I.O.U.S.A., I Want a Refund

I.R.I.P.O.F.F.U.S.A.

After the conclusion of the film, the premier’s rather schizophrenic benediction was staged by panelists Walker, Peterson, billionaire investor Warren Buffet, chairman William Niskanen of the pro-Fed CATO Institute, and some hack from AARP. In their best ‘Ah Shucks, folks’ corn pone delivery, they told their assembled Omaha audience (and the multitudes in theaters coast-to-coast, struggling both to keep awake and their dinners down) that the scary bad old film really didn’t mean it. Everything is really alright with the U.S.A. We’ve been in tight scrapes before and we always pulled through. Americans simply must save more and spend less. We need to tighten our belts and cut out all that nasty partisanship in Congress. I kept waiting for Mickey Rooney, Judy Garland, and the Andrew Sisters to rush onstage and break out in a chorus of Zip-A-Dee-Doo-Dah! Nothing was ever said about our draconian welfare-warfare state, its American Empire based in 130 countries, and their sinister symbiotic relationship with their enablers, the Federal Reserve, the real source of the problem supposedly addressed in the film. But then no one ever expected them to either.

The I.O.U.S.A. Scam

Writes Tim Moore: “The initial impression of this circus was somewhat promising, until the marquee lit up. The farcical exhibit was nothing more than a marketing vehicle in brand recognition for Peterson, Walker, and Novelli. All of whom are fully involved in the ServiceNation national servitude movement and their upcoming summit in NYC on Sept. 11/12. As expected, McBama will be headlining and any reference to the memory hole will be obliterated.”

Movie: Save the State

Writes Keith Mercer: “I just read the posts about IOUSA. I am quite familiar with Bonner and Wiggins work and went to see the film because they were involved. I was quite disappointed, not so much surprised, but disappointed.

“It started out OK with an amusing clip with Steve Martin.

“There was also an unintentionally amusing part later. They portrayed Bill Clinton as an heroic, paragon of fiscal responsibility, which caused a significant portion of the theater to literally laugh out loud.

“The theme for the movie can be summed up in one section. We are told that Eisenhower forced the British to leave the Suez Canal by threatening to trash their currency. The British had to comply because they were dependent on us to finance their debt. Then we were told in an ominous tone, that many historians consider that moment to be the end of the British empire.

“The message of the movie is clear. The state is in trouble and it is time for all good Americans to come to its aid by paying more taxes and saving more money, by force if need be.

“We were shown clips from the 40’s of various celebrities encouraging Americans to buy bonds. We were told that our parents and grandparents faced similar crisis and pulled together to pay higher taxes and buy govt. bonds.

“In case anyone missed it, the point was driven home several times during the panel discussion, which was worse than the movie. We were told repeatedly by Buffett that we don’t pay enough taxes. And the idea of forced savings was received warmly.

“When the event was over, my impression was that they are all statists and they are all in a panic because the state is in trouble and they want us to save it.”

Tim Moore notes how the some of the same people responsible for I.O.U.S.A. are also coalition members and sponsers of Service Nation.

He links to blog of bile too which is nice to see. In a weeks time we get plugged on FTL, Stefan Molyneux trying to log into blog of bile the other day (i’m assuming, username attempted was ‘freedomainradio’ and ’stefbot’ and they came from Canada, the login IP wasn’t in my visitor log oddly enough) and linked from one of the highest ranked libertarian blogs available.

http://www.marketwatch.com/…

Central bankers and regulators are rethinking their faith in the ability of market forces alone to police the increasingly complex global financial system.

In a speech in Jackson Hole, Wyo., Federal Reserve Chairman Ben Bernanke said the Fed’s toughest challenge is not restoring growth, fighting inflation, or providing fragile banks with sufficient liquidity to get through the current financial crisis. Rather, it’s finding a way to prevent the next one.

The bailout of Bear Stearns in particular represents a failure of the supervisors to monitor the system. Bear wasn’t a particularly large institution, but its assets and liabilities were so thoroughly linked with the rest of the financial world that its failure would have been devastating, Bernanke said. Read the speech.
It’s not that Bear Stearns was too big to fail, it was too interconnected.

Bernanke suggested that the Fed and other bank supervisors need to use a holistic approach, rather than look at each institution in isolation. The explosion of securitization and derivatives in the past few decades has shifted risks in ways that aren’t immediately apparent. A risk that would be manageable for one bank would be unbearable if it applied to all, because systemic risks tend to create illiquid markets.

The regulators also have to clearly explain when and under what conditions financial institutions will be allowed to fail and when they will be bailed out, Bernanke said. To limit moral hazard, bailouts should be structured so that shareholders are wiped out, similar to the way failing banks are now treated by the Federal Deposit Insurance Corp.

