Capitalism versus Socialism
I have always advocated Democracy, Christianity and Capitalism as the government for America. I have always been afraid of Democracy, Atheism and Socialism.
I have always known that Capitalism was dangerous, but thought Christian Principles could control the harsh nature of Capitalism. Unfortunately, Christian Principles no longer have any control over Capitalism because Christianity has been effectively removed from American Society. When you eliminate the Ten Commandments, you basically authorize lying, cheating and stealing. Isn't everyone doing it?
When the Economic Disaster of 2008 unfolded, I wanted to know what went wrong with Capitalism and wanted to know if I was wrong in what I advocated. What became apparent was that the root cause of the Economic Disaster of 2008 was the Community Reinvestment Act, Fannie Mae and Freddie Mac. The CRA was a socialistic program that forced banks to make risky sub prime loans. Banks resisted the risky sub prime loans till Fannie and Freddie were created to provide a guarantee for the sub prime loans. The guarantees gave sub prime loans an implied "AAA" rating so every crooked organization got into the sub prime business.
I knew Obama was a socialist, but I had no idea how effective he would be in making Capitalism the scapegoat for the Economic Disaster of 2008. I never thought so much money would be spent on implementing Socialism so fast.
I believe America is in for a world of misery as there is an attempt to implement Socialism.
In the long run, I believe it will be proven Capitalism is better than Socialism, but the question is whether America can recover from the Socialism.
Capitalism is loaning money to people you expect will pay it back.
Socialism is loaning money to people you hope sill pay it back.
Capitalism produces unequal prosperity, but Socialism produces equal proverty.
The following are my concerns about the Socialism being implemented by the Obama Administration.
Inflation
The democrats are spending money like a bunch of horny sailors on leave. democrats are asking for 600 billion for health care, 100 billion for education, 200 billion for the Iraq/Afghanistan war, etc. Inflation is sure to follow when the government starts printing money. Hillary Clinton would not mention human rights to China because the Obama Administration needs China to buy American debt. Why would China buy American debt at a 2 of 3% interest rate, when China can see an inflation rate of 10 to 20% in America?
Price Controls
When inflation starts, price controls will be implemented. Right now doctors, hospitals and medical insurance companies are looking at the massive health care/welfare spending as a pot of gold, but as sure as inflation starts, there will be price and wage controls on doctors and hospitals. There won't even be a need for insurance companies.
Wars
Socialists are usually pacificist, so they will not fight an enemy. They spend money on defense, but defense is useless in a siege situation. Just one time that the defense fails and it is all over. Capitalists know they will make mistakes in offensive wars, but it is better to make a mistake and kill the enemy instead of making a mistake and killing your own people. The appeasement policy of the Clinton Administration caused 3000 Americans to be killed on 9/11. A failure to have a strong military is always an invitation to an enemy.
Christians
Socialists are usually Atheists, so they will try to eliminate Christianity. The "Hate Crime" legislation is a sure sign of the way things can go. A lot of money is going to spent on education, but "diversity training" may be the main part of the education. For information on what is happening in Massachusetts go to www.massresistance.org
Free Speech and Freedom of the Press
The Atheistic Liberal News and Entertainment Industry has always been biased for democrats, but if the news media begins to turn on the Obama Administration, the government will take over control of the news media. The "Fairness Doctrine" is a sure sign of the way things can go.
Thursday, February 26, 2009
Wednesday, February 25, 2009
Correction
Correction
In the original post I stated the following.
I did not realize how bad this situation is till I saw a statement that said that the problem in Europe was a 40 trillion dollar problem. It is hard to believe numbers that big, but 200 hundred million people in America with an average family size of 3 yields about 70 million homes. Assuming the average house has dropped at least 20,000 dollars, that means the housing bubble represents a 20,000 dollars times 70 million homes or 1.4 zillion dollar problem. Even if Fannie Mae and Freedie Mac are on the hook for only one third of the problem, that is still 40 trillion dollars.
This was incorrect and should read.
