Archive for October, 2008

Our Isolationist Foreign Policy

October 31, 2008

In case you missed it, which you probably did considering how little news coverage it received, on October 27th, the US launched a cross-border raid from Iraq into Syria.  In this attack, they killed at least 6 people, one of them who was supposedly a key figure in smuggling foreign fighters into Iraq from Syria.

Then, today, the US launched 2 separate missle attacks from unmanned drones that killed over 20 people, one of them an Al Qaeda leader, in Pakistan.

Both of these acts were carried out across the Iraqi border, into Syria and Pakistan, respectively.

And you wonder why we’re hated in the Middle East?  We completely disregard international law, violate the borders of other countries, and are willing to kill civilians to get a supposed Al Qaeda operative.

Does anyone believe that these raids are actually helping quell the insurgency?  If anything, they are creating more hatred and resentment directed towards the US, which in turn inspires people to fight against us.

We need a foreign policy that uses diplomacy and negotiations, not brute force and bullying other countries.  These raids might help killing insurgents in the short term, but in the long run, they are adding multiple fighters for every one we kill.

Our goal should be stabilizing Iraq and then getting out.  We should use diplomacy and not sanctions and force to promote change in the region.

Some people feel it is the duty of the US to be the world police because we are the only remaining “super power.”  However, this policy is isolating us from the rest of the world, straining alliances, and costing us trillions of dollars.  We need to end our empire, bring our troops home, and promote peace and change by example and through diplomacy.

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No Interest in the President

October 30, 2008

I feel kind of un-American, but I really don’t care who wins the Presidency this year.

Haven’t we been bombarded with all this election drama for almost two years now?  First it was the primaries, where McCain won pretty easily and Barack and Hillary went at it.  Now we have this election with Palin and Barack’s connections with old domestic terrorists.  In the meantime, the economy went down the drain and all they’re talking about is saving $75 a month on taxes.  Yeah, that’s going to fix things.

Maybe I’m so apathetic because I don’t feel that my views are represented.  Throughout my life, I’ve known that I did not belong with one of the major parties.  I knew they were virtually the same and were there only to preserve the status quo, and not really do what’s best for America.

In high school, I thought being a libertarian sounded great.  Small government, less taxes, and less intervention sounded great.  The party at the time though, was a mess, and their message sounded more like anarchy than a real political platform.

Then, I thought Nader was the answer and that his policies would save the country.  He had some good ideas, but I found myself voting for him because he was against the establishment and corporations, not because of his political views.

Now, I think I’ve found myself with the philosophy of Ron Paul.  His belief in the Constitution and what the Founding Fathers wanted is beautifully simple.  It makes so much sense and it makes me want to be part of the revolution he is starting.  The groundwork is there, now we just have to spread the message.

The message of the Constitution reaches beyond any sort of social status or group.  Everyone can come together behind the document that set forth the plan for this great country.  The goal now should be to get this country back on track and back to looking at the Constitution and what the Founding Fathers wanted.

I guess I don’t care about McCain or Obama because they want to continue the same policies.  They might tweak taxes or healthcare, but are they really invoking change?  Not at all.  They both voted for the bailout.  They both want to keep our military empire intact.  Neither has challenged the Federal Reserve.  Neither has questioned the validity of all the taxes we pay.  Neither has tried to address our welfare state.

We need a voice that counters the political establishment.  Until this voice is heard, it doesn’t matter who is the President.

The Slippery Slope of Prop 8

October 30, 2008

I’ve already written one post in opposition to Prop 8, and I’ve seen so many conflicting ads the last few days that I’ve been inspired to write again.

Passing Prop 8 will set off a slippery slope, where people can use personal beliefs to strip the civil rights of other individuals.  If you do not believe in gay marriage that is fine and the decision is up to you.  However, you should not be able to disallow the rights of others.

Proponents of Prop 8 say Churches will get sued and lose their tax-exempt status if they do not marry gay couples.  If Prop 8 fails, they will be forced to marry gays in their chruch.

Currently, will a Catholic church lose its tax-exempt status if they refuse to marry non-Catholics?  No.  I know of couples where one is Jewish and one is Catholic and they had to search for a church that would marry them.  Neither their Catholic church or Temple would allow it.  Did their churches lose their tax-exempt status?  No.

Churches refuse to marry people all the time because of their beliefs.  Prop 8 will not change any of this!

Another argument is that schools will teach gay marriage as early as kindergarten.  First, I think it is really low to drag children into this debate.  If you are an adult and are against gay marriage, that is fine.  Why do you have to use kids as pawns in your religious debate?

