   As Washington discussed organizing this territory, the South noted that all of this territory was above 36th parallel.  Thus, any state organized would be, by the terms of the Missouri Compromise, free.  With no state below the 36th parallel added, the balance of power would tip to the North.  The South objected.  Douglas assuaged them.  With the Kansas-Nebraska Act of 1854.  Which replaced the Missouri Compromise (the 36th parallel) with popular sovereignty.  And Kansas bled.

The idea of popular sovereignty said that the people of the new organized state would determine if they were free or slave.  So the free and slave people raced to populate the territory.  It was a mini civil war.  A precursor of what was to come.  It split up the Whig and Democratic parties.  Southern Whigs and Northern Democrats quit their parties.  The Whig Party would wither and die.  The new Republican Party would rise from the Whig’s ashes.  They would address the cause, not the symptoms.  And at the heart of all the sectional divides was the issue of slavery itself.  It had to be addressed.  As Abraham Lincoln would say in 1858, “A house divided against itself cannot stand.”

ZACHARY TAYLOR CHOSE Whig Millard Fillmore as his vice president to appeal to northern Whigs.  When Taylor died some 2 years into his first term, Fillmore became president.  His support of the Compromise of 1850 (admit California as a free state, settle Texas border, grant territorial status to New Mexico, end the slave trade in the District of Columbia and beef up the Fugitive Slave Law) alienated him from the Whig base.

In the 1856 presidential contest, the Republicans nominated John C. Frémont.  The Democrats nominated James Buchanan.  And Millard Fillmore (compromiser and one time Whig) ran on the American Party ticket.  There was talk of secession should Frémont win.  It was a 3-way race.  Buchanan battled with the ‘compromiser’ in the South.  And with the ‘abolitionist’ in the North.  The race was close.  Buchanan won with only 45% of the vote.  But Frémont lost by only 2 states.  He had won all but 5 of the free states.  Had Fillmore not run, it is unlikely that these free states would have voted for the slavery candidate.  So Fillmore no doubt denied Frémont the election.

AMERICA’S ORIGINAL TRUST buster, Teddy Roosevelt (TR), said he wouldn’t run for reelection.  And he didn’t.  He picked Howard Taft as his ‘successor’.  TR was a progressive frontier man.  He had that smile.  This made him a popular and formidable candidate.  Taft just wasn’t as much of a TR as TR was.  So some asked TR to run again.  Against his own, hand-picked ‘successor’.  Which he did.

Taft won the Republican Nomination, though.  Undeterred (and having a really big ego), TR formed a third party, the Progressive Party.  He moved to the left of Taft.  So far left that it made Woodward Wilson, the Democrat candidate, look moderate. 

The 1912 presidential election turned into a 3-man race.  Between 3 progressives.  Taft ‘busted’ more trusts than did TR.  But he just wasn’t TR.  Woodward Wilson was probably the most progressive and idealist of the three.  But in the mix, he looked like the sensible candidate.  Roosevelt beat Taft.  But Wilson beat Roosevelt.  Wilson won with only 45% of the vote.  And gave us the income tax and the Federal Reserve System.  Big Government had come.

IN THE 1992 presidential campaign, George Herbert Walker Bush (read my lips, no new taxes) ran in a 3-way race between Democrat Bill Clinton and Ross Perot.  Perot bashed both parties for their high deficits.  He was a populist candidate against the status quo.  He went on TV with charts and graphs.  He called Reaganomics ‘voodoo’ economics.  While Bush fought these attacks on his 12 years in the executive office (8 as vice president and on 4 as president), Clinton got by with relative ease on his one big weakness.  Character. 

Exit polling showed that Perot took voters from both candidates.  More people voted that year.  But the increase was roughly equal to the Perot vote (who took 19%).  If anyone energized the election that year, it wasn’t Clinton.  He won with only 43% of the vote.  The majority of Americans did not vote for Clinton.  Had the focus not been on Reaganomics and the deficit (where Perot took it), Clinton’s character flaws would have been a bigger issue.  And if it came down to character, Bush probably would have won.  Despite his broken ‘read my lips’ pledge.

HISTORY HAS SHOWN that third party candidates don’t typically win elections.  In fact, when a party splinters into two, it usually benefits the common opposition.  That thing that is so important to bring a third party into existence is often its own demise.  It splits a larger voting bloc into two smaller voting blocs.  Guaranteeing the opposition’s victory. 

Politics can be idealistic.  But not at the expense of pragmatism.  When voting for a candidate that cannot in all probability win, it is a wasted vote.  If you’re making a ‘statement’ with your vote by voting for a third party candidate, that statement is but one thing.  You want to lose.

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