What would FDR do?

How often I think of FDR in these dark times, and wonder what he'd be doing - and especially what he would be saying - if he was here today. FDR: of the 'we have nothing to fear but fear itself,' rather than George Bush's endless 'BE AFRAID' speeches, designed to facilitate the fleecing of the people.

FDR cared... about more than merely getting re-elected or running off with the nation's wealth. People respond to humanity and compassion in high office.

We've had some terrific presidents in our history. Somehow I doubt, with our current media and (broken) election process, that we'll see any true leaders in our near or maybe even distant future.

Maybe Obama. Maybe. If can un-glue his mind from delusions of empire, and recall what it once meant to be a Republic.

"And to the REPUBLIC for which it stands..." even our own flag doesn't recognize us anymore.

Here is an excerpt from "Franklin Roosevelt, a Nation Turns Its Lonely Eyes to You," by Michael Winship:

The President has seemed underinformed, disconnected and not, you should excuse the word, invested. In his address to the nation Wednesday evening, he said that the government was blameless for the financial crisis; it had done what it was supposed to do but had been victimized by overseas lenders, greedy banks and Americans taking on more credit than they could carry. And as he has done too often before, he tried to make us afraid.

"The government's top economic experts warn that without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold." President Bush said. "More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs."

Contrast what he had to say with President Franklin Delano Roosevelt when he was sworn into office for the first time, in 1933, during the Great Depression. Rather than foster anxiety and panic, FDR proclaimed, "The only thing we have to fear is fear itself," despite the fact that 13 million were unemployed, nine million had lost their savings and a quarter of the banks had closed. Wages had plummeted 60 percent. "The only thing we have to fear is fear itself" is the phrase that everyone remembers, but here's a little more of what FDR had to say:

"This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure, as it has endured, will revive and will prosper ...

"In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunk to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income ... More important, a host of unemployed citizens face the grim problem of existence and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment ...

"The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit ... If I read the temper of our people correctly, we now realize, as we have never realized before, our interdependence on each other; that we can not merely take, but we must give as well."

Read the rest

Paul Craig Roberts: The Bitter Fruits of Deregulation

Excellent commentary by Paul Craig Roberts in CounterPunch (one of the online places I sneak off to visit when desperate for 'real journalism.')

Roberts - for those who don't know of him by name - was the Assistant Secretary of the Treasury under Reagan, Associate Editor of the Wall Street Journal editorial page, and a Contributing Editor of National Review.

In other words... he knows exactly what is happening, and why.

Here is one small portion of an excellent (if frightening) essay. I can't reprint it here in its entirety, but I wish I could. Please read it for yourself.

Exerpt from The Bitter Fruits of Deregulation

By PAUL CRAIG ROBERTS

This crisis comes at the worst possible time. Gratuitous wars and military spending in pursuit of US world hegemony have inflated the federal budget deficit, which recession is further enlarging. Massive trade deficits, magnified by the offshoring of goods and services, cannot be eliminated by US export capability.

These large deficits are financed by foreigners, and foreign unease has resulted in a decline in the US dollar’s value compared to other tradable currencies, precious metals, and oil.

The US Treasury does not have $700 billion on hand with which to buy the troubled assets from the troubled institutions. The Treasury will have to borrow the $700 billion from abroad.

The dependency of Treasury Secretary Paulson’s bailout scheme on foreign willingness to absorb more Treasury paper in order that the Treasury has the money to bail out the troubled institutions is heavy proof that the US is in a financially dependent position that is inconsistent with that of America’s “superpower” status.

The US is not a superpower. The US is a financially dependent country that foreign lenders can close down at will.

Washington still hasn’t learned this. American hubris can lead the administration and Congress into a bailout solution that the rest of the world, which has to finance it, might not accept.

Currently, the fight between the administration and Congress over the bailout is whether the bailout will include the Democrats’ poor constituencies as well as the Republicans’ rich ones. The Republicans, for the most part, and their media shills are doing their best to exclude the ordinary American from the rescue plan.

A less appreciated feature of Paulson’s bailout plan is his demand for freedom from accountability. Congress balked at Paulson’s demand that the executive branch’s conduct of the bailout be non-reviewable by Congress or the courts: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion.” However, Congress substituted for its own authority a “board” that possibly will consist of the bailed out parties, by which I mean Republican and Democratic constituencies. The control over the financial system that the bailout would give to the executive branch would mean, in effect, state capitalism or fascism.

If we add state capitalism to the Bush administration’s success in eroding both the US Constitution and the power of Congress, we may be witnessing the final death of accountable constitutional government.

And after that... the bankrupting of the United States. Mission Accomplished?