Each school district has established rules on the subject of sex education.  I know in my class, certain kids left the room during the lessons.  Their parents did not want them to be a part of the discussion.  Why not have the parents sign a waiver if gay marriage is going to be taught?  If you do not want your children learning about gay marriage, have the teacher pull them out of class.  It’s not that hard.

Or, they could just refer the questions of gay marriage to parents.  They do not need to address the subject, but if it comes up, the teacher could tell the child to ask their parents about it.

What needs to happen is better communication between parents and teachers.  We do not need to strip civil rights of millions of people because you don’t want your kid to learn about gay marriage.

Everyone has different religious beliefs.  I’ve heard the Adam and Eve argument over and over again as well.  It wasn’t Adam and Steve for a reason, is what they say.  Again, this is your personal belief.  Government should include the religious beliefs of what could be 51% of the population.  What’s next?  Do we not recognize Muslim marriages because they aren’t in the Bible?  I know this is extreme, but if we use religion to govern us, this could happen.

I urge everyone to vote NO on Prop 8.  Not because of how you feel on gay marriage, but because of how you feel about freedom and equality for all.  You can still be against gay marriage and your church can still choose not to marry gays.  However, it is not the government’s place to get involved in this set of beliefs, no matter what.  Passing Prop 8 will create a slippery slope where people can use their beliefs to discriminate against any race, gender or religion.  So, please separate your religious beliefs from your civic duty and vote No on 8.

Creature from Jekyll Island

October 29, 2008

A link to this lecture was posted on the Campaign for Liberty website, and I had to post it here as well.  It is a lecture by Dr. Edward Griffin from 1998.  He is the author of a book called The Creature From Jekyll Island, which is about the beginning and goals of the Federal Reserve of the United States.

It was really enlightening to me.  I had heard of the way the Federal Reserve was created and how it was conceived by the banks for the banks, but this really put the Federal Reserve and our fiat money system into place.  You will be enlightened as well.

Our economic system is one built on fake money and a cartel agreement between the big Wall Street banks and the Federal Government.   Even though this lecture is ten years old, it probably is more relevant now than ever before.  The part about bailouts is EXACTLY what happened with the huge $700 billion bailout of Wall Street.

Please take the time to listen to this.  I know, it’s 71 minutes long, but you can download it to iTunes.  Listen to it at work or on your way home.  It will open your eyes to the world we live in.

Rate Cuts… AGAIN?

October 29, 2008

Well, the Dow and the markets had a nice up day today.  However, the buying came on the expectation of a big rate cut coming from the Federal Reserve, perhaps to an all time low under 1%.  This is like fighting fire with fire.

As I’ve stated in previous posts, the 1% rate will encourage BORROWING, but will not encourage LENDING.  We need lenders to regain confidence in the people or entities they are lending to.  You can have borrowers lined up around the block, but if you aren’t getting a sufficient interest rate for the risk you are taking, you aren’t going to lend the money.

What we really need right now is for the market to set interest rates higher.  Once again, the Federal Reserve is artificially setting interest rates way too low.  If lenders could get 10% on their money, I bet a whole lot more of them would be making loans.  Right now though, prime is 4.5%.  That is not enough of a return for a lender to make a loan.

We keep hearing about how the free market and capitalism has failed.  We haven’t had capitalism and a free market since 1913 when the Federal Reserve was created.  What has failed is the inflationary policies of the Fed.  Their constant intervention and recent philosophy of low rates as a “cure all” is going to destroy this country’s economy.

Also, I read today that the Federal Government is strongly urging banks to lend money.  Banks have been injected with capital from the Federal Reserve, but instead of lending, the banks are using this money to help their balance sheets.

We need healthy financial institutions.  We do not need ones that are not healthy lending money because the government says so.  Again, the government is intervening, trying to fix things for tomorrow, while not thinking about next week.

This is the hazard of the government indiscriminately throwing money around to any financial institution.  They gave money to the good and the bad, and now they want them to start lending this money.  Rather than taking equity stakes, the government needed to let the bad banks get weeded out before they starting handing out funds.  Then, only the ones with strong balance sheets, that were well managed, and had sufficient funds would have survived.  They could have given the funds to these companies, and they would have been able to lend, rather than padding their balance sheets.

The actions of the Federal Reserve and Treasury Department have been a complete, unorganized failure.  Nothing they have done has worked, and rather than recognizing their failures and changing course, they have decided to start intervening more and throwing even more money at the problem.   At a time when we need leadership from the leaders of our economy, we have a reactionary policy that just compounds the problems, rather than fixing them.

