Friday, September 26, 2008

Bush Didn’t Convince the Nation

Recently, we've seen how one company can grow so large that its failure jeopardizes the entire financial system.—President George W. Bush, September 24, 2009 explains taxpayer bailout
Speaking in sweeping generalities Wednesday night President Bush asked the American people to trust that he and Congress would do the right thing in using $700 billion dollars of taxpayers money to give to unnamed people who have up until now made historical profits at the expense of the American taxpayer while these unnamed people and Corporations gamed the free market enterprise system. (transcript of speech)

In the President’s attempt to justify this criminal request he gave all the reasons why Americans shouldn’t allow for a bailout of the free market economy.

Number one companies have gotten to big. The only reason that companies are consolidating into such huge Global entities is to amass more wealth and more power.

These huge monstrosities are not helping competition in the market place, furthermore such wealth and power are a direct threat to the freedoms of the American people.

No to the contrary, what these Corporations are doing is they are devouring their competitors while creating tyrannous control and power over the markets of which they are apart. But if these Mammoths are threaten in any way the whole system is threaten and that includes the American people, and as we now see that also includes the World.

If the President was referring to the Corporation AIG as the one company that grew so large that its failure jeopardizes the entire financial system, then that is a rock solid case which demonstrates that it is detrimental to Americans and people of all countries to allow a company or companies to get so huge by not allowing some controlling authority to ensure that a company might not destroy the entire system by greed. (see related story)

Second the President should not expect the American people to give him trust without going into great detail who are the people and companies responsible for this crisis. Isn’t the President doing the same thing as he says caused this problem?

The President is asking the American taxpayer to hold so-called bundled bad debt without getting proper information on the requestors of the $700 billion dollar loan.

The American people need to know in detail names of who, methods of how and the amounts of money that was taken in what resulted in the need for entire free market to crawl on its knees to the American taxpayer to beg for a loan.

In the following excerpt from the president’s speech he describes a market that was working as it should:

[W]ell, most economists agree that the problems we're witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad because our country is an attractive and secure place to do business.

This large influx of money to U.S. banks and financial institutions, along with low interest rates, made it easier for Americans to get credit. These developments allowed more families to borrow money for cars, and homes, and college tuition, some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit, combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.

Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.

Optimism about housing values also led to a boom in home construction. Eventually, the number of new houses exceeded the number of people willing to buy them. And with supply exceeding demand, housing prices fell, and this created a problem.

Borrowers with adjustable-rate mortgages, who had been planning to sell or refinance their homes at a higher price, were stuck with homes worth less than expected, along with mortgage payments they could not afford.

As a result, many mortgage-holders began to default. These widespread defaults had effects far beyond the housing market.

See, in today's mortgage industry, home loans are often packaged together and converted into financial products called mortgage-backed securities. These securities were sold to investors around the world.

Many investors assumed these securities were trustworthy and purchasers of mortgage-backed securities were Fannie Mae and Freddie Mac.

Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.

The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses.

Before long, these securities became so unreliable that they were not being bought or sold. Investment banks, such as Bear Stearns and they could not sell. They ran out of money needed to meet their immediate obligations, and they faced imminent collapse.

Other banks found themselves in severe financial trouble. These banks began holding on to their money, and lending dried up, and the gears of the American financial system began grinding to a halt.

With the situation becoming more precarious by the day, I faced a choice, to step in with dramatic government action or to stand back and allow the irresponsible actions of some to undermine the financial security of all.

I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business.

Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence, and major sectors of America's financial system are at risk of shutting down.- George W. Bush

The above is how free enterprise works and here’s a very simple principle, What goes up, must come down!

According to the President everything worked except criminals who took advantage of the system. The President needs to identify these people clearly.

In addition to that, we can not artificially prop up a market that has over-reached and gotten too big. At some time this system was due to collapse because too many unscrupulous people were taking billions of dollars out of the system to place in their individual private accounts we should make them return that money.

Third Republicans have allow Democrats who are primarily responsible for not allowing regulation on these huge financial companies take the high ground in this crisis and by doing so have virtually cost Sen. McCain the election.

Democrats are blaming Conservative principles of allowing the markets to take care of themselves when it was Democrats who blocked Republican efforts to regulate these markets.

Sen. John McCain and Republicans attempted to do something to regulate these companies in 2005 and was blocked by Democrats and Rep. Barney Frank, Sen. Charles Schumer Hillary Clinton, Barack Obama and Sen. Charles Dodd . (see story)

Yet Republicans continue to allow Democrats to act if they had nothing to do with this problem and the Media is describing this as a Republican problem.

In an interview with Chris Cuomo of Good Morning American President Clinton freely admits that Democrats blocked reform and regulation that Republicans attempted to enact as my previous two post outlined. President Clinton says that Democrats even blocked his attempts to regulate the financial markets. (see 5min video about 3mins in)

“I think the responsibility that the Democrats have [in this financial crisis] may rest more in resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac"—Former President Bill Clinton, Good Morning America September 25, 2008
If the McCain campaign doesn’t get on the front end of this perception and reverse it this spells doom for his chances to be President.

As long as the Democrats can play on the ignorance of the America people Sen. Obama has a fair chance of turning sentiment away from Sen. McCain.

This crisis is the canary in the mine shaft for the American people there is something terribly wrong with America and it is my belief that Barack Obama and his Party the Democrat Party are the problems not the situation.

The last time Democrats worked with President Bush was on a Comprehensive Illegal Alien bill which would have given upwards of 20 million illegals unmerited and unwarranted citizenship.

This time President Bush and his Democrat allies would give criminals who have distressed the free market system $700 billion dollars to continue in their criminal enterprises against the American people.

Somehow the President didn’t convince me that this is the right thing to do! And I don’t believe that he convinced the American people.