Partisanship isn't all political

Yet more of my raw commentary from Hot Air, this on the long starting IRS scandal with the investigation of conservative non-profit organizations, which we are also getting hints of it going to Jewish groups and for-profit organizations in business.  Here I lay out something basic to keep track of in this thread on the topic:

Obama refuses to put the IRS in its proper place – he calls it an ‘independent agency’ but it isn’t. The IRS is under the Treasury Dept.

Now if the Tea Party groups reporting the increased forms and illegal questions are right, then this started in 2010 and it came from the one place that had one of the fastest nominees to go in place because of the financial ‘crisis’: Tim Geithner.

Tim Geithner was pro-Obama while in the Federal Reserve and knew the ropes, and was supposed to be wicked smart while being unable to do his own taxes. TurboTax Tim should have had a real good idea how to run the Treasury Dept. and yet within a year and half of his being in charge you get this sort of thing going on.

Thus TurboTax Tim is either:

- absolutely incompetent, doesn’t know any of the ropes in the financial side of DC and has no clue about how to properly run a large organization,

OR

- ran a department where it was not only allowed but encouraged by lack of oversight to start running a partisan investigation of those that the Administration didn’t like politically.

It can’t be both due to the amount of time TTT had in the FR: he did, indeed, ‘know the ropes’ and had progressed up the ladder of leadership high enough for Obama to appoint him. Basically the first option is non-viable as a cover-up fallback line.

That means TTT had put into place individuals who would run a partisan IRS. It takes a good six months to a full year for someone to actually figure out a high level federal job (look at every Administration post-WWII for this, as few get off the ground smoothly with appointees) and then start actually exercising decent oversight (or lack thereof) from their positions. Factor in time to go through the Senate and time to figure out the job and you get nearly a year and a half because the Senate wasn’t being all too swift on appointees.

If one remembers back to articles during the 2008-09 time frame pointed out that TTT was pro-Obama early on while he was at the Federal Reserve, so this raises the question: what, exactly, were the policies of the Federal Reserve and were they being influenced by Geithner towards partisan ends?

Any investigation of the IRS under Geithner must ALSO look at the Federal Reserve and start giving IT scrutiny because any head of the Treasury coming from the Federal Reserve that allows such things to go on under his command may also have had problems at his prior job.

If the IRS has problems, then Treasury has problems.

If the head of the Treasury Dept. had this sort of problem under his command then scrutiny into prior job activities in the financial sector under federal oversight must be performed because of the rapid pace in which the partisanship started.

Thus the Federal Reserve tenure of Tim Geithner going all the way back to his early NY Fed. days must be on the agenda. Not just a standard scandal due to an Administration, but also this actor put in place by them in the Dept. where it originated.

IRS then Treasury.
Treasury then Geithner.
Geithner then Federal Reserve.

Let your Congresscritter know as they might be a bit overwhelmed by the rush of events to figure this one out.

ajacksonian on May 14, 2013 at 7:28 AM

And then adding on to that just a bit later:

 

Spot on analysis. And TTT and the REB were college bosom buddies.

AH_C on May 14, 2013 at 7:44 AM

My thanks!

I try to state only what is the blindingly obvious to me and the early help of TTT with Obama was something the Left cheered about at the time. Go back to late 2008 to early 2009 in the HA archives and you can pull up some of the articles and commentary.

TTT was one of the engineers of the fiscal situation in 2008, along with a couple of his cohorts (Bernanke and Paulson), and they were strong-arming the bailouts through Congress and Bush, and then threatening banks who weren’t taking them when Obama came to office.

Something was and is seriously wrong with the Federal Reserve and its role in the financial crisis and the rise of Obama, then the slathering across all banks the problems of the few (mostly Citibank) is deplorable. It shows partisanship and an attempt to centralize the fiscal power of the US in the Federal Reserve by using it to partisan ends to get people into power to further go after organizations questioning the scope of US power: Tea Party groups.

Going after Tea Party and limited government organizations is not just a help to Obama but to the FR to escape scrutiny in ITS role in the fiscal mess we are in. It isn’t the sole author, but it is a major co-author and beneficiary of the Obama spending as it now has pent-up digital cash with which it can threaten the entire global banking system by destroying the value of the US dollar. To-date that money hasn’t been released and so inflation is low… the moment it gets into circulation your dollar will drop to some small fraction of its buying power and hyper-inflation ensue.

This time bomb must be stopped as well as the threat of financial destruction via the FR.

The IRS is just one part of a larger machine.

Pay attention and remember that fire must also be aimed at Geithner, Treasury and the Federal Reserve to get to the bottom of this. Geithner is a partisan and has been one to his own ends and beliefs before Obama. If you think a partisan federal government is a problem, imagine a partisan financial system that isn’t answerable to government.

ajacksonian on May 14, 2013 at 7:58 AM

I can point out that if one were a partisan in favor of an increased role for the Federal Reserve in controlling government policy or to evade government scrutiny, then working to quash those supporting those things would serve a dual function.  Also note that by Obama's attempt to make the IRS an 'independent agency' he is trying to isolate it from the Treasury Dept. and Tim Geithner's oversight.  This is not the case, of course, and Tim Geithner has control over these events by his position in the Treasury Dept.  It is odd to see a President try to protect an underling who should be easily bus-bound, but that is the case here.  It is by that odd protection that one must ask: why is President Obama trying to protect Tim Geithner?

And what was Geithner's agenda in the Federal Reserve and his role in the lead-up to the financial crisis?

Do you remember when Progressives used to believe...

Actually you would have to understand past positions by candidates who were Progressives way back when the Progressive movement started.  So lets do a bit of a refresher course to take a look at where Progressives were on policy and where they are today.  This should be fun, no?  All that intellectual integrity and stuff, you know?

Do you remember when Progressives used to believe...

1) That large companies were the 'problem'?  You know back in the Good Old Days when there were guys like Vanderbilt, Carnegie, Rockefeller, and JP Morgan the Progressives got all in a twist about corporate trusts, 'fat cat capitalists' and companies that used to put worker's life and safety at risk for increased private profit?  The guys that were the posterboys for anti-trust legislation, many of them had a major problem with control and money.  Yet in their waning years they also started to give the boatloads of cash away to fund libraries, universities, private foundations and even charities.  Most industrialists of the sole-owner variety do that because they had a long-term conscience even if their short-term ethics sucked.  The Sherman Anti-Trust act was put together to end such monopolies and legislation thereafter went after oligopolies and unfair collusion to rig the marketplace in their favor.

Today we have 'too big to fail' to describe such companies and through their lobbying of Congress corporate giants like GM and Chrysler got government cash and had their bond holders screwed over in favor of the Unions.  Government is not only propping up failing industries, it is propping up failing Labor Unions, as well.  And yet this flies in the face of the necessary reduction in sizes that companies must go through when fiscal priorities finally put them in bankruptcy court for re-structuring.  The necessary income and outgo all get renegotiated from the ground-up, so that failing parts of a company can be removed and the company restructured.  This means Big Labor takes a haircut, various smaller sub-organizations are determined on their fiscal viability and many get cut off, and creditors and bond holders come to legal terms with reduced expectations but still having a vital stake in the companies that go through such restructuring.  The government decided all that, and not well, so that companies had to undergo restructuring not based on fiscal reality but political crony gain.  Yet that is as unfair to the creditors and investors as crunching workers for added profit and the US taxpayer ends up footing the bill for such practices.  These are companies that would have done much better being restructured, selling off parts and trimming others to become lean and profitable against more competition.

And, BTW, that earliest era of Anti-Trust was specifically made to increase competition.  That was seen as forcing the marketplace to have to adopt more than pricing and income to become competitive and would continue the private movement by smaller industries to pay workers more under safer working conditions so that they could own their own homes that had amenities that you couldn't get by working with the Titans of Industry and Banking.  More on that in a bit.

Just so you can see the differences: original Progressivism has Big Business as bad, but their modern counterparts have such things as good and must be supported by the taxpayer!  Isn't that swell?  Sounds like collusion to me to shaft other industries in favor of cronies, which is an anti-competitive process.  They should be prosecuted, Big Business, Big Labor and Big Government.  Too bad Big Government writes the laws, huh?

 

2)  Remember when the banks were seen as the problem?  You know the Big Banks, those by JP Morgan that could lend money to the US government to cover its entire debt for a year?  That apparently wasn't going to last because it wasn't actually forcing the US federal government to offer its debt on the open market.  Yet the evil, fat cat bankers were making money off the debt of the American government and the American taxpayer was footing the bill!  Luckily those Big Banks colluded to create a new entity and proposed legislation that went to Congress with the election of Woodrow Wilson and the Federal Reserve was born!  An institution that is opaque as to who runs it, opaque on its transactions, has a license to print money, makes money off of selling the US debt and would never, ever be passed as legislation today to favor the largest banks with goodies and guarantees and shaft the smaller banks by excluding them from the federal debt market.

