Paulson Asks for Another Fix

Treasury Secretary Paulson asks for the remaining $350 billion:

Treasury Secretary Henry Paulson urged Congress to release the second half of the $700 billion financial rescue fund after the government exhausted the first $350 billion in less than three months.

Congress, which passed the Troubled Asset Relief Program on Oct. 3, “will need to release the remainder of the TARP to support financial market stability,” Paulson said today in a statement released in Washington.

The Treasury today agreed to lend $13.4 billion to General Motors Corp. and Chrysler LLC, after spending $335 billion mostly to increase bank capital. Lawmakers, who can vote against giving Paulson the remaining funds, have criticized the Bush administration for not using the rescue package to help stem foreclosures.

Paulson’s call for the other $350 billion may set off a debate in Congress, where some members have demanded more help for struggling homeowners. House Financial Services Committee Chairman Barney Frank said today he’s crafting legislation to unlock the unallocated money.

Today’s statement from Paulson wasn’t a formal request for the funds, a move President George W. Bush or his successor would have to make. Paulson intends to consult with Congress and President-elect Barack Obama’s staff on the strategy for officially requesting the next $350 billion, a Treasury official told reporters on a conference call. The official, who spoke on condition of anonymity, said he expected talks to begin soon.

Hopefully lawmakers will look back and ponder whether or not this whole program has been working, or if it hasn’t rather been a complete utter failure. As noted before, the program won’t work, it will make things worse. No matter what Paulson claims to use it for, it will be squandered, executives will take out as much as they can, and everyone is going to act surprised when they find out.

Unfortunately, lawmakers are braindead at this point.

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Bailout Fatigue is Setting In

After about $8.4 trillion pledged so far for numerous Auction Term Facilities, Troubled Asset Relief Programs, bridge loans,  to failing banks and businesses, one has to wonder how many more failures the government wants us to support.

House Democrats Barney Frank and Nancy Pelosi have clearly lost their minds and their last shred of common sense over the past months. They can’t do any more than repeat the same utter falsehoods, lies, and scams. “Bankruptcy is not an option” (…because I say so). “Letting them fail would lead to an epic disaster” (…so please, come on, give us more of your money!!).

After each taxpayer has now committed about $56,000 one has to sit back for a moment and ask “Has this been working so far? How much more money should we take from the people? How many more useless projects should we support with it? How much longer should we prolong the agony?”

Among reasonable people in congress one can sense the bailout fatigue. The car bailout of the big 3 in Detroit exemplifies this brilliantly: First it was going to cost $25 billion. Then it went up to $34 billion. Then one guy testified that over $100 billion might be needed. After it became obvious that House Republicans wouldn’t play ball the last desperate moves were made to tap into an existing funding package of $15 billion which was supposed to support clean energy cars. Then $1 billion was set aside for environmental programs. Now the scammers were hoping to at least take the remaining $14 billion.

One hour ago even this bill was voted down. Thanks, Senate Republicans for getting it right this time. That wasn’t that hard, now was it? You could have done this much earlier. It could have saved us roughly $8 trillion.

I don’t doubt for a second that Nancy Pelosi, Hank Paulson, Harry Reid, and George Bush are already convening in order to figure out a way how to force the scam down the taxpayer‘s throat this time.

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Government Intervention and The Great Depression

I liked today’s email newsletter statement from Andrew Davis, the Libertarian Party’s Director of Communications:

“The 1930s recession became the Great Depression because policymakers didn’t take the necessary actions,” said Democratic economic adviser Jared Bernstein in a recent Washington Post article. “Nobody wants to make that mistake this time around.”

This comment from Bernstein summarizes the prevailing mood of the Obama administration as it looks to take over the reins in January.  So, what does this mean for you, the taxpayer?

Unfortunately, more government spending.

Obama has just recently announced plans to spend at least $700 billion in order to stimulate the economy. This figure includes New Deal-styled programs that will explode the size of government, and dramatically add to the national debt—money that will be owed by generations to come.

Talk about redistributing the wealth!

Despite the obvious problems with government spending even more money when it should be cutting spending, Obama is projected to sign into law a new “Raw Deal” for the taxpayers within days of becoming president—if not even on the day he is inaugurated.

The justifications you will hear for this new spending all revolve around the “New Deal” policies of the Great Depression, so we thought you should know the truth about Obama’s “Raw Deal” and the myths behind what really pulled the U.S. out of the Great Depression.

Here’s a hint: It wasn’t FDR.