I read the news today - oh boy (Thursday edition)

Alternate heading: Republicans recall what it once meant to be Republican

For all of corporate media's blundering, sensationalism, bias and under-reporting; these little news blurbs that land in my inbasket each morning are a useful weather vane. I can grasp the general tone - the ambiance of the day - without reading any further.

For example, this CNN Quicknews alert:

AIG BAILOUT UPSETS REPUBLICAN LAWMAKERS

Key Republicans on Capitol Hill blasted the Treasury Department and the Federal Reserve on Wednesday for orchestrating an $85 billion bailout of insurance giant American International Group, and the White House for not informing them of the plan.

FULL STORY...

Key Republicans. Hmm. I'm actually curious this time, so I decide to take the bait.

Which 'key' Republicans actually remember that their traditional party platform doesn't include... well, bailouts? (The concept of 'small government' used to be a party platform cornerstone before the Neocons invaded.) And how interesting that they are willing to challenge their GOP-in-Chief in a public forum rather than a back room.

Key lawmaker number one comes to bat:

The criticism came a day after lawmakers were surprised by the news that taxpayers would again be called on to shore up a member of the struggling financial sector.

"Once again the Fed has put the taxpayers on the hook for billions of dollars to bail out an institution that put greed ahead of responsibility and used their good name to take risky bets that did not pay off," said Sen. Jim Bunning, R-Kentucky, a member of the Senate Banking Committee.

Kentucky weighs in: 'Heartland America,' old-school Republican values (similar to Indiana.)

Next at bat, key lawmaker number two:

A spokesman for Sen. Richard Shelby of Alabama, the top Republican on the committee, said the senator "profoundly disagrees with the decision to use taxpayer dollars to bail out a private company" and is upset the government has sent an inconsistent message to the markets by bailing out AIG after it just refused to save investment bank Lehman Brothers from bankruptcy.

"The American taxpayer should not be asked to unwillingly assume the inordinate risks that financial experts knowingly undertook, particularly when taxpayer exposure is increased by the ad hoc manner in which these bailouts have been engineered," said Shelby's aide, Jonathan Graffeo.

Alabama weighs in. Its going to be a lot harder to avoid raising taxes when we are bailing out bloated, greedy corporations right and left. Another old school and core Republican value: never raise taxes.

Key lawmaker three comes to bat:

Republican Rep. Roy Blunt of Missouri complained about not getting a heads-up about the bailout and said House Republicans are struggling to "understand a coherent strategy" about which firms get rescued and which ones don't.

Hmm. Appears - at least from the story - that Missouri is more concerned about not receiving a heads-up in advance. Well I can understand that, especially in an election year.

Key lawmaker number four comes to the plate:

Rep. Adam Putman of Florida, the third-ranking Republican in the House, said the cost is "unnerving" and called on the Treasury Department and Federal Reserve "to dispatch an envoy to the Hill to bring members of Congress up to speed."

"The communications lines are not operating efficiently," he said.

Florida - like Missouri - is more concerned about the fact that he wasn't warned in advance.

And yes... the cost is quite unnerving. When you add up all of the costs flying out of our Treasury (wars, storms, bailouts) it is very, very unnerving. And we haven't even mentioned our staggering national debt and crumbling infrastructure.

Alas... so many things going wrong - and in an election year! Chickens finally came home to roost?

Ron Paul: The Invisible Prophet

Found it - Ron Paul discussing the economy, in his own words. Great words of wisdom for today.

Oh wait... no, really? This was written in 2006!

Here is Ron Paul writing on Lew Rockwell.com... in March of 2006:

Last week in this column I wrote of a perfect economic storm facing America, caused by a federal government that spends, borrows, and prints so much money that our dollars are eroding in value at an alarming rate. Year after year our federal government spends beyond its revenues, prints new money to pay its debts, and borrows hundreds of billions abroad in the form of Treasury obligations that someday must be paid. With too many dollars and debt instruments in circulation, and no political will in Washington to cut spending, we've created a monster. Our perceived prosperity depends on keeping the great debt and credit engine pumping, but the only way to attract new lenders to fuel the engine is higher interest rates. At some point one of two things must happen: either the party in Washington ends, or the supremacy of the dollar as the world's reserve currency ends. It's a sobering thought, but a choice must be made.

How did this happen? How did we get to such a state? The answer is found in the nature of politics itself. The truth is that many politicians and voters essentially believe in a free lunch. They believe in a free lunch because they don't understand basic economics, and therefore assume government can spend us into prosperity. This is the fallacy that pervades American politics today.

I believe one of the greatest threats facing this nation is the willful economic ignorance of the political class. Many of our elected officials at every level have no understanding of economics whatsoever, yet they wield tremendous power over our economy through taxes, regulations, and countless other costs associated with government. They spend your money with little or no thought given to the economic consequences of their actions. It is indeed a tribute to the American entrepreneurial spirit that we have enjoyed such prosperity over the decades; clearly it is in spite of government policies rather than because of them.

