But historians, and even common sense, may inform us, that, however specious these ideas of PERFECT equality may seem, they are really, at bottom, IMPRACTICABLE; and were they not so, would be extremely PERNICIOUS to human society. Render possessions ever so equal, men's different degrees of art, care, and industry will immediately break that equality. Or if you check these virtues, you reduce society to the most extreme indigence; and instead of preventing want and beggary in a few, render it unavoidable to the whole community. The most rigorous inquisition too is requisite to watch every inequality on its first appearance; and the most severe jurisdiction, to punish and redress it. But besides, that so much authority must soon degenerate into tyranny, and be exerted with great partialities; who can possibly be possessed of it, in such a situation as is here supposed? Perfect equality of possessions, destroying all subordination, weakens extremely the authority of magistracy, and must reduce all power nearly to a level, as well as property.
We may conclude, therefore, that, in order to establish laws for the regulation of property, we must be acquainted with the nature and situation of man; must reject appearances, which may be false, though specious; and must search for those rules, which are, on the whole, most USEFUL and BENEFICIAL. Vulgar sense and slight experience are sufficient for this purpose; where men give not way to too selfish avidity, or too extensive enthusiasm.
Who sees not, for instance, that whatever is produced or improved by a man's art or industry ought, for ever, to be secured to him, in order to give encouragement to such USEFUL habits and accomplishments? That the property ought also to descend to children and relations, for the same USEFUL purpose? That it may be alienated by consent, in order to beget that commerce and intercourse, which is so BENEFICIAL to human society? And that all contracts and promises ought carefully to be fulfilled, in order to secure mutual trust and confidence, by which the general INTEREST of mankind is so much promoted?
Examine the writers on the laws of nature; and you will always find, that, whatever principles they set out with, they are sure to terminate here at last, and to assign, as the ultimate reason for every rule which they establish, the convenience and necessities of mankind.
Dear Ben Bernanke and distinguished members of the Federal Reserve:
We are writing today to formally solicit your help in obtaining approvals to start a new bank holding company, Money Unlimited. We of course understand that the approval process for a new bank is typically done through the FDIC, but as the Federal Reserve plays a crucial role in our business plan, we hope that you can expedite the process.
First, let us assure you that we will start from day one as a very well capitalized institution, with no need to raise outside capital. While actual cash is on the lower end of the spectrum, we both own stock portfolios that we plan to use as collateral for our banking operations. Our current holdings include Berkshire Hathaway (NYSE: BRK-B), Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG), and Coca-Cola (NYSE: KO).
For the purposes of this application, we are choosing to mark these assets to model rather than to market. Our basic assumptions include 7% U.S. GDP growth, 12% global GDP growth, a 4% U.S. unemployment rate, rising corporate profitability, U.S. debt repudiation, and the end of cloudy days.
In addition, Matt owns a home in Las Vegas. Though this asset is currently considered "under water" based on market valuations, a house down the street just sold for slightly more than Zillow.com said it was worth. We extrapolated that gain into infinity and determined the housing bust is simply a figment of the media's imagination.
Now the good news: Without getting into the complexities, our models show our combined net worths at just over $1 billion, all of which we'll use as capital for Money Unlimited. We hired a 22-year-old right out of college who's pretty darn good with Excel. He assures us it's a conservative figure.
While neither of us has any "formal" banking experience, our time-tested business model more than compensates for this apparent shortfall. As with Goldman Sachs (NYSE: GS), which was recently made a bank holding company, we have no plans to engage in actual banking operations such as deposit-taking and lending. That stuff just sounds hard. Regulators are always all, "You need to lend money to people who can pay you back." We'd rather just avoid that whole sticky situation altogether.
Instead, we're going to leverage our borrowings from the Federal Reserve to create a massive, money-spewing trading operation.
It's quite simple, really. We're going to borrow money from the Federal Reserve at 0%, then lend it back out to the U.S. Treasury at 3%. The Treasury can then use that money for fantastic programs like Cash for Clunkers. If we leverage our $1 billion asset base 20-to-1, we'll pull in $600 million in year one without breaking a sweat.
Because we want to do what's right for the economy, we plan to keep operating expenses to a bare minimum and limit our bonuses to $20 million each for the first five years. By plowing the remaining money back into the bank -- and, of course, leveraging it at 20-times -- we'll be able to grow like a weed. Assuming you folks at the Federal Reserve continue to do your part by lending money at 0%, we expect to clear $120 billion in assets in five years flat.
