Joe The Senator--Joe Biden To Stump In Colorado Next Week

Details haven't been announced yet, but Biden will visit Tuesday and Wednesday.

The Worst Is Yet To Come: Blame Congress--And Obama

By Julian Dunraven, J.D., M.P.A.

Honorable Friends,

I hope you did not get too excited by the rise in the market yesterday. Our system is nowhere near stable, and even further from recovery. We have not even begun to address the fundamental problems that have come together in this crisis. What we have heard about is a large number of bad mortgage backed securities which created a strain on credit in the banks and spurred Congress to pass the foolish $850 billion bailout. The problem has now bled into the financial paper market, though. Without the financial paper market, and the short term loans it provides institutionally, credit in this country dries up entirely. Thus, the Fed is injecting an additional $1 trillion directly into the commercial paper market to try to keep things flowing. What you have not heard, is how terrifyingly extensive the disease actually is. Just listen to Bud Burrell’s interview to get a good idea.

We now have banks that are hugely overleveraged, often at a rate of more than 40:1 debt to assets. Freddie Mac and Fannie Mae actually reached levels of almost 100:1. They also became hugely tied up with bad mortgage backed securities and other credit default swaps of derivatives, as did countless others. As we know, the consequences of this sort of behavior have been severe. However, the damage is much worse than the $850 billion bailout, or even the $1 trillion Fed remedy can handle. Over $58 trillion in derivatives liabilities has already been reported—and that covers only 10% of entities who engage in such trades. We have no idea how deep the poison really goes in the remaining 90%.

On top of this, we also have naked short selling (NSS) running through our ailing market like a fatal cancer. Short selling is where someone leases a security expecting its value to fall. He then sells the security to another. At the end of the lease, he repurchases the security, hopefully at a lesser price than it sold for originally, and returns it to the owner. NSS is similar, except that the seller sells the security before he is sure he can even lease it. As a result, people may pay for a security that cannot be delivered. This practice is illegal, but has not been enforced by the Securities and Exchange Commission.

This loathsome practice has contributed to the demise of Bear Stearns, Merrill Lynch, Washington Mutual, IndyMac, Lehman Brothers, and AIG. Its practitioners presume to sell stock in these companies without ever obtaining that stock. They then drive down the stock price, often without ever delivering a single stock certificate. The companies collapse -- not from any balance sheet problems -- but from these phantom trades of non-existent stock. It is even happening in commodities such as gold and precious metals, where people are selling ownership certificates without ever having the gold to back it, and the buyer is none the wiser unless he tries to claim the actual gold. As these problems converge now, they have the very real potential of utterly obliterating our economy and the value of the dollar itself.

Does it surprise you that this corruption has grown so large? It should not. Congress has done nothing but encourage it. Congress repealed of the Glass-Steagall Act in 1999, which allowed for the sale of mortgage backed securities and blurred the line between lenders and investors. They passed Sarbanes-Oxley in 2001, along with mark to market accounting. The hastily crafted Act required hugely expensive accounting processes that did little but drive small business out of public trading while doing nothing to curtail corruption in larger institutions. Mark to market accounting also forced assets to be valued at the last sale of similar type whether or not that sale was representative of the asset in hand, thus skewing valuation. Our government then lifted the leverage rules in 2004. Previously, banks were limited to a ratio of 12:1 debts to assets. With the lifted rules, they ballooned into 40:1 ratios or higher. Next, despite Regulation SHO prohibiting naked short selling the SEC has never enforced it, and even gone so far as to falsify reports playing down the dangers of the practice. Finally, let us not forget all the inflationary tinkering the Fed did to prevent any real adjustment in the market that could have purged these problems before they became behemoths.

The real root of the mortgage problem, though, began with the Community Reinvestment Act of the Carter administration in 1977 and amplified by Clinton in 1995. This encouraged loans to people with no money down, no assets, and no income. It also created the Community Development Financial Institutions Fund, which has been abused to support the activities of ACORN and its fraudulent voter registration drives. Incidentally, ACORN was also Obama’s first employer. Freddie and Fannie, operating under the goals of this Act, hid their losses through massive corruption. As they cooked the books, they funneled large donations into Congress to fend off oversight and reforms attempted by Bush in 2001 and 2003, and later by McCain in 2005. The second largest recipient of those corrupt donations was Barack Obama, and after only three years in office.

As Burrell notes, the legal system the Congress has created is one ideally designed for organized crime—not free markets. It has created a perfect economic storm that threatens to engulf the whole world. Those responsible for leading us here, especially Sen. Obama, who now presumes to lead us as president, should be held accountable for their reckless and irresponsible actions.

The Prophecy Of Ayn Rand From The Gods Of Rudyard Kipling

By Julian Dunraven, J.D., M.P.A.