Oh, wait, that did happen again, and was called the Toxic Asset Relief Program, or TARP!  It was TARP that brought in the 'too big to fail' meme and what it was supposed to do was buy out real estate assets from banks so as to shore up the market.  Instead what it did was force money at banks both solvent and insolvent types to hide the one or two huge banks that were facing critical solvency issues.  Banks like BB&T were told that they would be audited with a fine-tooth comb and raked over the coals for any minor paperwork problems if they didn't take the cash.    From that we learn that the Federal Reserve and US Treasury put such pressure on small and mid-sized banks to make it look like the entire sector was failing.  It wasn't.  BB&T paid everything back early so they could get out of the hold the federal government had on them and told what little they knew about the larger banks that were being covered by this wasteful fraud.  What 'too big to fail' did was to create a class of 5 banks that could do anything, take any risk, hazard the funds held in them with any venture they wanted and the US federal government would guarantee their continued existence.  In other words they became banking cronies of Big Government and backed by you, the US taxpayer.

No matter what you say about President Jackson, he knew a corrupt, crony banking situation when he saw it and got rid of the 2nd National Bank and forced the system to scale down so that localized banking at the State level could rise to take its place.  During the recession that started overseas in Great Britain and a few of the Continental Nations, that spread to the US and gave cover to later generations to conflate an overseas problem that was going to hit the US (via foreign held investors) and the demise of the National Bank.  The head of the National Bank also threatened to break the Nation if the thing was dissolved.  Today they don't need threats, just the convenient presence of lobbyists and pointing out that the Federal Reserve now prints money to cover the National Debt, and now HOLDS 60% of it.  They, apparently, wish to own the US federal government and its assets.  Luckily the federal government has all that lovely land it controls in Western States, no?  A match colluded to in the halls of Congress.  But then Progressives never actually treated the Big Banks like they did Big Business, back in the day, and break up such entities. No if you had to have a Big Government you had to have a Big Bank sector to finance it at taxpayer expense. Too bad Big Government writes the laws that protects and creates such entities and programs under the guise of 'breaking the system in order to save it' because they are 'too big to fail'!

 

3)  The rise of Big Labor was something that Progressives wanted, and pushed for as a counter to Big Business.  You needed to have Big entities to go after each other led by a Big Government mentality that makes it possible, after all.  Apparently all the US federal government under the power of Progressives in both parties knew how to do was to establish punishing bureaucracies with regulations so that Big Labor could get a Big Government backing to rise up against Big Business.  Those were the Good Old Days of brass knuckles, armed confrontation and organized crime getting into the racket because it was, after all is said and done, a racket.  That other path of lauding corporations that actually did well by workers, like George Westinghouse and Henry Ford (at least in his early years) showed that if you had safe working conditions, good pay, allowed workers to buy their own housing, put medical facilities into the manufacturing footprint and then subsidized social groups to build a strong surrounding community with good housing, sanitation and roads, that this would be a better thing than extracting every cent from overworked workers in bad working conditions.  Westinghouse had to face down the Big Business and Big Banks of his day and found their manipulative ways were intent on breaking his business because it was actually successful, expanding, increased PUBLIC SAFETY, increased productivity and gave a half-day off on Saturday which was unheard-of amongst the Vanderbilt, Rockefeller and Carnegie types.  He beat Edison at his own game, took 'inside' risk with interior profit to expand business and the few time he had to take on external capital he got punished for it.  A decade after his death his workers erected a monument to him in Pittsburgh, PA.  George Meany, the man responsible for the American Federation of Labor, said that if more capitalists had followed Westinghouse, there would be no organized labor movement in America.

No such men are never championed by Progressives because they freely offer such benefits to compete, make a profit and be responsible to their workers and communities.  You could find George Westinghouse at a lathe helping a lathe operator years after his companies became successful, which was not stereotypical behavior.  So instead of backing these men by offering tax discounts or some such (and that is a subsidy, don't get me wrong on that) to encourage good behavior and drive out bad, the Progressives wanted to 'reform' Big Business and not have it actually have to compete against those offering better labor standards by facing a profitability problem of subsidized good standards.  The power of government was used to force 'regulations' on industries to prevent child labor, unsafe working conditions and the such like, which are all laudable goals, just that the means are those of power, not persuasion.  Really, how many years were children going to be working in coal mines once heavy equipment could do their work at a fraction of the cost?  Vanderbilt's New York Central Railroad refused to put in Westinghouse's air brakes because the life of brakemen (who had to sit at the top of cars and manually turn brake wheels to slow each car, jumping from car to car) was cheap.  Publicity from the next major accident because of this, however, caused ridership to crash and the NY Central Railroad soon sported Westinghouse air brakes.  They are actually cheaper to run when lawsuits and liability are taken into consideration, and the Vanderbilt family proved that point by having to install safety features due to public outcry.  Similarly the large excavator was going to usher in a new era of mining that actually required brawnier men to move equipment around and children going through cramped shafts was going to be relegated to a bygone age.  You can still, to this day, however, find garment sweatshops with working conditions barely better than what was seen in the 1870's through 1910's as they are far easier to conceal than twisted and broken bodies of children from coal mines, and yet are also a heavily regulated industry.  And yet the Labor Movement got US federal backing and it is simply a means for workers to organize themselves... and then kick-back money into campaign coffers of their political backers.

Progressives are all against graft... when they aren't getting it, you see.  When they are getting it, they will dress up such graft with high sounding ideals and good intentions, but take the graft just the same.  Progressives are not about clean government, but dirty government that encourages cronies, kick-backs, hands out goodies to cover those two things, and ensures that by taking graft it gets a political constituency that will always back it, no matter how awful its candidates are.  Because, you see, those candidates are part of the 'enlightened party' of elites that is on both sides of the aisle in the halls of power.  While a man like Teddy Roosevelt wasn't all that easy to convince with money, a man like Woodrow Wilson, was, and he loved that elite establishment as one necessary to mold the US population into being much more amenable to being led, instead of just represented.

 

Today this means that there is an elite establishment that sees much good in 'spreading the wealth around' mostly to cronies so as to corrupt them further and make them compliant to the whims of political struggle.  This elite segment of the body politic uses hard earned taxpayer money to pay off an ever larger voting constituency by hooking them on such dollars, and by hooking banks, industry and labor into such lifelines of corruption, they seek to make the least competent actor in all of this (the US federal government) as the controlling factor of all life in America.

Give the Big Banks control of US federal debt so that they can use such debt to then call on the federal government to make good on it, and if it can't then to seize US federally backed assets.  There are large swaths of land out there to be taken and a whole bunch of residential land with Fannie and Freddie backed and held loans that can also be grabbed.  Hope yours isn't one of them.

Give Big Labor authoritarian stakes in Big Business companies by breaking contracts to do so, the most vital of which are the best understood: those of holding debt obligations from private actors.  By exchanging the 'bail out' money with GMAC TARP funds, GM is just as beholden to the federal government as when it had both such forms of cash, they just shuffled debt from one column to another.  The bondholders got screwed, franchise operators got screwed because government determined that cronies should retain dealerships even when they weren't making any money, and money making dealerships were cut even when those would help the company make sales.  Chrysler had its stake sold to the Italian automaker Fiat.  Has anyone taken a look at the state of affairs in Italy recently?  Would any sane person or company even venture such a deal?  And then take a haircut on it to boot?  Plus still have federal backing for the deal?

The Big Banks, those ones that convinced the Labor Dept. to sell the idea to Nixon of creating Ginnie Mae to give corporate banks an entry into the residential home market, does anyone doubt that the system started by them (that of federally backed security on loan packages) is one that is utilized by political whims?  It was aimed, directly, at killing the vital if conservative S&L system, and that then opened the excuse to political actors for a 'Community Reinvestment Act' to stop the 'redlining' of communities... that were not good investments and that went far beyond race.  By no longer having a locally savvy S&L system the Big Banks opened themselves up to creating an ill-run fraudulently created system that then put the smaller operators at extreme risk due to the cost of increasing regulations and the threat of federal audits.  Only the Big survive in that world of finance and that is one backed by the US federal government via legislation and US taxpayer funds.  What you wind up with is a brittle system of a few Big Banks that are 'too big to fail' and an economy resting on them so that when they do face problems the Nation crumbles under a debt load held by those very same banks which can seize assets in the form of land and companies that the federal government has bailed out.  Plus smaller competitors.  Isn't that sweet?

