Sunday, March 08, 2009

PART 1 of 2

By Jon Christian Ryter
March 5, 2009

What happens when the whole economy sinks underwater like Atlantis? Other than fading into oblivion, that is. The tsunami-like impact will closely resemble what happens to a home owner with a mortgage that is construed to be underwater—only on a much grander, and much more devastating, scale. When the balance owed on the home's mortgage exceeds the appraised value of the home, that mortgage is said to be underwater. Conversely, when the aggregate sum of the debts owed by a nation to its creditors exceed the ability of the nation to repay those debts, one can honestly say that nation is "underwater" and risks becoming a 21st century version of Atlantis.

Think in terms of the money owed to the bankers who financed the debt compared to the ability of ensuring generations of taxpayers to pay back the largess of the State. Congress just enacted what the politicians called a "stimulus bill"—the American Recovery and Reinvestment Act of 2009. Rhetoric aside, Public Law 111-016 won't stimulate anything except more corporate welfare and a larger monkey on the backs of the middle class taxpayers who are expected to repay it.

The legislation that was supposed to save the economy cost the taxpayers $789.5 billion. It was preceded by the $700 billion Emergency Economic Stabilization Act of 2008, which was preceded by HR 5830, the housing bailout bill that was supposed jumpstart the housing industry. (Buried in HR 5830 was a provision that would make permanent a temporary rule from 1988 [which expired last year] that let the IRS engage in a undercover sting operation in order to trap tax cheats. In 1994, the Clinton Administration reported that the IRS had 126 field agents involved in this program. The IRS was allowed to open tax preparation centers where IRS agents posed as civilian tax preparers. In the sting, the tax preparer tells his customer that "...I'm not sure that this deduction is entirely legal, but it will save you $1,000. Want to take it?") If you said "yes" you just got stung in a tax sting. Within a matter of weeks you would be notified by the IRS that your filing was flagged. So, if your vocally anti-IRS tax preparer tells you something like that next month, just say, "No thanks. I believe every American should pay their fair share. After all, someone has to pay back the three trillion, five hundred and seventy-nine billion dollars that Congress just saddled our children, grandchildren and great-great grandchildren with. We might just as well start paying it back now before accumulated interest turns that sum into real money."

The Barney Frank [D-MA] Housing and Economic Recovery Act of 2008 that started the current rash of "stimulus giveaways," pledged $300 billion to let the banks cherry pick the worst subprime mortgage loans in their portfolios and shift the burden of paying them to the taxpayers—up to $300 billion. Now, add those "stimulus" programs together and we have a whopping $1,789,500,000,000 before adding in the $450 billion currently being voted on in Congress—HR 1105, the Omnibus Appropriations Bill for 2009—that was passed in the House on Feb. 25. It was an almost party line vote—245 aye votes and 178 nays. The Senate now takes up the measure. With a virtually filibuster-proof upper chamber that will march lockstep with the socialist drumbeat of the Obama Administration on spending someone else's money and growing the size of government, its passage is virtually assured. (For the benefit of conservatives who believe there is no difference today between Republicans and Democrats, let me give you one real important distinction. The Democrat believes that all of the money in your pocket belongs to the government and that its merely taking a circuitous route through your checking account before it ends up in the Treasury. The Republican understands that the money you earn belongs to you and the economy grows when you are allowed to keep most of it. Think about that next November when you vote for third party candidates that can't win. You can tell yourself you did the right thing as you scour the help wanted ads looking for a part-time job to earn the extra money you will need to pay your fair share of phase two of Obama's redistribution of wealth—that is, if you still have your full-time job.)

Appropriation bills for the following fiscal year are usually enacted each year in October. The far left Congress delayed the FY2009 funding bill because President George W. Bush threatened to veto it because it contained 8,570 earmarks. When Obama won the election the Democratic leadership simply tabled the measure until their guy made it to the Oval Office. When President Obama railed against earmarks in the appropriations bill he failed to tell the American people that he had a few in this piece of legislation. When the Republicans revealed that fact that then Sen. Barack Obama had earmarks for his favorite contributors in the Appropriations Bill, the Obama White House took an eraser to the legislation. No, they didn't remove the earmarks—they removed Obama's name as the sponsor of the earmarks so that he doesn't appear to be the hypocrite he actually is when he rails against them. Earmarks, if you will recall was a major campaign issue between Obama and his GOP opponent, Sen. John McCain [R-AZ] when Obama told cheering crowds across the country that "...we need earmark reform," assuring voters that when he was elected, he would "...go line by line to make sure we are spending our money wisely." Except a DC US District Court Judge ruled that the line item veto enacted by Congress during the Clinton years was unconsititutional, so presidents can't go line by line and eliminate pork.