Honorable friends,

My ballot arrived in the mail today and I greeted it as I would a poisonous viper. As I considered which candidates would be least ill-equipped to deal with the situation we are beset with today, my mind continually turns toward a strange encounter I had this morning at the courthouse. Passing through the lobby, I paused to eavesdrop on a political debate between a few young people regarding the relative merits of McCain and Obama. I am always interested to learn how others view the political landscape, but was disappointed upon hearing only echoes of the populist nonsense the campaigns have been spewing about how their own brands of massive government intervention will save the economy—and all of us — from disaster. After a moment, though, my attention was drawn to an elderly lady sitting alone on a bench; she seemed to be silently crying.

Though this is not an entirely unusual event at a courthouse, it concerned me enough that I approached her to inquire whether she was well. She turned her careworn face to me and dabbed at her eyes with a handkerchief before managing an embarrassed smile. She explained that she had also been listening to the youthful debate and had become distraught by what she had heard. It seems that she was born in Germany and is old enough to remember Hitler’s rise as the nation descended into fascism. People spoke in just the same way, she informed me. Times were hard enough that when the government promised it could fix everything if it just had a few less restrictions and a little more control, the people believed them because they wanted to. She said never thought she would see America making those same mistakes: trusting government to solve all our problems and giving it unfettered access to our economy and our liberty to do it. She told me she knows where that road leads and despairing at the idea of getting any closer ever again.

I never did hear why this lady was at the courthouse, but I thought about what she said for quite a while afterward. Lately, as the Fed spins out of control and Congress and the President lurch from one irrational move to another, many of us have been warning about the failed economic controls attempted in the Great Depression and in communist and socialist economies which just serve to cripple markets and make bad situations worse. What we have not focused on, though, and what she is right to point out, is that massive government control of our economy has consequences that reach much further than just economics. Do any of you recall what Ayn Rand said of the doom of rotted civilizations in Atlas Shrugged?

Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self sacrifice – you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: ‘Account overdrawn.’ (New York: Signet, 1985. 383-384).

As I listen to the hum of the Fed printing presses, and watch as our government nationalizes our financial system and squanders the wealth of our nation on bailouts that should never have happened, I cannot help but think Ayn Rand may be correct.

The candidates this year all have a decidedly poor understanding of money and economics, and we have heard them make many promises of even more massive government intervention into the economy sweetened with populist rhetoric. Though John McCain, and Republicans in general, are less likely to balloon our government into the fascist, socialist nightmare Rand foretells, they have done little to earn anything close to our full confidence. We should all be putting a great deal of pressure on our Republican candidates in these last few days of the election to commit to solidly free market principles, and the reduction of government spending and power, or risk losing our votes. There has never been a better time to force a promise out of desperate politicians.

Should we fail to educate our politicians, unfortunately they will not be the only ones to suffer for their ignorance. Rudyard Kipling’s Gods of the Copybook Headings are even now descending in wrath to forcibly remind us of the economic realities we have tried so hard to deny for so long. Martin Hutchinson has a few good suggestions for appeasing these particular gods, all of which the candidates should probably study if they want to get us back on track to healthy free markets.

**Update--Entire Town Hall Video Posted; John McCain Health Care Town Hall Meeting In Denver

Closing statements (the controversial statements about Iraq and oil, skip to 5:00):


**Update 2--MSM reports coming in--"Americans are hurting today"; "McCain, in Denver, decries '100 years in Iraq' ads"





**Update--videos posted:

Part 1:


Part 2:


Part 3:


Part 4:


Part 5:


Part 6:


Part 7:


A look around, Sen. McCain exits:

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So much for the "liberal activists" that were supposed to disrupt the event, although the leftosphere is blowing a gasket over McCain's comments on oil and Iraq . . .

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Where in the world:

What--Colorado Health Care Town Hall, Denver

When--May 2, 2008 8:00 a.m.

Where--Robert E Loup Jewish Community Center
350 S. Dahlia St.
Denver, CO 80246

More Moonbat 1968 Nostalgia--Tariq Ali Laments Loss Of Revolutionary Zeal, Film Chicago 10 Glorifies DNC Agitators

First, moonbat lefty Tariq Ali's frothy paean to the "revolutionary" spirit of that fateful year, and the lament that it was not sustained:

The glorious decade (1965-75), of which the year 1968 was only the high point, consisted of three concurrent narratives. Politics dominated, but there were two others that left a deeper imprint - sexual liberation and a hedonistic entrepreneurship from below. We had cause to be grateful for the latter. We were constantly appealing for funds from readers when I edited The Black Dwarf in 1968-69. One day a guy in overalls walked into our Soho office and counted out 25 grubby £5 notes, thanked us for producing the paper and left. He would do this every fortnight. Finally, I asked who he was and if there was a particular reason for his generosity. It turned out he had a stall on Portobello Road and, as to why he wanted to help, it was simple. "Capitalism is so non-groovy, man." It's only too groovy now and far more vicious.