Imposing systemwide supervision and regulation won’t be easy to design or cheap to implement. Unintended consequences are certain to appear. But the alternative of doing nothing would consign us to periodic costly boom and bust cycles that could leave us all poorer.

Just… wow. The organization that is the biggest nonfree component of the current economy and who is looking daily to increase its power doesn’t have faith in the market’s ability to handle things. What a shock. I love that last sentence too. “But the alternative of doing nothing would consign us to periodic costly boom and bust cycles that could leave us all poorer.” Is this guy serious? Has this guy ever opened an economics book or thought critically on the subject? Making us poorer? The Fed’s massive inflation has helped do that. So has the socialization of so many aspects of our lives. We have periodic costly boom and bust cycles BECAUSE they refuse to do nothing. The bust doesn’t make us poorer. It makes us wealthier in the end. The bust is the liquidation of bad investments. If you continue on with the malinvestment you’re continuing on with an inefficient system and not investing in the things with the highest priority. The boom shouldn’t be happening in the first place. Spurred on by cheap debt and other manipulations. Some debt so cheap, like today, that they in fact are paying people to take money. Price inflation being higher than interest rates. Even if you don’t believe Mises and Rothbard on that one show me where the Fed has stopped the cycle? Please. Once you’re finished show me how well government regulation and interference in healthcare, education, housing, the poor, drugs, etc. has done.

http://www.economist.com/…

A LIFELONG libertarian, Alan Greenspan does not ordinarily advocate giving the government more power. But he does so in a new epilogue to the paperback edition of his memoir, parts of which were made available to The Economist. The crisis of the past year has convinced him it is the lesser evil. Better someone else be in charge of bail-outs, he argues, than the Federal Reserve, which he led for 18 years.

Mr Greenspan says a high-level panel of American financial officials should be given broad power to seize any financial institution whose failure threatens the entire economy, bail out its creditors and close it down. “We need laws that specify and limit the conditions for bail-outs” and do so transparently with taxpayers’ money, “rather than circuitously through the central bank, as was done during the blow-up of Bear Stearns,” he writes in “The Age of Turbulence”. (Penguin is to release the paperback on September 9th.)

If that means the government has to wade in, so be it. “Our country has long since abandoned the notion that we should leave crises to be resolved solely by the marketplace,” he says. “The critical need…is to formalise…the procedures improvised in the case of Bear Stearns. This should ensure that in the future, government financial assistance to lending institutions does not impact the Federal Reserve’s balance-sheet and monetary policy.”

He says a standby panel, empowered by Congress, should determine if an institution’s failure is dangerous enough to require taxpayer support. It would then form a vehicle to take the firm into “conservatorship”, wipe out the equity, preferably impose a “haircut” on its debts before guaranteeing them, and then sell its assets. Mr Greenspan’s model is the Resolution Trust Corporation (on whose board he served), created in 1989 to take over failing thrifts, sell their assets, then close itself down. He pours cold water on a proposal by Hank Paulson, America’s treasury secretary, to give the Fed broad responsibility over market stability.

Mr Greenspan’s proposal may be politically difficult. For years Fannie Mae and Freddie Mac, America’s mortgage giants, resisted the creation of a regulator that could close them down. With other large institutions—be they investment banks, hedge funds or insurance companies—there might be even more of a fuss. And the Fed is not yet ready to bow out. “Unless I hear from Congress that I should not be responding to a crisis situation, I think that it’s a long-standing role of the central bank to use its lender-of-last-resort facilities,” Ben Bernanke, Mr Greenspan’s successor at the Fed, said last month.

Just because the man used to hang out with Ayn Rand and was apparently a libertarian Objectivist doesn’t mean he continues to be one. Anyone who advocates aggression is not by definition a libertarian. But what better way to destroy a movement then by redefining the words? Eric Arthur Blair would be proud. It was done at around the turn of the 20th century with ‘liberal.’ In economics ‘inflation’ has been redefined. Now a concerted effort appears to be being made to change the meaning of ‘libertarian.’ People like Glenn Beck and Neil Bortz nationally claim to be libertarians. Advocating government manipulation of the market and money bailouts, immigration control and war with people who pose no threat is NOT libertarian.

http://ap.google.com/…

Obama has a 2-to-1 lead over McCain among 18-to-34-year-olds, according to a Washington Post-ABC News poll released last week. The same poll gave Obama an 8 percentage point lead among registered voters nationwide. In an AP-Yahoo News poll in July, the two were virtually tied among voters overall.

But does “coolness”_ or the perception of it at least — really matter to young voters?

