“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Wednesday, January 07, 2009

The Elephant Bar Solution to Social Security

The boomers are lining up for social security and everyone knows that the system will shortly be stretched to the limit. Meanwhile many of those who have been frugal have seen both their 401k's and equity in real estate diminished. There is a rather simple and elegant solution. It would include these points:

  • Allow potential retirees to opt out of the system on a yearly basis in exchange for permitting them to work without paying any income taxes with no income limit.
  • Allow those who are at retirement age to collect medicare. This would relieve worry about medical coverage, both privately and from employers.
  • Those opting to take the tax free income would continue to make payments into social security but the matching component by the employer would be dropped.
  • There would be no cap on social security payments by the tax exempt earner.
  • The combination would be very attractive to employers as they could hire skilled people without healthcare costs and with reduced tax liabilities.
  • This system would be very attractive to entrepreneurs and would create jobs.
  • Senior workers would have a higher propensity to save and that would help build the national saving base.
There is no reason why many millions of potential retirees could not work well into their seventies if they so chose and defer retirement in exchange for tax free earnings.


  1. The thing about Australians is that their hearts and humour are always in the right place!

    T. B. Bechtel, a part-time City Councilman from Newcastle , NSW was aske on a local live radio talk show

    just what he thought of the allegations of torture of the Iraqi prisoners.

    His reply prompted his ejection from the studio, but to thunderous applause from the audience.


    If hooking up an Iraqi prisoner's nuts to a car battery will save just one Australians life,

    then I have just three things to say,'

    Red is positive,

    Black is negative, and

    Make sure his nuts are wet.

  2. :)


    Duece, your suggestions have one drawback, they're too rational. They make sense. Now all we got to do is get some old folks group, the AARP, perhaps,(though its a crappy organization, but hey that might be an advantage here) to funnel millions to Congressfolks.

  3. Deuce,
    you might want to read this.
    The dead elephant that is the banking system:

    Let the Lawsuits Begin: Banks Brace for a Storm of Litigation

    In an article in The San Francisco Chronicle in December 2007, attorney Sean Olender suggested that the real reason for the subprime bailout schemes being proposed by the U.S. Treasury Department was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. The plan then on the table was an interest rate freeze on a limited number of subprime loans. Olender wrote:

    "The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

    ". . . The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . .

    "What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back."1

    The thought could send a chill through even the most powerful of investment bankers, including Treasury Secretary Henry Paulson himself, who was head of Goldman Sachs during the heyday of toxic subprime paper-writing from 2004 to 2006. Mortgage fraud has not been limited to the representations made to borrowers or on loan documents but is in the design of the banks’ "financial products" themselves. Among other design flaws is that securitized mortgage debt has become so complex that ownership of the underlying security has often been lost in the shuffle; and without a legal owner, there is no one with standing to foreclose. That was the procedural problem prompting Federal District Judge Christopher Boyko to rule in October 2007 that Deutsche Bank did not have standing to foreclose on 14 mortgage loans held in trust for a pool of mortgage-backed securities holders.2 If large numbers of defaulting homeowners were to contest their foreclosures on the ground that the plaintiffs lacked standing to sue, trillions of dollars in mortgage-backed securities (MBS) could be at risk. Irate securities holders might then respond with litigation that could indeed threaten the existence of the banking Goliaths.

    States Leading the Charge

    MBS investors with the power to bring major lawsuits include state and local governments, which hold substantial portions of their assets in MBS and similar investments. A harbinger of things to come was a complaint filed on February 1, 2008, by the State of Massachusetts against investment bank Merrill Lynch, for fraud and misrepresentation concerning about $14 million worth of subprime securities sold to the city of Springfield. The complaint focused on the sale of "certain esoteric financial instruments known as collateralized debt obligations (CDOs) . . . which were unsuitable for the city and which, within months after the sale, became illiquid and lost almost all of their market value."3

    The previous month, the city of Baltimore sued Wells Fargo Bank for damages from the subprime debacle, alleging that Wells Fargo had intentionally discriminated in selling high-interest mortgages more frequently to blacks than to whites, in violation of federal law.4

    Another innovative suit filed in January 2008 was brought by Cleveland Mayor Frank Jackson against 21 major investment banks, for enabling the subprime lending and foreclosure crisis in his city. The suit targeted the investment banks that fed off the mortgage market by buying subprime mortgages from lenders and then "securitizing" them and selling them to investors. City officials said they hoped to recover hundreds of millions of dollars in damages from the banks, including lost taxes from devalued property and money spent demolishing and boarding up thousands of abandoned houses. The defendants included banking giants Deutsche Bank, Goldman Sachs, Merrill Lynch, Wells Fargo, Bank of America and Citigroup. They were charged with creating a "public nuisance" by irresponsibly buying and selling high-interest home loans, causing widespread defaults that depleted the city’s tax base and left neighborhoods in ruins.

    "To me, this is no different than organized crime or drugs," Jackson told the Cleveland newspaper The Plain Dealer. "It has the same effect as drug activity in neighborhoods. It’s a form of organized crime that happens to be legal in many respects." He added in a videotaped interview, "This lawsuit said, ‘You’re not going to do this to us anymore.’"5

    The Plain Dealer also interviewed Ohio Attorney General Marc Dann, who was considering a state lawsuit against some of the same investment banks. "There’s clearly been a wrong done," he said, "and the source is Wall Street. I’m glad to have some company on my hunt."

    However, a funny thing happened on the way to the courthouse. Like New York Governor Eliot Spitzer, Attorney General Dann wound up resigning from his post in May 2008 after a sexual harassment investigation in his office.6 Before they were forced to resign, both prosecutors were hot on the tail of the banks, attempting to impose liability for the destructive wave of home foreclosures in their jurisdictions.

    But the hits keep on coming. In June 2008, California Attorney General Jerry Brown sued Countrywide Financial Corporation, the nation’s largest mortgage lender, for causing thousands of foreclosures by deceptively marketing risky loans to borrowers. Among other things, the 46-page complaint alleged that:

    "‘Defendants viewed borrowers as nothing more than the means for producing more loans, originating loans with little or no regard to borrowers’ long-term ability to afford them and to sustain homeownership’ . . .

    "The company routinely . . . ‘turned a blind eye’ to deceptive practices by brokers and its own loan agents despite ‘numerous complaints from borrowers claiming that they did not understand their loan terms.’

    ". . . Underwriters who confirmed information on mortgage applications were ‘under intense pressure . . . to process 60 to 70 loans per day, making careful consideration of borrowers’ financial circumstances and the suitability of the loan product for them nearly impossible.’

    "‘Countrywide’s high-pressure sales environment and compensation system encouraged serial refinancing of Countrywide loans.’"7

    Similar suits against Countrywide and its CEO have been filed by the states of Illinois and Florida. These suits seek not only damages but rescission of the loans, creating a potential nightmare for the banks.

    An Avalanche of Class Actions?

    Massive class action lawsuits by defrauded borrowers may also be in the works. In a 2007 ruling in Wisconsin that is now on appeal, U.S. District Judge Lynn Adelman held that Chevy Chase Bank had violated the Truth in Lending Act by hiding the terms of an adjustable rate loan, and that thousands of other Chevy Chase borrowers could join the plaintiffs in a class action on that ground. According to a June 30, 2008 report in Reuters:

    "The judge transformed the case from a run-of-the-mill class action to a potential nightmare for the U.S. banking industry by also finding that the borrowers could force the bank to cancel, or rescind, their loans. That decision was stayed pending an appeal to the 7th U.S. Circuit Court of Appeals, which is expected to rule any day.

    "The idea of canceling tainted loans to stem a tide of foreclosures has caught hold in other quarters; a lawsuit filed last week by the Illinois attorney general asks a court to rescind or reform Countrywide Financial mortgages originated under ‘unfair or deceptive practices.’

    ". . . The mortgage banking industry already faces pressure from state and federal regulators, who have accused banks of lowering underwriting standards and forcing some borrowers, through fraud, into costly adjustable loans that the banks later bundled and sold as high-interest investment vehicles."

    The Truth in Lending Act (TILA) is a 1968 federal law designed to protect consumers against lending fraud by requiring clear disclosure of loan terms and costs. It lets consumers seek rescission or termination of a loan and the return of all interest and fees when a lender is found to be in violation. The beauty of the statute, says California bankruptcy attorney Cathy Moran, is that it provides for strict liability: the aggrieved borrowers don’t have to prove they were personally defrauded or misled, or that they had actual damages. Just the fact that the disclosures were defective gives them the right to rescind and deprives the lenders of interest. In Moran’s small sample, at least half of the loans reviewed contained TILA violations.8 If class actions are found to be available for rescission of loans based on fraud in the disclosure process, the result could be a flood of class suits against banks all over the country.9

    Shifting the Loss Back to the Banks

    Rescission may be a remedy available not only for borrowers but for MBS investors. Many loan sale contracts provide by their terms that lenders must take back loans that default unusually quickly or that contain mistakes or fraud. An avalanche of rescissions could be catastrophic for the banks. Banks were moving loans off their books and selling them to investors in order to allow many more loans to be made than would otherwise have been allowed under banking regulations. The banking rules are complex, but for every dollar of shareholder capital a bank has on its balance sheet, it is supposed to be limited to about $10 in loans. The problem for the banks is that when the process is reversed, the 10 to 1 rule can work the other way: taking a dollar of bad debt back on a bank’s books can reduce its lending ability by a factor of 10. As explained in a BBC News story citing Prof. Nouriel Roubini for authority:

    "[S]ecuritisation was key to helping banks avoid the regulators’ 10:1 rule. To make their risky loans appear attractive to buyers, banks used complex financial engineering to repackage them so they looked super-safe and paid returns well above what equivalent super-safe investments offered. Banks even found ways to get loans off their balance sheets without selling them at all. They devised bizarre new financial entities - called Special Investment Vehicles or SIVs - in which loans could be held technically and legally off balance sheet, out of sight, and beyond the scope of regulators’ rules. So, once again, SIVs made room on balance sheets for banks to go on lending.

    "Banks had got round regulators’ rules by selling off their risky loans, but because so many of the securitised loans were bought by other banks, the losses were still inside the banking system. Loans held in SIVs were technically off banks’ balance sheets, but when the value of the loans inside SIVs started to collapse, the banks which set them up found that they were still responsible for them. So losses from investments which might have appeared outside the scope of the regulators’ 10:1 rule, suddenly started turning up on bank balance sheets. . . . The problem now facing many of the biggest lenders is that when losses appear on banks’ balance sheets, the regulator’s 10:1 rule comes back into play because losses reduce a banks’ shareholder capital. ‘If you have a $200bn loss, that reduced your capital by $200bn, you have to reduce your lending by 10 times as much,’ [Prof. Roubini] explains. ‘So you could have a reduction of total credit to the economy of two trillion dollars.’"10

    You could also have some very bankrupt banks. The total equity of the top 100 U.S. banks stood at $800 billion at the end of the third quarter of 2007. Banking losses are currently expected to rise by as much as $450 billion, enough to wipe out more than half of the banks’ capital bases and leave many of them insolvent.11 If debtors were to deluge the courts with viable defenses to their debts and mortgage-backed securities holders were to challenge their securities, the result could be even worse.

