Category: Big Mother (page 15 of 15)

by Sean Purcell

Real Estate Renaissance Man

Author website

Henry Paulson figured out that buying troubled assets does not help the cause.  If you want to own the financial industry you don’t get there by purchasing their problems, you get there by purchasing them.  (Or at least watching over them with Tin Foil Hat firmly in place.)   Read the full article here.

On the other hand, King Henry is watching the Democratic machine rev up in support of auto maker bail-outs and keeping his distance.  Either he recognizes this as a straight donation to the unions or he understands how little an ownership stake in the backward facing auto industry contributes to the nationalization of our economy.  In my opinion both are correct.  For an insightful read on the auto industries’ brazen beggary go here.

by Sean Purcell

Real Estate Renaissance Man

Author website

In an earlier post I laid out how my distrust of conspiracy theories is being severely challenged by our government and what appears to be a naked power grab.  I am loath to continue in this vein for fear of being labeled the nut job who writes about Area 51 and Men in Black.  But my tin foil hat fits well and the strange shenanigans continue unabated at the government level.

WASHINGTON – The former chief risk officer at investment bank Bear Stearns Cos., which nearly collapsed in March, is now a senior official of the Federal Reserve division that supervises U.S. banks.

Michael Alix, who worked at Bear Stearns for 12 years and was its senior risk manager since 2006, was named a senior vice president in the bank supervision group of the Federal Reserve Bank of New York, the Fed announced. (emphasis mine)

Read full story here.

So, just to make sure I am getting this straight: the senior man in charge of assessing risk for a company that… failed miserably in its risk assessments (costing billions) will now “help oversee the financial safety and soundness of banks.”

What?

We (the taxpayers) pledged $29 billion to backstop the sale of Bear Stearns to JP Morgan and the government hires the individual originally tasked with preventing such meltdowns and puts him in charge of evaluating bank risks?

Each time I find myself with tin foil hat in hand, I think it only prudent to end the post the same way I did that first one: I am no longer confused…  I am scared.  Are you?  Are you paying attention?

by Sean Purcell

Real Estate Renaissance Man

Author website

I am not, by any stretch, a conspiracy person.  I think the probability of a conspiracy succeeding is inversely tied to the number of people involved.  That makes me especially dubious of government conspiracies.  The bottom line for me is this: people are smart, groups are dumb.  If you want to understand something just follow the money.

But I am getting a little scared.

You may have heard about the various bailouts and financial manipulations the government is engaged in lately.  It has been in the news.  There was a $750 billion bailout, followed by another $500+ billion bailout.  A number of investment banking firms were bailed out (and, curiously, some were not) while AIG continues to be handed money.  Banks are being force fed money and there are more stimulus packages on the way.  All done, we are told, to save us from a world economic collapse.

But is it true?  This week the Fed lowered the fed funds rate… again.  Lowering the rate didn’t do a damn thing a month ago, so why are they trying again?  Here’s a better question: Why are they lowering the rate at all?  Lowering the fed funds rate effectively lowers the “cost” of money.  When do you lower the cost of something?  When their is a demand problem.  From everything you have read, do we have a demand problem or a supply problem?  We are being told that everyone needs money and no one will lend it.  So why in the world would you lower the price of money?

Let’s leave that alone for a minute and move on to the credit crunch.  As I mentioned previously, the world economic collapse is precipitously close and liquidity is the problem.  “No one is lending money.”  “Commercial paper has dried up.”  “Our financial system is grinding to a halt because cash is being hoarded.”  I have not taken the time to actually go out and find these headlines and link to them.  I trust this is now such common wisdom you will take it on face value.  But take a look at the following graph:

That represents the loans, in Read more

by Sean Purcell

Real Estate Renaissance Man

Author website

Although this post discusses the election in general, it is not meant to instigate a general discussion of the election.  It is… a non-political post on politics.

In talking to various people about the upcoming presidential election and their preferences, I was stuck by an odd response I kept hearing – in various forms – over and over again.  I decided to do an extensive, double blind study – exhausting all resources in order to generate a valid conclusion.  Following this study, I now believe we are witnessing a new election dynamic (or at the very least a dynamic not previously seen in our life time).

Editor’s Note: By “extensive” I mean I asked anyone who walked into, out of or near my office doorway.  I did not actually go the whole distance and get up off my seat.  Also, by “double blind” I mean to say neither I nor the person I interviewed had a clue what we were talking about.  I imagine my idea of “exhaustive” needs no further explanation…

In all seriousness, when I meet someone voting for either candidate I ask them a straightforward question: “Why are you voting for that candidate?”  Even though I spoke with a full spectrum of ideologies, I heard a similarity in all their responses.  If the person was an Obama supporter they would provide answers such as “four more years of Bush… disastrous deregulation by the current administration… conservative duplicity with Wall Street” and so on.  If the person was a McCain supporter they would provide answers such as “tax and spend Democrats… redistribution of wealth… lack of liberal strength in the face of terrorism” and so on.  I rarely got an affirmative answer with regard to their candidate of choice.  In other words: they were not voting for someone so much as voting against someone else.

That people cast their vote for someone they are not particularly excited about is not new.  Nor is casting a vote solely in opposition to the other candidate.  What is groundbreaking (and, so far as I know, not being reported) is that this year, for the first time Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Dr. Thomas J. DiLorenzo writing at the Ludwig von Mises Institute:

Hamilton was the intellectual leader of the group of men at the time of the founding who wanted to import the system of British mercantilism and imperialistic government to America. As long as they were on the paying side of British mercantilism and imperialism, they opposed it and even fought a revolution against it. But being on the collecting side was altogether different. It’s good to be the king, as Mel Brooks might say.

It was Hamilton who coined the phrase “The American System” to describe his economic policy of corporate welfare, protectionist tariffs, central banking, and a large public debt, even though his political descendants, the Whig Party of Henry Clay, popularized the slogan. He was not well schooled in the economics of his day, as is argued by such writers as John Steele Gordon. Unlike Jefferson, who had read, understood, and supported the free-market economic ideas of Adam Smith, David Ricardo, John Baptiste Say (whom Jefferson invited to join the faculty of the University of Virginia), Richard Cantillon, and Turgot (a bust of whom still sits in the entrance to Monticello), Hamilton either ignored or was completely unaware of these ideas. Instead, he repeated the mercantilist myths and superstitions that had been concocted by apologists for the British mercantilist state, such as Sir James Steuart.

Hamilton championed the cause of a large public debt — which he called “a public blessing” — not to establish the credit of the US government or to finance any particular public works projects but for the Machiavellian idea of tying the interests of the more affluent to the state: being government bondholders, they would, he believed, then support all of his grandiose plans for heavy taxation and a government much larger than what was called for in the Constitution. He was right. They, along with Wall Street investment bankers who have marketed the government’s bonds, have always provided effective political support for bigger government and higher taxes. That is why Wall Street investment bankers were first in line for a bailout, administered by one of Read more