Read What I See

 

     Barack H. Obama is our new president and by now, he is probably wondering why he let his friends and promoters talk him into running for this job.  As Jay Leno jokingly said, “he is asking for a recount.”  Will Obama sue George Soros for helping him finance his election?  You can read here that Soros is actually critical of the new administration path to recovery.

Follow up:

     Those who think that in a few weeks or months everything is going to be fine are in for a big surprise.  Obama already sounded the alarm in his inaugural speech.  “America. In the face of our common dangers, in this winter of our hardship, let us remember these timeless words.  With hope and virtue, let us brave once more the icy currents, and endure what storms may come.”  “ …but also our collective failure to make hard choices…”  In his own words, be prepared for what is coming.

     It is obvious that the danger of an economic collapse is our greatest danger, as no one is sure on how to tackle the economic crisis.  On Obama’s day two, we already have an integrity problem which begins with the nomination of Tim Gheithner for Treasury secretary.  It is ridiculous to say that in a country with a population of 300 millions we cannot find someone with equal or better qualifications.  What kind of precedent are they sending by nominating someone who had cheated the IRS by tens of thousands.  Yes he eventually paid, but for political expedience before he was exposed?  If we can’t do better than this then we are already doomed.  Nothing attempted yet with the bailouts has worked, so we could question Gheithner credentials and indispensability as to solve our current economic crisis.  It does not look like we had the luxury of multiple chances, it was a one out of one and they blew it.

     The financial mess that we are in today did not have to happen.  Government interference into our banking system is to blame for today’s demise.  Regulation and interference in the process are two completely different things.  Laws that were enacted in the past to make loan rules undiscriminating were misinterpreted and abused.  Banks were forced into making loans to high risk lenders and such were the origin of the subprime crisis.

     Obama speaks of starting a “new era of responsibility.” What responsibility are they promoting when they insist that the banks we are bailing continue the same lending practices that destroyed our banking system?   “Banks are not lending” critics say of the banks.  We are in an economy in which very few would qualify for loans if banks return to solid principles of lending.  It has only been a few month and they already forgot that the entire world economies are close to collapsing because of our subprime lending practices encouraged by the Community Reinvestment Act (CRA).  We infested the economies of the world with with the subprime experiment.

     There was a time in which sensible lending existed.  If you wanted to buy a home an initial investment was required and a substantial down payment of good faith mandatory.  There is nothing wrong with requiring from a borrower to hold a job for a sustained period and save one tenth of the value of the investment as down payment.  It was a good policy and made the borrowers more inclined to preserve the initial investment while giving the lenders assurance.  A fixed rate loan was and is a good policy but new gimmicks were developed to push thru loans.  The variable rate loan is a good example as it allowed buyers to qualify for loans, and a couple of years later could no longer afford the payments. It was just one bad policy after another.

    Same rule applies for new vehicles.  There was a time when the purchase a new car was bounded by sound lending rules.  Banks would only lend the wholesale value of a vehicle and the borrower needed to come up with a down payment on the difference.  It makes good business sense that a bank only lends an amount equal to the value of the vehicle.  This good sense rule was abandoned to a point in which buyers were allowed to walk out of dealerships owing thousands of dollars above the value of the vehicle.  This created the upside down effect that would remain for almost the entire length of the loan.

     Credit cards is another example as in recent years banks lower their standards.  It became profitable to issue credit to people who did not pay on time as long as they didn't default.  High interest and penalty charges were good for their business.  Of course, such practice has in today’s economy sent institutions like Citi-Bank to the brink of bankruptcy as those people default on the debt.  Banks do not make money on people who pay their balances every month.  The same applies to those who take low interest or 0% cash advances make the payments promptly and stop using the cards until the balances are paid in full.

     Let’s do an analogy of our nation’s current financial mess and the relationship between government, banks, and borrowers:

     There is an epidemic and people are dying as a result.  Doctors are rapidly losing revenues as the sick and the deceased have failed to pay their debt and as a result have threatened their ability to stay in business.  The government then steps in to financially aid the doctors instead of directly assisting those infected and preventing others from becoming so.  In the mean time patients continue to die.  As more patients succumb to the epidemic, more financial aid is given to the doctors to prevent them from bankruptcy.  Eventually the government realizes that there is no end to this cycle and no possible way to save the doctors businesses as the epidemic has spread beyond control.  Finally, government nationalizes their businesses as they are hopelessly bankrupt.  Once having nationalized their business government put doctors on their payroll to treat the survivors.  Then government proceeds to take possession of properties previously owned by the sick and the deceased patients who were unable to pay the doctors.

     Would such government be seen as humanitarian and compassionate or more interested into amassing capital, power, and controlling lives?  Or is it that such government is vastly dominated by incompetent idiots that can’t even save its own people?

     Even as our newly elected President undoubtedly presides over his new job with good faith, we can see that he intends to solve our problems by bearing us deeper into the problems that started our economic downturn with more infusion of socialism to our capitalistic system.  Our Congress is hallucinating with a new 850 billion stimulus package that supposedly is going to fix our economy.  First problem with it is that most of the stimulus money will take months or years before it hits the economy.  Second, it is full of waste such as 650 millions to subsidize TV digital signal converters.  Be aware that the total amount appropriated for this program is over a billion.  This converter appropriation is a subsidy for the liberal news media as to ensure that they maintain viewership.  It is also designed to ensure that the recipients continue to be exposed to liberal-socialist indoctrination.

     This ridiculous stimulus package should bring a lot of confidence to those who can see past their nose.  It has only been a few days and so far, our new President has shown nothing yet other than appeasing the naive of our society.  We don’t see moves that indicate real solutions to solve our problems.  He is already playing political games as if it was of real importance to close a prison where America haters are kept and declare illegal the means by which in the past were used to keep us safe from them.  Until President Obama shows some real leadership, hope is only for those Kool-Aid drinkers who blindly adore and idolize him.

     Welcome to today’s America governed by the clueless.  God help us!