Santelli and Baseball Crank - That's the Ticket!!

I propose a presidential ticket of Rick Santelli and Baseball Crank with Ron Paul as the next Federal Reserve Chairman. That would end the need for an audit of the Fed that nobody seems to want. Who's with me on this?

Three guys who are generally portrayed as kooks, loons, cranks or crack-pots by the criminally inept MSM, but I would bet that if we had heeded some of their words of advice from the past, we would not be in the economic or political predicament that we are in today. I speak specifically about Ron Paul-- who was portrayed unfairly by the MSM in the last presidential beauty pageant--CNBC commentator Rick Santelli and the writer of one of my favorite blogs Baseball Crank. Baseball Crank is a nom de plume, although his real identity is not much of a secret.

AGAIN I ASK, WHEN DO WE GET TO THIS POINT?


Some of my favorite hits from the past and present from these artists.

RICK SANTELLI - STOP SPENDING!! STOP SPENDING!! STOP SPENDING!!
JUNE 28, 2010 - SANTELLI VS. LIESMAN - THE STOP SPENDING RANT!!!




RON PAUL - END THE FED
FEB 27, 2008 - RON PAUL SCHOOLS BEN BERNANKE



AGAINST THE BAILOUT
SEP 27, 2008 - BEWARE THE SNAKE OIL SALESMAN OF THE BAILOUT




AGAINST THE FED
OCT 24, 2008 - ON GOVERNMENT (IN)EFFICIENCY




AGAINST THE STIMULUS
THE ORIGINAL RANT - FEB 19, 2009 - THE GENESIS OF THE TEA PARTY



Here is Mr. Santelli unplugged, for more than a 30 second sound byte of screaming that CNBC allows and encourages. What he says makes a lot more sense this way.

FROM KINGWORLDNEWS.COM
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/7/3_Rick_Santelli_files/Rick%20Santelli%207:3:2010.mp3


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Along with much the same argument and some cool data tables to back them up is Baseball Crank. I posted the entry in it's entirety because it is so good and so important to understand. You can either read it all here or on his site, but read it and understand it you should. If I violated any fair use provisions I am quite certain that being an attorney Mr. Crank will let me know. Happy reading and understanding.


from the blog Baseball Crank

POLITICS: Deficits Are A Symptom. The Problem Is Spending.
JULY 15, 2010

http://baseballcrank.com/archives2/2010/07/politics_defici_2.php

The Obama Administration has been in something of a quandary lately as to whether to primarily emphasize its plans to spend more taxpayer money as "stimulus" or to paint itself as fighting against deficits. The former has the advantage of looking like the White House is doing - or trying against GOP opposition to do - something about the economy and its still-listless rates of growth and job recovery; the latter has the advantage of allaying voter fears that the Democrats have been doing too much and digging us into a fiscal hole, as well as offering at least the possibility of bipartisanship or faux bipartisanship that helps (whether Republicans accept or reject Obama's offers) blur the lines between the parties on deficits and spending. Remember that the one thing Obama has sought from Day One of his stimulus strategy, and has largely failed at, is to avoid presenting a clear contrast between the two parties on spending and the size of government, that being an argument he cannot win.

With a deficit commission working on proposals that will be delivered after the fall election, some liberal pundits/activists like Ezra Klein of the Washington Post and Matthew Yglesias of ThinkProgress are trying to keep both options open by arguing that conservatives are somehow hypocritical for complaining about massive deficits under Obama and the Democratic Congress while promoting tax cuts to help with the lack of economic growth. But read their work and notice, as with Obama, what's missing: they talk only about deficits, not about spending - you will search Klein's column in vain for any indication that anyone should care how obese government gets, as long as it's feasting on current tax revenues instead of on deficit financing. And naturally, when and if Obama tries to do something about the deficit, he too will view it mainly as a revenue problem, not a problem with spending and the size of government. Indeed, history shows that even Beltway Republicans have tended to fall into the trap of assuming that the problem is mainly one of raising revenue, or at least that any deal to fix the deficit can only attract Democratic support if it includes Democrats' beloved tax hikes.

This is going about the question all wrong. Would you rather have a federal government that spends 15 cents of every dollar earned in this country, while taxing 12 and making up the difference by issuing debt - or a federal government that takes in and spends 30 cents of every dollar? I'd much prefer the former. The Democrats don't want to have that conversation at all.

Either way the spending is financed, the amount spent by government is a portion of the economy that cannot produce meaningful growth. Yes, wise government can play a role in a better growth environment, and yes, at times the government produces a little growth on its own, e.g., government scientists invent things that can help the economy grow. But by and large, a dollar invested in the public sector is a dollar that will never bear more than a dollar in fruit, and next year the government comes looking for another dollar, while a dollar left in the private sector can grow and be used later in either private or public hands. (In Biblical terms, the dollar in the public sector is like the servant who buried his master's money in the back yard) All of the growth we take for granted as producing increasing wealth over time comes from the portion of the economy that is not consumed by government. So, using our oversimplified example, which obviously excludes the state and local public sector, you have one economy in which 70 cents of every dollar goes back to the private sector to grow, and one in which 85 cents does. Which economy do you think will have more money after a couple of generations of this? Even at a paltry private-sector growth rate of 2% per year, the first economy has produced $1.59 at the end of three years for every dollar, and the second has produced $2.27. As I said, this is a vast oversimplification, but there's simply no way for the first economy to grow faster unless you believe - contrary to the most fundamental tenets of economics and history - that the public sector can produce economic growth at a rate comparable to the private sector.


Moreover, within reason, running a modest deficit can make sense, for reasons somewhat analogous to why a corporation issues bonds as well as stock to raise capital, or why even well-off families (especially under the present tax code) may take out a mortgage: sometimes, debt is cost-effective. As long as it is a safe bet to repay its debts, the US federal government can borrow funds more cheaply than any other entity on earth, and while debt requires us to pay interest, which means mandated spending, if the money not taxed is growing in the private sector at a faster rate than the interest rate paid by the government, then deficit spending makes sense for the same reason why you might buy stocks instead of paying down your mortgage - the rate of return is better. Also, the federal government should never run a surplus, since if the government is collecting, say, 20% in taxes and spending 18%, it's the 20% figure that represents the bite taken out of the private sector. So, the target for revenue should always aim for a little below spending.