    Putting the Genie Back in the Bottle

    So what would happen if the mega-banks engaging in these irresponsible practices actually went bankrupt? These banks are widely acknowledged to be at fault, but they expect to be bailed out by the Federal Reserve or the taxpayers because they are "too big to fail." The argument is that if they were allowed to collapse, they would take the economy down with them. That is the fear, but it is not actually true. We do need a ready source of credit, so we need banks; but we don’t need private banks. It is a little-known, well-concealed fact that banks do not lend their own money or even their depositors’ money. They actually create the money they lend; and creating money is properly a public, not a private, function. The Constitution delegates the power to create money to Congress and only to Congress.12 In making loans, banks are merely extending credit; and the proper agency for extending "the full faith and credit of the United States" is the United States itself.

    There is more at stake here than just the equitable treatment of injured homeowners and investors in mortgage-backed securities. Banks and investment houses are now squeezing the last drops of blood from the U.S. government’s credit rating, "borrowing" money and unloading worthless paper on the government and the taxpayers. When the dust settles, it will be the banks, investment brokerages and hedge funds for wealthy investors that will be saved. The repossessed will become the dispossessed; and unless your pension fund has invested in politically well-connected hedge funds, you can probably kiss it goodbye, as teachers in Florida already have.

    But the banking genie is a creature of the law, and the law can put it back in the bottle. The imminent failure of some very big banks could provide the government with an opportunity to regain control of its finances. More than that, it could provide the funds for tackling otherwise unsolvable problems now threatening to destroy our standard of living and our standing in the world. The only solution that will be more than a temporary fix is to take the power to create money away from private bankers and return it to the people collectively. That is how it should have been all along, and how it was in our early history; but we are so used to banks being private corporations that we have forgotten the public banks of our forebears. The best of the colonial American banking models was developed in Benjamin Franklin’s province of Pennsylvania, where a government-owned bank issued money and lent it to farmers at 5 percent interest. The interest was returned to the government, replacing taxes. During the decades that that system was in operation, the province of Pennsylvania operated without taxes, inflation or debt.

    Rather than bailing out bankrupt banks and sending them on their merry way, the Federal Deposit Insurance Corporation (FDIC) needs to take a close look at the banks’ books and put any banks found to be insolvent into receivership. The FDIC (unlike the Federal Reserve) is actually a federal agency, and it has the option of taking a bank’s stock in return for bailing it out, effectively nationalizing it. This is done in Europe with bankrupt banks, and it was done in the United States with Continental Illinois, the country’s fourth largest bank, when it went bankrupt in the 1990s.

    A system of truly "national" banks could issue "the full faith and credit of the United States" for public purposes, including funding infrastructure, sustainable energy development and health care.13 Publicly-issued credit could also be used to relieve the subprime crisis. Local governments could use it to buy up mortgages in default, compensating the MBS investors and freeing the real estate for public disposal. The properties could then be rented back to their occupants at reasonable rates, leaving people in their homes without the windfall of acquiring a house without paying for it. A program of lease-purchase might also be instituted. The proceeds would be applied toward repaying the credit advanced to buy the mortgages, balancing the money supply and preventing inflation.

    Local and Private Solutions

    While we are waiting for the federal government to act, there are also private and local possibilities for relieving the subprime crisis. Chris Cook is a British strategic market consultant and the former Compliance Director for the International Petroleum Exchange. He recommends getting all the parties to settle by forming a pool constituted as an LLC (limited liability company), in a partnership framework that brings together occupiers and financiers as co-owners under a neutral custodian. The original owners would pay an affordable rental, and the resulting pool of rentals would be "unitized" (divided into unit interests, similar to a REIT or real estate investment trust). Among other advantages over the usual mortgage-backed security, there would be no loans at interest, since the property would be owned outright by the LLC. Eliminating interest substantially reduces costs. The former owners would be able to occupy the property at an affordable rental, with the option to buy an equity stake in it. For the banks, the advantage would be that they would be able to find investors again, since the risk would have been taken out of the investment by insuring full occupancy at affordable rates; and for the investors, the advantage would be a secure investment with a dependable return.14

    Carolyn Betts is an Ohio attorney who served in Washington as issuer’s counsel for MBS trusts formed by various federal governmental entities, and represented Resolution Trust Corporation in its auction of defaulted commercial mortgage loans during the last real estate crisis. She proposes a squeeze play by the states, in the style of that brought against the tobacco companies by a consortium of state attorneys general in the 1990s. She notes that at the end of 2007, at least 20% of the funds held by the Ohio Public Employees’ Retirement System (PERS) were in mortgage backed securities and similar investments. That makes Ohio public money a major investor in these mortgage-related securities. Ohio governments have an interest in not having homes foreclosed upon, since foreclosures destroy local real estate markets, contribute to lower tax revenues and losses on PERS investments, and cause a strain on state and local affordable housing systems. A coordinated series of actions brought by state attorneys general could eliminate the culpable banker middlemen and return the properties to local ownership and control.

    Andrew Jackson reportedly told Congress in 1829, "If the American people only understood the rank injustice of our money and banking system, there would be a revolution before morning." A wave of private actions, class actions and government lawsuits aimed at redressing injurious banking practices could spark a revolution in banking, returning the power to advance "the full faith and credit of the United States" to the United States, and returning community assets to local ownership and control.

    Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves and how we the people can get it back. Her websites are and

  4. The Elephant Bar Liquor Cabinet

    What I can't get is why my little solvent bank here got a big wad of cash. They didn't need it or even ask for it. But they got it, according to a newsletter.

  5. That is a WHITE Elephant, Mat.
    Luckily, we're gettin a "Black" President, so he'll take care of everything, including them dreaded rising oceans.

  6. Even my wife hadn't seen that yet, al-Bob, and she's an expert, of sorts.

  7. Christ, sam.

    Shared four bottles of BBC's Monserrate Roja this evening. And a little Nektar.

    I don't think it improved them much. That happens.

  8. Trish will be glad to know her old buddy Michael Ledeen is happy about the Garlic Guy Headin Up the CIA.
    She shares such a high opinion of him, as he does the CIA.

  9. Man, this is co-inky dink posting nite, fer shure.

  10. "If the Chinese stop taking dollars , the US will simply stop buying Chinese goods. "
    WHY does that necessarily follow el-Deuce?
    ...or anyone else?

  11. She shares such a high opinion of who?

  12. C'mon, the Chinese are buying GM's Buicks. Why wouldn't they want more?!

  13. Huh?
    Do your eyes glaze over at his name?

  14. I absolutely *adore* Michael Ledeen. My go-to guy for everything important. And if I had a little aguardiente to spare, I'd toast 'im.

  15. Why is the little angel always on top of the Chrismas Tree?

    "When four of Santa's elves got sick, the trainee elves did not produce toys as fast as the regular ones, and Santa began to feel the Pre-Christmas pressure.

    Then Mrs. Claus told Santa her Mother was coming to visit, which stressed Santa even more.

    When he went to harness the reindeer, he found that three of them were about to give birth and two others had jumped the fence and were out, Heaven knows where.

    Then when he began to load the sleigh, one of the floorboards cracked, the toy bag fell to the ground and all the toys were scattered.

    Frustrated, Santa went in the house for a cup of apple cider and a shot of rum. When he went to the cupboard, he discovered the elves had drank all the cider and hidden the liquor. In his frustration, he accidentally dropped the cider jug, and it broke into hundreds of little glass pieces all over the kitchen floor. He went to get the broom and found the mice had eaten all the straw off the end of the broom.

    Just then the doorbell rang, and irritated Santa marched to the door, yanked it open, and there stood a little angel with a great big Christmas tree.

    The angel said very cheerfully,
    'Merry Christmas, Santa.
    Isn't this a lovely day?
    I have a beautiful tree for you.
    Where would you like me to stick it?'

    And so began the tradition of the little angel on top of the Christmas tree.

  16. Mitt Romney has joined the Marriot Board of Directors, FWIW.

  17. So, to recap, if the banks, thru investor class action lawsuits, are forced to put their off the book toxic SIV (Special Investment Vehicles) back on the book, they will not meet their reserve requirement. The leverage principle of "fractional reserve" lending, now working in reverse, shrinks the bank's capital base by a factor of 10 or more. The pyramid scheme goes bust.

  18. Dennis Miller has moved to Kido Radio in Boise, al-Bob, FYI.

  19. To Dueces suggestions I'd add allowing Social Security age folks to sell capital assets, at least up to some amount, without capital gains taxes, and foregoing the Social Security checks for some period of time.

  20. The Crisis of Common Sense:
    Is It So Difficult To Understand The Financial Crisis?

    Banks worldwide have collapsed!


    Two reasons – (i) they gambled at the casino and lost trillions and (ii) almost all their borrowers that borrowed huge sums (leveraging 30 times or more i.e. if a borrower has $1 million capital, he can borrower $30 million) have defaulted.

    Common sense tells us that if our income is only $X and we borrow 30 times in excess of $X, there is no way that we can repay the debt, unless our gambling bets pay out in excess of 30 times the original amount of $X.

    Common sense tells us that if our total family monthly income is e.g. RM3,500, we cannot afford a lifestyle that requires a monthly expenditure of RM10,000 financed by credit-cards with only 5% monthly payment on the outstanding. When interests start piling up on the accumulated monthly outstanding, a point will be reached whereby the cardholder cannot even keep up with the payment of the interests. The cardholder defaults and he gets sued by the lawyers acting for the credit-card companies and or banks.

    Common sense tells us that if you are conned into buying something allegedly worth US$500,000 when its actual value is US$5,000 and you borrowed to buy the inflated “asset”, there is no way that you will continue paying the installments and the interests on such an acquisition. The bank on the other hand is stuck with an “asset” supposedly worth US$500,000 but its actual worth is only US$5,000 or less.

    Common sense tells us that the banks and the governments (fearing a systemic banking collapse) will lie and cover up the con-game until it cannot cover up anymore as too many banks are having the same problems and more importantly, the con-game cannot be covered-up anymore because borrowers are walking away and saying to the banks and governments – “You conned us, you take the blame.”

    Common sense tells us that these so-called assets which “investors” have invested cannot be real assets, but mere papers masquerading as assets (such as CDOs, synthetic CDOs and CDO Squared – toilet papers). Therefore, so-called sophisticated “investors” were borrowing toilet papers to “invest” in toilet paper assets!

    Common sense tells us, and thinking naturally and in simple terms will enable us to conclude, that only greedy people can be lured by such con-games and that when gambling at such casinos, these so-called sophisticated investors were not using common sense.

    Common sense tells us that we, the remaining hardworking people should not allow any government to use our tax revenue to bailout such reckless and greedy b@#st@#ds.

    Common sense tells us that when gamblers lose millions at the Las Vegas, Macau or Genting Highlands casinos, no government can justify and or dare to bailout such stupid and greedy gamblers. We would vote them out of office.

  21. 40% of taxes go to pay interest on money that the US gov borrows for itself from itself thru the Fed Reserve Bank.

