Remember the early 2000s, when companies such as WorldCom, Enron, Tyco and Xerox suddenly and spectacularly were revealed to have been cooking their books?

Remember the glee expressed by Washington politicians, especially Democrats, as they watched CEOs and their underlings get perp-walked out of their buildings and into federal custody?

Enron became the poster child for corporate misdeeds. In the accounting crisis of 2002, CEO Ken Lay was one of the most loathed human beings on Earth. And no, that's not an exaggeration.

Here was California Attorney General William Lockyer, one of many Democrats on the national scene who gloated at the downfall of the Enron chief and others: "I would love to personally escort Lay to an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey.'"

Lockyer wasn't the only one swept up in a spiteful prosecutorial frenzy. Sure, some of the prosecutions were deserved. But some were excessive, part of a corporate witch hunt.

As noted in a 2003 study by Kathleen Brickey, a Washington University law professor, the Justice Department brought 50 major fraud prosecutions from March 2002 to August 2003. An estimated 90 corporate officers were involved. That's a lot of prosecutions.

Basically, any major-company CEO whose stock price fell sharply could be sued or charged with a crime and sent to prison.

Democrats wasted no time calling this a "GOP" scandal, tarring any Republican official with charges of corruption for taking so much as a dollar from any of the companies. Never mind that Democrats were also prominent on the political gift lists.

Fanning the fire were news media highlighting Republican ties to scandal-plagued firms while all but ignoring Democrat links.

In the end, what emerged from this atmosphere of retribution and attack was Sarbanes-Oxley — the toxic corporate regulatory law that has arguably destroyed more wealth than anything WorldCom, Tyco or Enron ever did.

We mention all this because we now have an opportunity, thanks to the New York grand jury, to probe perhaps the greatest financial crime ever — one that dwarfs Enron in size and scope.

Yes, we're talking Fannie and Freddie.

Here's how James B. Lockhart III, head of the Office of Federal Housing Enterprise Oversight, described the two companies back in 2006, before the meltdown occurred:

"The result of (Fannie's and Freddie's) rapid growth unconstrained by market forces and a weak regulator was years of mismanagement, flagrant earnings manipulation, and systems-and-controls problems. Managements of both companies were forced out, earnings were misstated by an estimated $16 billion, fines exceeding one-half billion dollars were imposed, and remedial costs will exceed $2 billion."

Yet Congress did nothing. Fannie and Freddie continued to enjoy a virtual monopoly of the housing finance market, holding nearly half the nation's $12 trillion in mortgage assets in 2007.

And what happened to Fannie's and Freddie's top executives, almost all with deep ties to the Democratic Party? Did they get perp-walked to prison like WorldCom's Bernie Ebbers, Tyco's Dennis Koslowski, Adelphia's John Rigas, ImClone's Sam Waksal, or any of the others who did time for corporate misdeeds in the early 2000s?

No. Jim Johnson, former Walter Mondale aide, became head of Barack Obama's vice presidential search committee. Franklin Raines, who headed Fannie from 1998 to 2004, the years of its worst excesses, pocketed nearly $100 million in pay and bonuses from Fannie. He, too, became an adviser to Obama.

Other Fannie-Freddie alumni did equally well. Rep. Rahm Emanuel has been front and center in crafting a new rescue bill. Ex-Clinton Justice official Jamie Gorelick careens from career catastrophe to catastrophe, and still gets top jobs. It pays to have ties.

Meanwhile, as previously documented, Rep. Barney Frank and Sen. Chris Dodd repeatedly thwarted reforms. Yet today they stand front-and-center as Democrats try to "fix" a problem they created.

As such, any investigation into Fannie and Freddie must include Congress, both current and past.

There's lots of evidence that the two mortgage giants had become little more than taxpayer-guaranteed front companies for Democrats, who used them to reward supporters with cheap loans and to provide jobs for out-of-work politicians.

Marx’s Proposal Number Five seems to be the leading motivation for those backing the Wall Street bailout 

By Martin Masse

In his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state. Proposal Number Five was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”

If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.

Indeed, analysts at the Heritage and Cato Institute, and commentators in The Wall Street Journal and on this very page, have made declarations in favour of the massive “injection of liquidities” engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled US$700-billion bailout package. Some of the same voices were calling for similar interventions following the burst of the dot-com bubble in 2001.
“Whatever happened to the modern followers of my free-market opponents?” Marx would likely wonder.

At first glance, anyone who understands economics can see that there is something wrong with this picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.

So why throw this sound free-market analysis overboard as soon as there is some downturn in the markets?