Always and ever the Progressives harp on Big Business, and yet it is also their benefactor and now has so many lobbyists and revolving door personnel writing regulations to protect them and shaft small business that it isn't funny.  Van Jones' Apollo Alliance writes vast swaths of a 'stimulus' bill that benefits: failing companies, puts money into the pockets of political activists and corporate political backers and then dares to say that these are 'investments' in the future.  But that is how Progressives work when they call themselves Communists: they just change the name and verbiage to make it sound palatable, but the muck they serve is still muck.

Do you remember when Progressives and their Leftist cohorts actually felt they meant what they said about 'protecting workers' and 'holding business and banks accountable'?

I do.

I didn't believe them as I grew up hearing that blather because what they did was opposite of what they were saying.  What they wanted was pure and unmitigated power over everything, which includes you and me.

You were born free.

And then government stepped in.

Perhaps, just perhaps, this long trail of abuses done for so long should lead to some change because governments, after all, are instituted amongst men... men are not created by government for its convenience, after all.  Although they will try to sell you that line now that they have IPABs.  Just wait until enforced number of births are required for 'the good and well being of society'.  If you think they are nasty with the power over death, just wait until you find out what happens when you give them the power over life.  And they will call such enslavement liberty and say that it is good.

If you don't remember when they used to say differently now, then your children will never have it taught to them because YOU didn't teach it to them now.  They can't restore America if we allow them to be corrupted by our government.  We are the ones given the honor, duty and hard work of making government accountable to us, as individuals and society, not as a collective.  Yeah, you will probably lose the goodies promised you.  You are going to lose them anyway, at this rate.  Once you are used to that idea, then one of less government is no longer frightening and even quite inviting.

If you only dare to remember what they said and how they have lied to you then, and now.

What I'm looking for in the way of policy

The United States has a problem.

That problem is the size, scope and power of its government.

We have a series of on-going economic crises, yes, and those stem from the problem.

The 'Housing Crisis' starts not with 2007 but back in the late 1960's when HUD lobbied President Nixon to create an agency to allow for the packaging of home loans with government guaranteed security on the risk of those loans.  Yes one government agency was telling the President that we needed more government!  It seemed like a good idea at the time, no doubt, but what this did is allow the large commercial banks to have guaranteed risk portions in their portfolio dedicated to residential lending.  These large organizations could out-compete local S&L's who could not take on such wide and varied risk as the larger entities could.  S&L's remained tied to what made sense for lending in a local market and the intervention of GNMA created a national market that had risk tolerances above and beyond what normal lending practices for the S&L's would allow.  This meant that the S&L's had to seek to diversify their risk portfolio into areas they had never been in and, as inexperienced players, they went down in the 1980's.  To get to the S&L crisis of the 1980's you have to have GNMA created by President Nixon.

At that point a home was still just a home, however, and not an upwardly increasing value property.  Prior to the 1960's home base valuation would go up at 1% per year, if you were lucky, thus a home was not an investment that would appreciate but a roof over your head.  After the creation of GNMA came a slow but steady rise in home valuation above the rate of inflation.  This was tied to other regulations that were illiquid until certain dates, which is to say 401(k) plans and IRAs.  These were protected assets that you could carry over after a bankruptcy, while a home became subject to bankruptcy proceedings. Consumers shifted their savings patterns away from reducing mortgage debt (via pre-payments or ahead of schedule payments) to put money into safer vehicles, like those provided for in the tax code.  Those investment vehicles meant that money was tied into them for the long term, protected and could appreciate faster in value than a home could.  Thus the home now became a secondary investment vehicle because the next round of regulations loosened up the Loan To Value ratio for lending.  With less stringent loan regulations comes higher home prices as people can expect to ask more than their prior 1%/year appreciation and GET IT.

Were the banks involved?

Yes, they were, at every step of the way.

Are they the sole culprits?

No.  The influence of Congress in its role to allow the creation of new regulations that allowed greater risk to flow into the system, while urged on by the banks, was something that was taken up by those Congresses.  No one forced them to do it and no President was forced to sign on to these bills.  To change the playing field you needed Congress and multiple Congresses obliged through vehicles like the Community Reinvestment Act in the 1980's, and then the loosening of requirements on how much had to be put down to get a loan in the 1990's.  By the early 2000's the NINJA loan (No Income, No Job or Assets) along with highly leveraged ballooning loans were the vehicle pushed by the regulatory atmosphere that was enabled by the regulators via the Congressional bills to do that.

Fannie Mae and Freddie Mac played large roles in this, as well, since they could use their money to lobby Congress directly.  This is an instance of a quasi-governmental agency getting a direct line into Congress, which means that the regulators and facilitators could now spend their money on politics to woo legislators.  Today these two entities continue to bleed the US treasury in ill founded loans that are guaranteed for risk by Ginnie Mae.

Thus we now have as culprits: Congress, large commercial banks, quasi-governmental agencies, government agencies, Presidents and those doing the asking for so much money on their homes.

These are the pre-conditions for a bubble and the agencies, quasi-governmental agencies and regulations (along with regulators) are still around unchanged since the housing bubble popped in 2007-08.  Not a single one of them has even been 'adjusted' by two Presidents.  No Congressional majority or minority in either party has even SUGGESTED killing off the source of the rot and returning to basic and fundamental local economic institutions assessing local risk for local lending.

Mind you this isn't the FIRST TIME that the government has sought to reshape the physical landscape via housing policy.  That goes back to Harry Truman and the Housing Act with its repercussions seen via a retrospective of those blacks who lived in areas deemed to be 'ghettos'.

 

Next up is the EPA started by... President Nixon.

Do not ever try to tell me that Nixon was in any way, shape or form a 'conservative'.  These agencies he created are Progressive monuments to governmental power.

Throw in the Dept of Energy with the EPA and you have a nasty pot just needing the right legislation (like the Endangered Species Act) plus activist regulators (seeking to 'expand' their Congressional mandate), plus an overly regulated mining and oil industry (via the Interior Dept.) and what you get is a strategic attack on the energy infrastructure of the United States dedicated to stopping industrial production and impoverishing American citizens.  Strangely enough the EPA didn't need to exist at all as States were already implementing their own regulations to stop pollution, clean up air and water, and didn't need federal help to do that.  Burning rivers stopped before the EPA even existed due to those regulations.  Simple observation shows that you cannot apply the same environmental regulations from sub-arctic tundra to sub-tropical swamp land.  It doesn't work.  And if you need to change it via local environmental needs the place to do that is the most local of areas, the State or local government, not at the highest end which is the federal government.

Indeed the federal charter we call the US Constitution allows for States to get together and ask the federal government for help in setting up a multi-State organization to deal with cross-border issues.  So long as it does not tread on federal powers, such organizations are the way for States to deal with common problems across their borders.  The federal government doesn't run such organizations, the member States do.  This concept was also brought up under the recent health care debates to allow multiple States to pool their requirements, de-conflict them and create their own multi-State based insurance requirement system for those wanting to get health insurance.  What these sorts of agencies do is cut the federal government out of the regulatory loop because it has no power to start that loop in the first place.

 

Not to harp too much on Republicans but the next place of rampant graft, corruption and federal policy going where it shouldn't is in the Dept. of Agriculture started by... President Lincoln.

Hey!  He couldn't be right all the time.

The Dept. of Agriculture was a key government instrument for helping to expand farming into the Soutwest of the US.  It encouraged the type of straight furrow, high water farming that was the norm in the Mississippi direct drainage basin in place that had a bit less rainfall.  A bit less when we got to them, at least.  What this did is encourage the expansion of farms with government help so that these techniques were used when the local natives didn't use nor want them at all.  Why didn't they want them?  Dry spells lasting years to a decade or more which cyclically go through the region due to Pacific wind currents.  The result is known as the 'Dust Bowl' and it was miraculously 'ended' by USDA people wanting tree wind breaks planted and examining the idea of contour farming.  Oh, the rains returned, too.  The plus side of all this was knocking down the western locust so we don't get swarms of them going over the  great plains every couple of years.  That was due to farming in Colorado and Wyoming... of course those farms are now becoming uneconomical so they are dying out and you can expect the locust to come back as their population was only cut down to wild areas, not eliminated.

Isn't that great?

Along with 'modern' farming policy comes the draining of the Oglalala Aquifer which sits under a number of western States and is utilized for dry, upland farming via irrigation.  Note this is not native dry, upland farming which used little irrigation, but the reduction of a deep aquifer that has a re-charge time that no one has measured but an inch a year for a few hundred feet of it begins to tell you of the time frames involved.  Sounds like a good, multi-State organization is needed here instead of the corrupt blunderbuss of the USDA.  No scalpel needed, just ignore the problem until it becomes a 'crisis' and expand government to 'solve' it!  Gotta love how that works, huh?