  22. Small potatoes compared to the Social Security Ponzi Scheme.

  23. A 40% tax cut is small potatoes?

  24. The Collapse of a 300 Year Ponzi Scheme

    All the king’s men cannot put the private banking system together again, for the simple reason that it is a Ponzi scheme that has reached its mathematical limits. A Ponzi scheme is a form of pyramid scheme in which new investors must continually be sucked in at the bottom to support the investors at the top. In this case, new borrowers must continually be sucked in to support the creditors at the top. The Wall Street Ponzi scheme is built on "fractional reserve" lending, which allows banks to create "credit" (or "debt") with accounting entries. Banks are now allowed to lend from 10 to 30 times their "reserves," essentially counterfeiting the money they lend. Over 97 percent of the U.S. money supply (M3) has been created by banks in this way.5 The problem is that banks create only the principal and not the interest necessary to pay back their loans. Since bank lending is essentially the only source of new money in the system, someone somewhere must continually be taking out new loans just to create enough "money" (or "credit") to service the old loans composing the money supply. This spiraling interest problem and the need to find new debtors has gone on for over 300 years -- ever since the founding of the Bank of England in 1694 – until the whole world has now become mired in debt to the bankers’ private money monopoly. As British financial analyst Chris Cook observes:

    "Exponential economic growth required by the mathematics of compound interest on a money supply based on money as debt must always run up eventually against the finite nature of Earth’s resources."6

    The parasite has finally run out of its food source. But the crisis is not in the economy itself, which is fundamentally sound – or would be with a proper credit system to oil the wheels of production. The crisis is in the banking system, which can no longer cover up the shell game it has played for three centuries with other people’s money. Fortunately, we don’t need the credit of private banks. A sovereign government can create its own.

    The New Deal Revisited

    Today’s credit crisis is very similar to that facing Franklin Roosevelt in the 1930s. In 1932, President Hoover set up the Reconstruction Finance Corporation (RFC) as a federally-owned bank that would bail out commercial banks by extending loans to them, much as the privately-owned Federal Reserve is doing today. But like today, Hoover’s plan failed. The banks did not need more loans; they were already drowning in debt. They needed customers with money to spend and to invest. President Roosevelt used Hoover’s new government-owned lending facility to extend loans where they were needed most – for housing, agriculture and industry. Many new federal agencies were set up and funded by the RFC, including the HOLC (Home Owners Loan Corporation) and Fannie Mae (the Federal National Mortgage Association, which was then a government-owned agency). In the 1940s, the RFC went into overdrive funding the infrastructure necessary for the U.S. to participate in World War II, setting the country up with the infrastructure it needed to become the world’s industrial leader after the war.

    The RFC was a government-owned bank that sidestepped the privately-owned Federal Reserve; but unlike the private banks with which it was competing, the RFC had to have the money in hand before lending it. The RFC was funded by issuing government bonds (I.O.U.s or debt) and relending the proceeds. The result was to put the taxpayers further into debt. This problem could be avoided, however, by updating the RFC model. A system of public banks might be set up that had the power to create credit themselves, just as private banks do now. A public bank operating on the private bank model could fan $700 billion in capital reserves into $7 trillion in public credit that was derivative-free, liability-free, and readily available to fund all those things we think we don’t have the money for now, including the loans necessary to meet payrolls, fund mortgages, and underwrite public infrastructure.

    Credit as a Public Utility

    "Credit" can and should be a national utility, a public service provided by the government to the people it serves. Many people are opposed to getting the government involved in the banking system, but the fact is that the government is already involved. A modern-day RFC would actually mean less government involvement and a more efficient use of the already-earmarked $700 billion than policymakers are talking about now. The government would not need to interfere with the private banking system, which could carry on as before. The Treasury would not need to bail out the banks, which could be left to those same free market forces that have served them so well up to now. If banks went bankrupt, they could be put into FDIC receivership and nationalized. The government would then own a string of banks, which could be used to service the depository and credit needs of the community. There would be no need to change the personnel or procedures of these newly-nationalized banks. They could engage in "fractional reserve" lending just as they do now. The only difference would be that the interest on loans would return to the government, helping to defray the tax burden on the populace; and the banks would start out with a clean set of books, so their $700 billion in startup capital could be fanned into $7 trillion in new loans. This was the sort of banking scheme used in Benjamin Franklin’s colony of Pennsylvania, where it worked brilliantly well. The spiraling-interest problem was avoided by printing some extra money and spending it into the economy for public purposes. During the decades the provincial bank operated, the Pennsylvania colonists paid no taxes, there was no government debt, and inflation did not result.7

    Like the Pennsylvania bank, a modern-day federal banking system would not actually need "reserves" at all. It is the sovereign right of a government to issue the currency of the realm. What backs our money today is simply "the full faith and credit of the United States," something the United States should be able to issue directly without having to draw on "reserves" of its own credit. But if Congress is not prepared to go that far, a more efficient use of the earmarked $700 billion than bailing out failing banks would be to designate the funds as the "reserves" for a newly-reconstituted RFC.

    Rather than creating a separate public banking corporation called the RFC, the nation’s financial apparatus could be streamlined by simply nationalizing the privately-owned Federal Reserve; but again, Congress may not be prepared to go that far. Since there is already successful precedent for establishing an RFC in times like these, that model could serve as a non-controversial starting point for a new public credit facility. The G-7 nations’ financial planners, who met in Washington D.C. this past weekend, appear intent on supporting the banking system with enough government-debt-backed "liquidity" to produce what Jim Rogers calls "an inflationary holocaust." As the U.S. private banking system self-destructs, we need to ensure that a public credit system is in place and ready to serve the people’s needs in its stead.


  25. "A 40% tax cut is small potatoes?"
    A Trillion Here,
    A Trillion There,
    No Big Whoops.

    Let me know when we're talkin Bazillions.

  26. Wow, mat has discovered the backside of the Federal Reserve System, after the barn burned down and the horses crispy critters.

    But as it was said, that part of the story does not make it to the public's awareness.

    GE, bringing good things to life,
    in a world created by Disney Imagineers, that the Redstone's frolick in.

  27. @ Dennis Miller's site (where I have been immortalized by a massive on-air put down by Dennis himself.) I passed on Sam's excellent story.
    Got this response, which admittedly is no match for Sam's, but still...
    Bill in CSprings said...

    "That reminds me of one of those ethics questions along the same lines:

    Assume you were a photojournalist assigned to cover the war in Afghanistan.
    One day while out alone taking some background shots near a river, you hear the screaming of a man who has fallen into the river.
    Upon examination you realize the man screaming is none other that Usama Bin Laden, and he is going to float within a feet of the shore where you're standing, and unless saved soon, he will likely drown.
    There is a fallen tree branch next you, that you quickly estimate would easily reach him to save him.
    But then again this is Usama Bin Laden

    So here's the question, and remember you can only choose one action, and have only a second to decide:

    Which lens do you attach, the wide angle or the zoom?

  28. My response to Dennis:

    I was going to share my story of the effects of a uvulaectomy on oral sex, but I can tell when I'm not appreciated...
    (he got a bunch of calls regarding uvulaectomies to cure loud snoring/sleep apnea)
    ...don't think I'll be volunteering for that.

    Calls ranged from how painful it was to choking easily while eating, to a woman's husband spraying all over when he sneezed, to having water come out your nose when you drink.

  29. @BC
    Some credentialed experts don’t like blogs because they often expose their ignorance, have a larger following and write better. Consider this post from the Sandbox pointing out one of Juan Cole’s factual errors. Cole inveighs against Israeli actions in Gaza saying that since Mohammed Atta was motivated to participate in 9/11 because he was outraged by scenes of Muslim suffering from Qana in Lebanon, one day the scenes being played out in Gaza will return to Israel like chickens coming home to roost. There’s only one problem with Cole’s argument, Sandbox says: chronology.

    Actually, Atta’s will was dated April 11, 1996—one week before the Qana tragedy, on April 18. We don’t know for certain why he made it, but it cannot be because he witnessed any footage from Qana, which was still in the future. And Cole apparently never read the will. It contains no pledge to die while avenging anyone. The will deals with disposition of Atta’s body and possessions in the event of his death. It’s not a “martyrdom will,” but a standardized one, provided by Atta’s Hamburg mosque. (You can read the full text here.)

    This is not Cole’s first problem with 9/11 chronology and facts. For an earlier instance, go here.

    Update: In the wake of this post, Cole has partly retro-edited his own post (without indicating so).

    That kind of public drubbing can be irksome to people who think they have worked long and hard to stand above the common herd. At least in their own estimation. But unfortunately the Internet has lowered barriers to information entry and Cole will have to take his chances just like the rest of us. Juan Cole is entitled to his opinion, but he’s not entitled to force people to read his, and only his, opinion. So if you think someone else — like Michael Totten — is more informative and logical than the credentialed experts, go vote for them at the awards. Michael Totten says:

    Don’t let Cole win. Go over there and vote for me. Alternately, My Marrakesh is a beautiful blog written by a woman who isn’t a neoconservative. Go vote for her. Or if you want to vote for a professor, vote for Martin Kramer.
    He actually knows what he’s talking about.
    Or there’s always Aussie Dave at Israellycool. I’ve met him, he’s a good guy, and he doesn’t sit around in his office and hatch asinine conspiracy theories like Cole does.

  30. This comment has been removed by the author.

  31. Did Bat Masterson Masturbate?
    Whatever the case, Rockford Rules.
    James Garner, a man's man.

  32. So, at the "Hill" they report

    $1.2T deficit roils Congress

    By Sam Youngman and Silla Brush
    Posted: 01/07/09 08:30 PM [ET]

    President-elect Obama and congressional leaders pledged Wednesday to push ahead with an economic stimulus package despite a bleak report projecting a federal deficit of $1.2 trillion.

    The Congressional Budget Office (CBO) report, which also forecast a jump in unemployment to over 9 percent next year, does not include the cost of the stimulus, which could add hundreds of billions to the budget deficit. Its initial forecast projects the deficit at about 8 percent of the Gross Domestic Product, the highest figure recorded in the post-war era.

    Obama, who had warned of the dire report a day earlier, said the news highlights the need to take decisive action with the stimulus, even if that adds to budget woes he described as short-term.

    “We have an economic situation that is dire, and we’re going to have to jumpstart this economy with my economic recovery plan, creating 3 million jobs,” Obama said during a Wednesday press conference.

    “That’s going to cost some money. And in the short term, we will actually see, potentially, additions to the deficit,” said Obama

    Which will be portrayed as the reasonable position. Even duece throws up his hands and says:
    "Obama will be over-lording trillion dollar deficits and they may work. He has no choice."

    Over at "Time" they say this, about the 'Long Term' prospects of moving forward, there being no other choice:

    President-elect Barack Obama admitted as much Wednesday, a day before laying out more specifics of his plan in a major speech. "By now, we know we are facing a crisis in our economy: one that requires immediate and decisive action," he told reporters in Washington. "Just today, the Congressional Budget Office announced that the deficit we are inheriting from this budget year will be $1.2 trillion. We know that our recovery and reinvestment plan will necessarily add more."(Read some of President-elect Obama's prepared remarks.)