But the fact that deficits can make economic sense under the right conditions does not mean that all deficits do - the bigger the debt, the more interest is paid on it (thus, more spending), and the higher rates must be paid (because too-large debt makes bond markets worry about credit risk); and the higher proportion of government spending that's financed by deficits, the worse are your odds that the money left in private hands will grow faster than the interest rate. At some point, deficit financing becomes a very bad bet. And of course, there are situations where the government may need to run a surplus if it needs to use the difference to pay down enough debt to get back to its usual position of running a manageable deficit, a strategy used in the past after the federal government took on excessive debts in a short stretch to fight wars.

So, why are conservatives up in arms now over deficits? Two reasons. One - which the Democrats seem determined to ignore - is that public concern about deficits is often linked to concern about spending and the size of government. Huge deficits can be a major symptom of overspending. But they're the symptom, not the disease. I have a chart below the fold showing federal revenue, spending, deficits, debt and interest as a percentage of GDP, as well as deficits and interest as a percentage of spending (the Def% and Int % columns) and partisan control of the White House, House and Senate from 1947 through 2011.

Until the 2006 elections, we hadn't been over spending 21% of GDP since the 1994 GOP takeover of Congress, and hadn't been over spending 23.5% of GDP in the postwar period. But the first year of the new Democratic Congress took us to 20.7%, then 24.7%, with spending projected to crack 25% for 2010 and 2011 for the first time, as the deficit - never above 6% before, below 4% since 1993 and often below 2% during the era of GOP control of Congress - soars to 9.9% in 2009 and projected 10.6% in 2010. This is simply more spending than the economy can bear, and the deficit is a symptom of that problem.

And two, we're in a situation now where the proportion of deficit spending is itself out of hand. Check the Def% column in the chart - in fiscal years 2009 and (projected) 2010, we're paying for over 40% of government spending by issuing debt, while it had topped out at 18.1% during the years the GOP controlled Congress and 25.5% as the postwar high. It's not at all unreasonable to be unconcerned when you're borrowing 10% or 15% of your budget - when you're borrowing 40%, you're living beyond your means. And anybody who thinks you can fix that by collecting a quarter of GDP in federal taxes is insane.

Spending has to come down. That's the only way to fix the deficit problem and the growth problem.

Here's the chart:

Yr Rev Spend Defc Def% Debt Int Int% WH H S
1947 16.5 14.8 1.7 11.49 110.3 1.8 12.16 D D D
1948 16.2 11.6 4.6 39.66 98.4 1.7 14.66 D R R
1949 14.5 14.3 0.2 1.40 93.2 1.7 11.89 D R R
1950 14.4 15.6 -1.1 -7.05 94.1 1.8 11.54 D D D
1951 16.1 14.2 1.9 13.38 79.6 1.5 10.56 D D D
1952 19 19.4 -0.4 -2.06 74.3 1.3 6.70 D D D
1953 18.7 20.4 -1.7 -8.33 71.3 1.4 6.86 D D D
1954 18.5 18.8 -0.3 -1.60 71.8 1.3 6.91 R R R
1955 16.6 17.3 -0.8 -4.62 69.5 1.2 6.94 R R R
1956 17.5 16.5 0.9 5.45 63.8 1.2 7.27 R D D
1957 17.8 17 0.8 4.71 60.5 1.2 7.06 R D D
1958 17.3 17.9 -0.6 -3.35 60.7 1.2 6.70 R D D
1959 16.1 18.7 -2.6 -13.90 58.5 1.2 6.42 R D D
1960 17.9 17.8 0.1 0.56 56.1 1.3 7.30 R D D
1961 17.8 18.4 -0.6 -3.26 55.1 1.3 7.07 R D D
1962 17.6 18.8 -1.3 -6.91 53.4 1.2 6.38 D D D
1963 17.8 18.6 -0.8 -4.30 51.8 1.3 6.99 D D D
1964 17.6 18.5 -0.9 -4.86 49.4 1.3 7.03 D D D
1965 17 17.2 -0.2 -1.16 46.9 1.3 7.56 D D D
1966 17.4 17.9 -0.5 -2.79 43.6 1.2 6.70 D D D
1967 18.3 19.4 -1.1 -5.67 41.9 1.3 6.70 D D D
1968 17.7 20.6 -2.9 -14.08 42.5 1.3 6.31 D D D
1969 19.7 19.4 0.3 1.55 38.6 1.3 6.70 D D D
1970 19 19.3 -0.3 -1.55 37.6 1.4 7.25 R D D
1971 17.3 19.5 -2.1 -10.77 37.8 1.4 7.18 R D D
1972 17.6 19.6 -2 -10.20 37 1.3 6.63 R D D
1973 17.7 18.8 -1.1 -5.85 35.7 1.3 6.91 R D D
1974 18.3 18.7 -0.4 -2.14 33.6 1.5 8.02 R D D
1975 17.9 21.3 -3.4 -15.96 34.7 1.5 7.04 R D D
1976 17.2 21.4 -4.2 -19.63 36.2 1.5 7.01 R D D
TQ76 17.8 21 -3.2 -15.24 35.2 1.5 7.14 R D D
1977 18 20.7 -2.7 -13.04 35.8 1.5 7.25 R D D
1978 18 20.7 -2.7 -13.04 35 1.6 7.73 D D D
1979 18.5 20.2 -1.6 -7.92 33.2 1.7 8.42 D D D
1980 19 21.7 -2.7 -12.44 33.3 1.9 8.76 D D D
1981 19.6 22.2 -2.6 -11.71 32.6 2.3 10.36 D D D
1982 19.1 23.1 -4 -17.32 35.2 2.6 11.26 R D R
1983 17.5 23.5 -6 -25.53 39.9 2.6 11.06 R D R
1984 17.4 22.2 -4.8 -21.62 40.7 2.9 13.06 R D R
1985 17.7 22.9 -5.1 -22.27 43.9 3.1 13.54 R D R
1986 17.4 22.4 -5 -22.32 48.1 3.1 13.84 R D R
1987 18.4 21.6 -3.2 -14.81 50.5 3 13.89 R D R
1988 18.2 21.3 -3.1 -14.55 51.9 3 14.08 R D D
1989 18.4 21.2 -2.8 -13.21 53.1 3.1 14.62 R D D
1990 18 21.8 -3.9 -17.89 55.9 3.2 14.68 R D D
1991 17.8 22.3 -4.5 -20.18 60.6 3.3 14.80 R D D
1992 17.5 22.1 -4.7 -21.27 64.1 3.2 14.48 R D D
1993 17.6 21.4 -3.9 -18.22 66.2 3 14.02 R D D
1994 18.1 21 -2.9 -13.81 66.7 2.9 13.81 D D D
1995 18.5 20.7 -2.2 -10.63 67.2 3.2 15.46 D D D
1996 18.9 20.3 -1.4 -6.90 67.3 3.1 15.27 D R R
1997 19.3 19.6 -0.3 -1.53 65.6 3 15.31 D R R
1998 20 19.2 0.8 4.17 63.5 2.8 14.58 D R R
1999 20 18.7 1.4 7.49 61.4 2.5 13.37 D R R
2000 20.9 18.4 2.4 13.04 58 2.3 12.50 D R R
2001 19.8 18.5 1.3 7.03 57.4 2 10.81 D R R
2002 17.9 19.4 -1.5 -7.73 59.7 1.6 8.25 R R D
2003 16.5 20 -3.5 -17.50 62.5 1.4 7.00 R R D
2004 16.4 19.9 -3.6 -18.09 64 1.4 7.04 R R R
2005 17.6 20.2 -2.6 -12.87 64.6 1.5 7.43 R R R
2006 18.5 20.4 -1.9 -9.31 64.9 1.7 8.33 R R R
2007 18.8 20 -1.2 -6.00 65.5 1.7 8.50 R R R
2008 17.5 20.7 -3.2 -15.46 69.2 1.8 8.70 R D D
2009 14.8 24.7 -9.9 -40.08 83.4 1.3 5.26 R D D
2010* 14.8 25.4 -10.6 -41.73 94.3 1.3 5.12 D D D
2011* 16.8 25.1 -8.3 -33.07 99 1.6 6.37 D D D