I did not realize how bad this situation is till I saw a statement that said that the problem in Europe was a 40 trillion dollar problem. It is hard to believe numbers that big, but 200 hundred million people in America with an average family size of 3 yields about 70 million homes. Assuming the average house has dropped at least 20,000 dollars, that means the housing bubble represents a 20,000 dollars times 70 million homes or 1.4 trillion dollar problem. Even if Fannie Mae and Freddie Mac are on the hook for only one third of the problem, that is still 467 billion dollars.
In the original post I stated the following.
I did not realize how bad this situation is till I saw a statement that said that the problem in Europe was a 40 trillion dollar problem. It is hard to believe numbers that big, but 200 hundred million people in America with an average family size of 3 yields about 70 million homes. Assuming the average house has dropped at least 20,000 dollars, that means the housing bubble represents a 20,000 dollars times 70 million homes or 1.4 zillion dollar problem. Even if Fannie Mae and Freedie Mac are on the hook for only one third of the problem, that is still 40 trillion dollars.
This was incorrect and should read.
I did not realize how bad this situation is till I saw a statement that said that the problem in Europe was a 40 trillion dollar problem. It is hard to believe numbers that big, but 200 hundred million people in America with an average family size of 3 yields about 70 million homes. Assuming the average house has dropped at least 20,000 dollars, that means the housing bubble represents a 20,000 dollars times 70 million homes or 1.4 trillion dollar problem. Even if Fannie Mae and Freddie Mac are on the hook for only one third of the problem, that is still 467 billion dollars.
Tuesday, February 24, 2009
CRA, Fannie Mae and Freddie Mac
CRA, Fannie Mae and Freddie Mac
The CRA by itself would never have produced the Financial Disaster of 2008, but when the risky CRA loans were guaranteed by Fannie Mae and Freddie Mac, the risky loans became "AAA" rated because they were backed by the federal government.
This linking of CRA, Fannie Mae and Freddie Mac occurred when the CRA was revised in 1995 under the Clinton Administration.
-----------------------------------------------------
2/23/09
Community Reinvestment Act
From Wikipedia, the free encyclopedia
In October 1997, First Union Capital Markets and Bear, Stearns & Co launched the first publicly available securitization of Community Reinvestment Act loans, issuing $384.6 million of such securities. The securities were guaranteed by Freddie Mac and had an implied "AAA" rating.[29][22] The public offering was several times oversubscribed, predominantly by money managers and insurance companies who were not buying them for CRA credit.[30][edit] Legislative changes 1999.
----------------------------------
Please note the phrase "implied "AAA" rating".
The reason the housing bubble lasted so long and the dangers not fully recognized was "rising home values". I remember a phrase called "flipping". Flipping meant buying a rundown home, throwing some paint on it and selling it for a very large profit. It was all possible because home values were rising and the Fannie and Freddie were guaranteeing the loans. Even if the people buying the home defaulted, another coat of paint was applied and sold again with a big profit.
Everyone was fat, dumb and happy, until the housing market was saturated with homes. When the defaulted homes could not be resold, the people turned to Fannie and Freddie to pay, but Fannie and Freddie did not have the money to pay.
Fannie and Freddie are now in default on there loan guarantees.
The root cause of the Financial Disaster of 2008 was the CRA, a piece of socialistic legislation passed by the democrats in 1977 in the Carter Administration and amended by democrats in 1995 in the Clinton Administration.
The idea for a solution being floated is to wipe out all the sub prime debt and start all over again. This means trillions of dollars lost by people who thought they were buying an investment that had a "AAA" rating. It also means violating the rule of "Moral Hazard", because evil activity is being rewarded.
The CRA by itself would never have produced the Financial Disaster of 2008, but when the risky CRA loans were guaranteed by Fannie Mae and Freddie Mac, the risky loans became "AAA" rated because they were backed by the federal government.
This linking of CRA, Fannie Mae and Freddie Mac occurred when the CRA was revised in 1995 under the Clinton Administration.
-----------------------------------------------------
2/23/09
Community Reinvestment Act
From Wikipedia, the free encyclopedia
In October 1997, First Union Capital Markets and Bear, Stearns & Co launched the first publicly available securitization of Community Reinvestment Act loans, issuing $384.6 million of such securities. The securities were guaranteed by Freddie Mac and had an implied "AAA" rating.[29][22] The public offering was several times oversubscribed, predominantly by money managers and insurance companies who were not buying them for CRA credit.[30][edit] Legislative changes 1999.