Next on modern farming is turning food into fuel.  What an asinine idea!  You can't eat ethanol... well you can but its not a great foodstuff, unlike beer... and the conversion rate of corn to ethanol is excellent but ignores the fact that such policies are hitting the third world, and soon the first world, hard.  Mexico has a problem in that their old, rural agricultural system that helped to sustain their population went north in search of jobs.  First to the cities and then, when those manufacturing jobs from the US went overseas to places like Thailand and Vietnam, those migrants decided that the US was a great place to get illegal jobs.  This was great while corn was cheap via the US, but corn has gotten very expensive because human food corn is now being replaced by corn to make ethanol, which I go over in this article.  Now with jobs running scarce in Mexico along with food where is the money at?  Why criminal organizations, of course!  Jobs disappearing due to globalization is one thing, but food disappearing due to asinine farming policy of a neighboring nation is another.

Then there are the subsidies to agriculture beyond just paying people not to farm.  Those are about 12-15% of the USDA budget and go far beyond corn to such things as setting price floors for some crops (like sugar beets) and guarantee payments.... plus payments to those farmers owning a farm in one State and not farming there to get their payment in another State. 

Isn't that great? 

The US government 'protects' certain crops NOT through long-term storage of a small percentage each year in case of famine but by paying people who can't compete in the world market and paying others NOT to compete in the world market, both on the taxpayer dime.  Thankfully the current generation of farmers is in their late '50s and early '60s and as we aren't encouraging the next generation to take up agriculture as a business...

What problems could we POSSIBLY get from that?

Why I haven't even hit on the 'entitlements' yet, and I have already covered all of the energy and food production for the Nation under the lovely control of the federal government via regulations that only suit the feel-good Congresscritters and the petty tyrants in the bureaucracy wanting to control the Nation.

Who needs Islamo-Fascists when you can get the home grown regular sort at home?

Of course we also have the other sort to deal with overseas, too... not that we will have any energy or food to deal with them.

Mind you the rest of the planet depends on our food supply and the fact that China has not had a good harvest and even some dustbowls recently points out that they are on the brink of a catastrophe.  There are already food shortages in the kleptocracies in Africa, but that is normal and cyclical... having governments that were relatively stable dictatorships go under to such things is a different matter...

 

The next President?

Name the one that will aim to take out, not manage 'better' or 'reform' but REMOVE any or all of the following: USDA, EPA, FHA, Fannie/Freddie/Ginnie, select parts of the Dept. of Interior, Dept. of Energy.

I can add to that list: Dept. of Education, DoJ (did you know when we had a small government that each agency had to enforce its own little jurisdiction and there was NO DoJ?), BATFE, Dept. of Labor (can't people figure this out on their own), SBA, anything involving the arts & humanities... and the UN and its dues and various hangers-on.

When you are facing insolvency it is time to do away with luxuries and that time is now here.  These places can be closed down, their funding removed, and those that are part of the federal government have their property and equipment sold off to generate some final revenue.

 

Yes, the entitlements have to take a hit.  I have a standard prescription for those.

Close off SSA to new entrants.  End the retirement age. Turn SSA into a regular spending program and get rid of FICA.  Give everyone an account they can spend from that is federal tax free where any investments can accumulate without any hit to them, and then allow spending after holding them for 20 years or 20 years after the date of issuance of the SSA card.  In other words find good savings that appreciate even minimally and you are set.  Anyone in SSA who wants to get out can, and have such an account in their name immediately with the thanks of the US government to becoming a self-sufficient citizen once again.  Once the last person getting payments dies or quits the program, it is ended.

Add Medicare and Medicaid together.  Divide by 2.  Apportion via Block Grants to the States to spend on health care for their people.  Stage this down to zero over 5 years.  That is the end of the federal take-over of your medical care, and you are on your own.  Lobby your State and local governments or help with charitable institutions to get something to cover those without the ability to get good medical care.  The US government sucks at it.

Put together a flat tax for corporations and individuals, remove all other taxes.  For those earning under the poverty line the tax can be graduated down, but everyone MUST pay into the US government as it serves ALL OF US without exception.  If you can figure out how to live without having a job, then our blessings should be upon those people as they have figured out how to carry their load without burdening the rest of us.

These give a firm and stable position that if you want to 'retire' you must DIY with NO help from the government and if you can't figure out you need health care then charitable institutions are your answer.

Do taxes go up?  Yes for those currently paying no federal income tax, but they may find that their new 'tax rate' is actually lower as there is NO FICA around to bite you.

No new taxes are necessary for this: no consumption tax or sales tax.  Those are left up to the States as we don't TRUST the US federal government to have such income capability.  Look how it has squandered the Progressive Income Tax by jerking everyone around with it.

 

Defense policy?

It starts at the borders.

Not Afghanistan, Iraq, Libya or Timbuktu.  We have a massive criminal insurgency threatening to spill over into the US and we have zip, zilch, nada in the way of preparations for it spilling over.  Sorry, that doesn't fly and neither do 'open borders' or 'path to citizenship' that doesn't start with an Embassy in a foreign country.

I'm willing to cut down on the illegal immigrant magnets by doing a 'Three Strikes and You're Out' policy for employers:

- First instance, fine and a couple of weeks in the pokey for all involved in the hiring chain from CEO to local approval office in a company.

- Second time is a massive fine (say 10% of the gross income of a business) and a year in Club Fed for all in that hiring chain.

- Third time the company is broken up at auction, never to be reformed and all in the hiring chain go away for 10 years in Club Fed.

There, that is a sane immigration policy in support of our defense policy and should get some of the corporate scofflaws out of the way in no time at all.  See how that goes?

I'm sure that would deflate the OWS people in no time and taking the support for the big banks away would collapse their fun little support for tyrannical socialism/communism/progressivism/anarchism.  They will hate not having Big Daddy Government to hit up for support, but them's the breaks.

 

In other words a policy that looks like:

1) A vastly smaller federal government getting back to basics and leaving the States and the people alone, which means ending entire agencies and their regulations all at one go.

2) Ending the entitlements as they cost too much, keeping promises to those on SSA and letting the States figure out if they want something better on their own for medical care.

3) Flat tax, no exceptions, everyone sends a check to the IRS.

4) Defense must start at home at the borders.  COIN isn't just for overseas any more.

5) Letting the legal system handle the collapsing banks and corporations either via their own hand in tinkering with regulations that will not sustain them or in hiring those they shouldn't hire.  Good companies go unmolested.  The bad ones downsize or disappear via normal legal means.  Nothing, and I do mean NOTHING, is 'too big to fail'.

 

Yes, Rome wasn't built in a day.

It was, however, looted in 3.

We are closer to the latter than the former.

 

For the life of me I can't seem to find a politician who has a clue on what policy is.

Plans come from policy.

Methodology is utilized to enact plans.

If no one has a policy, then their plans are based on nothing, anchored to nothing and entirely too flexible for my taste.  I can tell a Presidential Candidate who has no policy in minutes.  I am not voting for any who can't articulate what it is as they are, by default, a Progressive.  No matter how nice the 'plans' sound, they are words spoken in the winds of opportunism.

Are you a Trustafarian?

I am ran across the term Trustafarian while perusing an article by Zombie at PJM.  She was using it to describe the class of people at The Ongoing Occupation of America post on 29 SEP 2011.  I had never run across the term and decided it needed just a bit of personal definition which required a few days to mull it over.  By the time I finally started to get the term I then came up with a definition after Herman Cain criticized those at the OWS (Occupy Wall Street/ Out With Sanity/ Ongoing With Stupidity/ Outing Witless Students... take your pick) at Hot Air.  I will correct a few spelling errors and such just to make it clear who he was talking about and what a Trustafarian is by what they do.

= = =

You might be a Trustafarian if you are part of the OWS crowd and…

- Have any electronic device starting with an “i-”

- Have a pair of sneakers costing over $100

- Have a shirt, pair of pants or jacket with a logo emblazoned on it

- Have an ‘art’ shirt that cost more than $50

- Have a netbook/notebook/laptop/tablet computer

- Have more rings festooning your body than a packed bar has glasses on the bar

- Have a bandana/headband/keffiyah with a designer tag on it

- Have a pair of shoes that has individual toes as a feature

- Have any piece of clothing other than a belt made out of leather

- Have more pieces of artwork tattoo’d to your body than a SOHO art gallery has

- Have a pre-printed sign because you can’t figure out how to use a magic marker

- Have an item with the mass murderer Che on it

- Spout off about how a system you can’t even understand needing to go because your parents have paid your way through school

- Have a law degree

- Have any degree in any set of studies involving a hyphen or ethnic or gender in its title

- Have more gold jewelry on your body than a pawn shop has in its inventory

- Can say Media Matters with a straight face and think it means something

Yes these are leading indicators of being a Trustafarian.

Any Trustafarian needs to run, not walk, saunter, or just, you know, go more or less in the direction of, the nearest mental health clinic and report yourself with permanent detachment from reality syndrome… they will spend a decade ‘treating’ you and making you poor so you will then have something to complain about.