And don't worry about us. We understand that hard work and tangible economic contributions need to be rewarded, so in the sixth year of operation we both plan to take $500 million bonuses and use company money to buy ourselves private jets.
Money Unlimited will offer other significant benefits to the economy as well. We'll compete against banking organizations such as Goldman Sachs, JPMorgan Chase (NYSE: JPM), and Citigroup (NYSE: C), who are no doubt engaging in similar practices. (Have you seen their earnings?) Plus, we'll allow other banks to buy credit defaults swaps against us. As any financial professional worth his salt can tell you, this "increases liquidity" and helps small businesses. We can't tell you exactly how that works, but salesmen who wear shiny cuff links and talk really fast tell us it's true.
But helping the economy isn't all we're about. As Goldman Sachs' CEO Lloyd Blankfein recently put it, this is "God's work," and we certainly don't disagree with that.
Before long, the founders of Money Unlimited expect our trading operations will become so large that we will be considered "too big to fail." While some may consider this a concern, we disagree. There should be more competition among "too big to fail" institutions so that the risk of a Chernobyl-type catastrophe in our financial system is spread more broadly.
Thank you for your time and we look forward to your help obtaining a speedy approval for Money Unlimited.
As we enter the worst financial crisis in 80 years, almost none of the root causes of the crisis are being addressed, while the election of Obama has underlined the immunity that the groups behind the crisis will continue to enjoy.
The primary causes of the financial crisis have been:
1) affirmative action policies to increase mortgages issued for low income individuals
These policies include the Community Reinvestment Act, affirmative action mandates by Fannie Mae and Freddie Mac, and HUD.
As this article in the City Journal -a leading urban-policy magazine- on the Community Reinvestment Act explains, these affirmative action policies arose out of the observation by civil rights activists that banks were not lending in low income communities, communities that were often predominantly black/hispanic:
The Act, which Jimmy Carter signed in 1977, grew out of the complaint that urban banks were "redlining" inner-city neighborhoods, refusing to lend to their residents while using their deposits to finance suburban expansion. CRA decreed that banks have "an affirmative obligation" to meet the credit needs of the communities in which they are chartered, and that federal banking regulators should assess how well they do that when considering their requests to merge or to open branches. Implicit in the bill's rationale was a belief that CRA was needed to counter racial discrimination in lending, an assumption that later seemed to gain support from a widely publicized 1990 Federal Reserve Bank of Boston finding that blacks and Hispanics suffered higher mortgage-denial rates than whites, even at similar income levels.
The reason behind these lending practices was later found to be fully explainable by credit-worthiness considerations, rather than any insidious racial discrimination:
A September 1999 study by Freddie Mac, for instance, confirmed what previous Federal Reserve and Federal Deposit Insurance Corporation studies had found: that African-Americans have disproportionate levels of credit problems, which explains why they have a harder time qualifying for mortgage money. As Freddie Mac found, blacks with incomes of $65,000 to $75,000 a year have on average worse credit records than whites making under $25,000.
The Federal Reserve Bank of Dallas had it right when it said —in a paper pointedly entitled "Red Lining or Red Herring?"— the CRA may not be needed in today's financial environment to ensure all segments of our economy enjoy access to credit." True, some household —those with a history of credit problems, for instance, or those buying homes in neighborhoods where re-selling them might be difficult— may not qualify for loans at all, and some may have to pay higher interest rates, in reflection of higher risk. But higher rates in such situations are balanced by lower house prices. This is not a conspiracy against the poor; it's how markets measure risk and work to make credit available.
Nonetheless, affirmative action activist groups seized on the political argument of discrimination, and with the aid of Clinton's 1995 provisions to the CRA, an industry was born around extorting banks into lending in low income communities:
The Clinton administration's get-tough regulatory regime mattered so crucially because bank deregulation had set off a wave of mega-mergers, including the acquisition of the Bank of America by NationsBank, BankBoston by Fleet Financial, and Bankers Trust by Deutsche Bank. Regulatory approval of such mergers depended, in part, on positive CRA ratings. "To avoid the possibility of a denied or delayed application," advises the NCRC in its deadpan tone, "lending institutions have an incentive to make formal agreements with community organizations." By intervening —even just threatening to intervene— in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city. Observes Tom Callahnan, executive director of the Massachusetts Affordable Housing Alliance, which has $220 million in bank mortgage money to parcel out, "CRA is the backbone of everything we do."