In some ways, the 60s were a reaction to the 50s, and the intensity of the cold war. In the US, the McCarthyite witch-hunts had created havoc in the 50s, but now blacklisted writers could work again; in Russia, hundreds of political prisoners were released, the gulags were closed down and the crimes of Stalin were denounced by Khruschev as eastern Europe trembled with excitement and hopes of rapid reform. They hoped in vain.
. . .
Were the dreams and hopes of 1968 all idle fantasies? Or did cruel history abort something new that was about to be born? Revolutionaries - utopian anarchists, Fidelistas, Trotskyist allsorts, Maoists of every stripe - wanted the whole forest. Liberals and social democrats were fixated on individual trees. The forest, they warned us, was a distraction, far too vast and impossible to define, whereas a tree was a piece of wood that could be identified, improved and crafted into a chair or a table. Now the tree, too, has gone.

"You're like fish that only see the bait, never the line," we would mock in return. For we believed - and still do - that people should not be measured by material possessions but by their ability to transform the lives of others - the poor and underprivileged; that the economy needed to be reorganised in the interests of the many, not the few; and that socialism without democracy could never work. Above all, we believed in freedom of speech.

Freedom of speech--except for those that disagree with them. That is so "non-groovy, man."

But what would an entry about 1968 be without a reference to the Democratic National Convention of that year--with a movie detailing the Chicago agitators using archival footage and rotoscoping animation entitled Chicago 10 (via Drunkablog):

Capitalism's PR Problem

The best argument for capitalism is socialism, but it suffers a bit of a PR problem (via Tim Blair):

The problem for those of us who believe that capitalism offers the best chance we have for leading meaningful and worthwhile lives is that in this debate, the devil has always had the best tunes to play. Capitalism lacks romantic appeal. It does not set the pulse racing in the way that opposing ideologies like socialism, fascism, or environmentalism can. It does not stir the blood, for it identifies no dragons to slay. It offers no grand vision for the future, for in an open market system the future is shaped not by the imposition of utopian blueprints, but by billions of individuals pursuing their own preferences. Capitalism can justifiably boast that it is excellent at delivering the goods, but this fails to impress in countries like Australia that have come to take affluence for granted.

It is quite the opposite with socialism. Where capitalism delivers but cannot inspire, socialism inspires despite never having delivered. Socialism’s history is littered with repeated failures and with human misery on a massive scale, yet it still attracts smiles rather than curses from people who never had to live under it. Affluent young Australians who would never dream of patronising an Adolf Hitler bierkeller decked out in swastikas are nevertheless happy to hang out in the Lenin Bar at Sydney’s Circular Quay, sipping chilled vodka cocktails under hammer and sickle flags, indifferent to the twenty million victims of the Soviet regime. Chic westerners are still sporting Che Guevara t-shirts, forty years after the man’s death, and flocking to the cinema to see him on a motor bike, apparently oblivious to their handsome hero’s legacy of firing squads and labour camps.

And today's most self-righteous have flocked to the next-generation socialist ideology:

Environmentalism, too, has the happy knack of inspiring the young and firing the imagination of idealists. This is because the radical green movement shares many features with old-style revolutionary socialism. Both are oppositional, defining themselves as alternatives to the existing capitalist system. Both are moralistic, seeking to purify humanity of its tawdry materialism and selfishness, and appealing to our ‘higher instincts.’ Both are apocalyptic, claiming to be able to read the future and warning, like Old Testament prophets, of looming catastrophe if we do not change our ways. And both are utopian, holding out the promise of redemption through a new social order based on a more enlightened humanity. All of this is irresistibly appealing to romantics.

Both socialism and environmentalism also share an unshakeable belief in their own infallibility, which further ramps up their attractiveness. Both dismiss their opponents as either ignorant (‘falsely conscious’) or in bad faith, and they are both reluctant to allow counter-arguments, evidence, or logic to deflect them from the urgent pursuit of their proffered solutions. Although they both ground their claims in ‘science,’ their appeal is as much emotional as rational, and both take themselves so seriously that they lose any sense of irony. Rockstars fly around the world in private jets to perform at sellout stadium concerts demanding action on global warming, and indignant youths coordinate anti-globalisation protests using global communication networks.

And the intellectuals that harp on the benefits of socialism?

But the best explanation for the intellectuals’ distaste for capitalism was offered by Friedrich Hayek in The Fatal Conceit. Hayek understood that capitalism offends intellectual pride, while socialism flatters it. Humans like to believe they can design better systems than those that tradition or evolution have bequeathed. We distrust evolved systems, like markets, which seem to work without intelligent direction according to laws and dynamics that no one fully understands.

Nobody planned the global capitalist system, nobody runs it, and nobody really comprehends it. This particularly offends intellectuals, for capitalism renders them redundant. It gets on perfectly well without them. It does not need them to make it run, to coordinate it, or to redesign it. The intellectual critics of capitalism believe they know what is good for us, but millions of people interacting in the marketplace keep rebuffing them. This, ultimately, is why they believe capitalism is ‘bad for the soul’: it fulfils human needs without first seeking their moral approval.