Sources here, here and here, from the master budget-history site which has now been moved to the White House website. House/Senate historical partisan breakdowns here and here, including this note on fiscal years:

The Federal fiscal year begins on October 1 and ends on the subsequent September 30. It is designated by the year in which it ends; for example, fiscal year 2007 began on October 1, 2006, and ended on September 30, 2007. Prior to fiscal year 1977 the Federal fiscal years began on July 1 and ended on June 30. In calendar year 1976 the July-September period was a separate accounting period (known as the transition quarter or TQ) to bridge the period required to shift to the new fiscal year.

As with the prior iteration of this chart, I use 1947 as a starting point, as it's the first year after full demobilization from World War II; the war budgets were colossal - in Fiscal Year 1943, the deficit was over 30% of GDP. And before the New Deal, federal spending was generally less than 10% of GDP. The OMB site has projections beyond 2011, but since we don't even have a 2011 budget yet, much less the Congress that will vote on the 2012 budget, the projections further out than that are useless even if you assume that the federal budget forecasters have perfect clairvoyance about the state of the economy two or more years out (hint: I don't).

Que the Torch and Pitchfork Crowd!!!

THE TORCH AND PITCHFORK CROWD - COMING SOON TO A NEIGHBORHOOD NEAR YOU!!!

I just love stories like this. It's a local story. But this is and has been developing nationally for years. So we're back for further review of the landscape.

Schools debate if students should bear full cost when they pay to play

http://www.dailyherald.com/story/?id=365919

School board members learned last week that the cost of running the interscholastic sports for the district's middle and high schools averages $417.58 per athlete per sport.

At least two board members - Roberts and Jack Hinterlong - thought the fee hikes weren't enough. Hinterlong said a fee should cover at least 50 percent of the cost of the activity.

"I'm of the mind we have our backs pushed against the wall," Roberts said, noting the Batavia teachers union had just agreed to give up part of its raise and insurance benefits for next year, to avoid laying off up to 60 teachers.

If it comes to spending money in the classroom or on a club, the decision is a "no-brainer" for her, Roberts said. She'll favor the classroom.

Like it or not, since the beginning of the 20th century, extra-curricular activities and sports have been considered to be a vital, integral part of a well-rounded education.

This whole tactic of figuratively holding a gun to the head of extra-curriculars and sports in order to extract property tax increases from the electorate has been going on for many years and it was repulsive when it was done.

Now the shift is to use the programs to augment diminishing revenues and avoid cuts that strike at the fatty portions of the budget--which is very clearly salaries, benefits and spiraling, out of control administrative costs within the budget.

How logical is it to cut muscle and leave fat untouched? Or to attack a segment of the school that actually has demonstrable, proven positive effects on the health and well-being of kids?

We can't fire teachers who act criminally within the system and harm kids with any reasonable speed, but we sure can take a knife to what works pretty quick, can't we?

It doesn't make any common sense.

Average Total Spending per pupil has surpassed $9K each and is heading towards $10K nationally.

According to the Census Bureau, it was approaching $9K in 2007
http://www.census.gov/Press-Release/www/releases/archives/education/010125.html


Average Spending on Extra-Curricular Activities (ECA) is about $450 each.

According to Encyclopedia Brittanica via Wikipedia:
http://en.wikipedia.org/wiki/Extracurricular_activity

So we are looking to correct budget deficits by demanding payment from a segment of the curriculum that currently only commands 5% of the budget!!

Are you kidding me? Again, this is like someone who is drowning in debt suggesting that all they need to do is cancel a couple of channels on his cable bill or switch his cellular phone plan.

Compound stories like these, with the history of shell-game maneuvers like:

-- The "Pass a State Lottery to Benefit Education" shell game that was perpetrated on Florida voters years ago. Little or none of the funds went to benefit education

-- The property tax shell game that many municipalities play today--whereby property appraisals that are the basis for determining tax revenues sent to the schools are kept artificially high by basing them on inflated pre-housing bubble levels. They change the rules or methodology from recent sales (which are currently deflated) to a three-year average (to lock in the inflated values longer) in order to lock in higher revenues. Funny how when the market was moving higher they couldn't re-assess houses fast enough.

-- The prior history of "extra-curricular hostage taking" strategy to extort property tax increases via referendum.

And now this current strategy shift to off-loading of expenses is nothing more than a selective tax increase on parents whose children are involved in ECA.