These activist groups are deeply entrenched in the political world of Washington, with the current president having a long history of working in the civil rights/ minority empowerment activism industry:
he also joined Davis, Miner, Barnhill & Galland, a twelve-attorney law firm specializing in civil rights litigation and neighborhood economic development, where he was an associate from 1993 to 1996, then of counsel from 1996 to 2004, with his law license becoming inactive in 2002.[28][44][45]
Obama was a founding member of the board of directors of Public Allies in 1992, resigning before his wife, Michelle, became the founding executive director of Public Allies Chicago in early 1993.[28][46] He served from 1994 to 2002 on the board of directors of the Woods Fund of Chicago, which in 1985 had been the first foundation to fund the Developing Communities Project
Obama even represented a group suing Citibank for discriminating against minority applicants in its lending practices in 1994:
Case Name Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011 State/Territory Illinois Case Summary Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; and 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctive relief, actual damages, and punitive damages.
***
Barack H. Obama Davis, Miner, Barnhill and Galland, P.C.
Fannie Mae and Freddie Mac are the other major affirmative programs contributing to America's economic problems. They are government sponsored enterprises that spend amounts lobbying politicians, particularly Democrats.
They are massive organizations that own or guarantee half of the $12 trillion worth of mortgages in the US. In 1999, under intense pressure from the Clinton administration, they began a program to increase home ownership in the minority and low income demographics, a program which precipitated the sub-prime mortgage bubble:
Fannie Mae Eases Credit To Aid Mortgage Lending By STEVEN A. HOLMES Published: Thursday, September 30, 1999
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
The Democrats' intense dedication to these organizations meant that efforts to regulate their activities and impose responsible lending standards on them were blocked repeatedly, especially by black pro-affirmative-action Democrats in Congress:
How much has Fannie Mae cost the US? Besides the indirect costs like the losses from the financial crisis and the $700 billion bank bailout that the sub-prime mortgages spurred, there is also another $750 billion that the US has paid in the way of the Federal Reserve's purchase of Fannie/Freddie backed mortgages.
Given the Democratic party's history with these affirmative action groups, it's very likely that the Democrats will not confront the problems these groups cause in the economy, and will keep these policies inspired by affirmative action activism in place, as they continue to corrode America's economic competitiveness.
The Democrats will blame every thing else: deregulation in the financial industry, greed on Wall Street, predatory lending practices, etc, but will ignore the root cause, thus the economic problem will be go undiagnosed and untreated.
2) the Federal Reserve
The Federal Reserve's low interest, inflationary monetary policy led to the credit bubble that fed the housing bubble. Coupled with Fannie Mae and Freddie Mac's massive subsidization and securitization of mortgages, housing prices boomed leading to a speculatory spiral of increased borrowing and investment into housing, on the expectation of fast profits on small margins. Like all speculatory bubbles, it eventually came crashing down, taking down the entire financial sector with it.
This isn't the first bubble that the Federal Reserve has helped create, but it is the worst one, because the industry that the Fed's easy credit flowed into was created by affirmative action government mandate, rather than market forces like in the case of the dot com bubble.
In the case of the dot com bubble, there was real economic potential that was being speculated on, and massive new companies like Yahoo, Google and Ebay that arose in the bubble and survived its crash.
People over-estimated the speed at which the internet market would grow, and invested in many companies that were not viable businesses, but not all of the speculation was groundless, and many of the money invested did return value.
The beginning of the housing bubble and the concurrent sub-prime crisis meanwhile can be attributed almost solely to government intervention, motivated by affirmative action policies. The market fundamentals didn't justify vast amounts of wealth being poured into the construction of new houses. There was no explosive economic opportunity being bet on the way the dot com bubble bet on internet technology.
Furthermore, the scale of the intervention of the government in the housing industry made the housing bubble much larger than the dot com bubble. While speculation on intrinsic financial value spurred the dot com bubble, expectations of government giants Freddie and Fannie continuing to pour money into the housing market and push up prices drove speculators to invest far larger sums with more confidence than they did in tech companies.
When the NASDAQ crashed, about $5 trillion dollars was wiped out. The sub-prime crisis on the other hand has already wiped $8 trillion from just the US economy, and the losses and decline are widely expected to continue, with some predictions of a looming ARM (adjustable-rate mortgage) crisis that could parallel the subprime crisis in scale.
