Tuesday, September 7, 2010

The Emperor's New Clothes

TARP was supposed to rescue our financial system from total collapse by providing capital to failing financial firms; when the firms had stabilized and then paid back the money borrowed plus interest that returned money would be used to pay down the deficit. Contrary to express language in the bill, the Obama Administration bailed-out a number of imprudent financial and insurance firms, not only by the provision of capital, but also by the purchase of stock in these institutions.


TARP funds were also used for the hostile takeover of most of the nation’s automobile industry by stealing the value of the companies from investors and transferring it to the favored unions as part of a grand wealth redistribution scheme. Money returned by the financial firms has not been used to pay down the deficit, instead, it’s become a massive slush fund for Obama to distribute to his favorite special interests, like SEIU and ACORN.


The DISCLOSE Act was forged in dark, smoke-filled back rooms, behind closed doors, with Obamacrats and a gaggle of Most-Favored Lobbyists nose to nose as the special interests wrote in carve-outs for themselves, and the Obamacrats added language that hamstrings the opposition. They claim their legislation increases transparency and provides a more level playing field for more fair campaign financing. In reality, the Act does nothing to increase transparency and skews the playing field in favor of the Democrats by giving them an unfair advantage.


The Act goes on to provide for warrantless, compulsory submission of sensitive, private donor and member lists to the government, exposing vulnerable opposition supporters to government intimidation and persecution. While 2010 pre-election efforts to pass this legislation have been unsuccessful, the ideas behind the proposal have not been abandoned, and similar legislation is planned for the future.


Attempts by the Obamacrats to limit constitutionally guaranteed rights are not restricted to campaign free speech. Laws and executive orders have been promoted to restrict the free practice of religion, to limit other forms of free speech, and to abridge the right to keep and bear arms. In addition, the government takeover of student loans for higher education is being used to promote student indoctrination by providing financial aid only to students attending schools “approved” by the government. Other Obamacrat measures seek to control what kinds and how much energy Americans use, which energy industries will be permitted to survive, what body-mass index (BMI) is acceptable for Americans, and which foods and condiments Americans will consume.


President Obama touts the new financial reform law as ending any further taxpayer bailouts and as a boon to the consumer. In reality, the financial takeover legislation creates more layers of bureaucracy and red tape that dramatically increases cost to any business offering credit or financial services; this increased cost is passed along to the consumer. Millions of small businesses, including doctors, dentists, and local retailers, are no longer able to offer payment plans to their customers. Credit card companies have already raised interest rates and banks are no longer offering free checking in light of the new rules.


Written into the financial reform bill, the President and Secretary of the Treasury, are obligated to bailout, with taxpayer money, any company that they deem, at their sole discretion, to have serious financial difficulties. Favored companies will be propped up and preserved with taxpayer money. Politically unfavored companies, especially those that actively oppose the government’s agenda, will be placed in receivership, assets will be liquidated and sold at bargain-basement prices to favored companies, and favored companies will benefit from the reduced competition.


Two companies that played a big role in the housing and financial collapse that precipitated the Obama Depression, Fannie Mae and Freddie Mac, received a blank check from Obama as a perpetual, unlimited and continuous bailout using taxpayer funds, permitting these companies to continue to make the same high-risk, sub-prime loans that triggered this financial collapse. Likewise, the highly-leveraged mortgage-backed derivative market continues unchecked, where high-risk vehicles can produce eye-popping gains that are pocketed, or staggering losses that are bailed-out by Uncle Sam.


These companies were not included in the new financial law, and the business plan and practices that led to the failure of Fannie, Freddie, and Wall Street firms have not been corrected. The continuous drain on the treasury to pump life into the failed Fannie, Freddie, and others, along with the promise of bail-out for Wall Street and other large companies as needed, does nothing to restrict excessive risk-taking and adds daily to skyrocketing government spending and deficits.


Businesses and individual taxpayers shoulder the burden of higher taxes needed to help people who can’t afford a home buy one anyway, and to enable Wall Street’s gambling addiction by allowing them to enjoy their winnings without suffering the negative consequences of their actions in terms of losses that are bailed-out by taxpayers.


The financial legislation also gives the Administration unrestrained power to determine at its arbitrary and sole discretion, if a business should be declared insolvent or about to be insolvent, to take over that business, and distribute assets to cronies. This has sent a chill over the business community, as it is forced to think twice before donating to the opposition, when doing so could lead to very real dissolution of the business, in retaliation, by Obama’s lethal financial weapon. All of this contributes to iron-fisted control by the government of the American economy on an apparently unstoppable march to socialism and totalitarianism.


Obama’s Stimulus Bill is credited by the Administration with “saving or creating” millions of jobs, and breathing new life into a severely injured economy. The Stimulus Bill was advertised as principally funding “shovel ready” infrastructure projects. The truth is less than a third of the Stimulus money spent went towards anything that even slightly resembled infrastructure projects. Instead of saving or creating jobs, since the Stimulus Bill was signed into law, there has been a net extinction of millions of jobs, most of which were losses suffered by the private sector, and unemployment lines have never been longer, outside the Great Depression.


Most of the Stimulus money, which was primarily supposed to help the private sector, hardest hit by the Obama Depression, has been squandered. At a time when the average government worker makes over twice the income of non-government workers, the majority of this taxpayer-funded windfall went to government and union jobs and benefits, cementing organized labor support for the Obamacrats. The remainder was wasted on pork-barrel payback to other cronies to further strengthen the political base.