It's done because administrators and politicians cannot properly budget and control costs and expenses in an efficient manner.

So they kick the can down the road instead of taking proper steps to controlling the part of the budget that is bloated and out of control and responsible for the deficits. Nothing but a bunch of cowards, thieves and charlatans.

When the "torch and pitchfork" crowd comes knocking on their door, I hope they don't act too surprised. What we really need is a politician who confronts corrupt, out of control monopoly power of government in the same way the trust buster Teddy Roosevelt (the better Roosevelt) did when the abuse was on the private side of the ledger. Public abuse of power and control is just as bad.

Urban Dictionary definition of "torch and pitchfork" crowd:
A group of angry or vocal opponents who regularly come out against something, usually prognosticating dire consequences.

I guess the shoe fits.

However, it's not enough to complain and not offer constructive solutions. Here's a story of a district--Towanda School District (PA)--that is taking on the difficult steps necessary to tackle the problem in a common sense way.

http://thedailyreview.com/news/towanda-school-board-decides-to-not-eliminate-extracurricular-activities-1.630162

While the Towanda School Board had said in mid-January that it was going to look at the school district's extracurricular activities and possibly eliminate some of them, the board has since decided to keep them all in place.

The decision to preserve all extracurricular activities was made at the school board meeting on Tuesday, when the board also approved a school calendar for the 2010-11 school year and heard from a financial advisor on the state of its swap agreement.

In addition, Towanda schools Superintendent Diane M. Place announced that, under Gov. Ed Rendell's proposed budget for the 2010-11 fiscal year, the Towanda School District would receive a 9 percent increase in its basic educational subsidy, which is the primary form of state assistance to school districts.

Extracurricular activities

As the school board works on the school district's budget for the 2010-11 school year, it has been looking for ways to cut expenses, as it will be facing increased health insurance, pension, and salary costs in the coming year.

At its Jan. 11 meeting, the school board had asked school district Business Manager Doreen Secor to draw up a list of the school district's after-school sports programs and other extracurricular activities, which would include the amount spent on each program and the number of students who participate in each program.

The school board had planned at the time to look at the list to see which programs to eliminate.

The school board reviewed the list on Tuesday, and then accepted the school district administration's recommendation to keep all the extracurricular activities in place for the coming year.

The school board also accepted the administration's proposal to pare 2 to 3 percent from the school district's budget for after-school sports and other extracurricular activities, which would save the district $10,000 to $15,000.

"I'm not sure we could go much above (2 or 3 percent) without adversely affecting the quality" of the extracurricular activities, Secor told the school board.

By not eliminating extracurricular activities, the school district will "continue to offer the diverse opportunities to students that set us apart," Place said.

Place said that students do better academically if they are involved in extracurricular activities, and high school Principal Dennis Peachey said the activities also result in higher school attendance rates by students.

The main expenses related to extracurricular activities are stipends for coaches and advisors and transportation costs to meets, school board Vice-president Pete Alesky said. "The rest of the costs are not that much," he said.

Swap

In December, Pennsylvania Auditor General Jack Wagner had sent a letter to every school district in the Commonwealth, urging them to refrain from using interest-rate swaps and to terminate any swaps agreements they may have. Wagner has said the swaps are "risky financial instruments."

But Les Bear of Robert W. Baird & Co. in Exton, who is a financial adviser to the Towanda School District, said the school district's swap has worked out very well for the district.

So far, the district has earned $214,000 from its swap, he said. The district entered into the swap several years ago.

The swap is currently tied to the district's 2007 bond issue.

As the bond is paid off, the risk that comes from being in the swap agreement and the cost of terminating the swap early decreases, he said.

The exposure to risk and the cost to terminate the swap early "will reduce dramatically after 2012," he said.

While the swap is scheduled to end in 2023, the district could end it at any time before then, he said.

The cost of terminating the swap early, which is based on market conditions, would be $300,000 today, he said.

"Potentially, by 2015, it could be a lot less," he said.

He said the district should look at ending the swap well before 2023, after the early-termination cost decreases.

It is interesting to note the use of interest rate swaps as part of the budgeting process.

Because on the one hand--at the grass roots level--we have parents and kids selling coupon books or cookies and conducting car washes to help the schools balance their budgets while in the ivory tower we have administrators playing a game of poker with complex financial instruments.

THAT'S INTERESTING.

NOTE ON INTEREST RATE SWAPS from www.investorprotection.com:

Interest-rate swaps are complex financial instruments and tied to variable interest rates. If interest rates remain favorable, purchasers like a municipality benefit. If market conditions create an unfavorable interest rate environment, however, the bank responsible for initially selling the swap receives higher payments from the purchaser.

BECAUSE IT CAN LEAD TO THIS:

http://www.investorprotection.com/jpmorgan-chase.php

JPMorgan Chase & Co. is a global financial services firm with assets of $2.1 trillion and operations in more than 60 countries. For years, the company made big profits by arranging complex investment deals involving credit derivatives for states, cities, hospitals, school districts and other entities that sell debt in the municipal bond market.

In 2007, the collapse of the subprime market and the subsequent liquidity squeeze caused many of these financing arrangements to sour, forcing countless public agencies and municipalities to come up with billions of dollars to pay for increased interest payment costs.

WOW!!! Billions of dollars??? That's a lot of car washes, dude!!!

Get educated folks. And get involved!!

JUST ANOTHER CASE OF HISTORY REPEATING

STOCK MARKET CRASH OF 1929


STOCK MARKET CRASH OF 1987

I'm getting the same feeling about this stock market situation as I did when 9/11 occurred. At the time I felt like, "Wow, this must be what it felt like when Pearl Harbor was attacked". You knew that you were experiencing an event that would be in the history books of the future.

The same type of event continues in the stock market today. We experienced this as a nation in 1929 and 1987. The 1929 event was cataclysmic and changed this nation forever with the subsequent Depression and the ushering in of the New deal policies of FDR.

We will apparently go through similar changes today, which will cause government to bring about policy changes that will change our lives, and our children's lives forever.