And if you think you paid too much for your college education then ASK FOR YOUR MONEY BACK as it has done you NO GOOD AT ALL TO GO THERE.

= = =

You see?  A handy visual guide to the Trustafarians!  If you see someone with MORE than one of these attributes who is at the OWS gatherings (or 'supporting them') you have a Trustafarian: those living off of their parent's trust funds.

Easy to do, no?

Then I realized that they also fit under another term, which is a bit broader, in this headliner at Hot Air about how these OWS folks just might be, you know, POPULISTS!  Be still my beating stomach... I commented thusly...

= = =

Just a buncha Trustafarians.

Old hipsters and young dipsters.

The doucheoise.

= = =

Doucheoise was proposed as a new name for hipsters (I'm not going to bother looking up who proposed it) but as the class of people who are douche's, it also overlaps highly with the Trustafarians.  In fact all Trustafarians are part of the Doucheoise, but not all Doucheoise are Trustafarians and come by their status via other means.  The Trustafarians, in other words, are a sub-species.

Ahh... science!

I did a bit more after that on the Studentia branch of the Trustafarinensi.

= = =

And for the dipsticks complaining about their college loans and blaming the BANKS, just who is it that is ASKING for the money?

Oh, yeah, the COLLEGES.

How about BLAMING THEM for asking so much? And asking for your money back as you didn’t learn a damn thing there other than how to whine, moan and complain about how ‘hard you have it’. The banks are pushing you asshats to take out a loan the SCHOOLS ARE.

= = =

Yup!  It isn't the banks, folks, but the bubble of higher education that Insty has been talking about for a couple of years.  It is a much, much larger bubble than SSA, home loans, and medical cost inflation from 1970 to present.  It is the biggest bubble right next to all of them taken together next to our federal debt.  All these little bubbles gotta pop to get things set straight and the big one has to go down by removing the inflator we call 'government'.

Now since I'm the helpful sort with the guidebooks and such, though in no way the Shell Answer Man because I don't take questions, I decided to sum up not only what the problem is for the various sub-species of the Doucheoise, but what you need to do about it.  I really don't have time for real posts these days, what with finishing up my SKS stock and getting the thing re-assembled, plus having another 2-4 projects on my agenda, so these will have to do.

This is from another Hot Air thread at a Quotes of the Day posting. A spelling error and one typo corrected, mangled syntax and logic left as-is.

= = =

Remember in a deal in which the schools ask for more money and the banks lend it to students, who is to blame for the high cost of education?

A) The schools for CHARGING IT?

B) The students wanting the money to PAY FOR IT?

C) The banks for LENDING IT?

These OWS people blame C, put no responsibility on B and can’t think that those actually doing A who are the originators of the cost are to blame.

Now put in homes and who is to blame?

A) Those asking for more money than a home is worth?

B) Those wanting to pay those high amounts?

C) The banks for lending the money?

Again if you are an OWS’r you blame C, put no responsibility on B, and never, ever blame those asking for unrealistically high prices A.

In each case the root cause of the ‘problem’?

Government regulation that sets the playing field for giving loans. In the first part are federally backed loans that MUST be paid back to the federal government and that you can’t get around paying back.

In the second it is the government determining the risk, setting regulations as to who MUST be able to get loans for FAIRNESS which allows such things as NINJA loans to meet pre-set quotas by the regulators.

Now when you put the government as the D option in both, who is to blame?

A) Those asking for extraordinarily high amounts that they know YOU CAN GET via regulation?

B) Those seeking such high amounts and not questioning the ACTUAL VALUE of what they are getting and not blinking at the COST being asked?

C) Those providing the money as intermediaries for the government regulatory system because, to do business, they have NO OTHER OPTION in those realms?

D) The government for rigging the system to allow A to put B into debt via C the regulated intermediary?

The banks are not the villains, here, although they do share some blame in setting up D, it is the regulatory system, itself, that is swayed by such input. When A and C collude with D, it is B that is shafted.

The answer to what to do is to get D out of the equation so that they do NOT write exacting ‘fair’ regulations and only put out statutes against misrepresenting value and cost from both A and C so that B can make a decision based on actual facts, not promises of ‘fairness’ in a system being rigged against them.

These Trustafarians, the members of the Doucheoise, are HELPING those in the A category to vilify the C category so that they can get MORE REGULATIONS THAT DON’T WORK AND MAKE THINGS WORSE from the D category. They are not playing class warfare but committing economic suicide on a personal basis. If they meant what they said they would join the Tea Parties and work to get the government out of the system so that there is less to no government save for cases of fraud that need be ruled upon. As it is they are supporting the existing fraud-backed structure and want nothing to do with removing it.

Yes Rome wasn’t built in a day.

It was, however, sacked in 3.

You are seeing the sackers, not the builders, wanting their bite and not expecting the collapse to effect them one little, tiny, bit. If they get what they want they have a greatly limited life span because of what they get, that will shorten down decades to years, months, weeks or even days.

If you aren’t prepared for that disaster NOW then you will be joining them.

Your job is to survive, help and educate. And all three MUST be done AT THE SAME TIME. And to those who don’t listen, who scream and rage, you must turn away FROM to help those that WILL listen to reason. That is your duty as a citizen to your fellow citizens. Those that aren’t listening, who are screaming, who are marching… they are the walking dead if they get their way. You can save them but only if you do the right things as a citizen, now. It all depends on YOU being civilized each and every single day of your life no matter HOW BAD things get, all the way to your last breath on this earth. Only your fear will stop you…

= = =

All that stuff I've written about for survivalism, DIYism, plus looking at terrorism, organized crime, money laundering, politics... all that stuff... still comes down to you.

These people blockading their common sense for freebies don't understand how the world works and just want everything to be free.  Just like the USSR!  They can't live there any more since it collapsed under the weight of what happens when no one CAN achieve and everything is FREE and damned scarce, but that doesn't matter to the Trustafarians.

It does matter to the person wanting to be civilized and a citizen.

What you must do in such conditions is clear and I've spelled it out via hundreds of posts.

Your duty to your fellow citizens is to survive and be the one at the other end offering a hand up to a better life of personal liberty and freedom.

The verbiage that goes with being a free man, an individual, is well known and alien to the ears of those in the Trustafarian crowd, but should strike home to any who wish to lead a free life of equal justice, not 'fairness' as what is 'fair' is in the eye of the beholder:

I will not be pushed, filed, stamped, indexed, briefed, de-briefed or numbered.

My life is my own.

The OWSr's?  They DO want to be pushed (look at how they got there by having helpful 'organizers' push them), stamped (see the guidebook?), indexed (just HOW MANY loans do they have they can't pay up on?), briefed (again the organizers), de-briefed (they are going to lose everything including their briefs), numbered ('we are the 0.00001% who are the 99%'!).  Listen to any of the 'call outs' done by 'organizers' or 'radicals' or Frances Fox Piven or Cornel West and you begin to imagine Monty Python's Life of Brian in which the call out is 'You are all individuals' and the response 'YES WE ARE ALL INDIVIDUALS' save for that radical saying 'I'm not...'

There you go!

Now back to my normal business around here.

Gotta get that SKS up and running and then put the drum magazine through its paces now.

I will not be pushed.

And neither should you.

States on the brink

Prof. Bainbridge offers an interesting look at the possibilities of what would happen if a US State, in this case California, goes bankrupt.  He raises the question if the federal government could offer some sort of 'bailout' and then asks what would that look like?

Before jumping all the way to bankruptcy views of either the personal or commercial kind, lets take a look at the US Constitution and what it has to say about such matters:

Section. 8.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Section 8 is always a good place to start!  Here, however, the general Welfare clause is due to all the States, equally, thus the federal government cannot be seen as 'on the hook' to bail out California.  California did not incur its debts in the name of We the People but for its own population, and, from that, it is primary in its responsibility to solve its debt problems, not the federal government.

This is in stark contrast to the Revolutionary War debt owed to France, which was then apportioned out to the States to pay (which caused the impoverishment of farmers in the North and led to the rising of rebellion).  In that case it was a debt take on by We the People and the burden was to be shared.  Here that is not the case.

The next clauses in Section 8 of interest are the following:

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

Highlighting of sections is mine, throughout.

Here there is the interesting piece on the 'uniform Laws on the subject of Bankruptcy'.  This would, apparently, be the clause to look for to create legislation.  With that said the action where it is to be applied to is 'throughout the United States'.  Thus the laws created must be throughout the States so that there is a recognized way for those within the States to have a uniform process applied to them.  If it was then the language would read something like 'Bankruptcies to and throughout the United States'.  This is far too much power to give to a federal government if you are a collection of sovereign States looking to form a joint venture that applies to all of the sovereigns.