When Obama signs the Omnibus Appropriations Act into law, it will bring the current bailout of everyone except the middle class taxpayers who are expected to pay for it, to $2,239,500,000,000. Just so you can really appreciate those mind-boggling numbers, let's put those numbers into words. That's two-trillion, two hundred thirty-nine billion, five hundred million dollars in real words—and in real money—or, at least, in real fiat money. Add in the interest we get to pay to the transnational bankers who own the Federal Reserve, and we're finally talking about real money here because, by the time our great, great, great, great grandchildren finish paying for our stupidity, "we-the-people" will have collectively been saddled with compounded debt totaling around $71,664,000,000,000.00 and some change. Again, in real words, that's seventy-one trillion, six hundred sixty-four billion dollars. In one dollar bills, evenly stacked on top of one another, that's one humonguous mess of greenbacks to pick up off the floor when someone kicks it over.

As the Bush-43 banking regulators began examining the collapsing subprime mortgage industry, they discovered that in at least 46,717 cases, the loans that Congress wanted credit worthy taxpayers to absorb through the Housing and Economic Recovery Act of 2008 were obtained by minority buyers through misrepresentation and/or out-and-out fraud—loans they could not get without lying. In most cases, the income levels, debt ratios, or other pertinent data needed to determine credit worthiness were never verified. Loans, arranged by commissioned mortgage brokers, that should never have been granted were given. For the most part, the loans granted were toxic adjustable rate mortgages that were, in and of themselves, ticking time bombs, waiting for the first ARM adjustment to implode.

Under the Housing and Economic Recovery Act of 2008, Uncle Sam was supposed to buy all of the foreclosed subprime mortgages, remove them from the banks' bad debt inventories, and with an influx of new money, restore liquidity to the banks and mortgage companies and jumpstart credit buying by consumers. Sounds simple. And, it was. Had Congress mandated that was what was supposed to happen with the $700 billion, and had it happened that way, this would have been a very short article because the financial crisis would be over, the stock market would have rebounded and the American people who voted for Barack Obama would all have bumper stickers on their cars that said: "Thank me, I voted for Obama." Instead, in a few more months you'll be seeing bumper stickers that say: "Don't blame me. I voted for Sarah Palin" or, my favorite: "Obama, 2008; Depression, 2009."

That's what happens when the American people elect a completely inexperienced novice as President. Obama lacks even the most basic rudimentary skills in the diplomacy of governance at this level. The man had slightly over one year's experience as a junior Senator when he threw his hat in the ring for the Oval Office. As of this writing, the man's been president for about 40 days and, giving him the benefit of doubt on the learning curve, 40 nights. Instead of governing, he's still campaigning against George W. Bush. Had the nation's Chief Executive, its politicians and the newly-installed bureaucrats on Pennsylvania and Constitution Avenue known what they were doing, they could have solved the financial debacle caused by the subprime mortgage mess before it became a mess. Had they invested enough dollars early on (not $2,239,500,000,000.00) —probably about $800 billion total—and sold the bad debt to the Resolution Trust Company, swift action would have restored liquidity to the nation's banks, there would be no crisis today. But, mess—and more mess—is what the far left needed to create a Rooseveltian "national emergency" that would require massive socialist government invention to fix. That is, after all, why Obama chief-of-staff Rahm Emanuel laughingly told the media: "You never want a serious crisis to go to waste."

No one understood that quip better than Franklin D. Roosevelt. With a mirror economy of 2008 in 1932, FDR had no intention of letting the Recession of 1929 go to waste. Roosevelt knew when people are hurting, you can do just about anything to them as long as they think you're trying to make life easier for them. FDR knew he could manipulate the economic and societal structure of America and create a socialist democracy in which all men would share equally in the cornucopia of the land of plenty. But they would share it at the expense of the middle class, not the rich. In every socialist society, the rich and the poor prosper. Only the middle class suffers.

The program that was supposed to fix the financial crisis in America is known by the acronym TARP (Troubled Asset Relief Program), Public Law 110-343, and is part of the refurbished Emergency Economic Stabilization Act of 2008 that was originally voted down and then enacted. TARP was supposed to be run by the newly created Office of Financial Security in the Treasury. The $700 billion "stimulus" was split into two parts. Under the first part, $250 billion of TARP money (with the President having the prerogative to add an additional $100 billion) was supposed to fund a mortgage-backed securities purchase program to offset the loses investment companies suffered when the subprime mortgage industry collapsed.


Anonymous L.Thompson said...

"Don't blame me! I voted for SARAH PALIN" bumperstickers! We've been selling them since November!

Thursday, March 26, 2009 at 7:36:00 AM GMT-4  

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