I certainly have seen firsthand a great deal of economic ignorance in Congress over the years. Few members pay any attention whatsoever to the Federal Reserve Bank, despite the tremendous impact Fed policy has on their constituents. Even many members of the banking and finance committees have little or no knowledge of monetary policy. Perhaps this is why so many in Congress seem to believe we can all become rich by printing new dollars, or that we can make 2 + 2 = 5 by taking money from some people and giving it to others.

We cannot suspend the laws of economics or the principles of human action any more than we can suspend the laws of physics. Yet this is precisely what Congress attempts to do time and time again, no matter how many times history proves them wrong or economists easily demonstrate the harms caused by a certain policy.

I strongly recommend that every American acquire some basic knowledge of economics, monetary policy, and the intersection of politics with the economy. No formal classroom is required; a desire to read and learn will suffice. There are countless important books to consider, but the following are an excellent starting point: The Law by Frédéric Bastiat; Economics in One Lesson by Henry Hazlitt; What has Government Done to our Money? by Murray Rothbard; The Road to Serfdom by Friedrich Hayek; and Economics for Real People by Gene Callahan.

If you simply read and comprehend these relatively short texts, you will know far more than most educated people about economics and government. You certainly will develop a far greater understanding of how supposedly benevolent government policies destroy prosperity. If you care about the future of this country, arm yourself with knowledge and fight back against economic ignorance. We disregard economics and history at our own peril.

Ron Paul, March 27, 2006

And now for something even more amazing: Ron Paul warned of the impending collapse of Fannie May and Freddie Mac... in 2003!

Ron Paul in the House Financial Services Committee, September 10, 2003

Mr. Chairman, thank you for holding this hearing on the Treasury Department's views regarding government sponsored enterprises (GSEs). I would also like to thank Secretaries Snow and Martinez for taking time out of their busy schedules to appear before the committee.

I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase GSE debt. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.

Mr. Chairman, I would like to once again thank the Financial Services Committee for holding this hearing. I would also like to thank Secretaries Snow and Martinez for their presence here today. I hope today's hearing sheds light on how special privileges granted to GSEs distort the housing market and endanger American taxpayers. Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

Dr. Ron Paul is a Republican member of Congress from Texas.

Bravo!

If only Congressman Paul wasn't so terribly invisible. He and Congressman Kucinich should meet for an invisible lunch. I wonder if they could even get a table?

Yesterday upon the stair
I meet a congressman who wasn't there
He wasn't there again today -
But boy he had a lot to say!

Turn back the clock

Ron Paul was the only GOP candidate who worried about the economy before the housing market crashed and burned. Perhaps he is the only one who really understands how it works...? Or simply 'the honest one?'

This from The Nation, which is generally leans to the left (although they appreciate common sense from any party candidate when they see it - rarely - in American politics.)

The Nation talks about The Ron Paul Economy:

He is the only candidate who brings up what is happening to our money, which is another way of saying that he is worried about why the cost of buying groceries is going through the roof. While the other presidential contenders are silent on the topic, Paul reminds us that "government officials consistently claimed that inflation is in check at barely 2 percent, but middle-class Americans know that their purchasing power--especially when it comes to housing, energy, medical care, and school tuition--is shrinking much faster than 2 percent each year."

Paul is the contender who seems to understand that the Federal Reserve Board is not the Vatican and that its chairman, Ben Bernanke, is not the pope. It's a fixed practice by our politicians to treat whoever is the chairman of the Fed as though he were endowed with infallible powers.

On Wall Street, the sharper ones know better. They understand that lowering interest rates every time the stock market swoons will eventually, or even a lot sooner, bring a world of pain down on us. As it is, thanks to the Fed, interest rates are lower than the rate of inflation. This anomalous condition is called "negative interest," and for savers it means that their money is disappearing even as it rests safely tucked away in certificates of deposit.

For people who understand that their money is evaporating in front of their eyes there is a mighty incentive to rush out to the mall while that money is still worth something. For the moment a stampede to the stores by inflation-spooked people may please the economic pooh-bahs because current theory has it that people will buy lots of stuff, which in turn will create lots of jobs. But after they've spent their retirement money, then what?

Yes - believe it or not, this was written in January. Be nice if mainstream media would broadcast what Ron Paul is saying today.

The Daily Show: Crash of the Titans

Jon at play on Wall Street



Aasif Mandvi: Bed, Bank of America, and Beyond



And then of course... the response from our candidates! (Save, er, candidate Ron 'Not to be seen or heard' Paul.)