Luckily, this time we have Federal Reserve Chairman Ben Bernanke, an acknowledged student of the Depression, to guide us. In fact, one of his famous quotes is that we learned the lessons of the Crash of 1929 and won't repeat the mistakes that were made then which drove the nation into depression.
-------------------
http://www.irishtimes.com/newspaper/innovation/2008/1006/1222959318754.html

ON THE occasion of the 90th birthday of the Nobel-prize-winning economist Milton Friedman - celebrated at a symposium at the University of Chicago, in November 2002 - Ben S Bernanke, then governor of the US Federal Reserve Board, lauded Friedman and his longtime collaborator, Anna J Schwartz, for their seminal work, A Monetary History of the United States 1867-1960.

In this classic tome of American economic history, Friedman and Schwartz lay the blame for the Great Depression squarely at the doorstep of the Federal Reserve by arguing that, at the point of acute crisis, its tight policies caused the failure of more than 40 per cent of banks in the US and led to massive deflation.

At the very moment when capital should have flowed into the economy, they argue, the Fed staunched it and by its policies unleashed instead the pervasive suffering that followed.

Friedman's and Schwartz's insights about the role of the Fed contradicted the conventional wisdom at the time, but have stood up well. "This achievement is nothing less than to provide what has become the leading and most persuasive explanation of the worst economic disaster in American history," Bernanke said in his speech. He praised the book for its "development of historical detail" and for its "previously untapped" use of primary resources to craft its argument. "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve," Bernanke said. "I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
-------------------
Unfortunately, Bennie Boy, that doesn't preclude you as the Fed Chairman and some combination of the Treasury Department and the Congress from making new and improved mistakes that will change this nation forever.

At the rate old "Helicopter" Ben is dropping money on the financial system, he's clearly due for a nickname upgrade along the lines of "C-130 Cargo Plane" Ben.

In seeking to steer the nations monetary policy since he took over from the equally incompetent Alan Greenspan, Bernanke has shown all the skills of a hallucinogenic, teenage diver would exhibit in his first foray down the highway in a high performance sports car.

All of these clowns were only too happy to sit back and watch the Greenspan "housing bubble" deflate when the only apparent losers were homeowners. Now that the blood has splattered closer to home, and by home I mean on the pin-striped suits of the bankers they serve, the crisis reached proportions requiring emergency actions.
And by emergency actions, I mean grabbing for the taxpayers wallet and the savings of middle-class Americans, as well as their children and grand-children.

All of these destructive events happened under the Fed's watch:
- The Great Depression, through monetary expansion of the 20's which burst in the 30's (sound familiar)
- The S&L crisis (sound familiar)
- Long Term Capital Management (a hedge fund, sound familiar) failure of 1998 almost crippled the financial system
- The dot.com bubble burst in the 90's
- The 90's easy money era under Greenspan, brought about the housing current housing bubble that just burst and is spilling blood all over the street

And as we can see, some of the events are clearly repeating. Maybe we should treat the Fed like a dog that continually pees on the carpet. Nah, too good for them.

The first responsibility the Fed has, and the only one the European central banks concentrate on, is inflation, Why is this?: BECAUSE INFLATION IS A THIEF. BUT WAIT THERE'S MORE.

- Inflation destroys savings making it impossible to save funds for life purchases like a home, college for he kids and retirement
- Inflation moves wealth from the poor and middle-class to the rich.
- Inflation distorts the economy by providing "easy money" to those who haven't earned it and since it is not "their own" money, they waste it on bad investments.
Think of people who were "flipping" houses and condos because of easy monetary policy. Where are those "flippers" now? Probably hanging out with the "day-traders" from the 1980's in some bar talking about the fortunes they made and lost.
- This economic distortion leads to subsequent unemployment, which affects the middle-class and poor disproportionately. Countries that have low inflation and solid economic policy tend to have very low unemployment (think Switzerland).
- Inflation allows governments to deficit spend. Borrow first, then print money out of thin air to attempt to eliminate or pay-back the borrowed dollars with cheaper dollars down the road.
- Inflation is a hidden tax on future purchasing power and the government spends the money in advance.

I don't even want to get into how the government distorts (hell, why don't I just say it - LIES ABOUT) the CPI figures released to the public. Why would they do this? To keep the public docile and many government payments are tied to the CPI. Think Social Security payment to grandma and grandpa.

It just seems like we get into some of the problems because the Fed also worries itself about economic growth as well. If someone can't handle one task very well, asking them to do two tasks simultaneously seems to be a stretch, right?

FROM THE NEW YORK TIMES, SEPTEMBER 30,1999:
In a move to help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action will...encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans.

This step by the Clinton Administration, along with groups like ACORN and armed with provisions of the Community Reinvestment Act (CRIA), openly badgered and threatened banks with lawsuits (charging red-lining or racial discrimination) and with threats to block any future mergers the bank might entertain if they did not allow this type of lending to explode.

Combine this with the repeal of Glass-Stegall and the Graham-Leach-Blilley Act that the Republicans in Congress promoted allowed banks and Wall Street firms to run wild. They promoted the "casino" mind-set that we see in the market today that is dominated by short-sellers, hedge funds and other speculators.

The SEC under Chairman Christopher Cox has been almost as incompetent and possibly corrupt as the Federal Reserve. To allow short-selling with little or no restriction (no uptick rule), much less-naked short-selling (you don't even have to borrow the stock anymore) has allowed wanton speculation and wild, irrational trading that we still see daily. There are margin requirements to actually BUY a stock, but no requirements on the short-side. This is completely irrational.

Equally irrational and throwing more gasoline on the growing fire the SEC allowed investment banks to increase their profits by taking on more leverage (risk). We're suffering the consequences of that unwinding of leverage today.

I don't even want to scratch underneath the Federal Reserve and the SEC and get down the Federal Accounting Standards Board (FASB) and the mark to market rules that exacerbated the problem. If the above failure do not occur, then mark to market is not even an issue, in fact it's a positive.

So to review, we had:
- The GSE's (Fannie and Freddie) running wild
- The Federal Reserve provide the elixir of easy money
- Wall Street unshackled from regulators
- Government blessing provided by CRIA and the destruction of the regulatory walls provided by Glass-Stegall.
- Lowered mortgage underwriting standards
- Corrupt credit rating agencies violating the public interest
- Predatory borrowers AND lenders

And from our leaders we get finger-pointing, with neither side willing to look in the mirror and point the finger at themselves.

And then we wonder why Congress has a lower approval rating then the President.