Obama and his minions have stumped the country proclaiming the “Bush Recession” over and prosperity in view, believing, against hope, that if they ritualistically repeat the words often enough, they will magically come true and na├»ve Americans will accept them at face value. On their way to imaginary prosperity, Obama and the Democrats swallowed whole, Keynesian economic theory: if the government could just spend enough billions, the consumer-driven economy would turn around. In reality, despite over a trillion dollars of stimulus, growth remains at a dismal 1.6% and true jobless figures remain at a devastating 15% plus.


The Obama-led race to spend money we didn’t have led to an astronomical deficit; these huge deficits imperil the financial and national security of the nation. As deficits rise, interest on the debt rises exponentially. The excesses of today will be paid for by the sweat of our grandchildren in the future. This is not the legacy that Main Street Americans want to leave for their posterity. Part of the American dream is that our children should have a better life than we did. How can this American dream come true when our children and grandchildren will be saddled with the monstrous debt that this generation has accumulated over our lives? The Obamacrats continue to insist that our country is still much better off, even despite the massive deficits.


But the Family on Main Street is still out of work, and is trapped, upside-down in a high-interest mortgage, unable to refinance despite record low mortgage rates because appraisal value is significantly less than the balance owed. The Family is behind on payments or fighting foreclosure, owes $10-15 thousand dollars in credit card debt at recently raised exorbitant interest rates (another benefit of the financial bill), has exhausted savings and tapped into retirement accounts for living expenses, and has put off necessary expenditures for major items like a new roof, furnace replacement, auto repair or an expensive, indicated healthcare procedure. Despite active searching, no prospect of employment is apparent, and discouragement sets in.


The Small Business (SB) on Main Street is not doing much better: SB has been through downsizing and belt-tightening, trying to remain profitable in a marketplace where demand has dropped precipitously. The SB has too much debt, at unfavorable rates, production is down and receipts are too little. Money is tight, and the SB no longer has a standing line-of-credit with its bank, which it had used on occasion to cover cash-flow shortfalls. On some paydays, the SB owners do not draw a paycheck in order to make payroll for others in the company. What assets remain available are horded by the SB and spending on supplies or maintaining large inventories is curtailed.


A tidal wave of new regulations coming from Washington (Obamacare, the Financial Bill, the DISCLOSE Act and other legislation, executive orders and regulatory agency rulings), many yet to be written by their respective agencies, are casting a pall of uncertainty on the Main Street SB. Heavy regulation, such as that seen over the last 18 months and including the financial reform bill and Obamacare, dramatically increases the cost of doing business.


Without knowing exactly how these regulations will affect it, the Main Street SB knows it’s going to take a major hit. However, it has no way of determining the magnitude of the damage to be done, or to plan for the anticipated increase in costs, restrictions, reporting requirements and red tape. In this overburdened, uncertain and anti-business climate, the SB is paralyzed. Hunkering down, the SB is cutting personnel and other expenses to the bone, is struggling to get out of debt, is conserving capital and deferring any plans for hiring or expansion. Waiting on the sidelines for months and years for the business climate to improve, hope for the promised economic recovery has begun to fade and the SB contemplates permanently closing its doors.


Obama has promised on multiple occasions, that those with an income of $250,000 or less would not be subject to any tax increases. New Obama initiatives, astronomical government spending and deficits, and refusal to renew the Bush tax cuts have crushed that promise by imposing higher taxes on all Americans at a time when Americans can least afford it.


With Obamacare, the President promised “If you like your health insurance and your doctor, you can keep your health insurance and your doctor”. Obama promised that government would not get between the doctor and patient, and that there would not be rationing of healthcare or any “death panels” deciding who will live and who will die on a cost-benefit basis. Obama promised that public funds would not pay for abortion, that government healthcare spending would be contained, that healthcare and insurance expenses for the consumer would be reduced, and that actual savings from Obamacare would help pay down the deficit.


Estimates of the true cost of Obamacare have recently been dramatically revised upward, and this is now shown to be adding significantly to the deficit instead of reducing it. The cost of healthcare and insurance to the consumer has also increased because of Obamacare. Avoiding congressional and public scrutiny, Obama recess appointed “Dr. Rationing and Death Panel” as the director of CMS, the agency that runs Medicare and Medicaid, and this Director, with Obama’s approval, is planning on limiting the healthcare anyone can receive, making healthcare decisions previously made between the physician and patient, and withholding care when the government determines that the value of the individual to society is not worth the cost.


Public funds provided through Obamacare may be used to pay for abortions depending on the individual states. Also, most people will not be able to keep their same doctor or health insurance. During the Obamacare debate, a majority of the people recognized Obama’s dishonesty and fought passage of the bill. A smaller but not insignificant percentage of the people, took Obama at his word, and passively accepted passage of the bill, patiently awaiting Obama’s promises to be fulfilled. It is rapidly becoming apparent, even to this smaller, more passive group of Americans, that Obama was not being truthful and is not to be trusted.


President Obama and his Administration have been braying loud and proud about all of the good things Obama has done for the country, the economy, small business and the little people across the nation. However, this self-congratulatory trumpeting rings hollow on Main Street where the lack of any positive Obama accomplishment is glaringly apparent.


The Emperor’s procession moved slowly down the central road of town, lined with peasants cheering the Emperor. The Emperor’s advisors motioned for the peasants to come close to admire the Emperor’s new suit of clothes, handmade of the finest silk by the most skilled tailors in the land. “Only the most intelligent among us can truly appreciate the excellence of the Emperor’s new clothes”, they said, and the peasants clucked approvingly. As the procession neared the center of town, a small boy on the side of the road tugged at his father’s sleeve, “The Emperor has no clothes” he said. On hearing this, all the peasants looked again at the Emperor, and realized the boy was right, The Emperor Has No Clothes!

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