----------------------------------
Please note the phrase "implied "AAA" rating".
The reason the housing bubble lasted so long and the dangers not fully recognized was "rising home values". I remember a phrase called "flipping". Flipping meant buying a rundown home, throwing some paint on it and selling it for a very large profit. It was all possible because home values were rising and the Fannie and Freddie were guaranteeing the loans. Even if the people buying the home defaulted, another coat of paint was applied and sold again with a big profit.
Everyone was fat, dumb and happy, until the housing market was saturated with homes. When the defaulted homes could not be resold, the people turned to Fannie and Freddie to pay, but Fannie and Freddie did not have the money to pay.
Fannie and Freddie are now in default on there loan guarantees.
The root cause of the Financial Disaster of 2008 was the CRA, a piece of socialistic legislation passed by the democrats in 1977 in the Carter Administration and amended by democrats in 1995 in the Clinton Administration.
The idea for a solution being floated is to wipe out all the sub prime debt and start all over again. This means trillions of dollars lost by people who thought they were buying an investment that had a "AAA" rating. It also means violating the rule of "Moral Hazard", because evil activity is being rewarded.
Monday, February 23, 2009
Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Act
There is no question the GLBA contributed to the Financial Disaster of 2008.
The influence of big profits by unregulated investment institutions was too great a temptation for regulated banks (Glass-Steagall Act) and Republicans.
The GLBA made the problem worse, but the heart of the problem leads back to the Community Reinvestment Act, a socialistic program passed by democrats in 1977 in the Carter democratic administration and strengthened in 1995 in the Clinton democratic administration.
There is no question Republicans yielded to the temptation of the money, but I would assess the blame as 80% democrats and 20% Republicans.
Democrats are unfit for running the government because they enact socialistic/Atheistic legislation that create financial and moral messes.
It is unfortunate that the Atheistic Liberal News and Entertainment Media provides propaganda to help get democrats elected to control the government.
There is a cultural war in America between Christians and Atheists. This war is being fought on the battlefield of politics. The battles are in the voting booth. The prize in the cultural war is the hearts, minds and souls of the children. The Atheistic liberal news media greatly influences both domestic and foreign policy by constantly reporting only bad news about Christians, Conservatives and Republicans and only good news about atheists, liberals and democrats. The agenda of the Atheistic liberal news media is to promote evolution, extreme environmentalism, socialism, feminism, pornography, abortion, adultery, homosexuality and the Atheistic Lifestyle by having democrats in control of government.
-----------------------------------
Gramm-Leach-Bliley Act
From Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999, is an Act of the United States Congress which repealed part of the Glass-Steagall Act of 1933, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services.
The Gramm-Leach-Bliley Act (GLBA) allowed commercial and investment banks to consolidate. For example, Citibank merged with Travelers Group, an insurance company, and in 1998 formed the conglomerate Citigroup, a corporation combining banking and insurance underwriting services under brands including Smith-Barney, Shearson, Primerica and Travelers Insurance Corporation. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act and the Bank Holding Company Act by combining insurance and securities companies, if not for a temporary waiver process [1]. The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the financial services industry.
Remaining restrictions
Crucial to the passing of this Act was an amendment made to the GLBA, stating that no merger may go ahead if any of the financial holding institutions, or affiliates thereof, received a "less than satisfactory [sic] rating at its most recent CRA exam", essentially meaning that any merger may only go ahead with the strict approval of the regulatory bodies responsible for the Community Reinvestment Act (CRA).[9]. This was an issue of hot contention, and the Clinton Administration stressed that it "would veto any legislation that would scale back minority-lending requirements." [10]
There is no question the GLBA contributed to the Financial Disaster of 2008.
The influence of big profits by unregulated investment institutions was too great a temptation for regulated banks (Glass-Steagall Act) and Republicans.
The GLBA made the problem worse, but the heart of the problem leads back to the Community Reinvestment Act, a socialistic program passed by democrats in 1977 in the Carter democratic administration and strengthened in 1995 in the Clinton democratic administration.
There is no question Republicans yielded to the temptation of the money, but I would assess the blame as 80% democrats and 20% Republicans.
Democrats are unfit for running the government because they enact socialistic/Atheistic legislation that create financial and moral messes.