    The $1 trillion question is: how much more, and for how long? As qualms about the debt take a back seat to worries about a depression, the scope of the stimulus plan has grown to include everything from expanding Pell grants for college students and health care for the unemployed to investments in renewable energies. Instead of temporary measures meant to prop up the sagging economy over just the next two years, much of what has been proposed so far looks like a laundry list of Obama campaign promises. If passed, Obama will get, in one fell swoop, a running start on large swathes of his long-term agenda, the ultimate cost of which no one yet knows.

    "If all of the infrastructure and the programs to temporarily help individuals, to temporarily [help] companies, if all of this becomes bureaucratic institutions that are in place from now until forever, we're in trouble,"
    says Thomas Donahue, president of the U.S. Chamber of Commerce, which represents more than three million U.S. businesses. "You stop and think of some of these things and you say, 'Alright, that's just for two years.' Well, who's going to be in charge two years from now saying, 'We're not doing that any more'?"

    Near the end of the election campaign Obama was asked repeatedly what initiatives he would cut given the increasingly bleak economic realities. His responses then were suitably vague, and it turns out, the real answer appears to be: very few. The costs of some of those programs are being added to his "American Recovery and Reinvestment Act," all in the name of fixing the economy.

    Just as with the TARP passage, there was no other choice but to act, then.
    The fact that they abandoned the plan immediately upon passage of the authorization, smells of fraud, to me.

    Much like the past fraudlent behaviour of the cast of charecters described in mat's cut and paste: ... including Treasury Secretary Henry Paulson himself, who was head of Goldman Sachs during the heyday of toxic subprime paper-writing from 2004 to 2006.

    Change we're all goin' to believe in.

    Bet your last Amero on that, amigos.

  33. Another Bat, not out of Hell:

    Source: Compiled from one or more of the following: raw data from U.S.
    Government agency sources, correspondence with POW/MIA families,
    published sources, interviews. Updated by the P.O.W. NETWORK in 1998.

    SYNOPSIS: "Bat" Masterson was flying a night mission near Ban Ban, Laos on October 13, 1968, when his A16 prop air- plane developed gyro indicator trouble and he developed vertigo.
    Masterson radioed another aircraft that he was bailing out in the vicinity of a Pathet Lao headquarters and nothing has been heard from him since.

    The Defense Department maintained Masterson as Prisoner of War, while the Air Force listed him as Missing In Action. His wife is following his directive, "If I become a POW, I'll just wait for my government to come and get me. But if I become an MIA, I want you to find out what happened to
    Her search has led her to Laos and many times to Wash- ington D.C. She says, "Sometimes I feel that I can't possibly go on another day with this, and then I see that I live in the greatest country in the world. I have the freedom to move about and choose what I do, and what I say; I think of the
    men that are over there, that they can't speak for gives me the strength to work for their release."

    The Lao Government claims to have no knowledge of Michael "Bat" Masterson.

  34. The Ministry of Defence said that it did not investigae UFO sightings unless there was evidence of a potential threat to the UK.

    No threat here, move along, just another Octopufo from Andromeda.

    I've been trying to tell Mat, these alternative energy sources don't stand a chance, having been tabooed by the Local Galactic Group on environmental grounds. The windmills kill birds, for one thing, a Galactic no no. The One Galactic Government has mandated nuclear energy, and, they mean it.

    This was just a little shot across the bow.
    "You're made of Star Dust, if you're an optimist, or recycled nuclear waste, if you're a pessimist"

    from "The Book of Galactic Wisdom"

  35. You and Sam made the Miller Show? Great!

  36. Larry Flynt has asked for a Bailout.

    Who are we to Judge?

  37. As to duece's Social Security suggestion ...

    With unemployment reaching for 9% and higher, which segment of the society can best afford to be unemployeed? Which segment has a preexisting support structure, ready and able to subsidize them?

    It is not the youth of America.
    But the Seniors.
    The boomers, the majority of which have never sacrificed for the comon good, will have to retire.

    The next generation moving up to take their place in the world. They should be encouraged, not told that the boomers get another subsidy and a chance to hang on, past their prime.

    If the boomers want to continue working, that's on them. But to allow them to abstain from the civic responsibilities that are symbolized by their taxes ...

    Not a chance.

  38. Only 26% Say U.S. Will be Safer at Year's End

    Just 26% of Americans think the United States will be safer at the end of Barack Obama's first year in office than it is today, according to a new Rasmussen Reports national telephone survey.

    I agree with the majority opinion. The real question should have been "Will the USA exist at year's end?"

  39. Piddle piddle piddle

    The boomers may not be the Greatest Generation, but they went to Vietnam. Sacrificed in many other areas too, and paid plenty of taxes.

    You must be thinking of Generation X.

  40. Porn industry seeks $5 billion federal bailout



    Thursday, January 08, 2009

    LOS ANGELES — In an announcement that launched a thousand unprintable puns, adult-entertainment moguls Larry Flynt and Joe Francis said Wednesday that they are asking Washington for a $5 billion federal bailout, claiming that the porn business is suffering from the soft economy.

    No soft economy at Doug! He'll post this a gazillion times till the servers melt in orgasmic exhaustion.

  41. Wow, mat has discovered the backside of the Federal Reserve System, after the barn burned down and the horses crispy critters.

    Huh? I just posted the obvious observation that that system is not sustainable. Same as I did prior. And them are the hardcore facts.

  42. - Werner Herzog gets shot by LA sniper during Interview.

    Your aunt would be proud, al-Bob:

    "The Poet Must Not Avert His Eyes."


  43. The median income of a senior individual in 2004 was $21,102 for males and $12,080 for females with an overall median income of $15,193.
    For persons age 65 or over in calendar year 2004, as shown in the chart, Population 65 or Over Receiving OASI Benefits , 92 percent were receiving benefits. Retired workers account for the largest category of beneficiaries over age 65.

    In 2004, Social Security benefits comprised 39 percent of the aggregate share of all income to individuals and married couples 65 and over.

    Other sources of income include assets (12 percent), earnings (26 percent), and pensions (19 percent) both Government and private.

    So, today 26% of 37 million Seniors income is derived from wages. Under duece's propsal this stream, to both Income and Fica revenues, is lost to the Feds.

    The tax bite, at current levels not being high enough to be an economic barrier to employment for those seniors. Even though they already may lose some of their SS benefits by working.

    With an average median income of $15,193
    They already do not pay income tax.

    Data source = National Committee to Preserve Social Security and Medicare

  44. Well, bob, here you go

    Seventy-six million American children were born between 1946 and 1959, The Boomers, by definition.

    Almost 3 million Americans served in Vietnam.

    That'd be, ahhh ... 3.9%

    Not much of a general sacrifice.
    As for paying taxes, the US is trillions of dollars in debt, upwards of $15 trillion in either debt or unfinanced liabilities.

    The Boomers shortchanged the tax man, bob. They have not funded the retirement benefits they voted for themselves.

    The ultimate in irresponsibility, perhaps even generational financial fraud.

  45. And, bob, when that 4% had returned from their time of service in Vietnam, the 96% that did not go, they mostly did not honor the service of those that had.

    No indeed.

  46. The ultimate in irresponsibility, perhaps even generational financial fraud.

    Having also raped and poisoned the planet, they let the Jihadi plague breed into every corner of the planet.

  47. Walter Williams recently cited stats that said at present, the unfunded liabilities of Social Security are $110 Billion.

  48. ...ah that would be 110 TRILLION.

  49. Postponing Reality

    The triumph of the non-judgmental philosophy of high-toned circles.

    By Thomas Sowell

  50. $110 trillion?

    That is not real money, really.

    But cause for collapse of the currency.


  51. "Windows 7 Beta Release Imminent"

    Oh that feels good.

  52. As to your local bank, bob ...

    Now the Federals have an equity position in that Bank. They are the preferred owners.

    Your local bank was Nationalized and you still do not understand why?
    When it happens in Venezuela or Rhodesia you see the cause and effect.

    But then you do not admit to the continental empire you live in, either.

  53. CALLER: Thank you. Hey, $50 billion is chicken feed, and we all get to participate in the largest one, and I would think that would be Social Security.

    RUSH: Exactly right, sir. The largest Ponzi scheme, the most successfully run Ponzi scheme, a Ponzi scheme that even has morality attached to it, started by our old buddy FDR, Social Security, the single biggest, and here's the thing, you can back me up on this, Jeff, old buddy, old pal, every Ponzi scheme eventually collapses because at some point everybody in it wants their money, and there isn't any money.

    CALLER: I don't like the sound of that.

    RUSH: Well, brace yourself, buddy. People have been trying to warn about this, as you know, for who knows how long. This is why the effort to privatize it -- why do you think it was opposed, the effort to fix it? Government cannot give up the power; the Washingtonians cannot give up the power that running this Ponzi scheme gives them. They're willing to kick the can down the road and let it collapse when somebody else's gotta deal with it, except one thing. The difference between Bernie Madoff and the Washingtonians running their Ponzi scheme and others is he's probably going to go to jail. Our guys will be promoted and they'll be hailed as heroes, like Chuck Schumer, Barney Frank, Chris Dodd, all these clowns that are responsible for most of this financial mess now and I'd say that they're largely responsible or have a great deal of responsibility for the auto problem that we have today. They're being hailed as great heroes and fixers by the Drive-By Media. By the way, $50 billion is small fry to the Social Security Ponzi scheme, but again, just ask yourself, go to bed tonight and then pretend waking up tomorrow morning and you read the paper, found out everything you have is a lie, that you have nothing.

  54. Sick of Vista already, Mat?
    Join the club...
    I had the most stable computer I ever had.
    ...then came Microsoft's updates...
    Millions of man-hours wasted by others with the same problem I had, and still no solution.

    Never had "Win ME" so Vista is by far my worst experience ever.

  55. Sick of Vista already, Mat?

    Windows7 is just a vista service pack. And I like vista, simply for the fact that I don't have to pay the Apple Tax. I can run a machine twice as powerful for half the price of a Mac.

  56. This comment has been removed by the author.

  57. I still like Federal Socialist more than Washingtonian

    I mean, really, we shouldn't disgrace the memory of a Master of Freemasonry, George Washington.

    And we should not give the Federal Socialist any possible lineage to legitimate claim of the public myths of the Founders.

    Obama understands, using the linkage to Lincoln to his own advantage. Leaving the Republicans in the dust of their own mythical ideological hero. Obama in the midst of rewriting Lincoln's public myth from a liberal perspective.

  58. 50 some thousand dead in Vietnam, what generation since has lost that many? And lots of those were drafted, didn't particularily want to go. When was the last time we had a draft? The figures you were quoting the other day made military pay these days sound pretty good, the draftees basically got nothing, not even much of a thanks.

    Here's a history of the Federal Income Tax Rates over the years.

  59. Has Banking Been 'Nationalized'?

    My little bank is still owned by the same crew it was some months ago.

  60. Be Glad your machine runs, Mat!
    Probly cause you waited longer than I.

  61. Hawaii banks didn't take Fed funds either, al-Bob.

    No doubt they'll be properly punished for their prudence.