The rationale for intervening always seems to centre on the fear of reliving the Great Depression. If we let too many institutions fail because of insolvency, we are being told, there is a risk of a general collapse of financial markets, with the subsequent drying up of credit and the catastrophic effects this would have on all sectors of production. This opinion, shared by Ben Bernanke, Henry Paulson and most of the right-wing political and financial establishments, is based on Milton Friedman’s thesis that the Fed aggravated the Depression by not pumping enough money into the financial system following the market crash of 1929.

It sounds libertarian enough. The misguided policies of the Fed, a government creature, and bad government regulation are held responsible for the crisis. The need to respond to this emergency and keep markets running overrides concerns about taxing and inflating the money supply. This is supposed to contrast with the left-wing Keynesian approach, whose solutions are strangely very similar despite a different view of the causes.

But there is another approach that  doesn’t compromise with free-market principles and coherently explains why we constantly get into these bubble situations followed by a crash. It is centered on Marx’s Proposal Number Five: government control of capital.

For decades, Austrian School economists have warned against the dire consequences of having a central banking system based on fiat money, money that is not grounded on any commodity like gold and can easily be manipulated. In addition to its obvious disadvantages (price inflation, debasement of the currency, etc.), easy credit and artificially low interest rates send wrong signals to investors and exacerbate business cycles.

Not only is the central bank constantly creating money out of thin air, but the fractional reserve system allows financial institutions to increase credit many times over. When money creation is sustained, a financial bubble begins to feed on itself, higher prices allowing the owners of inflated titles to spend and borrow more, leading to more credit creation and to even higher prices.

As prices get distorted, malinvestments, or investments that should not have been made under normal market conditions, accumulate. Despite this, financial institutions have an incentive to join this frenzy of irresponsible lending, or else they will lose market shares to competitors. With “liquidities” in overabundance, more and more risky decisions are made to increase yields and leveraging reaches dangerous levels.

During that manic phase, everybody seems to believe that the boom will go on. Only the Austrians warn that it cannot last forever, as Friedrich Hayek and Ludwig von Mises did before the 1929 crash, and as their followers have done for the past several years.

Now, what should be done when that pyramidal scheme starts crashing to the floor, because of a series of cascading failures or concern from the central bank that inflation is getting out of control? It’s obvious that credit will shrink, because everyone will want to get out of risky businesses, to call back loans and to put their money in safe places. Malinvestments have to be liquidated; prices have to come down to realistic levels; and resources stuck in unproductive uses have to be freed and moved to sectors that have real demand. Only then will capital again become available for productive investments.
Friedmanites, who have no conception of malinvestments and never raise any issue with the boom, also cannot understand why it inevitably leads to a crash.
They only see the drying up of credit and blame the Fed for not injecting massive enough amounts of liquidities to prevent it.

But central banks and governments cannot transform unprofitable investments into profitable ones. They cannot force institutions to increase lending when they are so exposed. This is why calls for throwing more money at the problem are so totally misguided. Injections of liquidities started more than a year ago and have had no effect in preventing the situation from getting worse. Such measures can only delay the market correction and turn what should be a quick recession into a prolonged one.

Friedman — who, contrary to popular perception, was not a foe of monetary inflation, but simply wanted to keep it under better control in normal circumstances — was wrong about the Fed not intervening during the Depression. It tried repeatedly to inflate but credit still went down for various reasons. This is a key difference in interpretation between the Austrian and Chicago schools.

As Friedrich Hayek wrote in 1932, “Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. ... To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about ...”

The confusion of Chicago school economics on monetary issues is so profound as to lead its adherents today to support the largest government grab of private capital in world history. By adding their voices to those on the left, these confused free-marketeers are not helping to “save capitalism”, but contributing to its destruction.

The $700 billion rescue for the troubled global financial system foundered on a 228-205 vote Monday as both sides in the political debate feared being blamed for passing an unpopular bill.

Polls show more than 50% of Americans oppose what the pollsters call a "bailout" (but what we prefer to call a rescue). Meanwhile, a USA Today poll found that nearly a third of Americans think we're in a depression.

Concern about the financial system is fully justified. But excessive gloom is not. In the most recent quarter, GDP rose 2.1% year over year, 3.1% excluding housing. Hardly a depression. So let's not talk ourselves into one.

We, too, have qualms about the rescue effort. Washington under Democrat-led Congresses wrote the rules that made this mess possible, and we have little confidence in their ability to get us out of it.

We have even less confidence after watching Democrats try to insert things in the plan — from money for the radical community group ACORN to new taxes on Wall Street — that made no sense at all. We're glad Republicans opposed these and made the bill better.

