U.S. Economy: The Philosopher's Stone

Stupid Socialists think Peter Schiff is one of them

The stupid socialists over at 'Crooks and Liars' are congratulating Peter Schiff on correctly predicting the market crash. John Amato has linked to a video 'Peter Schiff was Right', where Peter's correct predictions on the market crash are shown, and he then goes on to write:

As C&Lers know, I actually watched many of Schiff's appearances on the Conservative-dominated stock shows and indeed all the free-market, screw-the-middle-class blowhards routinely laughed at him as he tried to bring some reality to their petty world. Things were terrible and nothing their cheerleading could do would change any of it ... as we've seen.

What John Amato doesn't understand, when he ridicules the supposedly "free market" guys who laughed at Peter Schiff, is that Peter Schiff is the most free market guy there is. His dad went to prison to protest the income tax. Peter Schiff believes that Obama's socialist policies will further destroy America's economy:





His main criticism of the Bush administration is that it has increased the size of government, and bailed out industries, rather than adhering to the principle of laissez faire and not intervening in the economy. He constantly criticizes America's government policies for being too socialist, as can be seen in the 4:10 mark of this video:



and at the 8:38 mark of this video:



For the socialists at 'Crooks and Liars' to pretend that Peter Schiff is one of them, and make fun of people who believe in the free market -as if Peter Schiff is opposed to the free market, just shows how incredibly ignorant and idiotic they are.

Everything I Want to Do Is Illegal

Here is a great article showing the flaw of using coercive collectivism (aka socialism aka big government) to manage society:

source

Everything I Want to Do Is Illegal
JOEL SALATIN / Acres v.33, n.9, Sept 2003 1sep03



Everything I want to do is illegal. As if a highly bureaucratic regulatory system was not already in place, 9/11 fueled renewed acceleration to eliminate freedom from the countryside. Every time a letter arrives in the mail from a federal or state agriculture department my heart jumps like I just got sent to the principal’s office.

And it doesn’t stop with agriculture bureaucrats. It includes all sorts of government agencies, from zoning, to taxing, to food inspectors. These agencies are the ultimate extension of a disconnected, Greco-Roman, Western, egocentric, compartmentalized, reductionist, fragmented, linear thought process.



ON-FARM PROCESSING

I want to dress my beef and pork on the farm where I’ve coddled and raised it. But zoning laws prohibit slaughterhouses on agricultural land. For crying out loud, what makes more holistic sense than to put abattoirs where the animals are? But no, in the wisdom of Western disconnected thinking, abattoirs are massive centralized facilities visited daily by a steady stream of tractor trailers and illegal alien workers.

But what about dressing a couple of animals a year in the backyard? How can that be compared to a ConAgra or Tyson facility? In the eyes of the government, the two are one and the same. Every T-bone steak has to be wrapped in a half-million dollar facility so that it can be sold to your neighbor. The fact that I can do it on my own farm more cleanly, more responsibly, more humanely, more efficiently, and in a more environmentally friendly manner doesn’t matter to the government agents who walk around with big badges on their jackets and wheelbarrow-sized regulations tucked under their arms.

OK, so I take my animals and load them onto a trailer for the first time in their life to send them up the already clogged interstate to the abattoir to await their appointed hour with a shed full of animals of dubious extraction. They are dressed by people wearing long coats with deep pockets with whom I cannot even communicate. The carcasses hang in a cooler alongside others that were not similarly cared for in life. After the animals are processed, I return to the facility hoping to retrieve my meat.

When I return home to sell these delectable packages, the county zoning ordinance says that this is a manufactured product because it exited the farm and was reimported as a value-added product, thereby throwing our farm into the Wal-Mart category, another prohibition in agricultural areas. Just so you understand this, remember that an on-farm abattoir was illegal, so I took the animals to a legal abattoir, but now the selling of said products in an on-farm store is illegal.

Our whole culture suffers from an industrial food system that has made every part disconnected from the rest. Smelly and dirty farms are supposed to be in one place, away from people, who snuggle smugly in their cul-de-sacs and have not a clue about the out-of-sight-out-of-mind atrocities being committed to their dinner before it arrives in microwaveable, four-color-labeled, plastic packaging. Industrial abattoirs need to be located in a not-in-my-backyard place to sequester noxious odors and sights. Finally, the retail store must be located in a commercial district surrounded by lots of pavement, handicapped access, public toilets and whatever else must be required to get food to people.

The notion that animals can be raised, processed, packaged, and sold in a model that offends neither our eyes nor noses cannot even register on the average bureaucrat’s radar screen — or, more importantly, on the radar of the average consumer advocacy organization. Besides, all these single-use megalithic structures are good for the gross domestic product. Anything else is illegal.



ON-FARM SEMINARS & ‘AGRITAINMENT’

In the disconnected mind of modem America, a farm is a production unit for commodities — nothing more and nothing less. Because our land is zoned as agricultural, we cannot charge school kids for a tour of the farm because that puts us in the category of "Theme Park." Anyone paying for infotainment creates "Farmadisney," a strict no-no in agricultural zones.

Farms are not supposed to be places of enjoyment or learning. They are commodity production units dotting the landscape, just as factories are manufacturing units and office complexes are service units. In the government’s mind, integrating farm production with recreation and meaningful education creates a warped sense of agriculture.

The very notion of encouraging people to visit farms is blasphemous to an official credo that views even sparrows, starlings and flies as disease threats to immunocompromised plants and animals. Visitors entering USDA-blessed production unit farms must run through a gauntlet of toxic sanitation dips and don moonsuits in order to keep their germs to themselves. Indeed, people are viewed as hazardous foreign bodies at Concentrated Animal Feeding Operations (CAFOs).

Farmers who actually encourage folks to come to their farms threaten the health and welfare of their fecal concentration camp production unit neighbors, and therefore must be prohibited from bringing these invasive germ-dispensing humans onto their landscape. In the industrial agribusiness paradigm, farms must be protected from people, not to mention free-range poultry.

The notion that animals and plants can be raised in such a way that their enhanced immune system protects them from kindergarteners’ germs, and that the animals actually thrive when marinated in human attention, never enters the minds of government officials dedicated to protecting precarious production units.



COLLABORATIVE MARKETING

I have several neighbors who produce high-quality food or crafts that complement our own meat and poultry. Dried flower arrangements from one artisan, pickles from another, wine from another, and first-class vegetables from another. These are just for starters.

Our community is blessed with all sorts of creative artisans who offer products that we would love to stock in our on-farm retail venue. Doesn’t it make sense to encourage these customers driving out from the city to be able to go to one farm to do their rural browsing/ purchasing rather than drive all over the countryside? Furthermore, many of these artisans have neither the desire nor time to deal with patrons one-on-one. A collaborative venue is the most win-win, reasonable idea imaginable — except to government agents.

As soon as our farm offers a single item — just one — that is not produced here, we have become a Wal-Mart. Period. That means a business license, which isbasically another layer of taxes on our gross sales. The business license requires a commercial entrance, which on our country road is almost impossible to acquire due to sight-distance requirements and width regulations. Of course, zoning prohibits businesses in our agricultural zones. Remember, people are supposed to be kept away from agricultural areas — people bring diseases.