  62. I would not begin to dismiss the sacrifice of those that went to Vietnam and died or were wounded, or even went, drafted or regular Army.
    The Generations since, bob, have not been asked by their leaders to go down such a fruitless road, until recently.

    GW Bush and Bill Clinton were both born in 1946, the outer cusp of the Boomer Generation.
    Neither were much for general sacrifice.
    Obama, born in 1961 is outside of the Boomer Generation. He's goin' to demand communal sacrifice. Spreading, not the wealth, but the pain.
    To pay for the folly of the Boomers.

    It is not about the tax rates of the past, bob.
    Or even the revenue they generated.

    It's all about the unfinanced Federal liabilities that the Boomers have promised my daughter's generation will pay to the Boomers.

    It was a total ponzi scheme, that now duece wants the Boomers to be able to further opt out of any responsibility to pay for.

    As there is no difference, to the Federals whether the revenues come from Fica or Income taxes. They are both put in the General Revenue pot and dispersed as needed.

  63. Be Glad your machine runs, Mat!

    It runs better than my two Macs combined. Much better build quality as well. Apple's hardware is junk.

  64. If they took the money, then they sold preferred stock to the Federals, bob.

    That added to the list of equity owners of the Bank, while improving the capitalization numbers of the Bank.

    It's what they are doing.

    Now the original owners still have their equity interest in their Bank, but now, they have "Federal partners".

    Incrementalism, bob.
    Slow encroachment.

    Watch and learn
    Learn it, Live it, Love it.
    The McCain Way - Country First.

  65. Has Banking Been 'Nationalized'?

    Not if no voting shares have been transfered. If no voting shares have been transfered, then it's just another bailout. More Crony Capitalism/Welfare'ism.

  66. The March of the Washingtonians

    That's such a disservice, to George Washington, but I bet trish is more approving of that term, to describe her and hers than she is of Federal Socialist.

  67. The Federals own the Charters, mat.

    They also have the regulating authority to control, or not, the management of the Banks.

    They were nationalized through the FDIC and the Fed controls, now further nationalized by the preferred equity positions taken.

    That the Federals used a privatized National Bank as the nationalizing agent, just part of webs weaved to privatize the profits while socializing the risks.

  68. privatize the profits while socializing the risks

    The banks are hiding huge crippling liabilities off the books. When the lawsuits start coming in, all of them will go bust.

  69. The Southern economic ideologies of Jefferson and Jackson lost the War. The Lincolnesque progressive radicals and New York bankers won.

    We are living with the results.

    With the incoming President dusting of the mantle of Lincoln.

  70. Lawsuits?
    In US Courts?

    That will destroy the financial system of the US?


    Like Obama's natural birth disqualification.
    Without much of a hearing.

  71. Dismissed.

    You know what, the judges are so corrupt, you might be right.

  72. I wouldn't hold your breath waiting for lawsuits to bring down the banks - it'll be a tough prosecution establishing fraud large enough for them to suffer crippling liabilities. Where most of the potential fraud lies is with the mortgage originators but they're pretty well pooched already and the miscreants long gone and the rating agencies will hide behind their boilerplate disclaimers. Heck the tobacco companies are still around and lawsuits were problematic for them and Gun companies are now protected by legislation so lawsuits against the bank, if seriously undertaken will also gain some sort of protection.

    Nope, printing more money seems to be the attempted solution and I'm most keen on trying to figure out the effects of such and how to position myself to weather the continuing storm. Relax, breathe, and cope....

  73. The System will allow the citizen to challenge the Federals, within bounds. The Federal Agency willing to slaughter the free roaming horses, in violation of Federal law, a Federal Judge will step in and enforce the law. That's part of the game, the freedom within the System to question and challenge the Executive.

    But the Federals will not allow the law to be a suicide bomb to the System.
    They'll change the law. Limit financial liabilities to whatever level they decide.
    Just like with nuclear powerplant liabilities.

    Retroactive and legal

  74. Exactly, ash, but I'd change that last to

    Relax, breathe, and profit....

  75. HEY, looking for the next bubble to burst? Try the T bill market. Who in their right mind would by a product that has a 30 yr. maturity yielding, at best, a few percent? Soon they'll wake up and that market could face some 'freezing'. Buyer beware!

  76. lol, yes, how to profit, how to profit...

  77. Exactly, ash

    You still don't get it. The lawsuits will force all these off the book toxic SIV (Special Investment Vehicles) back on the books. The bailouts are a tactic to hide these and keep them off the books.

  78. I'm going to the bank next week, I'll try to remember to ask him what's up.

  79. I get it, mat.

    If a threat to the Banking System begins to materialize through the Courts, the Congress and O will end the threat.
    Keeping those losses off shore.

    To believe, for an instant, that the Federals would allow civil torts to deconstruct the System is foolish on the face of it.

    They passed a $700 bn bailout without a week of debate. To change tort liability levels as part of a further rescue of the System, childs play.

  80. To change tort liability levels as part of a further rescue of the System, childs play.

    Well, there go your pension plans.


  81. In addition to the Fed's ability to 'game' the tort system you need present some sort of evidence that SIV's are 1.) fraudulent and 2.) that the off-balance sheet liabilities are significant enough to bring down the major banks.

    According the wiki via the Financial Times there are no more SIV going concerns since Oct. 2008.,Authorised=false.html?

    Now, I don't wish to suggest that the Banks balance sheets are good and don't suffer off balance sheet liabilities that are potentially lethal but the fear/hope of lawsuits bringing the solvency of the banking system to it's knees is misguided.

  82. yeppers, Pension plans and much more are at risk, systemic risk. Quick crank up the printing presses - harder faster, more more. Bail, Bail, cause if we sink now, well, we'll drown.

  83. Obama Says We Got To Spend Like Drunken Sailors

    It used to be tax and spend. Now it looks to be spend and print.

    At least until the Bush tax cuts expire.

  84. Borrow all the money you can, Ash, inflation is supposed to be good for borrowers. Pay it back with worthless money.

  85. Does anybody think that this spending a trillion more dollars has any chance to do any good?

  86. From my short cursory reading of her websites ( and, I think there's a serious risk, dRat.

  87. Welllll, bobal, that assumes that 1.)inflation will happen (as the Fed is hoping) 2.) that me, the little guy, will have debt that isn't affected by inflation. The banks have a strong hand - as inflation goes up so does the interest rate and there is no guarantee that my profits will go up as well. Nope, my strategy has been to reduce debt and find some way to try and protect my stash. Lately, not losing money equates to essentially profiting - things are relative as much as conservatives hate that basic fact ;D

  88. If they don't do it Bobal they risk being tarred as Hoover and the economy sits in depression for years. Stuck between a rock and a hard place...

  89. Does anybody think that this spending a trillion more dollars has any chance to do any good?

    I do. If they spend on green they'll create real assets and real jobs. They'll also spur innovation, and that's always been an engine for prosperity.

  90. Hey! Look what I get for sending off for that one Free Obama Button!

    Friend --

    On January 20th, our journey to bring change will officially begin.

    We're organizing the most open and accessible inauguration in our nation's history. And we're doing it without contributions from Washington lobbyists or big corporations.

    Just like we did on the campaign, we're relying entirely on supporters like you -- ordinary people giving whatever they can afford to make this an event for all Americans.

    I know we've asked a lot of you. But changing the way business is done in Washington will take a commitment from all of us. Right now, you can help give this administration a strong start.

    And if you make a donation of any amount before midnight tonight, you could be selected to come to Washington, D.C., and be part of the welcome ceremony, the swearing in, the Inaugural Parade, and the Inaugural Community Ball.

    Make a donation of $5 or more and be part of the historic moment you made possible.

    We have a long road ahead of us, and we're going to face some major challenges as soon as we start. But I know I can count on you every step of the way.

    Thank you for everything you've done and happy New Year,


    P.S. -- You could be there for this historic moment even if you cannot make a donation. You can show your support by sharing what this Inauguration means to you. Learn more here:

  91. My strategy for the next four years is to just keep on hunkering down. And buy more guns.

  92. And buy more guns.

    What are hiding there in your bunker, Bob? Better not be Irish girls.

  93. I'll bet you don't have a chance to be invited to The Inaugural Ball!

    We have a long road ahead of us

    O I agree, I agree.

  94. Well, bob, there is the $1.2 trillion already accounted for, in next years budget, plus the Obama adrenaline pump of another trillion, give or take.

    But put together the budget deficit will top $2 trillion dollars.

  95. Bobal,

    Look to the experience of farmers in the early 30's and your experience as a farmer. You spend a year growing your crops, you harvest them, pay all your suppliers ect. and it comes time to sell them and either no buyers or the contract to buy is violated (went bankrupt or whatever) and there you sit with your harvest crops and, well, that's a load of corn, or alfalfa for a single family to eat. Meanwhile the bank calls your loan 'cause it needs the cash. The 30's even had a drought to add to the fun...

  96. And we have no choice.

    Not even a binary one.

  97. Even McCain/Palin would have had to take this course.

    No fault navigation?

  98. Beat the coming hyperinflation with guns and girls.

    And gin too. The three g's.

    Like the gangstas.


    Ash, my dad used to say the depression didn't really hit out here, as everyone was pretty self sufficient on the farms.

    And, no dustbowl, of course.

    Thing to avoid is buying supplies with bank money. Then, you're "hunkered down."

  99. The three g's.

    alBoob, triple 'g' certified. :)

  100. Yes, mat, all that Ms Brown professes to be a problem, is. Has been since the inception of the Federal Reserve, in 1913. Along with the direct election of Senators, one of the progressive movements of that era.

    Ms Brown:
    So now, another pseudo-branch of the government (Federal Reserve Bank - chartered by Congress in 1913) is now buying most of these T-bills and T-notes and putting them on their balance sheet. They are doing so in a scheme to keep the interest rates as low as possible. In other words, they have stepped in front of the market and now ARE the market for T-bills and notes. There are other buyers and sellers of T-notes and bills, but due to the size of the Federal Reserve, and the depth of their pockets, they are elbowing everyone else out of the market.

    How is this even possible? Isn’t this price-fixing? The government is essentially selling T-bills and notes to itself in order to fix the interest rate? Shouldn’t this be illegal? This certainly seems to have more than a whiff of fraud to it, and yet our entire economic system is based on the premise of government selling debt instruments to itself?

    But that the Federals will allow this one hundred year old money monopoly to end? Not a chance.

    We're just coloring outside the lines of the acceptable, mat. It is an interesting view from here.

    But as Ms Brown says, she's new to this, some of us grew up amongst it.

  101. WASHINGTON (AP) - President-elect Barack Obama's proposed tax cuts are running into opposition from senators in his own party who say they won't do much to stimulate the economy or create jobs.
    Senators from both parties agreed that Congress should do something to stimulate the economy. But senators emerging from a private meeting of the Senate Finance Committee on Thursday said that tax portion of Obama's stimulus plan is unworkable.

    They were especially critical of a proposed $3,000 tax credit for companies that hire or retrain workers. Democratic Sen. Kent Conrad of North Dakota described it as "misdirected."