“I don’t think you can ignore that factor,” said James Kotecki, a 22-year-old political video blogger who achieved fame on YouTube last year after he interviewed former Republican presidential candidate Ron Paul in Kotecki’s Georgetown University dorm room.

“What Obama’s been able to do is capitalize on his hipness, at least as far as younger voters go,” said Kotecki, whose video commentaries now appear on Politico.com, the Web site for the Washington political newspaper. “I think it’s not that they don’t support his issues and his policies, but younger voters are more willing to work for him and work passionately for him because he’s someone who resonates more on their wavelength.”

“Coolness” is often associated with youth, but elder status doesn’t automatically signify “uncool,” Kotecki said.

Ron Paul, 72, amassed a considerable following among younger voters, largely because his libertarian message was deemed countercultural, Kotecki said.

“You can certainly be cool at any age,” Kotecki said. “Look at Hugh Hefner. He’ll be cool til the day he dies. But for him and for Ron Paul or anybody who’s elderly and who’s cool, part of it is what they represent that makes them that.”

Largely? Really? I’ve met a lot of Ron Paul supporters. Many of them ‘younger.’ I can’t say that a single one would have said anything about libertarianism being counterculture nor did I get the feeling that was why they were there. Federal Reserve, war, growing police state, 9/11 is what I heard. I’m not saying there weren’t a notable number who joined the bandwagon… but many that did learned a lot and stayed on for serious reasons. I don’t see Obama supporters saying the same thing. In fact the opposite.

http://www.nytimes.com/…

The Federal Reserve said Wednesday that it was extending its emergency borrowing program to Wall Street firms and was taking other steps to ease a tight credit market that has hobbled the national economy.  

The Fed said the program, where investment houses can tap the central bank for a quick source of cash, will be available through Jan 30. Originally the program, started on March 17, was supposed to last until mid-September.

Another program, where investment firms can temporarily swap more risky investments for super-safe Treasury securities also will continue through Jan. 30, the Fed said. And, it also will let commercial banks, in a separate program, be able to bid on cash loans that last longer — for 84 days, besides the 28-day loans now available.

The Fed said it was taking these steps “in light of continued fragile circumstances in financial markets.” The Fed said that the emergency borrowing program for investment houses and the program that lets investment firms temporarily borrow Treasury securities would be withdrawn should the Fed determine that conditions in financial markets are “no longer unusual and exigent.”

Starting Aug. 11, the Fed will give banks the option of bidding on 84-day cash loans from the Fed, besides the 28-day loans now available. Specifically, the Fed will conduct biweekly auctions. They will alternate between making available $75 billion in 28-day loans and $25 billion in 84-day loans. The steps expand a program started in December aimed at helping banks overcome their credit problems so that they can keep lending to customers.

The European Central Bank and the Swiss National Bank have informed the Fed that they also will make available to their banks similar 84-day cash loans. The Fed also increased its credit line with the European bank to $55 billion from $50 billion.

And the market rallies to the beat of their own destruction.

And in other news to rally against: Bush signs law to ‘help’ homeowners, Freddie and Fannie

President George W. Bush signed into law legislation that helps 400,000 homeowners facing foreclosure and extends a lifeline to Fannie Mae and Freddie Mac.

Bush signed the measure at the White House shortly after 7 a.m., spokesman Tony Fratto said. Treasury Secretary Henry Paulson, Housing and Urban Development Secretary Steve Preston and Federal Housing Administration Director Brian Montgomery were among those present.

“We look forward to putting in place new authorities to improve confidence and stability in markets, and to provide better oversight for Fannie Mae and Freddie Mac,” Fratto said.

The law is aimed at stemming foreclosures and halting a free-fall in housing prices by providing federal insurance for refinanced 30-year mortgages for homeowners struggling to make their monthly payments.

The measure also is designed to restore confidence in Fannie Mae and Freddie Mac by tightening regulations and authorizing the Treasury secretary to inject capital into the two biggest U.S. providers of mortgage money.

The Treasury chief, who was the lead lobbyist for the White House, persuaded Bush to back off a threatened veto over a section of the legislation that provides $3.9 billion in grants to states to buy and repair foreclosed properties. Bush said he regarded it as a bailout of lenders. Democrats said it would stabilize neighborhoods.

I think if they want to raise the prices of homes they should scrap this grants for buying and repairing properties and just blow up the homes on them. It’d be cheaper to the tax payers and the increase in scarcity will push up prices. Just like they’ve been doing with farmed products since the Great Depression.

Isn’t it more like Wall Street was slipped some PCP? Between the Federal Reserve, Congress and the executive branch we’ve got inflation, wars, deficit spending, subsidies, regulation, artificially low interest rates and other interventionist policy. All of which distort market reality and now we are in the comedown and it sucks a lot more then a hangover.