Even if we could comply with all of the above requirements, a retail outlet carries with it a host of additional regulations. We must provide designated handicapped parking, government-approved toilet facilities (our four household bathrooms in the two homes located 50 feet away from the retail building do not count) — and it can’t be a composting toilet. We must offer x-number of parking spaces. Folks, it just goes on and on, ad nauseum, and all for simply trying to help a neighbor sell her potatoes or extra pumpkins at Thanksgiving. I thought this was the home of the free. In most countries of the world, anyone can sell any of this stuff anywhere, and the hungering hordes are glad to get it, but in the great U.S. of A we’re too sophisticated to allow such bioregional commerce.



EMPLOYING LOCAL YOUNGSTERS & INTERNS

Any power tool — including a cordless screwdriver — cannot be operated by people under the age of 18. We have lots of requests from folks wanting to come as interns, but what do we call them? The government has no category for interns or neighbor young people who just want to learn and help out.

We’d love to employ all the neighboring young people. To our child-awning and worshiping culture, the only appropriate child activity is recreation, sitting in a desk, or watching TV. That’s it. That’s the extent of what children are good for. Anything else is abusive and risky.

Then we wonder why these kids grow up unmotivated and bored with life. Our local newspaper is full of articles and letters to the editor lamenting the lack of things for young people to do. Let me suggest a few things: digging postholes and building a fence, weeding the garden, planting some tomatoes, splitting some wood, feeding the chickens, washing eggs, pruning grapevines, milking the cow, building a compost pile, growing some earthworms.

These are all things that would be wonderfully meaningful work experience for the youth of our community, but you can’t simply employ people anymore. A host of government regulatory paperwork surrounds every "could you come over and help us . . . ?" By the time an employer complies with every Occupational Safety & Health Administration requirement, posts every government bulletin requirement, with-holds taxes, and shoulders Unemployment Compensation burdens and medical and child safety regulations — he or she can’t hire anybody legally or profitably.

The government has no pigeonhole for this: "I’m a 17-year-old home-schooler, and I want to learn how to farm. Could I come and have you mentor me for a year?"

What is this relationship? A student? An employee? If I pay a stipend, the government says he’s an employee. If I don’t pay, the Fair Labor Standards board says it’s slavery, which is illegal. Doesn’t matter that the young person is here of his own volition and is happy to live in a tee-pee. Housing must be permitted and up to code. Enough already. What happened to the home of the free?



BUILD A HOUSE THE WAY I WANT

You would think that if I cut the trees, mill the logs into lumber, and build the house on my own farm, I could make it however I wanted to. Think again. It’s illegal to build a house less than 900 square feet. Period. Doesn’t matter if I’m a hermit or the father of 20. The government agents have decreed, in their egocentric wisdom, that no human can live in anything less than 900 square feet.

Our son got married last year and wanted to build a small cottage on the farm, which he now oversees for the most part. Our new saying is, "He runs the farm, and I just run around." The plan was to do what Mom and Dad did for Teresa and I — trade houses when children come. That way our empty nest downsizes, and the young people can upsize in the main family farmhouse. Sounds reasonable and environmentally sensitive to me. But no, his little honeymoon cottage — or our retirement shack — had to be a 900-square-foot Taj Mahal. A state-of-the-art accredited composting toilet to avoid the need for a septic system and sewer leach field was denied.

When the hillside leach field would not meet agronomic standards and we had to install it in the floodplain, I asked the health department bureaucrat why. He said that essentially the only approvable leach fields now are alongside creeks and streams, because they are the only sites that offer dark-enough colored soils. Sounds like real environmental steward-ship, doesn’t it?

Look, if I want to build a yurt of rabbit skins and go to the bathroom in a compost pile, why is it any of the government’s business? Bureaucrats bend over back-wards to accredit, tax credit, and offer money to people wanting to build pig city-factories or bigger airports. But let a guy go to his woods, cut down some trees, and build himself a home, and a plethora of regulatory tyrants descend on the project to complicate, obfuscate, irritate, frustrate, and virtually terminate. I think it’s time to eradicate some of these laws and the piranhas who administer them.



OPTING OUT OF THE SYSTEM

I don’t ask for a dime of government money. I don’t ask for government accreditation. I don’t want to register my animals with a global positioning tattoo. I don’t want to tell officials the names of my constituents. And I sure as the dickens don’t intend to hand over my firearms. I can’t even use the "U" word.

On every side, our paternalistic culture is tightening the noose around those of us who just want to opt out of the system — and it is the freedom to opt out that differentiates tyrannical and free societies.

How a culture deals with its misfits reveals its strength. The stronger a culture, the less it fears the radical fringe. The more paranoid and precarious a culture, the less tolerance it offers.

When faith in our freedom gives way to fear of our freedom, then silencing the minority view becomes the operative protocol. The Native Americans silenced after Little Big Horn simply wanted to

worship in their beloved Black Hills, use traditional medicinal herbs to cure diseases, educate their children in the ways of their ancestors, and live in portable homes rather than log cabins. By that time these people represented absolutely no threat to the continued Westernization and domination of the North American continent by people who educated, vocated, medicated, worshiped, and habitated differently.

But coexistence was out of the question. Just like the forces that succeeded in making it illegal for me to use the "O" word, the Western success at Wounded Knee quashed the little guy. What does the Organic Trade Association have to fear from me using the "O" word? If society really wants government certification, my little market share will continue to deteriorate into oblivion. If, however, the certification effort represents a same-old, same-old power grab by the elitists to exterminate the fringe play-ers, it is merely another example of fear replacing faith.

Faith in what? Faith in diversity. Faith in each other. Faith in people’s ability to self-educate, thereby making informed decisions. Faith in seekers to find answers. Faith in marketplace dynamics to reward integrity and not cheating. Faith in Creation to heal. Faith in healthy plants and animals to withstand epizootics. Faith in earthworms to increase fertility. Faith in communities to function efficiently and honorably without centralized beltway interference. Faith in Acres U.S.A. to arrive every month with a cornucopia of insight and information.

Our culture’s current fear of bioterrorism shows the glaring weakness of a centralized, immunodeficient food system. This weakness leads to fear. Demanding from on high that we irradiate all food, register every cow with government agencies, and hire more inspectors does not show strength. It shows fear.

Indeed, official policy views all these minority production and marketing systems that have been shown faithful over the centuries to be instead things that threaten everyone and everything. As a teepee dwelling, herb healing, home educating, people loving, compost building retail farmer, I represent the real answers, but real answers must be eradicated by those who seek to build their power and fortunes on a lie — the lie being that genetic integrity can be maintained when corporate scientists begin splicing DNA. The lie that, as Charles Walters says, toxic rescue chemistry is better than a balanced biological bath. The lie that farms are disease-prone, unfriendly, inhumane places and should be zoned away from people.

Those of us who would aspire to opt out — both consumers and producers — must pray for enough cleverness to circumvent the system until the system cannot sustain itself. Cycles happen. Because things are this way today does not mean they will be this way next year. Hurrah for that.