    The cost of the economic rescue package Obama wants is expected to swell to more than $800 billion or more. About $300 billion of that would be tax cuts or refunds for individuals and businesses.

  102. And since I am a Milton Freemen fan I subscribe to this perception of the Great Depression, another manufactured crisis that consolidated the Feds posiion with the closure of over 9,000 mostly local, community Banks:

    It was not until 1963, when the National Bureau of Economic Research published Milton Friedman and Anna Schwartz’s monumental study, A Monetary History of the United States, 1857-1960, that an economic explanation of the Depression appeared. This was not a propitious time for the authors. The belief in market failure had had three decades to harden into an unchallenged orthodoxy, one reinforced by exaggerated claims for Soviet economic performance under central planning. Moreover, Friedman and Schwartz’s analysis was keyed toward explaining inflation and recession in terms of the behavior of monetary aggregates. Their account of the Depression is in one chapter and has to be fashioned out of copious material by the reader’s own mind. Although their work and its implications became known to many economists, it appears to have had scant impact on historians or on the public’s understanding of the Great Depression.

    A country that doesn’t understand its own history is not well equipped to deal with its future.
    The Great Depression was not a failure of the old order. It was the failure of the new order that had just begun.

    The Federal Reserve is the most powerful institution of a new order that believed in the efficacy of government and its ability to do good. The same Federal Reserve caused the Great Depression when its wise men made a series of cumulative mistakes that contracted the money supply by one-third and wiped out purchasing power in an unprecedented fashion.

    Economists could not at first explain the Depression because they were unaware of the dramatic shrinkage in the quantity of money. It was not until Friedman and Schwartz dug into the facts that the culpability of the Federal Reserve became known. Moreover, most economists found this culpability to be unwelcome information. In the 1960s economists were uniformly Keynesian in outlook. They were emotionally supportive of government intervention, and their human capital was invested in policies that rested on their belief in the effectiveness of government action. Although they could not refute the evidence, they did not warmly endorse the revelation that the Fed had caused the Great Depression.

    The folks at the Hoover Institute are polite, allowing that the Federals made a 'mistake" by contracting the money supply, both then and now.

    It looks more like a scheme to consolidate power and authority.

  103. LT APNewsAlert
    12 minutes ago

    SAN JOSE, Costa Rica (AP) — Strong earthquake shakes Costa Rican capital; frightened residents run into streets.

  104. 6.2 magnitude earthquake rocks Costa Rica, sends panicked people ...

  105. The U.S. Geological Survey says the 6.2 magnitude quake was centered 22 miles (35 kilometers) northwest of San Jose early Thursday afternoon

  106. Another earthquake, everything falling to the floor.

  107. The epicenter near Naranjo, it appears, from here.

  108. This should ease your nerves, duece

    Friday, July 25, 2008
    Tremors No Prelude To The Big One: Experts Say
    By Catherine Keogan

    Earth tremors this week in Guanacaste may have left some feeling a little shaky, but they aren’t the forerunners of the big earthquake experts say is due to strike the Nicoya Peninsula.

    Residents across the province were startled when three separate earthquakes rattled their homes Saturday, Sunday and Tuesday evenings. The seisms, considered light by geological standards, measured between 4.2 and 4.8 on the Richter scale.

    However, seismologists say they were unrelated to a much stronger earthquake that is expected to rock the Peninsula sometime in the near future, predicted to be of magnitude 7.5 or greater on the Richter scale.

    Just how soon that will be, however, is anyone’s guess.

    “The Nicoya Peninsula is still waiting for a big earthquake,” confirms Dr Marino Protti, a seismologist with the Costa Rican Volcanic and Seismological Observatory (OVSICORI).

    Records show at three major earthquakes of magnitudes 7 or greater have struck the peninsula in the last couple of centuries: in 1853, 1900, and 1950.

    While it might seem the next one is well overdue, 58 years later, Dr Protti points out the trend is too short for exact predictions.

    “Nature doesn’t follow strict statistics; it has been happening on an approximate 50-year cycle, but it can vary as much as ten years,” he notes.

  109. It seems the quake was up near the Poas volcano.

  110. The government is reporting a red alert for a couple of hours. There is a possibility of additional quakes. Windows and utility poles are down. Some collapsed buildings. Power is out in some areas. Water lines broken. Some collapsed roads.

  111. It looks more like a scheme to consolidate power and authority.

    They already bought all the politicians. What else do they need?

  112. I hope the quaking stops down there for you Deuce!

    Rat, interesting article. The author seems to have taken the Fed's mistake of limiting money supply when it should have increased it as being the source of all ensuing government planning. Ironically the the acceptance that the Fed has such power indicates its necessity and it's mistakes were just that, mistakes. It does not necessarily follow that all regulation is therefore a problem only that bad regulation is a problem.

    The authors prescription seems to be simply 'let it self correct' which, taken to its extreme, allows for all sorts of ponzi schemes.


    USGS link for quake

  114. No, the author, whom may or may not be correct, seems to be saying that limiting the money supply was not only a mistake, but was in contradiction to the Feds stated public policy.

    The Federal Reserve and the subsequent expansion of Federal power through the Administration of FDR and onward, uninterrupted at the feet of the progressives. The "Planners" with governmental authority that miss the mark.

    Whether by error or design.

    I know those fellows are amongst the best and brightest, they understood the causes and the effects. That being true in either case, 1929 or 2007/2008, they knew they were restricting the money supply.

    In the 1930s they continued the policy for a while, into the depths of depression and bank failures and consolidations, in 2008 they are turning on the liquity pumps, sooner by comparison.

    What do 'they' want, mat?
    Same as you profess, control of the society. Not by force of arms, but by finance and cultural modification.

    To play the game, wanting to control what other folk can do. How they can do it. For the greater good.
    'They' are just like you, in that regard.

    But instead of working short hours and blogging, they are out, working overtime, trying to get it done.

  115. What do 'they' want, mat?
    Same as you profess, control of the society.

    Haha, funny.

    What I want is full disclosure of all costs and a real democracy. It is you that seems perfectly content with corruption, abuse of power, and a system designed to systematically promote such.

  116. I gotta agree with Rat on his conception of you Mat. You constantly advocate a top down planners society solution with a shoot all dissenters meme attached..


    I'm curious as to your source for the recent restriction of the money supply. Was this decline in money supply a cause of the current problems or an effect of the evaporating debt and declining home values? A chicken and egg thing. Current kings at the Fed seem to be desperately trying to increase the money supply - by any means possible. Sure, folk like mats, will use this as an excuse to push their agenda, as that author suggests regarding the root cause of the 'progressive planners' but, that aside, will the hands off approach solve the problems that led to the original meltdowns? I think not.

    By omission or error? I'm willing to entertain the idea that conspirators are behind the curtain but evidence is required. I'm more prone to interpret macro economic/societal changes as peoples reactions to ever changing stimuli as opposed to the workings of a puppet master.

  117. "Was this decline in money supply a cause of the current problems or an effect of the evaporating debt and declining home values? "
    That's what got to me after my nephew's situation brought it to my attention.
    People like Buddy and Rufus could quote chapter and verse of all the high-falutin Economix Stuff, and I don't know shit, except elementary stuff I learned 40 yrs ago, but Ruf happily thot New Century was a piddle in a pond, while my simple mind was doing the total valuation involved in private real-estate, and comparing the amounts to the comparitively tiny amount involved in the internet bubble, or just about anything else, except for CDO's and Social Security, and I'd never heard of CDO's before.
    Such is the life of the simple minded.

  118. Working short hours?
    Is that some kind of put-down of Canucks in General?

  119. Terri said...
    "My nine-year-old had a lollipop and when she was almost done, she said, "Look how small it is, Mommy! It's Uranus on a stick!"

    I said, "Whuhhhh?"

    She said, "The planet, silly!"

    That was a great parenting moment. Of course, there are some not-so-great moments. That's when I feel like penning a book entitled Why Mommy Drinks.

  120. These policy proposals are offered by Independent Sector, a nonpartisan coalition of over 600 charities, foundations, and corporate philanthropy programs, to inform the policy decisions of the 111th Congress and President Obama’s administration to help achieve our shared vision of a just and inclusive society and a healthy democracy of active citizens, effective institutions, and vibrant communities.

    1. Ensure adequate resources and fair and responsible fiscal policies to support vital programs that sustain, protect and strengthen communities.

    Our government provides funding for vital programs and services that Americans depend on, including access to quality education, care in sickness and old age, safe highways and infrastructure, clean air and water, and more. The federal government administers some of these programs directly, and delegates responsibility for others to state and local governments.


    Such funding must not come at the expense of mandatory programs that provide critical support to our country’s most vulnerable populations, including Social Security, Medicaid, Temporary Assistance for Needy Families (TANF), the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), the Food Stamp Program, and the State Children’s Health Insurance Program.

    * Congress should follow the principles of “shared sacrifice” which characterized the major, successful deficit-reduction laws in 1990 and 1993 in creating a balanced budget package that combines reasonable adjustments to major programs with increases in taxes.

    * Congress should evaluate any changes in funding allocations for particular programs to determine where cost savings can be implemented without jeopardizing the impact and effectiveness of those programs, rather than imposing across-the-board or automatic cuts to all programs.

    * Congress should stipulate that government contracts with nonprofit organizations to deliver services on its behalf must cover the full cost of services, including necessary administrative overhead costs.

    Policy Proposals

  121. The 21-member committee began studying impeachment after the Democratic governor was arrested on a variety of federal corruption charges.

    The panel based its recommendation on those charges and other allegations of misconduct by Blagojevich. They include evidence he circumvented state hiring laws, misspent tax money and expanded programs without proper authority.

    If the House impeaches Blagojevich, the Senate would then conduct a trial on whether he should be removed from office.

    Illinois Governor

  122. It was a Kudlow article, ash, that said that during the 18 months prior to the crisis the Fed had held M1 growth to under 1%.

    When the crisis broke, that was upped to 7 or 8% growth. Seemingly an admission that the policy of the previous 18 months had had a contracting effect on the liquidity in the market.

    It was that lack of liquidity that caused the initial bursting of the sub-prime market. The money to float the surfers dried up.

    Now there were many who rang the warning bell, on this economic challenge. Even habu was able to ascertain that it was coming, so the idea of the wise Washingtonians guys not seeing the formation of the underlying faultlines, when habu did, that is just not viable.

    Ignorance to the point that GW Bush hung his head and asked "How did it come to this?", reportedly during the AIG bailout.

    That the Rockefeller crowd works in this manner, exemplified in my father's IBEC tenure, his time staffing for the Tri-lateral meetings and Team Nixon wanting him to go to China, during the ping pong diplomacy days.

  123. Would a "hands off" approach work now?

    I think not, because there is no possibility of such a thing. Just as the past decade is characterized as being devoid of regulation, when it was not.

    The Community Housing fiasco just a minor example how the Federals were manipulating the markets during that time.

    We are put in a position of "No Chioce". Which is the most artful form of the 'con'. The mark goes for the scam, there being no other 'reasonable' choice.

  124. Teresa Riggs said she wanted the EPA to tell the community what's in the sludge.

    "If it's not hazardous, why are they telling us, 'Don't walk it in and bring it back in your house?'" she said. " 'We're going to wash it off the tires of the trucks.