But now it's time for all to hold their noses and vote as soon as possible on a compromise. Both the public and the investment community need to be reassured their leaders aren't dropping the ball.

Failure won't just cost billions; it will cost trillions — in lost output, a shrunken job market, smaller retirements and lost productivity. Is this the future we'll choose for ourselves? We hope not.

Republicans who voted against the bill did so for legitimate reasons. They don't like government getting too involved in the economy, and this package permits just that. But they also don't want to be blamed, as the minority party, if the deal turns sour.

That's already happening. Yes, more than 60% of Republicans voted against the rescue bill, but so did 40% of Democrats. That said, it's time for Republicans to take a deep breath, pull up their pants and help pass a bill. The nation's confidence is riding on it.

Americans must be made to realize it's not Wall Street that's being "bailed out," as the media keep putting it. It's Main Street.

The reason President Bush and Treasury Secretary Paulson moved so quickly and boldly is they fear a "seizing up" of financial markets. That means banks will stop lending to one another. It means companies that finance in the money markets — as many medium- and large-size businesses do — will be frozen out.

No lending, no business. Here's where Main Street comes in. Thousands and maybe millions will be laid off as commerce grinds to a halt. That's a real threat. Republicans will never get a perfect bill out of this Congress; compromises must be made by both sides.

We hope the $700 billion requested of Congress is enough to cover the problem. But we also note that on Monday, without Congress' interference, the Fed made $630 billion available to world financial markets. That brings this rescue to $1.4 trillion.

The ability of the nation's and the world's financial markets to finance this shouldn't be questioned. As the nonpartisan Congressional Budget Office noted Monday, the cost of any eventual rescue plan would likely be "substantially smaller" than $700 billion because of asset resales. And, around the world, there's some $70 trillion or so in investment capital, according to estimates.

We're not short on capital, as we said, but on confidence. Passing a bill, even if flawed, would go a long way to restoring the latter.

Scared Money and Bad Government… Disaster for Generations.

Take a breath. A large number of Washington elites are trying to panic the American people into trading in their economic freedom for the promise of putting on a band aid over a mortal wound. The market had already gone down more than 400 points before the vote.

The markets had already discounted the bailout bill as a turkey before Pelosi had insulted the Conservative members of the House. There will be a price to pay for the looting of Fannie and Freddie by the Democrats and their fat cat friends. I want to see this fraud end with a series of perp walks by the folks that stole the money.

The adoption of the Fascist (system by which government and business are intertwined) Bailout Bill for social and political agendas and calming the markets is ludicrous. This social takeover of business and risk is doomed to be a failure and the drop will only become much worse.

These problems were not caused by free markets. They were caused by government forcing banks to give loans to people that were not creditworthy. Surprise, Uncle Sugar gave you a loan you can’t afford and you have bad credit. Is there any doubt a large number of folks will walk? The Black Caucus, ACORN and I’m sure a few well meaning liberals thought they could social engineer the free enterprise system and make more Marxist. These groups don’t want the deadbeats to pay for their mistakes nor do they to take the blame for this government debacle.

Sure they are going to blame George Bush and Conservatives- it’s in their DNA.

The only cure for this problem is the free market. Cutting government spending, capital gains, and changing the accounting regulations would help. We need as much free market and transparency as we can get.  I thought George Bush knew this.

This Chicken Little act is getting old. Mr. President, calm down that Wall Street. Let’s go back to the roots of Capitalism, not Capitolism.

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Barack Obama and the Strategy of Manufactured Crisis

The strategy of forcing political change through orchestrated crisis. The "Cloward-Piven Strategy" seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.

"Make the enemy live up to their (sic) own book of rules," Alinsky wrote in his 1989 book Rules for Radicals. When pressed to honor every word of every law and statute, every Judeo-Christian moral tenet, and every implicit promise of the liberal social contract, human agencies inevitably fall short. The system's failure to "live up" to its rule book can then be used to discredit it altogether, and to replace the capitalist "rule book" with a socialist one. (Courtesy Discover the Networks.org)

Their strategy to create political, financial, and social chaos that would result in revolution blended Alinsky concepts with their more aggressive efforts at bringing about a change in U.S. government. To achieve their revolutionary change, Cloward and Piven sought to use a cadre of aggressive organizers assisted by friendly news media to force a re-distribution of the nation's wealth.

By crisis, we mean a publicly visible disruption in some institutional sphere. Crisis can occur spontaneously (e.g., riots) or as the intended result of tactics of demonstration and protest which either generate institutional disruption or bring unrecognized disruption to public attention.