Often, the greatest escapes occur at the moment the noose becomes tightest. I’m feeling the rope, and it’s not very loose. Society seems bound and determined to hang me for everything I want to do. But there’s power in truth. And for sure, surprises are in store that may make

society shake its collective head and begin to question some seemingly unalterable doctrines. Doctrines like the righteousness of the bureaucrat. The sanctity of government research. The protection of the Food Safety and Inspection Service. The helpfulness of the USDA.

When that day comes, you and I can graciously offer our society honest food, honest ecology, honest stewardship. May the day come quickly.

We're all Austrians now

Peter Schiff, Ron Paul's economic advisor, was ridiculed in 2006-2007 for his predictions of a recession and massive decline in stock values by a financial media which is mostly filled with followers of the Keynesian school of economics who tout the current model of central banking control of the economy. Now that his predictions of a massive bust have borne true, the financial media and its Keynesian acolytes have been forced to bow down to the wisdom of the Austrian economic philosophy.

Peter Schiff Was Right 2006 - 2007



Here is Schiff again, in November 2008, being treated with the veneration that his prescience has earned him:

Kill the CRA

This is a great article from the Investor's Business Daily, urging the repeal of the CRA. The CRA (the Community Reinvestment Act) is a federal regulation that is doing tremendous harm to the economy, and is on the top of the list of government regulations and institutions that should to be abolished alongside the Federal Reserve and Fannie Mae/Freddie Mac.

Stop Covering Up And Kill The CRA

By INVESTOR'S BUSINESS DAILY

Regulation: The Community Reinvestment Act is to blame for the financial crisis, but it so powerfully serves Democrats' interests that they'll do anything to protect it — including revising history.

The CRA coerces banks into making loans based on political correctness, and little else, to people who can't afford them. Enforced like never before by the Clinton administration, the regulation destroyed credit standards across the mortgage industry, created the subprime market, and caused the housing bubble that has now burst and left us with the worst housing and banking crises since the Great Depression.

The CRA should be abolished, along with the government-sponsored enterprises that fueled the secondary market for subprimes — under pressure from Clinton, who ordered HUD to set quotas for "affirmative action" lending at Fannie Mae and Freddie Mac.

But powerful Democrats in Washington want to protect the act — along with Fannie and Freddie — and spin the subprime scandal as the result of too little regulation, not too much.

"Repealing or weakening the CRA would be a mistake," warns Senate Banking Committee Chairman Chris Dodd, D-Conn., who argues that the CRA should be strengthened.

Dodd, the top recipient of Fannie donations and himself a beneficiary of a sweetheart mortgage brokered by a subprime lender, recently invited one of Clinton's top enforcers of the CRA to testify.

"The notion that CRA has caused this problem is a pernicious thought," said former Comptroller of the Currency Gene Ludwig. "These are not truthful statements. The CRA has helped to create a better and sounder world for finance, not the opposite."

Dead wrong. But the mainstream media believe it, and have attacked those, including this paper, who dare to tell the truth about the crisis. Already the debacle has erased $13 trillion in wealth, while putting taxpayers on the hook for up to $8 trillion in bailouts.

"The latest salvo from conservatives began via a Sept. 15 editorial in Investor's Business Daily, titled 'The Real Culprits In This Meltdown,' " grumbled a column distributed by Scripps Howard News Service. "Its editorial blamed President Clinton for today's mess."

As we said, Clinton beefed up the CRA and used it to force banks to subsidize poor communities with close to $1 trillion in high-risk loans and other commitments that flouted underwriting rules.

Yet, somehow, these media-driven myths keep getting in the way of actual facts, such as:

Fact: The 1977 law was only lightly enforced until Clinton added teeth to it in 1994 and launched an anti-redlining campaign against banks, led by Ludwig, Housing Secretary Henry Cisneros (and later Andrew Cuomo) and Attorney General Janet Reno that lasted into this decade.

Minority homeownership rates, which had been flat, began a steep rise in 1995, and home prices soon followed, stoked by easier lending. Numerous bank officials complain that they still feel pressured by CRA regulators to make inner-city loans they know are at great risk of defaulting.

Myth: The CRA could not have led to financial Armageddon, because the overwhelming share of subprime mortgages came from lenders that were not banks and not regulated by the CRA.

Fact: Nearly 4 in 10 subprime loans between 2004 and 2007 were made by CRA-covered banks such as Washington Mutual and IndyMac. And that doesn't include loans made by subprime lenders owned by banks, which were in effect covered by the CRA.

Last year, when the bubble burst, bank subprime loans totaled $142 billion, dwarfing those made by lenders.

What's more, the biggest subprime lender, Countrywide, while not subject to the law, still came under federal pressure to make risky loans in minority communities.

Clinton created a separate department at HUD to police "fair lending" at Fannie and Freddie and also at lenders like Countrywide, which became Fannie's biggest client. In 1994, Countrywide became the nation's first mortgage lender to sign with HUD a "Declaration of Fair Lending Principles and Practices."

As a result, Countrywide made more loans to minorities than any other lender — and not surprisingly, was one of the first lenders swamped by loan defaults.

Other lenders felt the heat from Reno's Justice Department, which prosecuted them for failing to operate enough branches in black neighborhoods. Reno put the entire banking industry on notice about the CRA and her enforcement program.

Myth: The CRA did not force anyone to do subprime loans or take excessive risks.

Fact: Subprime loans were the vehicle banks used to satisfy CRA compliance, and Clinton and his regulators encouraged their use. Before Clinton took office, subprimes were virtually unheard of. By the time he left, they made up more than 9% of the market for mortgage originations. Today they're 20%.

"It's instructive to go back to the early stages of the subprime market, which has essentially emerged out of the CRA," ex-Fed chief Alan Greenspan said in recent testimony on the roots of the crisis.

Clinton pushed banks to grant mortgages to minorities with poor credit by using "flexible" underwriting standards — or risk being branded racist. Rules were weakened to the point where welfare and unemployment checks were accepted as qualifying income.

Myth: Greedy investment bankers, who securitized and sold subprime mortgages, drove us to the credit crisis, not government.

Fact: Clinton's regulatory policies led to the creation of this new risk on Wall Street. His CRA amendments created the subprime market, and only after he pressured Fannie and Freddie to socialize the risk and guarantee the profit from the subprime loans did Wall Street get involved in a big way.

The exotic securitizations that have gotten so much of the blame were a symptom, not the cause, of the crisis.

The architects of the crisis want to divert attention from their own culpability by blaming the markets rather than their own regulations mandating that banks make high-risk loans based on race.

In fact, regulations had almost everything to do with this mess. And instead of strengthening them to atone for the alleged "sins of capitalism," we should be abolishing them.

Two bills in the House would be a good place to start. HR 7264, which has nine co-sponsors, would repeal the CRA. And HR 7094, with 17 co-sponsors, would dissolve Fannie Mae and Freddie Mac.

During the last severe slump, President Reagan deregulated the economy, saying: "Government is not the solution to the problem; government is the problem." He's as right today as he was then.