It is unfortunate that the Atheistic Liberal News and Entertainment Media provides propaganda to help get democrats elected to control the government.
There is a cultural war in America between Christians and Atheists. This war is being fought on the battlefield of politics. The battles are in the voting booth. The prize in the cultural war is the hearts, minds and souls of the children. The Atheistic liberal news media greatly influences both domestic and foreign policy by constantly reporting only bad news about Christians, Conservatives and Republicans and only good news about atheists, liberals and democrats. The agenda of the Atheistic liberal news media is to promote evolution, extreme environmentalism, socialism, feminism, pornography, abortion, adultery, homosexuality and the Atheistic Lifestyle by having democrats in control of government.
-----------------------------------
Gramm-Leach-Bliley Act
From Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999, is an Act of the United States Congress which repealed part of the Glass-Steagall Act of 1933, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services.
The Gramm-Leach-Bliley Act (GLBA) allowed commercial and investment banks to consolidate. For example, Citibank merged with Travelers Group, an insurance company, and in 1998 formed the conglomerate Citigroup, a corporation combining banking and insurance underwriting services under brands including Smith-Barney, Shearson, Primerica and Travelers Insurance Corporation. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act and the Bank Holding Company Act by combining insurance and securities companies, if not for a temporary waiver process [1]. The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the financial services industry.
Remaining restrictions
Crucial to the passing of this Act was an amendment made to the GLBA, stating that no merger may go ahead if any of the financial holding institutions, or affiliates thereof, received a "less than satisfactory [sic] rating at its most recent CRA exam", essentially meaning that any merger may only go ahead with the strict approval of the regulatory bodies responsible for the Community Reinvestment Act (CRA).[9]. This was an issue of hot contention, and the Clinton Administration stressed that it "would veto any legislation that would scale back minority-lending requirements." [10]
Thursday, February 19, 2009
Information Web Links
Here is some links to the facts about the Economic Disaster of 2008. From the start of the problem to the end.
These links show how the socialistic - racially biased Community Reinvestment Act was imposed on Capitalism by democrats.
http://en.wikipedia.org/wiki/Fannie_Mae
http://gatewaypundit.blogspot.com/2008/09/bush-called-for-reform-of-fannie-mae.html
http://www.youtube.com/watch?v=_MGT_cSi7Rs
http://www.youtube.com/watch?v=RAuOEdttjZQ
http://iusbvision.wordpress.com/2008/09/21/in-plain-english-how-did-the-biggest-financial-scandal-in-history-happen/
http://www.foxnews.com/story/0,2933,432501,00.html
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&partner=permalink&exprod=permalink
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
http://online.wsj.com/article/SB122212948811465427.html
http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac/
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0
http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=306370789279709
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091102841.html
http://seekingalpha.com/article/95436-the-u-s-on-the-precipice
http://www.opensecrets.org/news/2008/09/brothers-grim-is-lehman-next.html
http://directorblue.blogspot.com/2008/09/jamie-gorelick-mistress-of-disaster.html
The Republicans trying to stop it,
http://hotair.com/archives/2008/09/16/whose-policies-led-to-the-credit-crisis/
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B74DABC67-B059-465E-AF68-6DB22EB961CD%7D
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=2
These links show how the socialistic - racially biased Community Reinvestment Act was imposed on Capitalism by democrats.
http://en.wikipedia.org/wiki/Fannie_Mae
http://gatewaypundit.blogspot.com/2008/09/bush-called-for-reform-of-fannie-mae.html
http://www.youtube.com/watch?v=_MGT_cSi7Rs
http://www.youtube.com/watch?v=RAuOEdttjZQ
http://iusbvision.wordpress.com/2008/09/21/in-plain-english-how-did-the-biggest-financial-scandal-in-history-happen/
http://www.foxnews.com/story/0,2933,432501,00.html
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&partner=permalink&exprod=permalink
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
http://online.wsj.com/article/SB122212948811465427.html
http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac/
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0
http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=306370789279709
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091102841.html
http://seekingalpha.com/article/95436-the-u-s-on-the-precipice
http://www.opensecrets.org/news/2008/09/brothers-grim-is-lehman-next.html
http://directorblue.blogspot.com/2008/09/jamie-gorelick-mistress-of-disaster.html
The Republicans trying to stop it,
http://hotair.com/archives/2008/09/16/whose-policies-led-to-the-credit-crisis/
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B74DABC67-B059-465E-AF68-6DB22EB961CD%7D
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=2
Wednesday, February 18, 2009
Credit Default Swaps
Credit Default Swaps
The idea of credit default swaps was that an insurance policy could be bought so that if a stock went down, the insurance policy would cover the loses.