    Don't let your animals drink the water.' If it's not hazardous, why are they telling us to be careful?"

    Plant Waste

  125. Japan had $2.66 billion in IMF reserve positions, up from $2.63 billion in November, and $3.03 billion in IMF special drawing rights, growing from $2.94 billion a month earlier.

    Other reserve assets came to $374 million in December, up from $343 million in November.

    According to IMF data, China was the world's largest holder of foreign reserves as of the end of April, followed by Japan, Russia, India and Taiwan.

    Record-high Figure

  126. Yellowstone quakes down from 152/week to 71.

  127. "If the Chinese stop taking dollars , the US will simply stop buying Chinese goods. "
    I repeat:

    WHY does that necessarily follow el-Deuce?
    ...or anyone else?

  128. Did you know that whether you are a mouse, a blue whale, a man or any other mammal, your heart in an average life time is going to beat about the same number of times, about 1.5 billion times?

    Did you know that in the earliest universe there was about 1 billion and 1 bits of matter for every 1 billion bits of anti-matter, which mutually self destructed, leaving the one piece of matter left out of those billions, and that's what most things are made of?And nobody has a clue why?

    Here is an example of the damnable outlook this book is fighting against--

    That Man is the product of causes which had no prevision of the end they were achieving; that his origin, his growth, his hopes and fears, his loves and his beliefs, are but the outcome of accidental collocations of atoms; that no fire, no heroism, no intensity of thought and feeling, can preserve an individual beyond the grave; that all the labours of the ages, all the dvotion, all the inpsiration, all the noonday brightness of human genius, are destined to extinction in the vast death of the solar system, and that the whole temple of Man's achievement must inevitably be buried beneath the debris of a universe in ruins--all these things, if not quite beyond dispute, are yet so nearly certain, that no philosophy which rejects them can hope to stand. Only within the scaffolding of these truths, on the firm foundation of unyielding dispair, can the soul's habitation henceforth be safely built."
    Bertrand Russel

    O weep!

    Old Bertie was wise enough to leave himself a little wiggle room there, as he got up each morning to face the day "on the firm foundation of unyielding dispair." :)

    taken from "The View From The Center Of The Universe"

  129. Where’s the bottom?

    Is inflation or deflation in the works? The Telegraph reports that the word “bad” doesn’t even begin to describe some of the developments in Europe — and the worst may be yet to come.

    German exports and industrial orders have both plunged at the steepest rate since modern records began and Spain’s unemployment has surged above three million, capping one of the most disastrous days for Europe’s economy since the Second World War. … “It makes truly dismal reading,” said Julian Callow, Europe economist at Barclays Capital. “Industrial sentiment has never experienced such a rapid slump. There is an implosion of demand.”

    Spain lost almost 140,000 jobs in December, pushing unemployment to 3.1m or 13.4pc. The Labour Office said the country had shed a million in jobs in 2008 as the building boom collapsed. This is equivalent to 7m job losses in the United States.

    The Labour Secretary Maravillas Rojo said she could not rule out a rise in unemployment to 4m this year. “We are in an unprecedented situation, and 2009 is going to be very difficult,” she said.

  130. Sung Joo Yung, a spokesman at Seoul-based Korea Development Bank, declined to comment when contacted by Bloomberg News.

    Ssangyong will pay December salaries to employees today, it said. The automaker's union earlier this week filed a complaint against three executives over the late pay.

    The union has also already held a ballot about possible strike action over restructuring plans.

    Cash Runs Short

  131. Dialogue, Doug, dialogue, it's what's needed, you know that.

    We enter the new "Age of Dialogue".

    But should we talk with the good cop Fatah, or the bad cop Hamas? Or the hizzies, or all three at the same time? Dialogue or trialogue or quadralogue?

    Those are the questions we need to ponder in this hour, Doug.

  132. Like Gore says, we're long past the point of certainty about Global Warming.

    Extreme Alaska cold grounds planes, disables cars...

    Minnesota sled dog race canceled -- because of too much snow...

    Astronauts threatened by cosmic rays as sun becomes less active...

  133. We're at a balmy 52 degrees tonight, with a breeze, and the rivers are rising like hell.

  134. He got laughed out of the box on Aquavelvejad, I spose they'll act like Hamas is all different and it makes sense?

  135. Yellowstone quakes down from 152/week to 71.

    Maybe we've dodged the killer eruption this time around. Knock on wood.

  136. For commuters who have fuel in their vehicles and would like to offer a ride to an individual travelling on their route, or distressed commuters looking for a ride, now they can simply log on to and post their carpool request for free or search through existing carpool requests for free. The website uses criterion like city, origin, destination, pin-code, departing and return time and other personal information like gender etc. to yield results for matching of commuters. has been a hit with commuters from across India since its launch in 2006. Being India’s 1st carpool website it has till today enabled over 10500 people to make carpools via its unique route matching technology which helps commuters find carpool partners travelling on their route and their time in a secure fashion and thereby reduce their fuel consumption and expenses.

    In a recent online survey conducted by, 87% people voted carpooling as the number one choice for reducing fuel expenses and would want to give it a shot. The maximum car-poolers on are from Delhi & NCR followed by Mumbai and Bangalore and more and more are opting for the concept everyday.

    Fuel Shortage

  137. Aquavelvejad :)

    Big O will simply talk them out of their held philosophy of the last 1400 years, it's just that simple.

    Or, more like, "My brothers, let us speak together secretly."

  138. Nationwide Inquiry on Bids for Municipal Bonds

    The authorities have been investigating what appears to be collusion in the multibillion-dollar municipal bonds market.

    Average Mortgage Rate Hits 5%, Lowest in Decades

    It is unclear whether the record low will be enough to lure home buyers back into the house market.

  139. If that's the case, then ordinary Nigerians are in luck. Energy analysts say oil prices are likely to remain low until the recession ends — probably not before 2010 at the earliest.

    Scrambling to prevent further price drops, the 11 OPEC oil ministers voted in December to pump 2 million fewer barrels a day — the biggest production cut in the organization's 48-year history. But even this may fail to push prices up, since it is the dramatic slowdown in global growth, and not an oil glut, that is driving the cost of oil lower.

    It is this cold truth and its consequences that have leaders from Ahmadinejad to Chávez so rattled.

    Sinking Fortunes

  140. Maybe you should delete that link, al-Bob.
    Linear will stroke out if he reads that article.

  141. I'm not really sure I can recommend "The View From The Center Of The Universe." They promised me a new myth for our global age, and while it started out good, and their heart is in the right place, and I learned some stuff about dark matter and dark energy, towards the end it sort of degenerated into a 'pump up you car tires, eat less, and turn your thermostat down' kind of deal. So I concentrating on "Texas Holdem For Dummies" the rest of the night.

    Global Warming Update

    Poles freeze to death, deadly cold grips Europe, wheat prices rise on freeze damage, etc....

  142. Israeli artillery retaliated and the UN peacekeeping force in southern Lebanon sent reinforcements to the region.

    Hamas and Hezbollah , which was the target of an Israeli offensive in 2006, denied involvement in the attack.

    Israeli leaders gave a restrained response and media cited military sources as saying the rockets were probably fired by Palestinian militants.

    UN Urges Truce



    Published in the New York Post on January 8, 2009

    President-elect Barack Obama's appointments to Homeland Security, the Justice Department and now the CIA indicate a virtual abandonment of the War on Terror.

    As Homeland Security chief, he's named a governor whose only experience has been with the US-Mexican border. His attorney general pick, meanwhile, took the lead in pardoning FALN terrorists. Now he has rounded out his national-security and Justice Department teams by naming ultraliberals.

    Leon Panetta, his choice for CIA chief, is as liberal as they come. Though originally a pro-Nixon congressman, he long ago embraced the left with the fervor of a convert and brings these values to the CIA.

    As President Bill Clinton's chief of staff (a tenure that coincided with my own work with Clinton), he was a dedicated liberal, opposing accommodation with the Republicans who ran Congress and battling hard against a balanced-budget deal. After winning re-election, Clinton jettisoned Panetta for the more moderate Erskine Bowles in order to reach a deal with the GOP.

    Plus, Panetta was a prime mover in the 1995 appointment of John Deutch to head CIA, replacing hardliner Jim Woolsey. Deutch eventually needed a presidential pardon after being caught committing a massive security breach by taking home his laptop, laden with secret files.

    Choosing Panetta to head the CIA culminates liberals' 35-year crusade to take over the agency, humble its operatives and rein in its operations. In 1977, President Jimmy Carter named liberal JFK adviser Ted Sorenson to head CIA, only to have the nomination killed. In 1997, Clinton tried to name his ultraleftist National Security Adviser Tony Lake (who had quit Secretary of State Henry Kissinger's staff over Vietnam), only to have that nomination rejected as well.

    Each time, the intelligence community acted to protect its own and curbed the liberal president's inclinations. But now, under Obama, the Democrats will finally have their way and appoint a liberal zealot to head the agency.

    Panetta will, presumably, curb such practices as waterboarding, rendition and warrantless wiretapping. So we won't gather much intelligence - but our spies will dot all the i's and cross all the t's.

    Over at Justice, Obama is naming four liberals to staff the agency, each determined to rein in effective intelligence-gathering.

    Professor Dawn Johnsen of Indiana University Law School is to head the Office of Legal Counsel. She distinguished herself by writing a law-review article taking issue with President Bush's efforts to keep us safe. It was titled, "What's a President To Do: Interpreting the Constitution in the Wake of the Bush Administration Abuses." Presumably, she'll bring back the days of the wall between criminal and intelligence investigations, which led to our failure to examine the computer of "20th hijacker" Zacharias Moussaoui, which contained wire-fund-transfer information on the other hijackers.

    No less an authority than Harvard Law professor Laurence Tribe, who taught Elena Kagan, the new solicitor general, predicted that she and Johnsen would "freshly re-examine some of the positions the previous administration has taken."

    Obama's other Justice appointments, David Ogden as deputy attorney general and Thomas Perrelli as associate AG, bring back Clinton/Reno Justice Department retreads. Both participated eagerly in the constraints on intelligence-gathering that left us so vulnerable on 9/11.

    Bush's legacy shows one clear achievement: He kept us safe after 9/11. Now his successor's policies are about to eradicate that singular achievement. The liberals will, of course, all cheer these appointments and the policies they'll pursue once in office, but these appointments make it frighteningly more likely that we will, indeed, be hit again.


    AEHI is the only publicly traded company proposing a deregulated advanced nuclear generating company for US

    Boise, Idaho, January 8 , 2008 – Alternate Energy Holdings, Inc (OTC: AEHI.PK): The Idaho Energy Complex, an advanced nuclear plant, is the only proposed pure nuclear generating company in the US and possibly in the world that is investor owned and publicly traded by AEHI said President and CEO Don Gillispie. Also, AEHI is the only public company to propose any new nuclear power plants west of the Rockies.

    “Most companies operating nuclear plants are regulated utilities unable to benefit from the free market thus the significant profitably of these electricity generators,” Gillispie said. “So, when you purchase a US nuclear utility stock you are also investing in coal, natural gas, hydro plants, etc. and sometimes even other non-power ventures.”