Brave Marine Speaks About Ron Paul, Taliban, Blackwater

Ron Paul got more donations from active military personnel than all other presidential candidates combined. This shows his foreign policy is the correct one.

There are dozens of videos like this from soldiers, who say Ron Paul is the only one who gets it.

Fed pledges another secret $7.4 Trillion

Bloomberg

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit (Update1)

By Mark Pittman and Bob Ivry

Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

Too Big to Fail

Bloomberg News tabulated data from the Fed, Treasury and Federal Deposit Insurance Corp. and interviewed regulatory officials, economists and academic researchers to gauge the full extent of the government’s rescue effort.

The bailout includes a Fed program to buy as much as $2.4 trillion in short-term notes, called commercial paper, that companies use to pay bills, begun Oct. 27, and $1.4 trillion from the FDIC to guarantee bank-to-bank loans, started Oct. 14.

William Poole, former president of the Federal Reserve Bank of St. Louis, said the two programs are unlikely to lose money. The bigger risk comes from rescuing companies perceived as “too big to fail,” he said.

The government committed $29 billion to help engineer the takeover in March of Bear Stearns Cos. by New York-based JPMorgan Chase & Co. and $122.8 billion in addition to TARP allocations to bail out New York-based American International Group Inc., once the world’s largest insurer. Yesterday, Citigroup Inc. received $306 billion of government guarantees for troubled mortgages and toxic assets. The Treasury Department also will inject $20 billion into the bank after its stock fell 60 percent last week.

“No question there is some credit risk there,” Poole said.

Exposure

Congressman Darrell Issa, a California Republican on the Financial Services Committee, said risk is lurking in the programs that Poole thinks are safe.

“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”

The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.

The Dow Jones Industrial Average through Friday is down 38 percent since the beginning of the year and 43 percent from its peak on Oct. 9, 2007. The S&P 500 fell 45 percent from the beginning of the year through Friday and 49 percent from its peak on Oct. 9, 2007. The Nikkei 225 Index has fallen 46 percent from the beginning of the year through Friday and 57 percent from its most recent peak of 18,261.98 on July 9, 2007. Goldman Sachs Group Inc. is down 78 percent, to $53.31, on Friday from its peak of $247.92 on Oct. 31, 2007, and 75 percent this year.

‘Snookered’


Regulators hope the rescue will contain the damage and keep banks providing the credit that is the lifeblood of the U.S. economy.

Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary.

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”

New Deal

President Franklin D. Roosevelt’s New Deal of the 1930s, when almost 10,000 banks failed and there was no mechanism to bolster them with cash, is the only rival to the government’s current response. The savings and loan bailout of the 1990s cost $209.5 billion in inflation-adjusted numbers, of which $173 billion came from taxpayers, according to a July 1996 report by the U.S. General Accounting Office.

The 1979 U.S. government bailout of Chrysler consisted of bond guarantees, adjusted for inflation, of $4.2 billion, according to a Heritage Foundation report.

The commitment of public money is appropriate to the peril, said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. and a former economist at the New York Fed. U.S. financial firms have taken writedowns and losses of $666.1 billion since the beginning of 2007, according to Bloomberg data.

“This is the worst capital markets crisis in modern history,” Harris said. “So you have the biggest intervention in modern history.”

Federal Lawsuit

Bloomberg has requested details of Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral.

Collateral is an asset pledged to a lender in the event a loan payment isn’t made.

“Some have asked us to reveal the names of the banks that are borrowing, how much they are borrowing, what collateral they are posting,” Bernanke said Nov. 18 to the House Financial Services Committee. “We think that’s counterproductive.”

The Fed should account for the collateral it takes in exchange for loans to banks, said Paul Kasriel, chief economist at Chicago-based Northern Trust Co. and a former research economist at the Federal Reserve Bank of Chicago.

“There is a lack of transparency here and, given that the Fed is taking on a huge amount of credit risk now, it would seem to me as a taxpayer there should be more transparency,” Kasriel said.

$4.4 Trillion

Bernanke’s Fed is responsible for $4.4 trillion of pledges, or 60 percent of the total commitment of $7.4 trillion, based on data compiled by Bloomberg concerning U.S. bailout steps started a year ago.

“Too often the public is focused on the wrong piece of that number, the $700 billion that Congress approved,” said J.D. Foster, a former staff member of the Council of Economic Advisers who is now a senior fellow at the Heritage Foundation in Washington. “The other areas are quite a bit larger.”

The Fed’s rescue attempts began last December with the creation of the Term Auction Facility to allow lending to dealers for collateral. After Bear Stearns’s collapse in March, the central bank started making direct loans to securities firms at the same discount rate it charges commercial banks, which take customer deposits.

In the three years before the crisis, such average weekly borrowing by banks was $48 million, according to the central bank. Last week it was $91.5 billion.

Lehman Failure

The failure of a second securities firm, Lehman Brothers Holdings Inc., in September, led to the creation of the Commercial Paper Funding Facility and the Money Market Investor Funding Facility, or MMIFF. The two programs, which have pledged $2.3 trillion, are designed to restore calm in the money markets, which deal in certificates of deposit, commercial paper and Treasury bills.

“Money markets seized up after Lehman failed,” said Neal Soss, chief economist at Credit Suisse Group in New York and a former aide to Fed chief Paul Volcker. “Lehman failing made a lot of subsequent actions necessary.”

The FDIC, chaired by Sheila Bair, is contributing 20 percent of total rescue commitments. The FDIC’s $1.4 trillion in guarantees will amount to a bank subsidy of as much as $54 billion over three years, or $18 billion a year, because borrowers will pay a lower interest rate than they would on the open market, according to Raghu Sundurum and Viral Acharya of New York University and the London Business School.

Bank Subsidy

Congress and the Treasury have ponied up $892 billion in TARP and other funding, or 12 percent.

The Federal Housing Administration, overseen by Department of Housing and Urban Development Secretary Steven Preston, was given the authority to guarantee $300 billion of mortgages, or about 4 percent of the total commitment, with its Hope for Homeowners program, designed to keep distressed borrowers from foreclosure.

Most of the federal guarantees reduce interest rates on loans to banks and securities firms, which would create a subsidy of at least $6.6 billion annually for the financial industry, according to data compiled by Bloomberg comparing rates charged by the Fed against market interest currently paid by banks.

Not included in the calculation of pledged funds is an FDIC proposal to prevent foreclosures by guaranteeing modifications on $444 billion in mortgages at an expected cost of $24.4 billion to be paid from the TARP, according to FDIC spokesman David Barr. The Treasury Department hasn’t approved the program.

Automakers

Bernanke and Paulson, former chief executive officer of Goldman Sachs, have also promised as much as $200 billion to shore up nationalized mortgage finance companies Fannie Mae and Freddie Mac. The FDIC arranged for $139 billion in loan guarantees for General Electric Co.’s finance unit.

The tally doesn’t include money to General Motors Corp., Ford Motor Co. and Chrysler LLC. Obama has said he favors financial assistance to keep them from collapse.

Paulson told the House Financial Services Committee Nov. 18 that the $250 billion already allocated to banks through the TARP is an investment, not an expenditure.

