Vulcan's Hammer

The difference between Liberals and Libertarians (like myself) is that Liberals really believe that government can be a vehicle for progress in that it can, by the dint of its scope and power, help people achieve economic prosperity, equality, and fairness. Conservatives and libertarians, on the other hand, are suspicious of concentrated power and view government as prologue to abuse of power. The latest escapade regarding the "bailout" bill is a prime example. Our government has written up a bill, now law, that would drive any fiscal conservative batty. There are so many bells and whistles in the "bailout" that temerity itself could not explain the boldness that it took to write it and then vote to pass it. Yet another example of how anything that is dealt by our government amounts to largesse, bureaucracy, and fickle solutions.

From National Review Online:

It is no coincidence that the Senate passed its economic bailout bill in a package containing unrelated legislation and special-interest tax breaks. This is an important lesson about how Washington works that is seldom mentioned in the debate over “earmarks,” if these tax provisions can be called that. For in addition to the common objections to earmarks — the wasteful nature of many of them, and the climate of disrespect for taxpayers that they create — it is also important to remember that earmarks grease the skids for bad or unpopular legislation.

“They’re trying to buy off members,” says conservative Rep. Michelle Bachmann (R., Minn.), who spoke to me on Thursday afternoon, ahead of the House’s expected Friday vote. “I think this sort of thing leads to cynicism on the part of the public. It demonstrates the crassness of Washington, the out-and-out vote-buying that happens when leadership feels a bill has to pass. It’s a bit troubling to think that someone would throw out the concept of free markets for the sake of wooden arrows.”

Cha-ching!! The taxpayers get hosed again. This bill looks like a Christmas tree— lit up with all sorts of pork. Both candidates for president supported this bill. Disgusting.

Rep. Barney Frank (D., Mass.): I worry, frankly, that there's a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. . . .

Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez:
Secretary Martinez, if it ain't broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?

House Financial Services Committee hearing, Sept. 25, 2003:
Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .

House Financial Services Committee hearing, Sept. 25, 2003:
Rep. Gregory Meeks, (D., N.Y.): . . . I am just pissed off at Ofheo [Office of Federal Housing Enterprise Oversight] because if it wasn't for you I don't think that we would be here in the first place. And Freddie Mac, who on its own, you know, came out front and indicated it is wrong, and now the problem that we have and that we are faced with is maybe some individuals who wanted to do away with GSEs in the first place, you have given them an excuse to try to have this forum so that we can talk about it and maybe change the direction and the mission of what the GSEs had, which they have done a tremendous job. . .

Read more wonderful quotes from those that brought us financial crisis

Russell Roberts (professor of economics at George Mason University) has a great article on the housing collapse and the financial mess that has reared its ugly head in today’s Wall Street Journal . The simple-minded meme from the Left these days is that all of this has to do with deregulation and the voracity of the free market. It seems to be a popular, if not populist, argument. The issue is far more complex than we are being told.

Quite possibly one of the most educational podcasts that I have listened to regarding the debacle of Fannie Mae and Freddie Mac is this one on Econ Talk with Russell Roberts and Arnold Kling. The discussion covers all the intricacies and mechanisms between government and these large congress-created behemoths. If you don’t believe that government had a hand in the collapse of these two GSE’s (government sponsored enterprises), take some time and listen in.

From The Bobo Files:

There is an overwhelmingly clear majority in both the House and the Senate in Congress. If the Dems really wanted to pass a bill, they could do it on their own. I don’t buy their bullshit that they want to pass a partisan bill. They could care less about anything else, so why this? Could it be the fact that they are trying to siphon off 20% from the $700 Billion + to go to ACORN (the organization that Obama worked with) and other housing organizations? That 20% which is supposed to be going to pay down debt - they want to put it back in to the same kind of freakin’ organizations that caused this problem in the first place. They want to bail out stupid and/or unqualified homeowners on our dollar. They want to give money to an organization that is currently under investigation for voter fraud. Is it any wonder the Republicans won’t sign off on it?