Neither political party discusses what role the Federal Reserve's low interest rate policy may have had in creating the bubble, and very little is said about how government intervention in the housing sector may have started the speculatory rise in prices.
Some criticism of Fannie/Freddie has been levied by major Republican politicians, but it has been limited to criticizing the Democrats for their role in blocking efforts to regulate Fannie/Fannie. The only solution offered by the Republican leadership has been to reduce the scope of Fannie/Fannie, rather than dealing with the fundamental problem and abolishing affirmative action policies in housing altogether.
This is not surprising as the Republicans are responsible for pushing for affirmative action policies in housing as well (e.g. Bush's 'ownership society'), and thus can't attack the principle of government intervention in housing without admitting that they too contributed to the problem.
3) neocon foreign policies
The loyal opposition, the Republicans, have been discredited due to their partnership with the Likudnik Israeli right and their Christian Zionist allies. With people afraid of what the AIPAC allied McCain might do if he were elected, many fiscal conservatives actually favored Obama over McCain, despite their disdain for Democratic economic policies.
The Republican elite have allied with the likes of Pastor Hagee, head of "Christians United for Israel", a darling of the Israel lobby, and an advocate of war against Iran. Likewise, Joseph Lieberman became a close ally of McCain's during his campaign, and was one of the leading advocates of war against Iran.
Meanwhile, McCain's advisor, Randy Scheunemann, was a former lobbyist for the Georgian government, and an advocate of bringing Georgia into NATO. As Pat Buchanan points out, had Georgia been a NATO member in its recent conflict with Russia, the US may have had to go to nuclear war with Russia:
He is the principal foreign policy adviser to John McCain and potential successor to Henry Kissinger and Zbigniew Brzezinski as national security adviser to the president of the United States.
But Randy Scheunemann has another identity, another role. He is a dual loyalist, a foreign agent whose assignment is to get America committed to spilling the blood of her sons for client regimes who have made this moral mercenary a rich man.
From January 2007 to March 2008, the McCain campaign paid Scheunemann $70,000—pocket change compared to the $290,000 his Orion Strategies banked in those same 15 months from the Georgian regime of Mikheil Saakashvili. What were Mikheil's marching orders to Tbilisi's man in Washington? Get Georgia a NATO war guarantee. Get America committed to fight Russia, if necessary, on behalf of Georgia.
Scheunemann came close to succeeding.
Had he done so, U.S. soldiers and Marines from Idaho and West Virginia would be killing Russians in the Caucasus, and dying to protect Scheunemann̢۪s client, who launched this idiotic war the night of Aug. 7. That people like Scheunemann hire themselves out to put American lives on the line for their clients is a classic corruption of American democracy.
U.S. backing for his campaign to retrieve his lost provinces is what Saakashvili paid Scheunemann to produce. But why should Americans fight Russians to force 70,000 South Ossetians back into the custody of a regime they detest? Why not let the South Ossetians decide their own future in free elections? Not only is the folly of the Bush interventionist policy on display in the Caucasus, so, too, is its manifest incoherence.
Defense Secretary Robert Gates says we have sought for 45 years to stay out of a shooting war with Russia and we are not going to get into one now. President Bush assured us there will be no U.S. military response to the Russian move into Georgia.
That is a recognition of, and a bowing to, reality—namely, that Russia’s control of South Ossetia and Abkhazia and occupation of a strip of Georgia cannot be a casus belli for the United States. We may deplore it, but it cannot justify war with Russia.
If that be true, and it transparently is, what are McCain, Barack Obama, Bush, and German Chancellor Angela Merkel doing committing the United States and Germany to bringing Georgia into NATO? For that would commit us to war for a cause we have already conceded, by our paralysis, does not justify a war. Not only did Scheunemann's two-man lobbying firm receive $730,000 since 2001 to get Georgia a NATO war guarantee, he was paid by Romania and Latvia to do the same. And he succeeded.
Latvia, a tiny Baltic republic annexed by Joseph Stalin in June 1940 during his pact with Adolf Hitler, was set free at the end of the Cold War. Yet hundreds of thousands of Russians had been moved into Latvia by Stalin, and as Riga served as a base of the Baltic Sea fleet, many Russian naval officers retired there.