“I think it would be extraordinarily unusual if the government did not get that money back and more,” Paulson said.

‘We Haircut It’

In his Nov. 18 testimony, Bernanke told the House Financial Services Committee that the central bank wouldn’t lose money.

“We take collateral, we haircut it, it is a short-term loan, it is very safe, we have never lost a penny in these various lending programs,” he said.

A haircut refers to the practice of lending less money than the collateral’s current market value.

Requiring the Fed to disclose loan recipients might set off panic, said David Tobin, principal of New York-based loan-sale consultants and investment bank Mission Capital Advisors LLC.

“If you mark to market today, the banking system is bankrupt,” Tobin said. “So what do you do? You try to keep it going as best you can.”

“Mark to market” means adjusting the value of an asset, such as a mortgage-backed security, to reflect current prices.

Some of the bailout assistance could come from tax breaks in the future. The Treasury Department changed the tax code on Sept. 30 to allow banks to expand the deductions on the losses banks they were buying, according to Robert Willens, a former Lehman Brothers tax and accounting analyst who teaches at Columbia University Business School in New York.

‘Wells Fargo Notice’

Wells Fargo & Co., which is buying Charlotte, North Carolina-based Wachovia Corp., will be able to deduct $22 billion, Willens said. Adding in other banks, the code change will cost $29 billion, he said.

“The rule is now popularly known among tax lawyers as the ‘Wells Fargo Notice,’” Willens said.

The regulation was changed to make it easier for healthy banks to buy troubled ones, said Treasury Department spokesman Andrew DeSouza.

House Financial Services Committee Chairman Barney Frank said he was angry that banks used the money for acquisitions.

“The only purpose for this money is to lend,” said Frank, a Massachusetts Democrat. “It’s not for dividends, it’s not for purchases of new banks, it’s not for bonuses. There better be a showing of increased lending roughly in the amount of the capital infusions” or Congress may not approve the second half of the TARP money.

A Tremendous Speech by Ron Paul

Yesterday, on November 20, 2008, Ron Paul made a tremendous speech before the U.S. House of Representatives:

Statement of Congressman Ron Paul

United States House of Representatives

The Austrians Were Right

Madame Speaker, many Americans are hoping the new administration will solve the economic problems we face. That’s not likely to happen, because the economic advisors to the new President have no more understanding of how to get us out of this mess than previous administrations and Congresses understood how the crisis was brought about in the first place.

Except for a rare few, Members of Congress are unaware of Austrian Free Market economics. For the last 80 years, the legislative, judiciary and executive branches of our government have been totally influenced by Keynesian economics. If they had had any understanding of the Austrian economic explanation of the business cycle, they would have never permitted the dangerous bubbles that always lead to painful corrections.

Today, a major economic crisis is unfolding. New government programs are started daily, and future plans are being made for even more. All are based on the belief that we’re in this mess because free-market capitalism and sound money failed. The obsession is with more spending, bailouts of bad investments, more debt, and further dollar debasement. Many are saying we need an international answer to our problems with the establishment of a world central bank and a single fiat reserve currency. These suggestions are merely more of the same policies that created our mess and are doomed to fail.

At least 90% of the cause for the financial crisis can be laid at the doorstep of the Federal Reserve. It is the manipulation of credit, the money supply, and interest rates that caused the various bubbles to form. Congress added fuel to the fire by various programs and institutions like the Community Reinvestment Act, Fannie Mae and Freddie Mac, FDIC, and HUD mandates, which were all backed up by aggressive court rulings.

The Fed has now doled out close to $2 trillion in subsidized loans to troubled banks and other financial institutions. The Federal Reserve and Treasury constantly brag about the need for “transparency” and “oversight,” but it’s all just talk – they want none of it. They want secrecy while the privileged are rescued at the expense of the middle class.

It is unimaginable that Congress could be so derelict in its duty. It does nothing but condone the arrogance of the Fed in its refusal to tell us where the $2 trillion has gone. All Members of Congress and all Americans should be outraged that conditions could deteriorate to this degree. It’s no wonder that a large and growing number of Americans are now demanding an end to the Fed.

The Federal Reserve created our problem, yet it manages to gain even more power in the socialization of the entire financial system. The whole bailout process this past year was characterized by no oversight, no limits, no concerns, no understanding, and no common sense.

Similar mistakes were made in the 1930s and ushered in the age of the New Deal, the Fair Deal, the Great Society and the supply-siders who convinced conservatives that deficits didn’t really matter after all, since they were anxious to finance a very expensive deficit-financed American empire.

All the programs since the Depression were meant to prevent recessions and depressions. Yet all that was done was to plant the seeds of the greatest financial bubble in all history. Because of this lack of understanding, the stage is now set for massive nationalization of the financial system and quite likely the means of production.

Although it is obvious that the Keynesians were all wrong and interventionism and central economic planning don’t work, whom are we listening to for advice on getting us out of this mess? Unfortunately, it’s the Keynesians, the socialists, and big-government proponents.

Who’s being ignored? The Austrian free-market economists – the very ones who predicted not only the Great Depression, but the calamity we’re dealing with today. If the crisis was predictable and is explainable, why did no one listen? It’s because too many politicians believed that a free lunch was possible and a new economic paradigm had arrived. But we’ve heard that one before – like the philosopher’s stone that could turn lead into gold. Prosperity without work is a dream of the ages.

Over and above this are those who understand that political power is controlled by those who control the money supply. Liberals and conservatives, Republicans and Democrats came to believe, as they were taught in our universities, that deficits don’t matter and that Federal Reserve accommodation by monetizing debt is legitimate and never harmful. The truth is otherwise. Central economic planning is always harmful. Inflating the money supply and purposely devaluing the dollar is always painful and dangerous.

The policies of big-government proponents are running out of steam. Their policies have failed and will continue to fail. Merely doing more of what caused the crisis can hardly provide a solution.

The good news is that Austrian economists are gaining more acceptance every day and have a greater chance of influencing our future than they’ve had for a long time.

The basic problem is that proponents of big government require a central bank in order to surreptitiously pay bills without direct taxation. Printing needed money delays the payment. Raising taxes would reveal the true cost of big government, and the people would revolt. But the piper will be paid, and that’s what this crisis is all about.

There are limits. A country cannot forever depend on a central bank to keep the economy afloat and the currency functionable through constant acceleration of money supply growth. Eventually the laws of economics will overrule the politicians, the bureaucrats and the central bankers. The system will fail to respond unless the excess debt and mal-investment is liquidated. If it goes too far and the wild extravagance is not arrested, runaway inflation will result, and an entirely new currency will be required to restore growth and reasonable political stability.

The choice we face is ominous: We either accept world-wide authoritarian government holding together a flawed system, OR we restore the principles of the Constitution, limit government power, restore commodity money without a Federal Reserve system, reject world government, and promote the cause of peace by protecting liberty equally for all persons. Freedom is the answer.

source

If I Had the Power to Transform America

I originally posted this in a forum thread in politicsforum.org.

I am reproducing it here because I thought it was an interesting exercise.


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If I had the power, this is how I would go about changing the political structure of the US.