From Shaving Leviathan:

Thanks to the creation and favored treatment of Fannie and Freddie, the CRA, the Tax Act Reform of 1986, and a host of other legislation, the mortgage lending market was severely distorted. Self-limiting free-market mechanisms that constrain bad investment decisions was thus removed. The Fed greased the wheels, and put the whole train on a roller coaster, through a years-long policy of artificial manipulation of interest rates.

(This is not to mention the ample funds Obama himself received from Fannie and Freddie. However, even at #2 on the list of recipients, $135,000 over three years isn't enough to make the case that he was bought, as is common currency on conservative blogs. It's chump change and a tiny percentage of the $150 million those two paid to politicians over the years.)

From Charles Krauthammer:

The mob is agitated, but hardly blameless. While the punch bowl -- Alan Greenspan's extremely low post-9/11 interest rates -- was being held out, few complained about cheap loans and doubling home values. Now all of the sudden everything is the fault of Wall Street malfeasance.

I have little doubt that some, if not many, cases of malfeasance will emerge. But what we conveniently neglect is the fact that much of this crisis was brought upon us by the good intentions of good people.

For decades, starting with Jimmy Carter's Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac -- who in turn pressured banks and other lenders -- to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity.
Read More

I found this great article on the housing crash and the root of its cause:

One of the most frequently asked questions about the subprime market meltdown and housing crisis is: How did the government get so deeply involved in the housing market?

The answer is: President Clinton wanted it that way. Fannie Mae and Freddie Mac, even into the early 1990s, weren't the juggernauts they'd later be. While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was Clinton who supercharged the process.

After entering office in 1993, he extensively rewrote Fannie's and Freddie's rules.In so doing, he turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocs and handed favors, jobs and money to political allies. This potent mix led inevitably to corruption and the Fannie-Freddie collapse.

Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton unveiled his National Homeownership Strategy, which broadened the CRA in ways Congress never intended. Addressing the National Association of Realtors that year, bluntly told the group that "more Americans should own their own homes." He meant it. He saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.

Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, he ordered Robert Rubin's Treasury Department to rewrite the rules in 1995. Read More

From Terry Jones at Investor Business Daily

HT: Liberty Pen

This is proof positive that the radical Left are hardcore zealots with nary an ounce of forethought for making the most crass of requests in their journey to save us all.

It would have been nice if all the regulatory agencies (The Federal Reserve, SEC, the Comptroller of the Currency, FDIC) and the government approved rating agencies would have done their job before the current financial crisis. Of course, I think it’s ridiculous that the very people that helped drive Fannie Mae, Freddie Mac and all of the investment banks to ruin are sitting around grilling Paulson--for example, Chris Dodd.

SUBJECT: REQUEST FOR URGENT BUSINESS RELATIONSHIP

DEAR AMERICAN:

I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.

I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.

I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTIN IS 100% SAFE.

THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.

PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV
SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.

YOURS FAITHFULLY MINISTER OF TREASURY PAULSON

(HT: The Volokh Conspiracy)

I heard about this in the afternoon and I was simply incredulous: The Democrats are going to let the offshore drilling ban expire. Hmmm, we’ll see.

Oh, it’s gonna cost us, dear taxpayer. We will rue the day that we allowed the government to take hold of the economy to the extent that it has over the last week or so. The bailout will cost roughly $6,500 per family or $2,000 per person. Ho, ho, ho, Merry Christmas to us! The Liberal hounds are howling their tortuous tune of how regulation would have saved us from all this. All I hear all day on lefty talk radio is the Glass-Stegall act and how it was wiped out by the evil free-market conservatives. “Oh, look what it has wrought!” Poor fools. This country is going to go down the wrong road and we will regret it later on with more government intervention. Sorry to break it to liberals but all of this is due to the government and it’s whacked regulatory bureaucracy. With this crisis and the populist call to have the feds take control, we get closer and closer to collectivism and more government control of our lives and economy. Progressives must be so happy.
Despite the bipartisan touchy feely-ness of the last couple of days, it looks like there is going to be a lot more ideological tugging and pushing rearing its ugly head. Does anyone want to doubt that our political class will screw this entire episode up?