The children and grandchildren of these Russians are Latvian citizens. They are a cause of constant tension with ethnic Letts and of strife with Moscow, which has assumed the role of protector of Russians left behind in the "near abroad" when the Soviet Union broke apart.
Thanks to the lobbying of Scheunemann and friends, Latvia has been brought into NATO and given a U.S. war guarantee. If Russia intervenes to halt some nasty ethnic violence in Riga, the United States is committed to come in and drive the Russians out.
With these dynamics at play, the reign of affirmative action groups that leech off the economy seems like a good alternative to a Republican administration. That is the sorry choice America has had to make.
The only bright side to all of this is that with the election of Obama, one of the three root causes of the financial crisis may possibly be addressed; the neocon policy of foreign interventionism. The hope is that the Obama administration can bring peace to the middle east thereby reducing the power of the pro-war Israeli right and its influence over Republican foreign policy.
This would allow the Republicans, with the influence of the Ron Paul core, to re-emerge as a credible party that addresses domestic fiscal policy, rather than one that risks a nuclear war for countries on the other side of the planet.
My debate with Politicsforum.org member, Order, found here, got me thinking about socialized health care and how it differs from private health insurance as it exists today.
Order's argument was that people would prefer the security of having a safety net provided by the government, over the higher probability of being wealthy provided by the free market. I disagreed, and still disagree, but the exercise of defending my position and comparing private vs public insurance led me to see an advantage that a government run health care system has over private health insurance, even though overall, I still see the private health insurance option, i.e. the free market health care option, as superior to the socialized health care option.
Basically, with a government run health care program, you are forced to pay a premium proportional to your income for your whole life, and in turn, you are guaranteed medical coverage for your whole life.
There is no analogous private option, simply because the legal mechanisms don't exist for a person to choose to enter into a life long contract with a private insurance company wherein a percentage of the person's income is taken by the insurance provider every month in exchange for a lifelong guarantee of coverage. For example, whereas the government can do an audit to verify your income, that option doesn't exist for private health insurance companies.
The reason for this is obvious. Society cannot trust private companies with the powers currently enjoyed by government tax collection agencies, and it is unwilling to socialize the cost of auditing individuals to verify contractual commitments of income sharing.
What I am wondering is, does a legal mechanism exist by which private companies could provide what government-run health insurance currently provides: a guarantee of lifelong health coverage in exchange for a percentage a person's income and the broad power to collect it, without the risk of granting private companies dangerous governmental powers, and without imposing a heavy administration cost on government in enforcing compliance with the client - insurance provider contract.
Perhaps one way to do it would be for health insurance providers, after paying a fee to cover the government's administration costs, to be allowed to offer lifelong contracts where their clients' premiums would be incorporated into their individual income tax, so that the government collects the insurance premium for the insurance company. There could also be a small surcharge, for example 2% of the premium, that the government would collect to offset the per unit administration costs.
This is just one quickly thought out proposal. Doubtless there are many other possible routes.
Regardless of the specifics of the program, the idea if proposed would be highly controversial, as in some ways it is similar to indentured servitude, in that a person voluntarily gives up some of their liberty in exchange for material compensation. On a close analysis though, it's not any worse from an individual liberty standpoint than government run socialized health care, and in fact would afford people with at least the option of not opting into a higher-taxation-for-life-in-exchange-for-guaranteed-coverage arrangement, something people living in countries with socialized health care don't have.
The Obama administration has declared an end to tax payer bailouts of struggling corporations and in a historic move, has declared that the staff will use their own money to save GM. This is truly remarkable, and shows the generous and selfless nature of the Obama administration staff.
Here's a letter that I sent earlier this week to Barack Obama:
30 March 2009
Mr. Barack Obama President, Executive Branch United States Government Washington, DC
Dear Mr. Obama:
On your website today you write that "my administration will offer General Motors adequate working capital to continue operations for the next 60 days." Because you're a man of your word and you choose your words carefully, I trust that you mean here that you and the public servants in your administration will personally pony up the working capital for G.M.
That is, like, soooo cool!!
I'm psyched that an American president and his administration finally will help a struggling company by digging into their own pockets! Thank you, thank you, thank you for breaking with the capitalist/GOP/"free-market-fundamentalist" tradition of forcing me and other taxpayers to shovel money into the bank accounts of giant multinational corporations. Thanks for risking only wealth that is your own, rather than following the prescription of lazy-fairies like Milton Friedman who (I learned in my sociology classes and from reading Naomi Klein) believed that innocent taxpayers should be forced to serve Big Multinational Corporations.
