7 posts tagged “credit”

I give President George W. Bush the dubious credit for destroying the remainder of Reaganism that his father didn't dismantle. I really think that the Bush family is poison for the Republican Party. There is no longer a vision that has political legs, which will propel America forward in the 21st century in the tradition of the Bill of Rights. The Washington DC culture is so corrupt that I doubt that America can be saved. 1913 when the 16^th Amendment and the Federal Reserve was passed may have doomed America to fascism/ socialism. Is this the death of the conservative movement?

The credit bubble was created by the Federal Reserve and Congress through the Community Reinvestment Act and allowing Fannie Mae and Freddie Mac to buy no document home loans. This last economic expansion was created artificially through the over expansion of credit.  Destroying the traditional standards that financial institutions had used before extending credit has ruined the balance sheets of most public companies that were in the business of extending credit.  Congress and the President have created more debt to throw good money after bad in bailing out insolvent companies. I find it terribly ironic that the institutions that created these bad loans like the money was free are getting bailed out with taxpayer’s money and debt while citizens who are in trouble because of their debt may actually face bankruptcy while in the long term be subject to additional taxation to service this debt and dollar repudiation.

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

I am very sad for my country. Changing the President doesn’t create a positive reality. Barack Obama’s appointments are the same beltway insiders that created this mess in the first place. While I want my country to succeed, I am not a cheerleader for the Obama administration.

You Cannot Get Even
By Hans F. Sennholz

Dr. Sennholz heads the Department of Economics at Grove City College and is a
noted writer and lecturer on monetary and economic affairs.

Government affects individual in­comes by virtually every decision it makes.
Agricultural programs, vet­erans' benefits, health and labor and welfare
expenditures, housing and community development, federal expenditures on
education, social insurance, medicare and medicaid programs, and last but not
least, numerous regulations and controls affect the economic conditions of every
citizen. In fact, modern gov­ernment has become a universal transfer agency that
utilizes the political process for distributing vast measures of economic income
and wealth. It preys on millions of victims in order to allocate valuable goods
and services to its beneficia­ries. With the latter, transfer pro­grams are so
popular that few public officials and politicians dare oppose them.

The motive powers that drive the transfer order are as varied as human design
itself. Surely, the true motives are often concealed, and a hollow pretext is
pompously placed in the front for show. And yet, man is more accountable for his
motives than for anything else. A good motive may exculpate a poor action, but a
bad motive vitiates even the finest action. Conscience is merely our own
judgment of the right and wrong of our action, and therefore can never be a safe
guide unless it is enlightened by a thorough understanding of the im­plications
and consequences of our actions. Without an enlightened conscience we may do
evil thor­oughly and heartily.

An important spring of action for the transfer society is the desire by most
people to get even in the redis­tribution struggle. "I have been vic­timized in
the past by taxation, in­flation, regulation, or other de­vices," so the
argument goes, "there­fore I am entitled to partake in this particular benefit."
Or the time se­quence may be reversed: "I'll be vic­timized later in life,"
pleads the col­lege student, "and therefore I want state aid and subsidy now."

This argument is probably the most powerful pacifier of conscience. It dulls our
perception and discern­ment of what is evil and makes us slow to shun it. After
all, we are merely getting back "what is right­fully our own." With a curious
twist of specious deduction the modern welfare state, which continually seizes
and redistributes private property by force, is defended by the friends of
individual liberty and pri­vate property. "Man is entitled to the fruits of his
labor," they argue, "we are merely getting back that which is rightfully and
morally our own." They borrow the arguments for the private property order to
sus­tain the political transfer order.

Surely getting back that which is rightfully and morally our own is a principle
that is rooted in our ina­lienable right to our lives. It is a property right
that springs from our human rights and from the right to life itself. It is the
right to restora­tion of the fruits of our efforts and labors of which we are
deprived by deceit, force, or any other immoral practice. It is a specific right
to re­covery or compensation from those who are wronging us or have injured us
in the past.

This right to restoration does not beget the right to commit the very immoral
act from which we seek restoration, to imitate others in act­ing immorally, or
to seek revenge against the trespassers or innocent bystanders. But this is
precisely what the "get-even" advisors urge us to do.

In an unfortunate automobile ac­cident we are hurt or injured, or our vehicle
may be damaged, because of the negligence of another driver. This gives us the
right to demand restoration and compensation from the guilty party. But it does
not give us the right to seize another car parked in the neighborhood, or
re­turn to the road and injure another driver. Or, our home is burglarized and
we suffer deplorable losses in personal wealth and memorabilia. This does not
bestow upon us the right to do likewise to others. But the "get-even" advocates
are draw­ing this very conclusion.

He who is desirous of "getting even" in the politics of redistribu­tion longs to
join the army of benefi­ciaries who are presently preying on their victims. They
would like to get their "money back" from whomever they can find and victimize
now.

Like the victim of a burglary who becomes a burglar himself, they are searching
for other victims. But in contrast to the new burglar who may be aware of the
immorality of his actions, the "get-even" advocate openly defends his motives
while he is pursuing his political craft.