With that said the question of making bankruptcy laws for the States, as States, is questionable as they are the sovereign actors that sign on to, and lend power to, the federal government.  As sovereign actors they have the authority to dispute laws which apply to them as sovereigns and an attempt by the federal government to dictate bankruptcy laws to the States is not something that is outlined by this clause.  This is the first stumbling block: as the States are the ones who bring the Constitution into force for their people by agreement, then they are the ones left holding the bag for their people for their interior administration.

There are two venues for how to approach this.

1) Each State creates its own laws for what happens when it goes bankrupt.  This is problematical as it is unlikely to be seen as trustworthy given that the very same government is the one spending the State into bankruptcy.

2) A Convention of the States is held to create a system applicable to all of the States.  This could be through the federal government or by a common assent of 3/4 of the States to agree to have a newly devised system applied to them.

Due to the strict limitation of federal power by Amendments IX and X, the States are left holding the bag for their own problems in the realm of debt.

Those are the positive powers of Congress, as seen in Section 8, and while great for normal affairs of a Nation as a whole, they do not address the Nation as parts as those parts are independent actors within the Union they agree to.

Now onto the the States.

Section. 10.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

Generally I like to think of Section 10 as the Ten Commandments for the States as they are of the 'thou shall not' form.  Still within that form there are positive articles.

The part on coining money that I highlighted I tried to deal with in a prior post.  Here the proscriptions are fierce, and yet at one time the United States had money from different States under the Constitution.  The difference between now and then is that our current money is scrip that has no backing, while what is allowed is gold and silver Coin as tender for payment.  The United States, itself, stayed on a gold standard before the federal government started to just print money and President Nixon took us off the gold standard.  Paper money can and did represent gold tender with so many dollars per ounce, and this was also true of the States at one time.

Thus, one possibility is the one I outlined in my prior post: have the gold bullion held by the US Treasury divvied up to the States by population with the States to have a gold backed debt scrip set by the State (say at 1200 scrip per ounce of gold, or 2 grams of gold per single scrip).  This could be circulated as Tender in Payment of Debts with a cashout period of, say, 5 years to allow the economy to stabilize inside California (or any other State for that matter).

This would have the benefit of being gold backed, and thus having real value, and extremely limited, which would force California to cap off its debt spending if creditors no longer accepted greenbacks.  Part of sliding into bankruptcy is having your credit drop to nothing, and you are forced to deal in real money that has some backing to it.  As each person in California would have a vested interest in keeping their gold backed scrip inside the State, this would create a decision point on what to do about spending.  A penniless State is one that beggars the imagination, and yet the citizens from it would be free to leave for more fiscally sound States while leaving the bankrupt State behind.  Or the citizenry could demand that the State stop spending the very last part of its wealth, for that is what the gold represents, and downsize internally.  This is a variation of the 'in State' way to solve the bankruptcy via the allowance of being able to pay off debt with only gold or silver. 

When a State loses its creditworthiness it finds borrowing impossible.  Thus a debt scrip would allow it to re-organize internally while the government drastically downsized to fit its revenue from taxation and not squander the last of its wealth in gold and silver.  When others stop accepting money on credit due to the amount of debt financing an individual has to do, they are unable to borrow and must pay 'cash on the barrel'.  Thus it is for a State and once they run out of greenbacks, which would be very quickly these days, they are no longer going to get monetary 'floats' on even short term debt: basic necessities become something you pay for up front, not even on account.  Since such purchasing happens between a State and private enterprises, there is no conflict between the States as this is a business matter, not an internal State-to-State matter: businesses have the right to refuse custom based on inability to pay and being a sovereign does not change that relationship.  This may seem in conflict with Article IV:

Section. 1.

Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.

But that is for laws and proceedings, not for actual credit or debt obligations.  Thus all of Articles I, II and III are done and now into Article IV a bit further.

Here is the meat of what Prof. Bainbridge and some commentators are getting at:

Section. 3.

New States may be admitted by the Congress into this Union; but no new State shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.

The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State.

Section. 4.

The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened), against domestic Violence.

Section 3 is pretty clear: you must be able to guide your own actions as a State before you can be admitted into the United States.  Thusly California is a sovereign with voluntary entry into the Union.  To become a Territory would require the consent of the governed and this is, essentially, a discorporation of a sovereign State:  California, as a sovereign entity, would be at an end.  This is not something that can be imposed by any law as it is the people of the United States, in each State, who guide their own destiny.  While putting forth that having California as a Territory might be more pleasing and be something that the United States is better able to deal with, the United States would then be on the hook for all the debt of the prior State.  To do that would also require an agreement, by Congress, to accept the Territory of California into the protection of the United States as once a State discorporates there is no 'reversion' to the United States as it was free and independent territory before it joined the United States. 

While the United States government would, presumably, claim possession of California, it would be with the understanding of it as a 'failed State' with debt obligation.  That would be true of Mexico, China, Russia or any other Nation that wanted to do so: those debts do not go away and a larger sovereign entity assuming possession of California is stuck with its debt.

The only way for California to rid itself of debt, and this is in the extreme, would be to totally disband and repudiate its current government and hold an internal convention to create a new one only after the old one had defaulted on all debts.  This could, of course, be done within the framework of the US as it stands: the people are free to make any interior government for their State so long as it upholds the commonality of the Constitution.  With that said, California would have trouble getting any credit, any loans, indeed anything, on an other than 'cash only' basis if it did this.  Those that go into default have a very, very, very hard time getting their creditworthiness back, and such a default would reflect badly upon the rest of the States through no fault of their own... which is why States would seek to have their creditworthiness rated separately from that of the Union and other States.  California, meanwhile, would have a State with no contracts, no labor unions, nothing left from its previous incarnation and start from scratch with a new constitution, new laws and a new representation system.  There would be no 'debt spending' as no one will give California any credit and the State may, in fact, see itself wanting a debt scrip just to get some working overhead as a new entity.

The prospects of a new government, after the old one defaults and disbands, is perilous inside or outside the Union: those who would seek to control the new State constitution would try to make it a 'modern' over-burdened affair that, unfortunately, would have no credit to run on.  No matter what would be written into the thing, without any cash to institute any grandiose wealth redistribution schemes, the government would be severely limited in what it could do.  And any attempts to 'soak the rich' even more would cause further emigration from California of anyone willing to work for a living.

Basically California needs to learn the basics of doing for oneself and getting out of the idea of people being entitled to anything more than Life, Liberty and the Pursuit of Happiness... and that last is a risky business as they have found out after catching Happiness: they are now succumbing to it.  They have forgotten the Life is in the Pursuit of Happiness, using one's Liberty.  The moment you think you have gotten it you soon find yourself without Liberty and then, very quickly, without a Life worth living.

Emergency Government

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” -H. L. Mencken (from Ralph Benko, from an addendum to a Mark Tapscott story at the Washington Examiner, found via Instapundit)

Yes we have yet another emergency, this the Swine Flu which was predicted months ago and the President promised that there would be enough vaccine for everyone, and from the folks who brought you:

"You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before." - Rahm Emanuel

That was when the entire economy was going to go poof overnight and we needed, desperately needed, the stimulus package to do something!  Or perhaps it was the big, bad banks who were following federal regulations on lending and putting money out to borrowers who couldn't pay it back in housing and other areas that needed, oh, so needed, the TARP and rescue package because they were too big to fail! The auto companies were going down and they would be forced to go bankrupt and re-organize which would be awful because that would mean massive job loss and we just had to do something! And we have to have more lending in the housing market because that will collapse and the entire Nation will go to wrack and ruin , so we have to do something!  And the stimulus has pushed unemployment far above the expectations of doing nothing that we now need, desperately need, a second stimulus package, because we just can't sit by and do nothing!

Meanwhile, those Nations that didn't go on a spending binge are out of their recessions, worried that the US will pull down the rest of the world market as we flush our economy down the drain with emergency spending, and wondering just why the hell we can't stop doing things and let the recovery take over.  But those are the so very wise European governments that we are supposed to take our wisdom from... say, just why can't we follow their leads and let the economy recover and not try to tax and spend ourselves to oblivion and take much of the rest of the world economy with us?  For all the grousing, moaning and complaining about how much of the world's resources the US uses, it is also a fact that we are a quarter of the world's economy, produce much more per capita than anyone else around, and the world depends on us to be sober in our spending habits.

Instead we have gotten a massive hit to our economy, massive job loss, a disorganized private sector because government now sees fit to invalidate contracts on whim, and tax money flowing out in a tidal wave that will cause massive structural debt, increased inflation, devalue the dollar, and bring instability to all those countries holding securities in the US who are seeing their investment in our way of life go poof!

Now here's the question on structural debt via Non-Performing Loans (NPLs).

