Wednesday, April 2, 2008

Too Big To Fail and Fed Up!


Wow.
Bailing out Bear Stearns because they are "too big to fail".

You see, it all started out with real estate and mortgage brokers who steered people into easy-credit sub prime mortgages that they really could not afford if interest rates went up. They were told it wouldn't be a problem and then when their interest rate climbed and the real estate market started to take a dive, they couldn't afford the payments. Some couldn't even sell their properties for the amount of their mortgage. Who knew?

But you see the only loser here was the homeowner who shouldn't have put himself into that position to begin with. No one told the buyer to read the small print or to be careful. It's been argued that they knew what they were doing (and should therefore take the consequences), but judging by what our education system has been producing it might be doubtful that they knew what they were risking. Anyway, before things went bad, the broker walked away with his tidy commission and the bank just turned around and sold that lovely dopey mortgage loan to big guys like Bear Stearns.

Multiply that by a whole lot more "losers" who now face foreclosure and financial ruin, the big bankers are now stuck with all these bad loans (as if THEY didn't know what they were getting into). So as usual, the problems of the little guys were chalked up to making poor buying decisions - and when the big investment houses like Bear Stearns got stuck ...well... then the "govmint" had to make efforts to step in to bail them out because these of course were the important banker guys making $500,000+ who were now "suffering" and swimming in red ink. Poor babies. Some might have actually been at risk to losing some of their own assets. Tsk, tsk. Pass the Kleenex.

Charging to the rescue, on a white steed of course, is JP Morgan Chase in a nice little buyout, and if this problem of bad loans and foreclosures continues to persist, even with lowered interest rates as the Fed's "cure", then we know the Federal Reserve and Chairman Bernanke will be at the ready with taxpayer money in the billions to fix the problem. Only it won't really fix the problem. It just puts taxpayers' money into the pockets of the rich to save them from (gasp) failure. Are we a bunch of suckers or what? Oh, but don't cry - you are getting a stimulus check in the mail, so you can go shopping. (It's not even a decent sized consolation prize).

Personally, I think if these big investment houses buy bad investments they should all suffer like the rest of us who make bad investments. And if that means they go out of business without a government bailout - so be it.

No one is too big to fail.

Some say this Bear Stearns bailout probably should be noted as one of the biggest bank heists in history.

So now, here we are further down the road to nationalizing the banks and that's frightening.
Federal Secretary Paulson is recommending sweeping reforms that gives the Federal Reserve more power and control over the economy.
The plan would greatly expand the role of the Fed, created in 1913 after a series of bank panics, to oversee the stability of the entire financial system including commercial banks, investment banks, insurance companies, hedge funds, private-equity firms and others.

Rather than checking on the health of a particular organization, the Fed's focus would be on whether a firm's or industry's practices pose a danger to overall financial stability, said Treasury Secretary Henry Paulson, the former head of investment giant Goldman Sachs whom Bush put in charge of the plan.

"It will have broad powers and the necessary corrective authorities to deal with deficiencies," Paulson said.
Interestingly enough, you don't all believe that this 218 page document was just whipped up in the past few weeks do you? No doubt it's been sitting around waiting for Paulson and friends to spring it all on us. They had a "solution to a problem" that they have been creating all along! Are you surprised?

Seeing as these investment houses and the Fed got us into this mess to begin with don't you find it interesting that their solution is to give them more control? Has it occurred to you that this "credit crisis" is just being used as an excuse to expand the Federal Reserve's power over ALL financial markets just as 9-11 has been used as an excuse to curb our civil liberties and degrade 4th amendment rights (among other things)?

The 5th plank of the Communist Manifesto states:

Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.

We need a new monetary system...and like it or not Congressman Ron Paul was right in his predictions, and has been right all along with regard to monetary policy. Why didn't more of you listen? Read his most recent statement.
The Federal Reserve, a quasi-government entity, should not be creating money or determining interest rates, as this causes malinvestment and excessive debt to accumulate. Centrally planned, government manipulated economies always fail eventually. The collapse of communism and the failure of socialism should have made this apparent. Even the most educated, well-intentioned central planners cannot plan the market better than the market itself. Those that understand economics best, understand this reality.

In free markets, both success and failure are options. If government interventions prevent businesses, like Bear Stearns, from failing, then it is not truly a free market. As painful as it might be for Wall Street, banks, even big ones, must be allowed to fail.

The end game for this policy of monetary inflation is that the money in your bank account loses purchasing power. So, by keeping failing banks afloat, the Fed punishes those who have lived frugally and saved. The power to create money is a power that should never be granted to government. As we can plainly see today, the Fed has abused this power, and taxpayers are paying the price.
We are headed for some really bad stuff and marching even more quickly towards Socialism. It's not pretty at all if you believe in our Constitution and all that our forefathers have fought and died for. It's so sad to see this happening.

Redistribution of wealth, socialized medicine, nationalized economy, federal control of education... welcome to the New America. As for Hillary, Obama, McCain... it's all the same, just rearranging the deck chairs on this sinking ship of state.

Buy gold and silver. Work now to protect your assets. Vote all traitors out of office. See this all for what it really is and not what the media is telling you it is. Watch this video from Peter Schiff, author of Crash Proof: How to Profit From the Coming Economic Collapse (Lynn Sonberg Books).


“Extreme taxation, excessive controls, oppressive government competition with business... frustrated minorities and forgotten Americans are not the products of free enterprise. They are the residue of centralized bureaucracy, of government by a self-anointed elite.” - Ronald Reagan


and from Von Mises Blog:
The 3 towers of wealth destruction:
1. Interventionist Foreign Policy
2. Government provided services like education, health care and social security.
3. Intrusive law enforcement.

Yeah... that sounds about right.

1 comment:

Elisheva Hannah Levin said...

The whole thing is extremely worrying. And although you mentioned it, you did not elaborate on how all those interest rate cuts are purchased by printing money. That's why the gas prices are increasing at the pump, because the dollar is falling.

Boy, am I glad we own our house. But they are raiding our standard of living to prop-up the "big houses."

I am writing in Ron Paul this November. I have been "thowing away" my vote every four years since the election of 1980 (I have never cast my vote for a major party candidate) Maybe this time...