I'm so inspired that you and your White House teammates will give G.M. the bucks it needs - give them from your own private funds rather than take them from from taxpayers! That's just, like, so progressive! What a change! I believe in it!
The Sarbanes-Oxley Act of 2002 has devastated new business creation in the United States.
The Wall Street Journal notes:
According to the National Venture Capital Association, in all of 2008 there have been just six companies that have gone public. Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986. Faced with crushing reporting costs if they go public, new companies are instead selling themselves to big, existing corporations. For the last four years it has seemed that every new business plan in Silicon Valley has ended with the statement 'And then we sell to Google.' The venture capital industry is now underwater, paying out less than it is taking in. Small potential shareholders are denied access to future gains. Power is being ever more centralized in big, established companies. For all of this, we can first thank Sarbanes-Oxley. Cooked up in the wake of accounting scandals earlier this decade, it has essentially killed the creation of new public companies in America, hamstrung the NYSE and Nasdaq (while making the London Stock Exchange rich), and cost U.S. industry more than $200 billion by some estimates. source
An advisory committee to the SEC found that:
beyond the aggregate costs involved with Section 404 compliance, costs in relation to revenue have been disproportionately borne by smaller public companies. The lack of proportionality of the cost and amount of resources devoted to Section 404 compliance for smaller public companies is evidenced by data which shows that the expected cost of Section 404 implementation, as a percentage of revenue, is dramatically higher for smaller public companies than it is for larger public companies. source
The committee found that compliance with Sarbanes-Oxley costs small companies, defined as those with a market capitalization of less than $100 million, an average of 2.55% of revenues. For large companies on the other hand, compliance only costs an average of 0.06% of revenues.
That's a 42.5 times greater relative cost that this regulation imposes on small companies versus large ones.
The situation is absolutely intolerable and needs to be reformed, given how important new business creation is for the US economy. Many of the most dynamic companies today, companies like Google, Ebay, and Yahoo, began in the last 10-15 years. How many future Googles and Ebays has Sarbanes-Oxley prevented from emerging? How many jobs and billions in revenues have been lost to this misguided intervention in the financial sector?
As Ron Paul pointed out following the Madoff scandal, the idea of regulating away financial scandals with regulations enforced by an SEC cannot work, and only imposes more costs on the US economy:
Forget the Constitution, forget the enumerated powers of the federal government, when it comes to the economy, the Obama administration is "open-minded" about the prospect of using tax payer dollars to bailout GM and Chrysler. From Bloomberg:
Task Force Open to Auto Aid, Avoiding Bankruptcy, Rattner Says
By John Hughes
March 17 (Bloomberg) -- The Obama administration is “open minded” about giving General Motors Corp. and Chrysler LLC more aid and will use “all the resources” of the federal government to avoid bankruptcy for the automakers, said Steven Rattner, chief adviser to the U.S. Treasury’s autos task force.
U.S. auto suppliers may get some aid, and the task force plans to meet a March 31 deadline for assessing GM and Chrysler viability, Rattner said yesterday in an interview. “We are open minded about committing additional resources to ensuring a viable domestic car industry,” he said.
Gone are the days when politicians looked upon the Constitution as their rulebook, and with a sense of duty to their Constituents, strove to limit the power of the federal government in the spirit of Constitutional Republicanism.
There is now no limit to what the politicians will consider as a justifiable exercise of power by the federal government. The federal government of the United States is no longer a limited government as setup by the framers of the Constitution. It is an all-powerful central government that decides how much freedom to afford the people. It can interfere and intervene in any sector of the society. The Constitution is merely a relic of a distant past, with no bearing in political decisions.
In times like this, a review of James Madison's quote expounding his fears of an all powerful federal government seems fitting:
"If Congress can employ money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may appoint teachers in every State, county and parish and pay them out of their public treasury; they may take into their own hands the education of children, establishing in like manner schools throughout the Union; they may assume the provision of the poor; they may undertake the regulation of all roads other than post-roads; in short, every thing, from the highest object of state legislation down to the most minute object of police, would be thrown under the power of Congress.... Were the power of Congress to be established in the latitude contended for, it would subvert the very foundations, and transmute the very nature of the limited Government established by the people of America."