I am a strong supporter of State economic autonomy, but there is a need for a governmental mechanism to coordinate cross-state infrastructure projects.

In fact, James Madison wanted to allow canals and roads to be built across America, but he could not find the authority in the Constitution:

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In his last act before leaving office, Madison vetoed on states' rights grounds a bill for "internal improvements", including roads, bridges, and canals:

Having considered the bill ... I am constrained by the insuperable difficulty I feel in reconciling this bill with the Constitution of the United States.... The legislative powers vested in Congress are specified ... in the ... Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers.
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He urged Congress to amend the Constitution to permit the federal government to build national infrastructure:

Among the means of advancing the public interest, the occasion is a proper one for recalling the attention of Congress to the great importance of establishing throughout our country the roads and canals which can best be executed under the national authority. No objects within the circle of political economy so richly repay the expense bestowed on them; there are none the utility of which is more universally ascertained and acknowledged; none that do more honor to the government, whose wise and enlarged patriotism duly appreciates them. Nor is there any country which presents a field where Nature invites more the art of man to complete her own work for their accommodation and benefit. These considerations are strengthened, moreover, by the political effect of these facilities for intercommunication, in bringing and binding more closely together the various parts of our extended confederacy.

Whilst the states, individually, with a laudable enterprise and emulation, avail themselves of their local advantages, by new roads, by navigable canals, and by improving the streams susceptible of navigation, the general government is the more urged to similar undertakings, requiring a national jurisdiction, and national means, by the prospect of thus systematically completing so inestimable a work. And it is a happy reflection, that any defect of constitutional authority which may be encountered, can be supplied in a mode which the Constitution itself has providently pointed out.

Federal Infrastructure Board

So what I propose is a Constitutional amendment creating strict, focused provisions allowing the federal government to involve itself in national infrastructure.

I think a distributed collaborative approach is always better than one where a single individual decides on matters.

For this reason, I would have a "federal infrastructure board", which would administer projects voted on by property owners across the US. The projects would be funded by a land tax, and, as mentioned, would be voted on by property owners. Each person's vote would be proportional to how much land they have. So if one individual owns 0.5% of the land in the US, he would have a 0.5% vote.

Some of the provisions would be:

1. The Federal Infrastructure Board (from here on referred to as the Board) would be given the power to build and maintain infrastructure for the continental US (excludes Alaska and Hawaii)

2. The projects the Board undertakes would have to be of vital importance to AT LEAST two states.

3. All efforts to create the proposed project through the coordination of state governments would need to have been exhausted for the Board to have authority to undertake it.

4. The Board's annual spending could not exceed 30% of annual federal budget

5. Property owners with combined ownership holdings that would pay at least a 1% share of the tax revenues towards a given project should it pass need to nominate the project for it to be brought up for a general vote.

6. All property owners would need to participate in the general vote. They can delegate their voting rights to another party.

7. In the first 6 months of the year, projects can be nominated. In the 9th month, all nominated projects would be brought up for a vote

8. Each property owner's vote towards a particular project is proportional to how much of the total revenues needed to be raised for the project would come from taxes levied on property owned by that property owner should the project pass.

9. There is a maximum limit of 30% of the annual federal budget that the cost of the projects that a property owner votes 'Yes' on can be.

10. There are two tax structures that a project can use, a gradient tax structure, or a uniform tax structure.

A gradient tax is higher at a point, or a line, and gradually decreases at a set rate towards the outer rim of the taxed area.

A uniform tax is a uniform fee levied on each acre of the taxed area.

Each project can only use a single tax structure.

11. The share of the fees levied from each property owner for a project have to be proportional to the benefits that property owner derives from the project.


Case Example

In the case of the high-speed maglev rail network that Dave proposed, here is how it could be funded through this governing framework:

1. This infrastructure project would require two official projects to pass for it to be launched. There would be a project that levies a gradient tax along each side of the maglev line up to 150 km from the line and 300 km from its major stations that allow freight loading, and another project that would levy a uniform tax on the rest of the continental US.

2. Property owners with at least a 1% share of the land area that would be taxed under each respective project would need to nominate the two projects.

3. In the general vote, if both projects get over 50% of the vote, then the maglev rail construction project would be launched.

There are 1,995,874,608 acres in the continental US. If the area under the gradient tax structure is 204,177,610 acres, and an average of $200 is levied on each acre within this area (with the fee increasing in proportion to how close an area is to the maglev line or major station), that would raise $40.835 billion.

If $61.80 is levied on each of the 1,791,696,998 acres under the uniform tax structure, that would raise another $110.727 billion.

This would be a total of $151.562 billion for the high speed maglev line.

If the fees are collected over a 5 year period, that would be an average of $40 per acre per year in the area under the gradient tax structure, and $12.36 per acre per year in the area under the uniform tax structure.

Here's a visual of the concept:




Reducing the size of the federal government

That's for infrastructure, now as far as getting federal government spending down to 3% of GDP (from 20% now) and removing the vast unconstitutional regulatory framework (e.g. the federal reserve system) in place now, I would propose following a 15 year plan.

A Constitution board would be setup that would be in power for 15 years, and would have as its task to return the federal government to its Constitutional scope over a 15 year period.

The task of reducing spending and eliminating regulations would be broken down into 15 bite sized portions, and one portion would be tackled each year.

Spending would need to decrease by about $110 billion a year, and exactly how regulations would be phased out could be worked out in consultation with industries to cause the least amount of shock to the economy.


Currency

I would allow gold and silver to compete with fiat dollars as legal tender. With a decreased tax burden, there would be a decreased compulsion to hold dollars for government payment purposes, and the economy could for the most part choose its own currency.


Civil Effort

This political effort can only succeed with massive public support. What we need is a coordinated effort by a good portion of the 297 billionaires in the US to make this happen. We need a council, a round table, where the wealthiest Americans congregate and coordinate to spend considerable amounts of money on educating the public of the importance of this kind of effort, and funding candidates that support it.

Ron Paul and Peter Schiff get flurry of media attention

In the last few weeks, since the market has begun to tank, Ron Paul and his economic advisor Peter Schiff have made several appearances on major media.

Here are a few of the interviews from the last three weeks:

Ron Paul on CNN on 09/19/2008:



Ron Paul Fox Business 10/14/2008:



Peter Schiff on CNBC 10/08/2008:



Ron Paul on Bloomberg 10/02/2008:



Ron Paul "Rescue Plan is not good", Fox Business News 10/10/2008:



Ron Paul on the Late Edition with Wolf Blitzer 09/21/2008:



Ron Paul on CNN: Buying Debt is the Wrong Solution 10/01/2008:

http://edition.cnn.com/2008/POLITICS/10/01/paul.qanda/#cnnSTCVideo

Ron Paul on Fox Business News, 09/24/2008:



Ron Paul on Cavuto, Fox News, AIG bailout, 09/17/2008:



Ron Paul on Cavuto, Fox News, 09/27/2008:



Ron Paul Rescuing The Rescue W/ Cavuto, Fox News, 10/11/2008:



Peter Schiff on Glenn Beck 10/06/2008:



Peter Schiff on Glenn Beck 10/11/2008, Part 1/5:



Peter Schiff on Alex Jones 10/02/2o08, Part 1:



Peter Schiff on CNN, 10/04/2008:



It's not surprising that Ron Paul and Peter Schiff are now being revered by the media, given that they have been predicting this crash since at least five years ago:

Ron Paul predicting collapse of Fannie/Freddie and housing bubble five years ago:

Ron Paul in the House Financial Services Committee, September 10, 2003

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Ron Paul on The Korelin Economics Report 03/2007, part 1:



Ron Paul predicting crash a year ago:



Peter Schiff Mortgage Bankers Speech, 11/2006, Part 1 of 8:

quick summary:

In 2006 Peter Schiff tells over 1000 mortgage brokers they are about to be out of jobs. Watch how he completely nails the coming real estate/mortgage debacle before anyone else even realized it was coming.