Education – Special or Otherwise

October 26, 2008

Sarah Palin made a statement the other night that the Federal Government needs to play a larger role in the education of special needs children.  Personally, I don’t believe the Federal Government should have anything to do with the education of any children, special or not.

Currently, the Federal Government spends about $70 billion a year through the Department of Education.  This roughly accounts for 9% of the total money spent on education in this country, which is close to $1 trillion (both of these figures were taken from the Deparment of Education website, http://www.ed.gov).

However, the Federal Government has a broader reach with different Acts and Laws that require performance or allocation of money, such as the No Child Left Behind Act.  This forces the states and local school districts to follow laws that are mandated by Washington.  So, even though the Federal Government only funds 9% of the education programs in the US, it basically controls the allocation of all of it.

It’s great that Governor Palin wants to help those with special needs.  However, it should be left up to the states and local school boards, not politicians and bureaucrats in Washington.  The states should have control of the money they raise for school programs, and should be able to allocate their resources accordingly.

As Americans, we need to realize that we should not look to Uncle Sam for everything.  Instead we should look to our states and local governments.  It might sound good to have a President who wants to change education policies, but the federal government just throws a blanket over the entire system.  Local governmets can tailor policies and adjust to the needs of the area.  How are bureaucrats in Washington supposed to know this?

I really believe that as soon as we get the Federal Government out of the education of our children, the sooner they will be better performers and come out better prepared for the high tech jobs of today.  We need teachers teaching how to think, reason and question.  Instead, they are teaching how to pass a standardized test.

So when you hear a Washington politician talking about education, realize that they have good intentions.  However, if they really wanted to change the education policies, they would be talking about ending Federal education programs and returning that power to states and local school boards.

Don’t Lower Rates Again!

October 25, 2008

I read today that Bernake is expected to lower rates to historically low levels, perhaps as soon as next week.  This time though, rates might drop below 1%, to perhaps 0.75%.

Seriously, does anyone in Washington have a history book?  Or maybe even an economics book?  The Japanese did the same thing trying to encourage lending.  They actually lowered rates to ZERO and they stayed in an economic downturn for over ten years!

Bernake’s logic: Lower interest rates will encourage borrowing.  He’s exactly right there.

But lower interest rates will NOT encourage LENDING!  It actually gives lenders no incentive to lend money.  What we really need is much higher interest rates!

Think about it for a second. Right now, lenders have no confidence that they will be paid back.  Normally, if you are a risky borrower, you get charged a higher interest rate.  This way, the lender is compensated for the risk they are taking.  Instead, the Government is intervening in the system and trying to encourage lending by lowering rates.  This will encourage borrowers, but it does nothing to encourage lenders.

We need to let the market set interest rates, not the Federal Reserve.  The more intervention, the worse the problem is going to get.

Sure, the higher rates might be a crimp on our credit based economy, but in the short term, it will encourage lending.  In the long term, it will increase the reliance on savings and paying cash and discourage the use of credit for funding everyday expenses and paying the bills.

Quotes of Thomas Jefferson

October 24, 2008

I’m tired of all these stupid quotes from McCain, Palin, Obama and Biden.  I’m tired of all the arguments over taxes that equate to $100 a month.

Here are some quotes from one of the greatest political thinkers of all time, Thomas Jefferson.  As you’ll see, his quotes are probably more valid now than they were when he said them.

“A government big enough to give you everything you want, is strong enough to take everything you have.”

My reading of history convinces me that most bad government results from too much government.

The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

“I believe that banking institutions are more dangerous to our liberties than standing armies.”

“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them around the banks, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”

What Greenspan’s Comments Really Mean

October 24, 2008

Today, Alan Greenspan, the former chairman of the Federal Reserve, testified before Congress.  He said he made errors in judgement and was “shocked” by the outcome of the Fed’s policies.

Honestly, I do not see how a person in charge of the the money supply of the United States can be shocked about any action he makes.  With that kind of responsibility, you must consider all possible outcomes with every decision.  I guess I’m just disappointed that a person in that position isn’t as smart as we think he should be.

What gets me more riled up than anything else though, is how the members of Congress and Greenspan keep talking about the failure of the “free markets” and how “deregulation” led us to this crisis.

The American economy is anything but a free market!  The Federal Reserve wouldn’t exist in a free market in the first place!

