I received a comment from a liberal friend commenter on my blog. He suggested that I answer his questions in a post. Generally, I wouldn't do that, but I think it is a fair request given the critical problem we face today. I can't possible address all the issues, but here are some thoughts. They may sound a little disjointed but I'm responding to various issues we've been discussing.
I'm going to answer your comment specifically because I'm still working on an extended evaluation piece to post regarding liberalism and conservatism. You wonder how McCain proposes to lower taxes. I hate to state the obvious but the very simple answer is to start severely cutting earmarked and other unnecessary spending. Why is that not an option? This whole problem is the function of government attempting to solve an issue by dictate, without using capitalistic values, when it is antithetical to common sense.
Barney Frank, during the Carter presidency, forced the passage of a "bank loan" change that required banks to eliminate red lining. The Franks bill threatened banks with substantial fines if banks who did not loan to "questionable" borrowers which, I might point out, put the money of hard working depositors at risk....but Franks didn't care about them…only the "poor."
I know that was a laudable effort, but when you force banks or any private organization to act against centuries of sound judgment, you invite disaster. Then, to keep this brief, the banks were forced by Clinton to do even more in providing loans with the pressure of Fannie Mae and Freddie Mac. Clinton appointed Franklin Raines and Jim Jackson to head the quazi-government agencies. Raines and Jackson cooked their books to inflate the value of the Fannie and Freddie equity to meet goals so they could give themselves big bonuses for "meeting" the goals which they did only on paper. Raines got 90 million dollars in 6 years, with his bonuses.
The Raines-inflated loans values were then packaged and sold them to investment firms at those inflated values. Then when the borrowers who really couldn't afford the loans had to confront their first interest adjustments a couple of years ago, the foreclosures started. Then the second adjustment hit and the foreclosures ballooned. Suddenly houses valued at $500,000 were suddenly worth only $350,000 or less and that $150,000 simply evaporated leaving banks and investors holding the empty bags. The packaged mortgage investment became almost valueless. Homebuyers, who the Franks model, was supposed to help were forced into foreclosure.
I believe that attempting to force government solutions to solve poverty, when those solutions fly in the face of logical reality, as Franks demanded, is insanity. If you want to help the poor you don't sell them houses that you know that they will not be able to afford them when the interest rate goes up. Greedy mortgage brokers were allowed by F-Mae and F-Mac to loan up to 125% of the value of a house….that's crazy. In 2002, Bush tried to get legislation passed that would have protected against the "ARM" landmine that finally exploded. Then McCain did the same thing in 2005 and Democrats stopped both changes in the law to address just this very critical issue. "It would hurt the poor." they cried. Well, that's exactly what it has done by Democrats not allowing the correcting the problem it has hurt the poor worse than ever? It has hurt not only the poor but every American.
With this said, I'm opposed to the bailout. It's like not allowing a child not to suffer the consequences for their choices. No matter how many times you tell them…they don't listen and the only way to teach them is to have them make their decisions and suffer the consequences. The problem is that 60 to 70 per cent of Americans own stocks and they're watching their retirements shrink. And now, the very people who caused the debacle are being haled at the saviors…ala Barak Obama…who just happens to have Raines and Jackson as financial advisers…it's sick.
Regarding McCain. What are you proposing, that we continue raising taxes during a credit crunch? It simply isn't logical. Forcing taxpayers to pay for the greed of others is wrong. The UK Telegraph yesterday suggests that a stock market crash could cause a 33% loss in US stock value. Maybe we need to have that happen to learn our lessons. Forcing private industry to face the music like children should do. Maybe it will also force Democrats to realize that to help the poor, you don't put them on perpetual assistance. Provide jobs and demand that they take care of themselves. It is never a solution…with the exception of those who can't really help themselves. But that's not what this is about. Rich capitalists are the catalystists for job creation...punish them and you punish job creation....dumb, dumb, dumb!
Rest assured that there were many Republicans who were also greedy, and they're "earmarks" lost them the election in 2006. They paid for abandoning core fundamental conservative values. Did you know that the Democrats are trying to load up the bailout plan with additional earmark spending…more insanity.
The government solution should be to let the market handle this by backing a plan to help the banks through an insurance system….not bail them out. Let the market find it's level. If it deflates some values...is our punishment for our own greed and the botched effort to unwisely try bail out the poor in an impossible gush of bleeding heart liberal blood. There simply was not realism in any of this...and the same is true in 90 per cent of the programs for the poor...absolutely no accountability for what the politicians have passed. I'm not talking about the programs themselves...but the accountability of the politicians who passed them. They should be held to pay the price.
Lonely, just think of this. The bail out is estimated to be 700 billion dollars…which will explode to double that. Right now we send 700 billion dollar per year to foreign countries for oil when we have oil, coal natural gas, oil shale right here in America. There's enough to provide all our own oil and gas and keep our money at home for years to come while were discovering altenatives...not wind, solar etc which are lost causes, but because environmentalists have demonized carbon fuel, and Al Gore saying we need to eliminate carbon fuel in 10 years, which is an idea to stupid to discuss, we can't even work on clean coal and oil solutions. It's idiocy of the first order. As I perpetually say, THE ENERGY CRISIS IS NOT A CRISIS OF ENERGY IS A CRISES OF THE STORAGE OF ENERGY!!!!!!!!!!! Coal, oil and natural gas are simply systems to store energy...we need to find a way to store energy collected....we haven't found that system yet.
I detest Huckabee. I don't like anything about him. Although I am Christian, I consider him to be sleazy at best and very disingenuous and that's even too much praise for him from me. Considering the absolute critical nature of the economic crisis, Romney sure looks like a missed opportunity with his understanding of things financial. Unfortunately, my preferred candidate wasn't on either ballot. My December 3, 2007 and January 4, 2008 posts give you my opinion of Huckabee.
If Obama is elected he will raise capital gains taxes and corporate taxes…he can't help himself. He is a very liberal Democrat, like the scorpion, it is in his nature. At the very time we need to have capital in the private markets to allow for expansion of the economy, that's how jobs are created, Obama will yank it out to give to the least efficient system using money in existence - GOVERNEMENT! No government taxes have Never created an economic boom…except when they are cut. Kennedy did it, Reagan did it and Clinton, at the demand of a Republican congress reluctantly did it by force.
And by the way, I wouldn't trust NBC and Brian Williams with my dog's turd. NBC is by far the most liberal and in the tank for Obama news organization in the mainstream media and has become a blatant propagandist. They aren't even trying to be balanced any more. As a former journalist, I can't believe the bias in the media. True, old fashioned journalism is DEAD.
Finally, we are on a new planet. America has never faced this kind of economic problem before. Not even during the depression. Increased taxes are not the answer. Average Americans own more stock than ever and in higher percentages than ever. So the impact goes deep into the soul of the American psyche. But the only real medicine is to get out of this by rethinking our spending and rejection of accessing our own energy sources. We need new thinking….not the same old tired Democrat more government, higher taxes solutions to everything, as Obama is proposing. I'll grant you that McCain is not much better, but at least he has some life experience which the debate demonstrated Obama doesn't….especially when it comes to economic problems and worse on foreign affairs…which are a whole other issue.