Peter Schiff Predicts The US Economic Collapse With Unbelievable Accuracy 8/28/2006:

Warren Buffett's dad and Ron Paul

Warren Buffett's dad was libertarian Congressman Howard Buffett, who believed in the same things Ron Paul did.

Here is the wikipedia article about him:

Howard Buffet

Howard Homan Buffett (August 13, 1903 – April 30, 1964) was an Omaha, Nebraska businessman and four-term Republican United States Representative.

Buffett attended public schools and graduated from the University of Nebraska in Lincoln, Nebraska in 1925. While a student, Buffett was a brother of the Alpha Sigma Phi Fraternity. Entering the investment business, Buffett also served on the Omaha board of education from 1939 to 1942. In 1942 he ran for the U.S. House of Representatives in the Nebraska district in which Omaha was located, winning the Republican nomination in the primary and then the subsequent general election; he was reelected twice. In 1948 he was again the Republican nominee for another term but was defeated for reelection; however he was again the Republican nominee for the office again in 1950 and won the office back. In 1952 Buffett decided against seeking another term and returned to his investment business Buffett-Falk & Co. in Omaha, in which he worked until shortly before his death.^[1]

Buffett is remembered for his highly libertarian stance, having maintained a friendship with Murray Rothbard for a number of years. A vocal critic of the Truman Doctrine and the Korean War, speaking on the floor of Congress, he said of military interventionism that,

Even if it were desirable, America is not strong enough to police the world by military force. If that attempt is made, the blessings of liberty will be replaced by coercion and tyranny at home. Our Christian ideals cannot be exported to other lands by dollars and guns.^[2]

Although his son Warren Buffett has criticized investing in gold feeling that investing in businesses does more social good, his father, Howard Buffett, was a proponent of the Gold Standard. ^[3]

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Warren Buffett adopted a different set of beliefs from his father, and recently was criticized by Ron Paul for his advocacy of the government bailout plan for Wall Street:

Part 1:

Part 2:

Obama shows glimmer of true leadership

The situation in the halls of political power has been dire since 1913, the year the federal reserve act and the federal income tax were enacted. Since then, the size of government has steadily increased, and politicians have increasingly relied on interventionist big government rhetoric to buy votes.

Obama, as a Democrat -who have traditionally been greater advocates of big government than Republicans- has taken big government political positions that are a sad example of the kind that have done so much to harm America.

In a recent speech though, I noticed a glimmer of wisdom -a glimmer of wisdom which ignited a hope in me that maybe, just maybe, his eyes may open to the truth of what ails the economy, and he will undergo a political metamorphosis to become a defender of limited government ideals. The speech where I saw this potential was the one he made about the mortgage crisis, and the changes he thinks are needed:



He repeated many common big government positions, such as advocating another federal stimulus package, bailing out home owners who are facing mortgage problems and touting the importance of giving more federal support for state health and education programs, etc, but he also touched on the problem of the investors of semi-privatized institutions like Fanny Mae socializing the risk of their business ventures by relying on government bail-outs when things go sour.

Criticizing the big Wall Street investors is a positive step, and maybe, just maybe, it's an indication that he has the courage to stand up to a corporate-political establishment that uses big government programs as a private piggy bank, and that he will see that the only way to fight for the true interests of America and stop this kind of opportunistic exploitation of public funds by powerful interests is by cutting back on these big government programs.

His tone too gave me hope that perhaps he was coming around to seeing the truth. It was somber, as if it was donning on him that there was an inherent contradiction between his advocacy for bailing out homeowners and his criticism of bailing out investors of semi-privatized companies like Fanny Mae.

I'm probably being way too optimistic, but I welcome any move towards sobriety among the political leadership.

Stopping PRC agents from immigrating to the US

As we speak, thousands of PRC agents are entering the United States every year as legal immigrants. I see this as a basic threat to the political independence of the United States. Any time there is a dispute with the Chinese government, these Chinese immigrants can be expected to exert tremendous domestic pressure on the side of China.

We saw this with Tibet, when thousands upon thousands of Chinese emigre demanded that pressure on the Chinese government cease and Tibet's struggle for freedom abandoned.

We saw this with the lead paint controversy, when thousands upon thousands of Chinese emigre demanded that Cafferty be fired for calling China's communist government a bunch of "thugs".

This pressure was not benign, it was intense and emotionally potent:





In South Korea, pro-government Chinese emigre viciously attacked an innocent American for his pro Tibetan views:



This threat will not subside. Chinese immigrants come from a country where nationalistic propaganda is overwhelming and where violence to control political opinions is legitimized.

As John Derbyshire points out, sino-fascism is alive and well in China's emigre population:

I have proposed before on VDARE that immigrants from different cultures—even, as David Hackett Fischer showed in Albion's Seed, from different regions of England—bring quite different notions of governance, nationhood and citizenship with them. These attitudes can be very persistent, surviving long after actual memories of the "old country" are forgotten.

The first part of this proposition has been brought home to me with great force recently. A few months ago I signed up for an e-mail list run by and for Chinese software engineers in the United States. A Chinese friend told me it was a good place to pick up software tips, a matter of professional interest to me. He also said that I, as the author of a novel about Chinese people in America (Seeing Calvin Coolidge in a Dream) might find interesting some of the occasional opinion pieces posted on the list.

The list turned out to be of little use. Notices of volleyball games, advertisements for rooms to rent, and advice on immigration issues were the main topics. Software tips were few and far between, and a query of my own went unanswered. The few opinion pieces were mostly vaudeville head-whacking exchanges between proponents of Taiwan independence and the Mainland One-China crowd.

I did notice that the Mainlander sides of these exchanges were expressed with extraordinary vehemence. A typical line of argument was that the Taiwanese had been psychologically deformed by the Japanese occupation (which ended 55 years ago!) and yearned to abandon their Chineseness and become slaves of the Japanese. A fiercer element thought that China should use her nuclear weapons against Taiwan, to "teach them a lesson". (On historical and oratorical evidence, China must be the odds-on favorite for the title "First Nation to Nuke Its Own People." As far back as the Korean War, Madame Chiang Kai-shek asked the U.S.A. to use atomic weapons against her countrymen.) The Taiwaners mainly responded with patient explanations that they didn't want to fall into the hands of the Chinese Communist Party, and that, given the CCP's historical record, nobody could blame them.