1. The offensive organizes previously unorganized groups eligible for government benefits but not currently receiving all they can.
2. The offensive seeks to identify new beneficiaries and/or create new benefits.
3. The overarching aim is always to impose new stresses on target systems, with the ultimate goal of forcing their collapse.

The movement's impact on New York City was jolting: welfare caseloads, already climbing 12 percent a year in the early sixties, rose by 50 percent during Lindsay's first two years; spending doubled... The city had 150,000 welfare cases in 1960; a decade later it had 1.5 million.  

Moreover, this kind of mass influence is cumulative because benefits are continuous. Once eligibility for basic food and rent grants is established, the drain on local resources persists indefinitely.

• 1. Register as many Democrat voters as possible, legal or otherwise and help them vote, multiple times if possible.
• 2. Overwhelm the system with fraudulent registrations using multiple entries of the same name, names of deceased, random names from the phone book, even contrived names.
• 3. Make the system difficult to police by lobbying for minimal identification standards.

By advocating massive, no-holds-barred voter registration campaigns, they [Cloward & Piven] sought a Democratic administration in Washington, D.C. that would re-distribute the nation's wealth and lead to a totalitarian socialist state.

In the 1980s, groups such as the activists at ACORN began pushing charges of "redlining"-claims that banks discriminated against minorities in mortgage lending. In 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation.

A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money.

Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.

The revisions also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages. The changes came as radical "housing rights" groups led by ACORN lobbied for such loans. ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama. (Emphasis, mine.)

"...the issue here isn't guilt by association; it's guilt by participation. As CAC chairman, Mr. Obama was lending moral and financial support to Mr. Ayers and his radical circle. That is a story even if Mr. Ayers had never planted a single bomb 40 years ago."

I've been fighting alongside ACORN on issues you care about my entire career (emphasis added). Even before I was an elected official, when I ran Project Vote voter registration drive in Illinois, ACORN was smack dab in the middle of it, and we appreciate your work. - Barack Obama, Speech to ACORN, November 2007 (Courtesy Newsmax.)

It would be telling to know if Obama, during his years at Columbia, had occasion to meet Cloward and study the Cloward-Piven Strategy.

The “Crap Sandwich” was delivered by a well meaning President relying on a Democrat Treasury Secretary in the form of an emergency “depression saving” stack of worthless paper. In fact it was dropped on the American public just before Election Day and was met to insure the election of Obama as well as provide cover of the looting of Fannie and Freddie by Democrat operatives.

The Fascist Social Takeover Bill was bad at best and will not save anybodies 401K’s from the follies of the free market. There will be a judgment day for the fleecing of Fannie and Freddie. It will affect your investments and you must not forget who did this. A bailout at best would put a band aid on a wound infected with the germs of numerous fat cat Democrat insiders for the faux social plan of housing for the poor, cover it up and elect OBAMA.

If this monster had passed and Obama was elected on the basis of this plan we would all be eating “crap sandwiches” in a socialist state for a long, long time.

God bless the American people and the Democrats power play for killing this nightmare bill.

Barney Frank and the politics of family values

By STAR PARKER
Scripps Howard News Service
2008-09-12 00:00:00

Imagine 5,000,000 of your closest friends and neighbors all sharing adventures of nature in an urban setting. It seems that nature invaded our city and surrounding suburbs with a vengeance. Who needs nature programs in HD? We had beautiful trees and wildlife in our living rooms.

With the exception of the random generator we lived an “Al Gore Green” primitive existence for more than week. I want a Nobel Prize for this feat. Hell, I’d like to see Al Gore survive a similar experience to validate his stupid movie and awards.

This experience brought the whole Peak Oil, Global Warming- Sustainable Living Crap that’s being pumped into American homes by soft headed liberals into prospective.

More than ever I want to denounce these dangerous misguided morons that want to destroy our country, economy and culture.

EVERY TIME I HEAR GREEN, I SEE RED.

There are 3 theories that have been concocted to bring our nation to its knees and make the US a second tier country. These are “half baked” ideas that present untrue vision of our nation and its place in the world.

These theories are:

Peak Oil- The idea that all the easy cheap oil has been found so we give up our exploration for energy.

Man Made Global Warming- The idea that our industrial strengths have hurt others in the world and damaged the planet so it can’t sustain life unless we follow some “new green rules” for living.

The United States is on the decline as a world power- This theory can only be true if you believe and live like the other theories are true.

So, if you want to see the end of our nation, believe the world will soon run out of oil, we are destroying the planet and need to pay more taxes to the UN and fee’s to the likes of Al Gore and everything is going to hell in a hand basket and we need leaders like Obama to tell us what to do.

This would be my idea of Hell.

Now I understand why liberals are so unhappy.