We cannot get even with those individuals who deprived us of our property in the
past. They may have long departed this life or may have fallen among the victims
them­selves. We cannot get even with them by enlisting in the standing army of
redistributors. We merely perpetuate the evil by joining their forces. So we
must stand immune to the temptations of evil, regardless of what others are
doing to us. The redistribution must stop with us.

The redistributive society has vic­timized many millions of people through
confiscatory taxation, infla­tion, and regulation. Government, acting as the
political agency for coercive transfer, seized income and wealth from the more
productive members and then redistributed the spoils to its beneficiaries.
Although many millions of victims and benefi­ciaries were involved, which often
obscures the morality of the issue, the forced transfer took place be­tween
certain individuals. It is true, the beneficiaries, who used political force to
obtain the benefits, cannot easily be recognized in the mass process of
transfer. But even if we could identify them, and establish a personal right to
restoration, our property has been consumed long ago. A vast army of
beneficiaries, together with their legions of gov­ernment officials and civil
servants, consumed or otherwise squandered our substance. There is nothing to
retrieve from the beneficiaries who probably are poorer than ever be­fore,
having grown weak and depen­dent on the transfer process.

When seen in this light, the get-even argument is nothing more than a
declaration of intention to join the redistribution forces. It may be born from
the primitive urge for revenge against government, state or soci­ety. But it is
individuals who form a government, make a state and con­stitute a society. By
taking revenge against some of them for the injuries suffered from the hands of
others, I am merely reinforcing the evil.

Revenge is a common passion that enslaves man's mind and clouds his vision. To
the savage it is a noble aspiration that makes him even with his enemies. In a
civilized soci­ety that is seeking peace and har­mony it is a destructive force
which law seeks to suppress. But when the law itself becomes an instrument of
transfer, the primitive urge for re­venge may burst forth as a demand for more
redistribution. It becomes a primary force that gives rise to new demands or, at
least, reinforces the popular demands for economic transfer. The common passion
for revenge, no matter how well con­cealed, undoubtedly is an important motive
power of social policy that leads a free society to its own de­struction.

No wealth in the world and no political distribution of this wealth can purchase
the peace and har­mony so essential to human exis­tence. Peace and harmony can
be found only in moral elevation that reaches into every aspect of human life. A
free society is the offspring of morality that guides the actions and policies
of its members. To effect a rebirth of such a society is to revive the moral
principles that gave it birth in the beginning. It is individ­ual rebirth and
rededication to the inexorable principles of morality that are the power and the
might. The example of great individuals is useful to lead us on the way, for
nothing is more contagious for greatness than the power of a great example.

To spearhead a rebirth of our free society let us rededicate ourselves to a new
covenant of redemption, which is a simple restatement of public morality. In the
setting of our age of economic redistribution and social conflict it may be
stated as follows:

 No matter how the transfer state may victimize me, I shall seek no transfer
payments, or accept any.
 I shall seek no government grants, loans or other redistributive favors, or
accept any.
 I shall seek no government orders on behalf of redistribution, or accept any.
 I shall seek no employment, or accept any, in the government ap­paratus of
redistribution.
 I shall seek no favors, or accept any, from the regulatory agencies of
government.
 I shall seek no protection from tariff barriers or any other institu­tional
restrictions of trade and commerce.
 I shall seek no services from, or lend support to collective institu­tions that
are creatures of redis­tribution.
 I shall seek no support from, or give support to associations that ad­vocate or
practice coercion and re­straint.

We do not know whether our great republic will survive this century. If it can
be saved, great men of convic­tion must lead the way—men who with religious
fervor and unbounded courage resist all transfer tempta­tions. The heroes of
liberty are no less remarkable for what they suffer than for what they achieve.

You Cannot Get Even| The Foundation for Economic Education: The Freeman, Ideas on Liberty
Foundation for Economic Education
30 South Broadway
Irvington-on-Hudson,
New York, 10533
1-800-960-4FEE •                                    

The Freeman: Ideas on Liberty - June 1978
Vol. 28 No.  6

©2007 Foundation for Economic Education. All Rights Reserved.
http://www.fee.org/publications/the-freeman/article.asp?aid=6015

I just received a letter from my bank offering me a home equity line of credit at 5% interest. The bank is Compass Bank, so I guess not every bank is fearful to lend or out of money or bankrupt. Maybe I should entertain their offer as the money could come in handy.

John Mauldin's "Thoughts from the Frontline"

Who's Afraid of a Big, Bad Bailout?

Instead of going into debt of between $700 Billion to Infinity and bailing out the bad investments and investment banks, I would use the same cash to create new banks with fresh balance sheets and auction off the stock of the new banks to repay the initial investment. Then we would have a new healthy financial sector with new banks that have a healthy balance sheet and the people who took the risk would get their just reward.