I've heard the US is heading north on NPLs, which are loans 90 days past due and unlikely to ever be paid off.  A large part of that is due to the new home market, which ripples through the economy to durable goods and consumer sectors.  We brought that on ourselves by encouraging those who are economically marginal to actually get federally pushed loans via lenders and the FHA then packaged those up (along with Freddie and Fannie) and put the 'US Govt Safe' seal of approval on them, when the loans, themselves, were anything but safe.  Now I'm going to start stealing some data from one of my previous articles to look at the NPL problems that have happened elsewhere:

NPL are Loans that are in default or close to being in default. And this International Journalists' Network article by Anya Schiffrin on the large role of NPLs in banking crises, points out that once a Nation gets over 9% NPL on all outstanding loans, it is starting to look at real trouble.

The role of NPLs in a Nation's economic structure cannot be over stated.  At the time of writing that article, the US NPL was less than 2% with the majority of that being in consumer debt, not institutional or business debt, and the majority of that consumer debt in the NPL status was in credit cards.

Now a note of update on my article via a Business Insider 23 OCT 2009 article by Joe Weisenthal who references this Financial Times article by Arthur Kroeber on 06 OCT 2009:

So just how big is China’s NPL time-bomb? That is largely a function of economic growth rates.

Average annual nominal GDP growth of 11 per cent, 9 per cent and 7 per cent over the next decade would generate net fiscal NPL costs of 6 per cent, 7.2 per cent and 8.7 per cent of GDP respectively in 2019 – substantial, but not catastrophic.

There is no necessary reason why existing NPLs, even including bad loans arising from the 2009-2010 monetary stimulus, should threaten the viability of the system. In short, the calculated bet of letting NPLs shrivel through time and growth can safely be placed one more time.

But this bet absolutely cannot be placed a third time.

The above scenarios only work if the financial system generates no net new NPLs in 2011-2019 beyond the banks’ own ability to provision and write down.

China has been playing games with its debt by shuffling it around to different vehicles, and has done so since the 1990's.  Twice China has shuffled its debt to different vehicles, and now the money is expecting to be paid out.  China has a major problem: there is a global recession and many of its hardest cash holdings are in the US real estate market, via investing in Freddie and Fannie.  The crony capitalist system, a form of national socialism, has allowed those in favor with the regime to build businesses, default on those loans when the businesses collapse and have that passed into debt vehicles approved of by the government.  Any similarity to the passing on of bad housing debt via federally approved vehicles is purely intentional.

Plus for all the phenomenal growth rate China reports, the conservative estimate of having 30% of their economy underwritten by these loan vehicles, in other words 60% of their GDP depending on NPL loan swaps to different vehicles, is conservative because China under-reports the NPLs and over-estimates its growth.  Market based estimates go up to 50% of the economy underwritten by NPL loan vehicles picking up the temporary tab for the bills of past failures.  Those bills are coming due, US housing investments are tanking and China is in a bind.

So how are things going here?  Well the FDIC Select Peer Group and Report Date for 30 JUN 2009 sees some disturbing trends on 06 and 06A:

Real Estate Loans in the non-accrual and 90+ days past due is up to 2.31% from 1.29% in 2008.

Commercial real estate is up to 0.11% in the same category, up from 0.01% in 2008.

Construction and land development up to 5.23% from 2.16% in 2008.

1-4 family homes 4.10% up from 1.89% in 2008.

Other construction and land development 5.45% up from 1.95% in 2008.

The longer trends on these are going from EOY to mid-Year cycle so that there is only 6 months between 2007 and 2008, but still interesting to note them (06/30/2009, 06/30/2008, 12/31/2007, 12/31/2006), again all for the NPL (non-accrual plus 90+ days past due):

Real Estate  2.31%  1.29%  1.76%  0.90%  0.57%

Commercial 0.11%  0.01%  0.03%  0.00%  N/A

Const.         5.23%  2.16%  3.57%  1.05%  0.24%

1-4 Family    4.10%  1.89%  3.05%  1.34%  N/A

Other           5.45%  1.95%  3.44%  1.18%  N/A

We are just now getting the repercussions of the tanking of the real estate market in the NPL arena for housing.  Construction can be seen as a leading indicator as it feels the pinch first when housing starts are put on hold or canceled, thus causing a rippling into that part of the industry.  The last two interesting, indicating a cyclic market, but one that is increasing in its NPL area.  All of this while the mortgage market is only slowly seeing its rates go up for the same category:

Non-Farm Mort/Residential  1.66%  0.81%  1.20%  0.61%

The category I'm not showing is the 30-89 days past due, which shows that some of the influence is from those loans, no doubt, slipping into the other categories or just having a delinquent set of payees who can get payments in but late on a continual basis.  On 06A we get the final Gross line item for all loans and leases for the 06 section, and below that, in the totals, we get the full percent of all loans and leases past due including non-accrual for the entire banking industry that is overseen by the FDIC:

%Total P/D LN/LS    3.78%  2.45%  3.30%  2.20%  1.17%

This is a pretty good proxy stand-in for National NPL status, and the trendline from EOY 2006 to MID 2009 is up in all categories thus reflected in the total which is up by over double.  Of particular note is that the 'housing crisis' starting by EOY 2007 had lessened, somewhat, by MID-2008, and this was reflected in all P/D loans in all categories.  Thus the MID 2008 to MID 2009 jump is due to the intervening months as the market had been digesting the problems by EOY 2007.  The multiple 'crises' times between those two reporting periods changed what had been an up and down, choppy trendline (in other words still increasing but with rapid market changes) to one that now flattens out to increasing at a much higher rate.  If all the 'necessary' things to 'stabilize' the market had, indeed, actually stabilized the market, each of these trends would have flattened with minimal increase from the previous year.  Even with the undigested loans in the market, those were being addressed by changing in lending practices and crunching those loans out of the system.  This did cause some massive losses in big banks and all the money poured into those should have stabilized the market, but didn't do that.

So we are left at MID 2009 with NPLs going up towards 4%.

This is before all the 'stimulus' money gets into the pipeline, which is causing headaches on loans and lending as the projects that are being done do not address the structural problems of the market.

Additionally the Community Re-investment Act is getting re-upped, which is a major cause of the increasing home prices over time, due to easy money lending practices to those who can't afford such loans.  That is causing structural debt problems in the market that need more than just cash infusion in them, and need a change in the regulations to allow normal repayment expectations to hold sway and get the federal 'help' in lending out of the system.  Additionally the banks should be the ones to judge the ability of those credit vehicles that gather up such losses and put them on the market.  As both Democrats and Republicans have voted to approve past revisions of the CRA to achieve these policies, there is no 'party' to whine about as being at fault: they are both idiots in this area.

Finally some of the instability is reflected in TARP, itself, with funds going unaccounted for and the market not knowing how the public will react to that.  As the Federal Reserve pushed that vehicle forward, and Timothy Geithner was a prime mover at the end of the Bush Administration and continues on in the Obama Administration, his role in this is not to be underestimated, particularly in the lead-up to the 'necessary' bailouts.

So, if you really and truly believe that all the spending will actually make the government solvent AND help out the entire market for NPLs, then you need to address the structural components leading up to this problem, which has been in large part from the federal side, with crony lending institutions (FHA, Freddie and Fannie) plus willing (or coerced) banks facilitating these policies which date back to the Carter Administration and were puffed up during the Clinton Administration and Bush Administration.  That is a bi-partisan problem and pissing about it being 'Bush's Fault' ignores the long standing structural problems both parties have willingly introduced into the lending arena.  All of those extra regulations to 'help' people have now changed the path of the entire economy, and throwing good money after bad is putting us into a nasty position of not being able to have all that lovely outgo be covered by tax income.  That then gets you inflation, as the Federal Reserve puts money into the system to cover those debts, thus reducing the value of the dollars currently held.  And supporters must then address the economic growth problem in the US, as small businesses are not hiring people due to the instability in the market introduced by the federal government and more regulations and not letting the rule of law put companies into bankruptcy for restructuring, and those external holders of our debt that have a huge insolvent debt load that needs some hard cash income to try and keep their economy afloat.

Which is China.

If you cry, bitch and moan about Halliburton and its evility, then where is the crying, bitching and moaning about AIG, Merrill Lynch, Bank of America, GM, Chrysler, etc. that are holding this country hostage with federal help?  If you complain about the petty overcharges by Halliburton, then why are you not complaining about the huge rip-off that is going on with these companies and the billions in TARP that are not being accounted for?  Would it not be better to have these large companies go through bankruptcy restructuring, which they would all do, have their debt and valuation properly assessed and then get on with life as smaller, leaner companies that would then open up the market to new entrants?  Or do you really like the idea that companies deemed 'too big to fail' can hold our Nation hostage via willing politicians willing to put these huge corporations on the dole and then run them as efficiently as the federal government can, which is at the post office level of things?