From the fiasco of the first Hank Paulson-Ben Bernanke "rescue bill", to the subsequent new-and-improved Pelosi-Frank-Dodd-Paulson bill to the G-7 or 8 or however many clowns-stuffed-into-small-car measures there were, we've seen the market spit all measures back into the bureaucrats collective faces like a colicky new-born.

Is there any wonder why I think the following video would be an accurate depiction of the effectiveness of our leaders fiscal problem-solving abilities?




Nobody is arguing that some of these steps were taken with the best of intentions. Who doesn't want to own a home? In hindsight, now I know how I was able to qualify for a mortgage when--at the the time I applied--using some of the old-school underwriting standards, I was probably not the best candidate for mortgage approval.

But we didn't go for any of those exotic mortgages, using the rationale that if the terms sound to good to be true they probably aren't, we went for a traditional 30-year mortgage with a 10-15% down payment. So, we had some equity stake in the house. It wasn't given to us freely or too easily. People don't value things that are given to them as much as things they have to earn.

The unintended consequence was they devalued the American Dream of home ownership for everyone by turning it into something that was almost as easy to achieve as the prize at the bottom of a Cracker Jacks box. Thanks again, leaders.

NO MONEY DOWN, INTEREST ONLY PAYMENTS, NO INCOME VERIFICATION, NO JOB, NO PROBLEM--HECK, WE DON'T EVEN CARE IF YOU PAY THE MORTGAGE--WE'RE GOING TO PACKAGE IT AND SELL IT ANYWAY.

That's what some of the radio ads sounded like from some of these fly-by-night mortgage companies, and where was the Fed or any of the regulatory bodies when these spiels were flying around the airwaves. I know I thought, "How the heck are these guys going to stay in business?" Now we know, on the backs of Uncle Sam and his seemingly bottomless pit - the taxpayers wallet.

They've all collectively pissed on the American Dream of home ownership.

They've all collectively and continuously pissed on the faith and confidence of the public in our JUSTICE SYSTEM, OUR FINANCIAL SYSTEM, AND FINALLY, OUR ENTIRE SYSTEM OF GOVERNMENT.

My only question is when are we a nation going to say - NO MAS, NO MORE?

There's an election coming up, we have a chance to put our money (what's left of it) where our mouth is, so to speak.

I have to say, under the circumstances--if any incumbent gets re-elected to go back and FINISH THE JOB--then we do deserve the government we continue to get.

My advice to guys like Bush, Greenspan, Bernanke, Paulson, Cox and their newest best-est buddies in the Congress Pelosi, Reid, Dodd, Frank and others I'm sure I am leaving out should just quietly leave D.C., quietly go home and retire.

Don't write any books documenting your sorry-ass legacies.

Don't go out on any public-speaking tours, telling lies about what you did. We can see and feel the results better than you. We have to live with the consequences.

For all those guys, my enduring thoughts regarding their legacy can be summed up by former Tampa Bay Bucs coach John McKay's famous quote.

When asked about his team's execution during one of their many consecutive losses during their initial season, McKay replied, "I think it's a good idea".

SAME HERE.

I just have one simple question, just one. When do we get to this point, are we there yet?:

---------------------------
UPDATE-PAULSON EXPRESSES REGRET:

Washington (AP)- Treasury Secretary Henry Paulson on Thursday expressed regret for the many errors made that led to the biggest financial crisis in seven decades, but he insisted the administration is pursuing the correct course now to end the debacle.

"We're not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here," Paulson said in an interview on Fox Business Network.

Well, at least we have that. I'll give him credit, he's the first one I've heard take some sort of ownership of the crisis. Of course he should. When he was in charge at Goldman Sachs, he advocated heavily for the SEC to loosen the purse strings on the leverage restrictions under the guise of keeping our financial system competitive with international markets. To which of course is the "Mom's Wisdom" logic: "If everyone else was jumping off a bridge would you? Do the right thing, NOT what everyone else is doing"
-----------------------------
Can somebody tell me what is wrong with McCain? Is the Republican strategy to NOT WIN the election?

It seemed in last nights debate as if somebody had to tell him he should be angry and had to coach him up as to what he needed to be angry about. Something like this:

Campaign Flukie: John, tonight we need you to show some anger, some passion about this economic situation we're in. The markets are tanking, people's 401K's are melting away faster then the polar icecaps.

John McCain: That's OK, my friend. That just means they'll need more beer. Did I tell you my wife Cindy is a beer magnate. And she's pretty hot too. ;) ;)

Campaign Flunkie: JOHN, THIS IS SERIOUS. PEOPLE ARE CONCERNED ABOUT LOSING THEIR HOMES.

John McCain: Well my friend, I'll just explain to them that maybe they should have 7 or 8 homes like me and they wouldn't be so worried. In any event there's still lot's of beer. That should appeal to Joe Six-Pack. It shows I'm a regular guy, except for the glut of homes.

I think he has demonstrated that he's not much more than Bob Dole with a better personal story. And if it wasn't for Sarah Palin, he would have been down by 20 points and this election would have been over a long time ago. Good luck back in the Senate John.
------------------
SPEAKING OF MOM'S WISDOM: YOU'RE JUDGED BY THE COMPANY YOU KEEP. CHOOSE YOUR FRIENDS WISELY

THE GANG OF THIEVES - YOUR TAX DOLLARS AT WORK

WE DON'T GET FOOLED AGAIN - NO, NO!!!

The recent weeks events leading up to the market meltdown and the subsequent "bailout" mania truly hasn't reduced my faith in our government's leaders to do the right thing. That's only because I had no faith in these idiots abilities to begin with.

Where I am beginning to lose faith is in the ability of the American public to see through these guys and hold them accountable.

We hear so much that this is a failure of greedy CEO's, a failure of the market, too little regulation, too little oversight. It's not that at all. The financial services industry is one of the more heavily regulated industries in the country.

It's a failure of brought on by government manipulation and intervention to achieve social goals that brought the housing market and the credit markets to the edge of a cliff.

So we have to listen to the anti-capitalist drivel from leftist idiots who were party to the problems produced and directed by their ilk, underwritten by Fannie and Freddie, without once hearing them hold up the mirror to themselves and admit that they and their failed policies are part of the problem. AMAZING.

REPRESENTATIVE BARNEY FRANK (D-MA)


I'M NOT SURE IF YOU SHOULD WATCH YOUR WALLET OR WATCH YOUR ASS WHEN THIS GUY IS TALKING - EITHER WAY IT SEEMS YOU'RE GOING TO GET SCREWED, RIGHT?