    AEHI is seeking local and federal approval to construct a large advanced nuclear reactor, the Idaho Energy Complex, which will produce electricity and bio-fuels from the waste heat near Mountain Home, Idaho to sell power locally and to the west coast. The company has 1,400 acres under contract in Idaho. Also, the company has a pending agreement with the Mexican government to construct an advanced nuclear reactor that will also desalinate sea water into potable water for the southwestern US. An MOU has been signed with the landowner and water sources for an advanced nuclear reactor for electricity as well as joint venture on solar for the Colorado Energy Park near Pueblo, CO. Another AEHI holding is Energy Neutral Inc which uses technology and renewables to virtually eliminate energy bills for homes, businesses and farms and is just starting to do business in Arizona and Colorado as well as Idaho.

    AEHI’s internationally recognized senior nuclear executive team is highly regarded in the management of construction, operations and maintenance of commercial nuclear reactors. The company has arrangements in several Asian countries to obtain funding and strategic partners for its projects. More information is also available at

    About Alternate Energy Holdings, Inc. (

    Alternate Energy Holdings actively acquires private green energy companies, as well as develops and markets innovative clean energy sources. Current projects include the Idaho Energy Complex (, nuclear plant and bio-fuel generation facility, energy-neutral home and business technology (, Colorado Energy Park and International Reactors, Inc., which assists developing countries with nuclear reactors for power generation and production of potable water.

    “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Although AEHI believes that the assumptions underlying the forward-looking statements contained herein are reasonable, there can be no assurance that the forward-looking statements included in this press release will prove accurate.

    US Investor Relations:


  145. Obama's transition office announced that William Lynn, an undersecretary of defense in President Bill Clinton's second term, is nominated to Defense Secretary Robert Gates' deputy.


    The transition office also announced other Defense Department nominations, including former Assistant Secretary of the Air Force Robert Hale for undersecretary of defense and Michele Flournoy, who was part of Obama's Pentagon transition team, for the undersecretary devoted to policy. Gates interviewed Lynn and the other appointments, according to the Pentagon

    "He interviewed each of them, came away impressed with their personal character and professional credentials, and recommended the president-elect hire them," said spokesman Geoff Morrell.

    Deputy Defense Secretary

  146. Today is Elvis's Birthday. He's 74, and everyone has forgotten.

  147. Ledeen seems completely off track in his sanguine view of Panetta @ CIA.
    Trish is not surprised.

  148. Nuclear proliferation is coming Here and Here

  149. she is the real deal....she is also by far the nicest, most sincere and seemingly honest subject I’ve ever questioned.

    Palin Takes Moose Gun To Media

    see video and exclusive interview

    Beyond the great interview for the film (from which there is still plenty of tremendous stuff yet to come), the most important part of my visit to the Palin home was learning there’s a big difference between thinking something is true and knowing for sure it is. I now know Sarah Palin is exactly who I thought she was.

    I also know, with moral certitude, that the media assassination of her, her character and family, was one of the greatest public injustices of our time...

  150. I’m thinking of trading my John Deere in on an ox.


  151. He dreams of the summer evenings he spent in the air conditioned cab listening to late night.
    (probly imagined he was in a space ship)

  152. The Roar of Creation

    Or, destruction?


    "It is not good for a galaxy to be alone."

    Even now, a mutual attraction is being felt between Andromeda and The Milky Way. Soon, as these cosmic romances go, a merging and cosmic dance will begin, culminating in a cosmic marriage, as the two become one and a new Galactic Being will leap forth--Milky Andromeda.

    We're the senior partner, I believe the book said, being both bigger, and I think, older.

  153. A cautious farmer these days should have both a John Deere and oxen--in fact two, male and female, of every kind of burden bearing, milk and meat giving critter.

  154. It takes Karl Rove to try to get the truth out there, as the world is taken over by myth making. Myth making in the bad sense.

    President Bush Tried To Rein In Fannie and Freddie

    When the real culprits are Barney Franks, Dodd, the democrats and etal.

    Now we've got the same crew to 'clean up the mess'.

  155. US of A from one Mormons point of view--

    on January 8, 2009 at 4:46 pm Mormon Patriot

    I am a mother, a Mormon, and I teach at a university. Thank you for your articles and your exhaustive research into these important topics. I am responding to your article, to your citing of the Mormon archives of Washington’s Vision, and to the link to the address by Ezra Taft Benson that you posted. I wanted to give you and the readers of this blog a little more perspective on the Church of Jesus Christ of Latter-Day Saints (Mormons) and its relationship with the United States of America.

    During the primary elections this year, I often felt infuriated at the media’s grilling of Mitt Romney, a Mormon, about the Church’s standing of not letting black men hold the priesthood until 1978. Did I feel it was wrong for people to question him about his church membership or to ask him about his response to that Church policy? No. I felt those were questions that needed to be asked so that the American public could understand the background to the Church’s policy and make an informed decision, especially since this election cycle seemed to revolve so much around racial issues. What did infuriate me was the absolute refusal of the media to question Barak Obama about his 20 membership in a church that was clearly racial and blatantly anti-American when they wanted to paint Mitt Romney and the LDS Church in the same light.

    Let me tell you a little about the Mormon’s history in America. In the early 1800s, after its founding in New York, the Church’s membership migrated westward to Missouri. There they suffered severe persecution, including the burning of their homes, the murdering of their church leaders, and the raping of their women. The governor of Missouri, Lilburn Boggs, issued an extermination order against the Mormons, meaning that Missouri “militias,” no more than rabid mobs, could drive the Mormons from the state, confiscate their lands, and kill them with impunity. In response to this persecution, the Church’s membership moved to Illinois, where they built a city from a malaria-infested swamp, and called it Nauvoo, the “City Beautiful.” Within a few years, Nauvoo was the largest city in Illinois, boasting an extensive school system, printing presses, theaters, and stately brick homes. However, persecution again raged and forced the members to leave their homes at gun point, in the dead of winter, February 1846, and migrate across Iowa, in an American death-march that is little talked about in our public schools. After several failed Petitions for Redress to the Congress, to the President, to the Supreme Court for the loss of thousands of lives, and several millions of dollars in property and real estate, the Church’s new leader, Brigham Young, had a vision to lead the Mormon people outside the United States, to Utah, which was then Mexican territory.

    In the midst of their suffering, and their being forced from the United States, a captain came with orders to conscript 500 Mormon men into the United States Army to fight against Mexico. The audacity of that move is incomprehensible to me. What is more incomprehensible is the response of my people. Even though the loss of so many able-bodied men would be devastating to their migration westward, outside the U.S., the Mormons still fulfilled their obligation to their country and to a government that had abandoned them in their greatest time of need. More than 500 Mormon men and a few women enlisted to form The Mormon Battalion and march over 2000 miles until finally being discharged in California in 1847.

    The rest of the Church moved onward to Utah. On first arriving in the Salt Lake Valley, a barren desert, on July 24, 1847, one would expect that the Mormons would be more than bitter about their treatment by the United States of America. However, to the contrary, their first “Pioneer Day” Celebration, on July 24, 1849, was to be a celebration not of the Church or its founding, but of America. There were brass bands, parades, flags, and people carrying copies of the Declaration of Independence and the Constitution. On that day, one of the Church leaders came forward and said:

    “Brethren and friends, we who have lived to three-score years, have beheld the government of the United States in its glory, and know that the outrageous cruelties we have suffered proceeded from a corrupted and degenerate administration, while the pure principles of our boasted Constitution remain unchanged. . . . As we have inherited the spirit of liberty and the fire of patriotism from our fathers, so let them descend [unchanged] to our posterity.” (Quoted in “The Test” by Boyd K. Packer, Ensign, November 2008, pp. 88-9)

    Most Mormons, who are citizens of the United States and descendants of those pioneers, have an undying, tested love for our country. Utah, to this day, has a greater percentage, per capita, of its population enlisted or on active duty than almost any other state in the nation. I found it insulting and more than infuriating that Mitt Romney’s church, with such a history as I have outlined here, could come under intense scrutiny and attack, when Barak Obama’s incendiary preacher, father-figure, and mentor of 20 years could receive a pass for his blatant hatred for and near-treasonous remarks against the United States of America. And yet, Barak Obama will now be the commander-in-chief of the very country his reverend and mentor excoriated.

    Have African-Americans suffered greatly at the hands of the government and of the people of this great nation? The answer is a resounding yes. But so have the Mormons. Governor Lilburn Boggs’ Extermination Order was not rescinded until the 1970s! It was technically legal in the state of Missouri to kill a Mormon without fear of punishment until that time. And yet, the current governor of Missouri campaigned extensively for Mitt Romney in 2008. We Mormons, as Christians, are more than willing to let bygones be bygones. The past must not be allowed to hold the future hostage. Loving your enemies, doing good to those who despitefully use you and persecute you are the foundations of Christianity, and any church that bears Christ’s name should be found not only espousing but living that doctrine.

    I have been a member of the Church my entire life. My family have been members for generations. One of my ancestors left his family and marched in the Mormon Battalion in service to a country that had abandoned him. And yet, not in 1847, nor in 1849, nor at any time during my life, have I ever heard a disparaging remark about the United States of America spoken from the pulpit by a leader in a Mormon Church, and I have attended services across the country and across the world; nor am I aware of any such remarks in the records of our leaders’ speeches. Yet Mitt Romney continually had to answer questions about his faith and his church’s position on everything. In contrast, we have now elected a man who is a member of a church that has openly criticized, disparaged, and attacked our great nation, and even met with her enemies, and no one questioned Barak Obama about his church’s policies.

    The readers of this blog and I may not agree on all issues, doctrinal or political. That is fine. That is the beauty of America. However, we can all agree that the ideals and the practical application of them as found in the Constitution of the United States of America are worth fighting for. I am not sure how the Congress or the Supreme Court will act or react in the coming days. And I must say that based on my ancestors’ experience with Petitions for Redress, I do not have much hope in that process either. However our official governmental bodies’ actions will not destroy America. America exists in the hearts and minds and souls of its people. That it is articulated and regulated in the Constitution, it is true; and while the election of a usurper legally makes that contract null and void and threatens the existence of the Union, America herself will still exist. While some succeeded in driving the Mormons out of the United States of America, they could never drive America out of the Mormons.

    And so it must be in our time. Those of us who still love freedom, and still love America, must stand strong and stand together, no matter what our differences, and no matter what the response is to our redresses for wrong. We the people are America, and the choices we make in our individual spheres have the most important consequences. Let us make those choices that will have the greatest consequences for good in our generation and in those to come.

    I believe that divine providence guides our country. Our Church leaders have continually emphasized that this country and its Constitution were founded by divine inspiration (see the Doctrine and Covenants of the Church of Jesus Christ of Latter-Day Saints, sections 98, 101, and 135). I know that God will listen to and answer our prayers for our country’s protection, if we, too, are willing to fight for and protect it.

    Thank you, Dr. Kate, and TD, and Judah Benjamin. Please keep up this dialogue and your vigilance in informing others of what you know.

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