I am more than willing to let the rule of law run its course with these companies.

'Cash for Clunkers' was a nice one month sugar rush, but now the auto market is seeing less in the way of purchases as people decided to buy early and not try to get the best possible deal on a car later.  Thus you are not getting a long term upturn in the market, but a short to mid length down turn that is happening during a recession.  Thus making the recession worse.  It is that same sort of 'do something for the sake of doing something without a plan' that is causing this problem.  Extending loans to those who can't pay them back means more failed loans, not increased prosperity.  Increased prosperity means more and better paying jobs and a competitive job market, not one with artificial price supports in it at the low end which places a barrier to entry for first time job holders in place because of the cost of hiring them.  This is not getting people to work, allowing them to make a living for themselves, no matter how marginal, and making the entire cost of business much, much higher and encouraging businesses to lay off people at the low end.  Which we now have during a recession with the latest minimum wage jump.

This economy is being run into the ground by politicians who think that we can regulate our way to nirvana, and willing followers who believe that everything in life should be regulated.

That is not a description of freedom, but one of tyranny.

What is it called when government tells business what to do?

Yeah.

From the WSJ 28 APR 2009:

Mr. Lewis has told investigators for New York Attorney General Andrew Cuomo that in December Mr. Paulson threatened him not to cancel a deal to buy Merrill Lynch. BofA had discovered billions of dollars in undisclosed Merrill losses, and Mr. Lewis was considering invoking his rights under a material adverse condition clause to kill the merger. But Washington decided that America's financial system couldn't withstand a Merrill failure, and that BofA had to risk its own solvency to save it. So then-Treasury Secretary Paulson, who says he was acting at the direction of Federal Reserve Chairman Bernanke, told Mr. Lewis that the feds would fire him and his board if they didn't complete the deal.

Mr. Paulson told Mr. Lewis that the government would provide cash from the Troubled Asset Relief Program (TARP) to help BofA swallow Merrill. But since the government didn't want to reveal this new federal investment until after the merger closed, Messrs. Paulson and Bernanke rejected Mr. Lewis's request to get their commitment in writing.

"We do not want a disclosable event," Mr. Lewis says Mr. Paulson told him. "We do not want a public disclosure." Imagine what would happen to a CEO who said that.

After getting the approval of his board, Mr. Lewis executed the Paulson-Bernanke order without informing his shareholders of the material events taking place at Merrill. The merger closed on January 1. But investors and taxpayers had to wait weeks to learn that the government had invested another $20 billion plus loan portfolio insurance in BofA, and that Merrill had lost a staggering $15 billion in the last three months of 2008.

This was the second time in three months that Washington had forced Bank of America to take federal money. In his testimony to the New York AG's office, Mr. Lewis noted that an earlier TARP investment in his bank had a "dilutive effect" on existing shareholders and was not requested by BofA. "We had not sought any funds. We were taking 15 [billion dollars] at the request of Hank [Paulson] and others," Mr. Lewis testified.

The government strong-armed Bank of America with threats, intimidation and then wanted that held secret from the public so that Bank of America would absorb the insolvent and money-losing Merrill organization.  By what authority did Paulson and Bernanke have to do that?  It is NOT an area where the Constitution gives any power to Congress or the President.  Not one single word on forcing private institutions taking government funds with threats if they don't.

And that wasn't even the first time that happened.

The article ends with:

The political class has spent the last few months blaming bankers for everything that has gone wrong in the financial system, and no doubt many banks have earned public scorn. But Washington has been complicit every step of the way, from the Fed's easy money to the nurturing of Fannie Mae and Freddie Mac, and since last autumn with regulatory and Congressional panic that is making financial repair that much harder. The men who nearly ruined Bank of America have some explaining to do.

Then there is this from Larry Kudlow at National Review Online, 27 APR 2009:

What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they’re getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they’re getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.

Meanwhile, top Obama adviser Valerie Jarrett opened the door wide on CNN yesterday to bank nationalization and CEO firings. Unfortunately, my take that the economic stress tests are a political stalking horse for more government ownership, more government control of the banks, and more government disruption of shareholder rights and normal corporate governance looks to be coming true.

Then there’s today’s huge New York Times story about Tim Geithner. It starts on the front page and goes on and on for thousands of words. Yes, he missed early signs of the crisis. But he was altogether too cozy with the New York banks, especially Citibank — and Robert Rubin along with Sandy Weill. In fact, at one point Weill asked Geithner to be Citi’s new CEO. And Geithner joined the board of a Weill-run non-profit to help inner-city high-school students. There were numerous lunches and dinners with Rubin and Weill and other Wall Street luminaries.

[..]

No, the Times article doesn’t mention Geithner’s failure to pay back taxes until just before he was nominated for Treasury secretary. But it seems that at this point in history we need a strong, credible, and independent TARP and bank regulator.

Actually, at this point, I don't want any government involvement in the banks AT ALL.  See that Bank of America problem?  Now imagine that the government DOES nationalize it and a few others... and decides that secret meetings are the way to go.  Just like they have ALREADY done with public funds.

Over at Bloomberg on 27 APR 2009, Jonathan Weil sums up the banking insanity with the following:

It would be nice to think that SEC Chairman Mary Schapiro might call for a sincere, thorough investigation. But there’s nothing in her professional background that suggests she has the spine or the nerve to take on a major financial institution, much less a former Treasury secretary or the sitting Fed chairman.

We probably won’t get any searching inquiries out of the banking industry’s elected overseers in Congress. Senate Banking Committee Chairman Christopher Dodd took V.I.P. loans from Countrywide Financial Corp., now a subsidiary of Bank of America. His counterpart in the House, Barney Frank, declared last July that Fannie Mae and Freddie Mac were “not in danger of going under,” about two months before they did.

That leaves you and me, the American public, with the uncomfortable realization that we are slipping toward a state of lawlessness in this country, all in the name of saving our financial system by creating even bigger banks out of combinations of banks that were dangerously too big already. This doesn’t inspire confidence. It destroys it.

We can have our freedom. Or we can have our systemically failure-prone financial institutions. We probably can’t have both.

Yes, Chris Dodd's old friends at Countrywide got to be part of Bank of America, not that he had any interest in them due to the special interest loans he has gotten from them.  Heaven forbid that he be seen as CORRUPT from taking loans that you and I couldn't get from a bank that is part of his OVERSIGHT duties.

And Barney Frank is famous at the top of the housing bubble saying that its not a bubble and that everything will be peachy, really, and that economics will always prop up loans to people who can't repay them... just like the legislation he fostered said it would do.  And that Fannie and Freddie weren't giving ENOUGH money backed by the federal government out.  Which is OUR money backing them.  Don't mind all the lovely lobbying and money donated to his campaigns by these government authorized institutions... no don't mind the possibility for corruption there, where brown-nosing sycophants to politicians get plumb jobs for lots of money as payback for past support.  That could never look BAD, now, could it?

No, that just couldn't ever happen.

I mean those Hamiltonians are really upset that such 'limited' work of the government turns into State direction of corporations and banks via intimidation, threats and promises of plumb jobs for supporting them.  I mean no BAD could ever come of Teddy Roosevelt's 'expansive' view of powers for those in office, now, could it?

Hamilton, himself, always saw the US as needing a restricted monarchy with an aristocratic elite to guide it... yes, he did step away from that, but the warnings were stark and clear at the time of the Founding of the Constitution.  It has taken over two centuries to so corrupt the process, so water down the restrictions that our very liberty is now at stake against our government.  This will not last long.  A government directing businesses will fail.  Either internally by lack of support and bearing new citizens into a Nannystate, as seen in modern Europe, or via corruption on a massive scale, as seen in the USSR, or by slow decohesion of government and attempting to prop up 'preferred' businesses by bad loans as seen in Japan, South Korea, and now China and the USA.

The authoritarian and, indeed, despotic stances taken by those in 'regulatory' positions is clear: they are anti-democratic, anti-liberty and seek to suppress vital information that the public demands for open and above-board operations in its government.  State secrets to protect the Nation flow out like water, and we are now far less protected than before.  Information that shows support for expansive government control is kept secret, thus extending that control.  And with that the corruption spreads further as politicians feast upon the public treasury for their own supporters and then require more payments to feed their appetites as an aristocracy always does.

What is it called when government tells businesses what to do, decides if you get to have any private property or any information at all when government is at work?

That is very simple, and yet so many have loaded this concept down that few dare speak it.

It is called: Fascism.

Plain and simple... not with a little moustache.  And everything done to centralize power, be it health care or some 'mandatory volunteerism' or a 'civilian protection force' that will be the size of DoD or deciding how much of GDP should be put into R&D... these are not hallmarks of a Free Land.  Just the opposite.

Americans are founded against such despotism, have fought against it and instinctively recognize the poison, no matter how much sugar surrounds it.