I would trust my fate to the greediest of greedy Wall Street CEO's before I would trust it to this guy and his merry band of thieves and liars.

THE PRESIDENTIAL RACE:
We've heard a lot lately about how McCain is poison because his voting record is the same as Bush 90% of the time. If this tidbit is obtained from the Congressional Quarterly study, as I believe it is, then the only positions it seems that CQ can grade link the President to are positions in which President Bush has a clear and well-defined position on. This leaves only issues that are fairly well established and non-controversial. A small sample to start with and a non-representative sample to make a true evaluation on. It would be like me telling you what type of season Ryan Howard had after only seeing 10 game per season and cherry-picking one statistic.

CONGRESSIONAL QUARTERLY VOTING STUDY:
http://www.cqpolitics.com/cq-assets/cqmultimedia/flash/votestudy/index.html

The greater question becomes, OK 90%. Is that a high, middle or low number relatively speaking? On the surface we don't know if we just accept the 90% figure at face value. If someone tells me a baseball pitcher throw 90 MPH, on it's surface that's useful information, but does it tell me if the pitcher throws FAST. Faster than me yes, but don't I have to know if we're discussing a professional pitcher, a collegiate pitcher or a high school pitcher, so I could make a determination by comparison to his peers, whither said pitcher was VERY FAST, AVERAGE FAST or BELOW AVERAGE FAST? Of course. If we're talking professional-DUDE IS AVERAGE. Collegiate- DUDE IS ABOVE AVERAGE. HIGH SCHOOL PITCHER- THE GUYS A SUPERSTAR.

The candidates and their campaign manager count on a lazy electorate that accepts what they are told at face value without asking questions or doing the necessary homework to come up with real answers.

THE MCCAIN COMPARISON:
Compared to other Republican Senators it seems like it's a rather low grade. This 90% figure actually ranks McCain 25 out of 49 Republican Senators. That would make him a C student if we were grading him as a rubber-stamping, lap-dog, brown-nosed, clone of Bush. In terms of voting along party lines, McCain votes with his Republican brethren 81% of the time, ranking him 44th of 49 Republican Senators. Maybe a D- if you're grading him as a partisan, but perhaps a solid A, if you were looking for an independent, non-partisan (a maverick?).


If you look at a certain Senator from Illinois you come up with some interesting data as well. You find a Senator who votes with the President 40% of the time which is at the low end of the spectrum (high end as far as opposing President Bush's positions). By comparison we see Pelosi at 20%, Clinton and Ted Kennedy at 49%, Biden at 52% and Harry Reid at 53%. In terms of party unity, Obama agrees with his party 96% of the time, same as Clinton. Pelosi is at 98%. Ted Kennedy at 97%. Biden and Reid at 93%.

Birch Bayh comes in at 57% with the President and 81% voting with the party, making him the prototypical "McCain Democrat". No wonder he's not on the ticket.

So when we hear Obama brush off the charge that he's a liberal because he's voting against Bush's policies, that's not the case. It's more because he's in lock-step with the Ted Kennedy, Harry Reid, Nancy Pelosi ultra-liberal wing of the party.


DNC CHAIRMAN - HOWARD DEAN


SENATE MAJORITY LEADER - HARRY REID



SPEAKER OF THE HOUSE - NANCY PELOSI

I'm not sure who scares me more.
---------------------------

=================
So we are where we are. On the brink of financial Armageddon we're told, by the people who drove us to this point, for the most part. And they come to us, the American people and say, "Don't worry folks, we have the answer this time."

And it seems like when I see things like the earmark to a special interest group like Acorn--for 20% of the funds from profits from the nationalization of the toxic debt--if any profit materializes from such purchases and sales--why do I feel like the Lucy-Charlie Brown animation shown above is an apt analogy to the situation. We the people are Charlie Brown and our fearless leaders are Lucy.

This is a "hair of the dog that bit you" solution. Never mind they are using taxpayer funds to favor a special interest group that whose mantra, whose raison d'etre, is what got us into this mess in the first place i.e: the gross proliferation of mortgages to low-income people who couldn't afford to pay them using lower standards to approve them (liar loans, no doc, no money down, etc.) and new investment vehicles to hide the resulting damage which were promoted and sanctified by Fannie and Freddie. And we had no less an authority than the patron saint of easy credit, Alan Greenspan, continually bless the process. So everybody felt good about it, very few people saw the warning signs and kicked a fuss about it. And when they did, as McCain and Bush did years ago, they were dismissed as being unconcerned about low-income families or worse, painted as being racially motivated (by Barney Frank).
===============================
The real heroes recently have been Ron Paul, shown here questioning Bernanke, and the House Republicans, who were willing to stand in front of this moving freight train and say NO!! HELL, NO!!

The sad part is those guys will be targeted when they go up for re-election for daring to have the guts to stand up for the taxpayers and against the special interest.



A LONE VOICE OF SANITY AMONG THE MADNESS - RON PAUL

It seems to be the height of political hypocrisy to have these Dems, who have spent the better part of the last few years venting their spleens railing against Bush now working side by side with his administrations crash-test dummy Hank Paulson in this endeavor. That alone should tell you there's something wrong with this process. I understand the phrase "Politics makes strange bedfellows", but this is clearly beyond the pale.


“Removing governmental power to manipulate money removes the temptation for government to spend, print and cheat. Sound money ensures that our government’s spending priorities would be brought into sharp focus and reduced to only what we can afford.

The Federal Reserve has lately been auctioning off large amounts of treasury bills as a way to finance the wars in Iraq and Afghanistan, and our crushing entitlement burden. The resulting devaluation of the dollar is quickly eroding our image as a good trading partner in the world. As a consequence, there is more talk of economic isolation and war.

The vicious cycle of spending, fighting and inflating is not what Americans want. Sound money curbs the government’s ability to engage in these shenanigans and reduces the wars we fight to only truly defensive ones, for which Americans are more than willing to stand and fight.” Congressman Ron Paul, August 30, 2008

“No generation can contract debts greater than may be paid during the course of its own existence” Thomas Jefferson to James Madison, 1789

We're really straying far off-course from these wise words from one of our nations founders.