The idea of all insurance is that if something bad happens the insurance policy will pay for the cure for the problem.
The assumption of every type of insurance is that only a small fraction of the stocks will go down, or that only a small fraction of the people have a problem.
The Economic Disaster of 2008 has proven insurance does not work if a large fraction of the stocks go down. Insurance will not work if a large fraction of the people expect to get anything from insurance.
Insurance and socialism are closely linked, because they are a way to avoid personal responsibility. You can take a greater risk if you have the safety net of insurance.
People must return to personal responsibility.
The best way to achieve personal responsibility is by following Christian Principles, but that requires accepting Jesus Christ as Lord/Savior and committing to following the commandments/doctrines of the Bible.
The idea of credit default swaps was that an insurance policy could be bought so that if a stock went down, the insurance policy would cover the loses.
The idea of all insurance is that if something bad happens the insurance policy will pay for the cure for the problem.
The assumption of every type of insurance is that only a small fraction of the stocks will go down, or that only a small fraction of the people have a problem.
The Economic Disaster of 2008 has proven insurance does not work if a large fraction of the stocks go down. Insurance will not work if a large fraction of the people expect to get anything from insurance.
Insurance and socialism are closely linked, because they are a way to avoid personal responsibility. You can take a greater risk if you have the safety net of insurance.
People must return to personal responsibility.
The best way to achieve personal responsibility is by following Christian Principles, but that requires accepting Jesus Christ as Lord/Savior and committing to following the commandments/doctrines of the Bible.
Moral Hazard
Moral Hazard
The phrase moral hazard is now being used in the discussion of the Financial Disaster of 2008.
The moral hazard is that if you bailout a bank that created its own problems, what is to prevent it from doing the same thing again.
This leads to a similar problem in contracting called "implied consent". If you fail to warn a company of the first infraction of the contract, there is an implied consent that the infraction provision of the contract was not important and can not be used for breach of contract later on.
By bailing out or infusing capital into banks the government has crossed over into socialism.
Moral Hazard is the problem with socialism. If you give health care/welfare to a person that created their own problems, what is to prevent them from doing the same thing again.
The reality is that when you do offer health care/welfare or bailouts, you are giving implied consent to the evil that was being done to create the problems.
In the economic world Moral Hazard was killed by saying that the economy would die if the bailout was not done.
In the social world Moral Hazard is killed by saying the person will die if the heath care/welfare in not provided.
There is no good thing (cure) that can be done after sin has been begun, just bad choices.
By following Christian Principles the sin can be prevented, but that requires accepting Jesus Christ as Lord/Savior and committing to following the commandments/doctrines of the Bible.
The phrase moral hazard is now being used in the discussion of the Financial Disaster of 2008.
The moral hazard is that if you bailout a bank that created its own problems, what is to prevent it from doing the same thing again.
This leads to a similar problem in contracting called "implied consent". If you fail to warn a company of the first infraction of the contract, there is an implied consent that the infraction provision of the contract was not important and can not be used for breach of contract later on.
By bailing out or infusing capital into banks the government has crossed over into socialism.
Moral Hazard is the problem with socialism. If you give health care/welfare to a person that created their own problems, what is to prevent them from doing the same thing again.
The reality is that when you do offer health care/welfare or bailouts, you are giving implied consent to the evil that was being done to create the problems.
In the economic world Moral Hazard was killed by saying that the economy would die if the bailout was not done.
In the social world Moral Hazard is killed by saying the person will die if the heath care/welfare in not provided.
There is no good thing (cure) that can be done after sin has been begun, just bad choices.
By following Christian Principles the sin can be prevented, but that requires accepting Jesus Christ as Lord/Savior and committing to following the commandments/doctrines of the Bible.
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