A Credit Worthy Society

By Zak Arthur Klemmer

The phone rang the other day and it was a former colleague who is part of the far left Coalition for Credit Fairness and as luck would have it is an insider with the Obama campaign. To make a long story short I was offered a commission to write a speech for Barack Obama’s next rally! Here is the final draft, which I submitted to Senator Obama. ;)

My Fellow Americans:

I understand the frustration that you feel when you have to subordinate your desire for pleasure to that of necessity; that the Fat Cats at Goldman Sachs may live only for the luxuries because they have the means to afford them without the concern for the necessities.  The basic necessities of life are just a matter of course; no struggle is requited for their attainment.

The over burdened middle class continues to struggle while corporate giants get preferential treatment and tax breaks form the Bush Administration.  Why should the middle class continue to struggle and pay while corporate Fat Cats play and receive golden parachutes after they run the company into the ground?  This is unfair, the American middle class must continue to do all the living, working and dying in this great land of ours without an incentive for all the sacrifice that they have suffered in life. What’s in it for them? 

We live in tumultuous times, the uncertainty of permanent employment brought about by the “future shock” of new technologies and foreign workers that can work for five cents an hour.  As the changes accelerate at a faster pace, you are unable to plan for an uncertain world. You are just one pink slip away from financial hardship, resulting from the greed and selfishness of multi-national corporations. Like an old shoe, American workers are thrown out, pink slipped when they are no longer needed. 

We are in a “Credit Crisis” due to the unequal availability of credit; we must fix our credit delivery system.  The high cost of employee theft, shoplifting and bad debt charge offs that business must pass along in higher prices to the consumer will be eliminated under my plan. The cost to financial institutions resulting from home foreclosures and repossessions will be eliminated under my plan. The hidden cost of paper work and red tape will be eliminated under my plan.

This “Credit Crisis” has created feelings of insecurity and a general lack of confidence in the future.  We are in a recession because of this lack of confidence. The engine of our consumption economy has stalled. We need to stimulate demand, accelerate spending and increase consumption. We need to relieve the fear that you feel about the future. My plan is to guarantee a continuation of our free spending exuberance. We will issue every citizen a “Spending Security Card.”

I know that many of you have excellent credit and that you are reluctant to increase the amount of personal debt during these uncertain times. That’s why I have appointed Senator Hillary Rodham Clinton to a blue ribbon commission to study the problem of insufficient spending and consumption. They have drafted a plan, which I will submit, to Congress on my first day in office.  With the Democratic Congress we will stimulate the economy and guarantee every American a high standard of living.

Interest rates are very low, rather then only allowing only major corporations to borrow below the prime rate, our plan calls for credit fairness.  Even the working poor and middle class families will be able to borrow at these sub-prime interest rates.  Every citizen will be issued a Spending Security Card. Every cardholder will be able to receive thirty to one purchasing power just like hedge funds and investment banks. This is credit fairness, until now only the wealthiest Americans could afford a luxurious lifestyle.

You will be able to use this card to make major purchases on demand. When you want a new car, a new boat or a new home- or even take a vacation, it all can be charged on your Spending Security Card. The interest will be charged at the lowest short term U.S. Treasury rate.  It will be a great boon to business, as it will be backed by the full faith and credit of the United States of America! Credit approval is pre-approved under my plan. No citizen will ever be turned down for credit again. This will save you, my fellow Americans, the embarrassment of the salesperson bringing back a negative credit history about you causing you to be turned down for the loan. No one will ever be turned down for credit again.

Some may ask: “How will all of the credit created by the plan be repaid?”  It will be repaid by all of the savings that businesses are now paying in the high cost of managing their consumer credit accounts receivable. It will be repaid by all of the prosperity created by the spending and the resulting growth in private sector jobs, and new tax payers- increased taxes to the Federal Government as well as state sales taxes on merchandise. The increased revenue will pay for the plan. The average citizen will now be on an equal footing with a Kennedy or a Rockefeller. My plan creates credit fairness.

We will create a National Credit Clearing Corporation. All charges made with a Spending Security Card will be processed by the NCCC. The nation will be divided into 13 NCCC regional alliances. To quell concerns about how this program will be affordable we will pay for this with payroll contributions that will never exceed 3% of the employee’s gross wages. To make it fair, the employer will contribute 80% of the cost of this program, but any employer’s payroll contributions will not exceed 8% of gross payroll. The profit from increased demand for goods and services will compensate of the payroll tax. My plan will create new purchasing power, freeing up cash for savings and investment and help pay for your child’s college education.  

Until now only the Congress could spend your children and grandchildren’s future unearned income. Until now only Congress could write their own checks and grant themselves an interest free loan. Until now, only Congress could give them selves a gigantic pay raise. Now with my plan, the ordinary workingman or woman will be able to share in the special privileges and perks that Congress has reserved only for them selves. My plan creates credit fairness without regards to income, past credit history, gender, race, creed or culture.  With your support we will create a Credit Worthy Society. 

copywrite 2008 by Zak Arthur Klemmer