A return to the discipline of the gold standard would provide some needed stability, but don't hold you breath waiting for that. MONEY IS POWER and a fiat currency means power to those who control it. Why would politicians ever want to give up the
power of the printing press?

The gold standard would control the massive debt we have accumulated and mitigate inflation. Growth of GDP might be slowed due to less speculation, but that seems like a reasonable trade-off nowadays, doesn't it? If these guys really cared about people who gather around their kitchen table trying to figure out how to pay their bills and plan for college, this would be the best step forward in that attaining that goals. Next on the list would be a complete overhaul of the income-tax system, which would require the same government officials to give up another lever of the power they have over people's lives. Which, of course, they totally mismanage.

Why do we not hear either of the candidates talking about issues like this? And wonder now, why were they so quick to dismiss the candidacy of Ron Paul? Because they don't want you considering these options for obvious reasons.

We haven't even discussed looming disasters, again brought to you by government, like the Social Security crisis and the coming inflationary cycle that will result from this massive injection of money to prop up the system.

STAY TUNED FOLKS, JUST DON'T EXPECT THE ANSWERS FROM YOUR FEARLESS LEADERS.

If there is one thing that is painfully obvious from the weeks events, they are truly clueless. And they don't want the light of day to shine on the process. That's why they were upset with McCain coming back to inject himself into the process. Because with him would come more scrutiny from the media.

Nothing could be more demoralizing to the nation's moral than to watch these idiots at work.


Congressman Ron Paul before the Joint Economic Committee, September 24, 2008
“Mr. Chairman, I believe that our economy faces a bleak future, particularly if the latest $700 billion bailout plan ends up passing. We risk committing the same errors that prolonged the misery of the Great Depression, namely keeping prices from falling. Instead of allowing overvalued financial assets to take a hit and trade on the market at a more realistic value, the government seeks to purchase overvalued or worthless assets and hold them in the unrealistic hope that at some point in the next few decades, someone might be willing to purchase them.”

“Do we care about freedom? Do we care about responsibility and accountability? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Times like these have a way of telling us what kind of a people we are, and what kind of a country we shall be.”
================================
I remember seeing this essay about the gang of 545 a while back, during some other crisis of leadership we were going through, and it seems more true now than ever before.

We should think long and hard about these people we elect and ask them serious questions about what happened and what they were doing about it and why? And find out if their record supports the answer given.

I think the best thing that could come out of this election and the next couple after, is not necessarily who wins the White House. One of the two major party candidates is going to win. That may be part of the problem, but we can deal with that four years down the road. It would be for candidates for the House and Senate across the nation to feel the sting of defeat--to be thrown out of office--TO BE FIRED!!!!

If any of the "middle-class", an acceptable euphemism for the "little people" these guys say they are so concerned about, performed as miserably in their jobs, that would be the expected and acceptable response from the boss.

AND WE ARE SUPPOSEDLY THE BOSS OF THE GOVERNMENT, NOT THE OTHER WAY AROUND.

IF THESE FOLKS DO NOT WANT TO SERVE THE PEOPLE, THEY NEED TO FIND A NEW JOB.
--------------------------------
The Truth About the Gang of 545
by Charlie Reese

545 People

“Politicians are the only people in the world who
create problems and then campaign against them.

Have you ever wondered why, if both the Democrats and
the Republicans are against deficits, we have
deficits?

Have you ever wondered why, if all the politicians are
against inflation and high taxes, we have inflation
and high taxes?

You and I don't propose a federal budget. The
president does.

You and I don't have the Constitutional authority to
vote on appropriations. The House of Representatives
does.

You and I don't write the tax code, Congress does.

You and I don't set fiscal policy, Congress does.

You and I don't control monetary policy, The Federal
Reserve Bank does.

One hundred senators, 435 congressmen, one president
and nine Supreme Court justices - 545 human beings out
of the 300 million - are directly, legally, morally
and individually responsible for the domestic problems
that plague this country.

I excluded the members of the Federal Reserve Board
because that problem was created by the Congress.

In 1913, Congress delegated its Constitutional duty to
provide a sound currency to a federally chartered but
private central bank.

I excluded all the special interests and lobbyists for
a sound reason. They have no legal authority.

They have no ability to coerce a senator, a
congressman or a president to do one cotton-picking
thing.

I don't care if they offer a politician $1 million
dollars in cash. The politician has the power to
accept or reject it. No matter what the lobbyist
promises, it is the legislator's responsibility to
determine how he votes.

Those 545 human beings spend much of their energy
convincing you that what they did is not their fault.
They cooperate in this common con regardless of party.

What separates a politician from a normal human being
is an excessive amount of gall.

No normal human being would have the gall of a
Speaker, who stood up and criticized the President for
creating deficits.

The president can only propose a budget.

He cannot force the Congress to accept it.

The Constitution, which is the supreme law of the
land, gives sole responsibility to the House of
Representatives for originating and approving
appropriations and taxes.

Who is the speaker of the House?

She is the leader of the majority party.

She and fellow House members, not the president, can
approve any budget they want.

If the president vetoes it, they can pass it over his
veto if they agree to

It seems inconceivable to me that a nation of 300
million cannot replace 545 people who stand convicted
-- by present facts - of incompetence and
irresponsibility.

I can't think of a single domestic problem that is not
traceable directly to those 545 people.

When you fully grasp the plain truth that 545 people
exercise the power of the federal government, then it
must follow that what exists is what they want to
exist.

If the tax code is unfair, it's because they want it
unfair.

If the budget is in the red, it's because they want it
in the red.

If the Marines are in IRAQ, it's because they want
them in IRAQ

If they do not receive social security but are on an
elite retirement plan not available to the people,
it's because they want it that way.

There are no insoluble government problems.

Do not let these 545 people shift the blame to
bureaucrats, whom they hire and whose jobs they can
abolish; to lobbyists, whose gifts and advice they can
reject; to regulators, to whom they give the power to
regulate and from whom they can take this power.

Above all, do not let them con you into the belief
that there exists disembodied mystical forces like
'the economy,' 'inflation' or 'politics' that prevent
them from doing what they take an oath to do.

Those 545 people, and they alone, are responsible.

They, and they alone, have the power.

They, and they alone, should be held accountable by
the people who are their bosses - provided the voters
have the gumption to manage their own employees.

We should vote all of them out of office and clean up
their mess!”