Eventually I decided to put my two cents in. The topic of Taiwan seemed a bit inflammatory, so I offered some fairly commonplace remarks about whether a democratized China would be able to hold on to the western territories of Tibet and East Turkestan. The base populations of those territories are non-Chinese and do not want to be ruled by China, and presumably would say so at the ballot box. If China was to have democracy (I said), this conundrum would have to be faced.

I signed myself off with my Chinese name—not out of any real intent to deceive, only because this was a Chinese e-list and I thought they might throw me off if they knew I was a round-eye. At this point I was still hoping the list might be useful.

The response to my mild, questioning remarks was astonishing. What kind of Chinese was I, that wanted to dismember the Motherland? Didn't I know that those territories had been Chinese since the beginning of time? That their inhabitants were sunk in slavery and oppression under wicked priests and landlords until rescued by Chinese occupation? (Yes, these two assertions were often made by the same person.) That all the countries of the world recognized Chinese sovereignty over them? That China's right of possession had been acknowledged by the Nationalist governments of the 1930s and 1940s, even before Mao came along? The range of tones was from baffled to furious. How could a Chinese person cast doubt on the integrity of the national borders?

We went back and forth a few times, until someone noticed that my sign-off Chinese name, "Yuehan", was the common Chinese transcription of "John". Was I really Chinese? I confessed frankly that I am not; that I am an Englishman living in America, with a Mainland-Chinese wife and two half-Chinese children.

Now the floodgates of race-hatred opened. One of the subsequent e-mails addressed me as: "England Big Nose". Another offered, as part of a long, labored attempt at sarcasm, to "kiss my hairy hand". Yet a third laid out a very complicated psychological theory trying to demonstrate (if I have understood it correctly) that for a white man to wish to marry a Chinese woman was a form of mental illness, dooming both partners to misery and their offspring to madness. Hardly any of these charming epistles failed to remind me that the British were notorious imperialists, of infamous rapacity and cruelty, whose dream of everlasting world domination now lay in ashes. There was a general opinion that we British must be fuming with rage at the impudence of our once-subject peoples in throwing us out, and that this impotent fury was what accounted for our willingness to say such incomprehensibly shocking things as that Tibetans might prefer to be ruled by other Tibetans rather than by Chinese.

Bear in mind, please, that the writers of these e-mails are the intellectual cream of Mainland China, now immigrants to the U.S. Few do not have Master's degrees; many have Ph.D.s. The average age is around thirty, I suppose. Their academic and professional qualifications, and their command of English, are sufficient to have impressed an American consul into awarding them a visa—no easy matter, allegedly. Yet for all this, their notions about national sovereignty were essentially those of the Ming dynasty mandarinate, and their knowledge of history a collection of false and preposterous clichés.

Underneath all this were some even more disturbing currents: a deep, atavistic hatred of the West and all its works; a profound scorn for Western "civilization" and "democracy"—the quotation marks seem to be obligatory. Also, a rooted conviction that China had never done anything wrong, and never could. Here are the words (I have polished the grammar a little) from a correspondent who has a Master's in Sociology from Peking University, a very prestigious institution:

Every time I read recent Chinese history, I can't help crying. What did we do in the past to make this nation, this race suffer so much? Nothing we did! It was those "honorable", "democratic", and "noble" western "civilized" people and culture! ... I suffer as my nation suffers, I cry as my people cry.

Now the greatest catastrophes to afflict the Chinese people this past 50 years have been:

the post-Revolution "land reform" (1949-52)

the Anti-Rightist campaigns (1957-58)

the "Great Leap Forward" famine (1959-61)

the Cultural Revolution (1966-76)

Total deaths: about 65 million. Total foreign involvement: zero.

If you go further back, to earlier horrors like the Boxer uprising (1900) and the Taiping rebellion (1852-64), the West does indeed share some small part of the responsibility. Yet even here, the overwhelming majority of Chinese dead (12 to 15 million in the Taiping) were killed by other Chinese, acting on Chinese orders.

"Nothing we did!" All the fault of the foreign devils!

That writer is by no means a lone eccentric. This is the voice of the new generation of Mainland Chinese, born in the 1970s and 1980s: puffed up with self-pity and self-righteousness, all their rage and frustration directed against the outside world, utterly ignorant of the modern history of their country. A well-adjusted Chinese citizen is expected to have "moved on" from the horrors of the Mao period (1949-76), yet to be seething with indignation about the Opium Wars (1839-42).

This mindset has been fostered by the Communist educational system. As Steven W. Mosher has documented in his new book Hegemon: The Chinese Plan to Dominate Asia and the World, the Communists have been at pains to replace the discredited Marxist-Leninist rationale for their rule with nationalism of the grossest and coarsest type. Chinese school history textbooks make no mention of the 1959-61 famine—in terms of the number dead, a greater human calamity than WW2—but dwell bitterly on the tale about a sign saying NO DOGS OR CHINESE at the entrance to a Shanghai park in the 1920s. (Does anybody know if this story is true?) This hyper-nationalism is not limited to the schools, either; it is carried over to movies, TV shows, popular magazines and even roadside billboards.

Cherish the Motherland, which never has done, and never could do, any wrong. Hate the foreign devils, who have inflicted untold miseries on our people, and who never cease plotting to weaken and dismember our country. The borders of the People's Republic [which are actually those of the Manchu empire, minus Outer Mongolia] are sacred and inviolable, and must not be questioned.

This is the world-view with which Chinese people emerge from their schools and universities. "England Big Nose" and "hairy hand" are the terms in which China's M.A.s and Ph.D.s address foreigners who question these dogmas. What thoughts swirl in the minds of less well-educated, less-privileged young Mainlanders, one can only wonder.

Now, an American—especially, perhaps, an American who has logged on to VDARE—might say: "Good luck to them! I only wish our people would be that fierce in their nationalism." He might also point out that I could have got some similar responses from an e-group of Irish software engineers.

Both reactions miss the point. Modern western nationalisms like the American and Irish are tied up with a longing for freedom from oppression, and have been tempered and civilized by Enlightenment rationalism. The emotions let loose in my little encounter were pre-modern, primitive; uninformed by anything from the Enlightenment, or even from the Reformation or the Renaissance for that matter, and unconnected to—in fact, rabidly hostile to—any concept of liberty, self-determination or government by consent.

I have sat with Irishmen for long evenings, discussing their history and their nationhood as topics on which different points of view might be exchanged, different opinions passionately, yet reasonably, held. No such discussion is possible with these younger Mainland Chinese. When you raise their "national question", they just lose their temper and ask how you dare be so impudent as to offer an opinion on something that only concerns Chinese people. If you ask them whether they would prefer a free, democratic China without the "three T's" (Tibet, Turkestan and Taiwan) or the present corrupt despotism with them, they unhesitatingly go for the latter.

Moreover, this Chinese group feeling is consciously racial and explicitly anti-white. Irish immigrants do not have this reflex working to alienate them from their new countrymen.

Importing Sino-Fascism?

There needs to be a better screening process to ensure PRC agents, or those loyal to the current PRC regime, are not entering the West.