The failure was based in the monetary policies of the Federal Reserve and the American government’s aversion to economic slowdowns or recessions.  In our economy, you have to let the down cycles bottom out.  If you do not, you only prop up a system that is bound to fail.  By not letting the economy recover after the dot-com bust and 9/11,  and lowering interest rates to 1%, the Fed pumped the economy to historic heights.  This just made the bottom (now) that much lower.

If the Federal Reserve did not keep rates at 1%, the credit bubble would not have gotten so big.  If the market had set interest rates, they would have been higher because they would need more in return for their risk of losing money.  It was the intervention of the Fed that led to the crisis.

Now, everyone is convinced how capitalism and the free market has failed and how we need more regulation.

Some of this is true.  We do need regulation of the derivatives market.

However, we do not need the excess intervention from the government we are experiencing now.  We do not need “Helicopter Ben” and the Fed pumping hundreds of billions of dollars into our economy and we do not need $700 billion bailouts.  We also do not need the nationalization of Freddie Mac, Fannie Mae, and AIG.  This is only making things worse.

The moral hazard that is being set is disasterous.  After the bailouts of the auto industry, the precedent was already set for government saving dying companies.  Now, banks know if they take too much risk and fail, they will have Uncle Sam and the taxpayers there to pick up the pieces.

Maybe once the bottom has been found and we are on the upswing again, we can implement well thought out regulation that will help us avoid the mess we got in here.  The point is that the bottom has to be found, and we can’t have the government helping prop everyone up.

Greenspan should have said that he was a part of the problem, but that the actions his successor and the government is taking now is going to bring the whole ship down.  Instead, we got the idea that more government intervention is good, and capitalism is bad.

A Layman’s View of the Credit Crisis

October 23, 2008

I am not an economist nor do I have a business degree.  So, I do not really understand all the ins and outs of this current “Credit Crisis” that we’re in.  The funny thing is that I’ve got friends with MBAs who really don’t understand all the derivatives and complex debt instruments that made this problem so much worse.

I took a couple of real estate development classes when I was in college.  Our professor told us that real estate is a cyclical market, and that during booms, prices go up and credit is easy to obtain (low rates).  At the peak, homes become overvalued and people can not afford them.  Then defaults start, prices start to decline, and lenders pull back (loan less money at higher interest rates, to account for increased risk).  Then it bottoms out, and another boom starts.  Pretty simple, right?

Think about how that cycle was perverted during the last boom that ended in 2006.  Credit was too easy to obtain, and with zero down, interest only and teaser rates, people could afford a home that cost hundreds of thousands more than they could only 10 years before.  So the peak was pushed to an artificial, unsustainable peak.  Now, instead of a few people defaulting, there is a massive wave or foreclosures, and lenders aren’t just pulling back, but they’re failing altogether.

This same analogy can be used to describe our current financial system.  Normally, people would borrow to buy a home or maybe a car, or for some catastrophic event.  We used to save to buy things.  I remember my uncle who paid cash for a car.  How crazy does that seem now?  In our current state, we started using credit for buying cars, boats, or for items we really didn’t need, but wanted.  Instead of saving up for something, we just put them on credit.

During the last real estate bubble, banks were basically giving credit away.  You could use your house as an ATM machine and buy all sorts of frivolous things.  If you borrowed against your home at a low rate and invested it and made a good return, that’s one thing, but most people just spent the money.  

So now, we’re experiencing the downturn in the cycle.  But instead of lenders just tightening standards and pulling back, they’ve gone to the extreme of not lending at all.  This is the trade off for years of giving money away.  Lenders are so nervous that they will not get repaid that they won’t lend to even the most trustworthy borrowers.

Now is the time interest rates should be rising.  In order for a lender to take the extra risk of lending you money, they charge a higher rate.  Instead though, right now, rates are being cut.  There is no extra premium for lending money, so why would a bank right now.

The point I’m trying to make is that this whole mess needs to bottom out before we can move forward.  Currently, though, we are taking all sorts of measures to keep the bottom from being found.  Until the debts are all sorted out and liquidated, there will be the lack of confidence between parties and no one will lend money.

In the bigger scheme of things, the fact that credit is such an important part of our economy is disasterous as well.  Credit should be used to finance big purchases and that’s it.  Instead, businesses rely on credit to meet payroll and overhead costs.  Individuals use credit to buy groceries and gas.  Our reliance on credit for every day purchases has exagerated the problem as well.

We need a return to saving and thrift with the American people, and a government that will let the bottom be found.  Until those happen, we will only be propping up the house of cards and not rebuilding it with more sturdy materials.