Like Democrats, “many people are looking back to the Great Depression and the New Deal for answers to our problems,” says George Mason University Economics Professor Tyler Cowen. “But while we can learn important lessons from this period, they’re not always the ones taught in school.”

What Cowen means is that the conventional wisdom of the Great Depression is absolutely wrong: Government spending did not save the economy.  “In short, expansionary monetary policy and wartime orders from Europe, not the well-known policies of the New Deal, did the most to make the American economy climb out of the Depression.”

Harold L. Cole, an economist at UCLA, agrees with Cowen:

“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes. Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

This is the danger we face with Obama and his “Raw Deal” for taxpayers.  Instead of staying out of the economy and letting it work itself out, Obama is continuing the same policies as those of FDR and the Bush administration and spending taxpayer money that will have no positive results.

And it’s not just the spending we have to be worried about under an Obama administration; it is the regulatory policy that may come as a result of using capitalism as a scapegoat for the recent economic crisis.

“There is a familiar urge to restrict those who got us into this mess, but regulation is a nasty business—nasty because the law of unintended consequences is always there to show us how we got it wrong,” says Thomas F. Cooley, the Richard R. West Dean Of New York University’s Stern School Of Business, and Lee Ohanian, an economics professor at UCLA. “The danger we face at this fork in the road is the conventional wisdom that associates more regulation with better regulation and more restrictive policies with less risk. History teaches us that the opposite is usually true and that the costs of getting it wrong can last for decades.”

If Obama is to learn anything about the economy from the lessons of the Great Depression, let it be that government intervention is like sending a car mechanic to perform open-heart surgery.  The complications that arise will have long-term, catastrophic effects.

What better example of this than Fannie Mae—a product of the New Deal that is now at the heart of today’s economic problems.

The Libertarian Party and our members have been saying this from Day 1 of the economic crisis (and for many, many years before): Government is not the answer.

Our solution? Less is more.  That is, less government is more economic prosperity.

Essentially, get government out of the way so that the market can adjust.  This path will not be without its bumps and hardships, but it’s best for the long-term economic stability of the nation. What would have taken three or four years to fix through the market will now take at least a decade because of government intervention.

In the coming days of financial woe, and the coming years of the Obama administration, remember the lessons of history and challenge those around you to avoid continuing the myths of government effectiveness, especially when it comes to economic policy.

Live free,
Andrew Davis
Director of Communications
Libertarian Party

Amen to that.

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Abolish the Fed?

I think the easiest, and most convincing proposal toward sound money is the following: Don’t abolish the Fed. Leave it in place. But allow other individuals to compete in the business of money production. Don’t prosecute them for producing their own money. Don’t force individuals to accept paper fiat money via legal tender laws. Leave it up to them to decide which money to accept and which not to accept. Let the consumers decide whose money they prefer. Don’t tax them when a high quality money that they are using becomes more expensive in terms of another, inferior money. Get rid of capital gains taxes on gold and silver.

The crucial problem that is rarely ever discussed is not the money printing by the fed. It is the fact that this money is forced upon the people, and that competing with it is outlawed. Let the Fed suffer the humiliation of going out of business for its inability to compete…

Abolish counterfeiting laws.
Abolish legal tender laws.
Abolish capital gains taxes on gold and silver.

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Dear Senator/Congressman, you are making a huge mistake…

…if you let this $700 billion bailout bill pass.

Remember how you were going to stand up to this administration?

Remember how you said “No blank check for this President!”?

What has happened to that?

The Paulsons and Bernankes in this scam are nothing but the Cheneys and Wolfowitzes of the Iraq war.

Remember how congressmen/-women and senators regret their votes on the Iraq bill? You must have thought to yourself back then “How could they??”. Now you are about to do the same thing!!

These people don’t have the solution to the financial crisis. They have been wrong on everything they said. Remember how Paulson said a few weeks ago the banking system is sound? Remember Bush’s endless reassurances that the economy is strong and stable?

Why listen to these people?

Why not sit back for a second and listen to the people who have been talking about this problem for years? How about listening to the people who have been right on everything? The people who saw this coming and who have again and again presented logical solutions. In particular I would like you to take a look at what these two people have been talking about for years, even decades:

– Ron Paul (http://www.campaignforliberty.com/)
– Mike Shedlock (http://globaleconomicanalysis.blogspot.com/)

You have to understand: This bailout plan is more of the same. The cause for the credit crisis is that the federal reserve and government entities like Fannie Mae and Freddie Mac have been buying up mortgage backed securities with taxpayer money and/or printed money. It has been fully explained by the theory of credit expansion. This bill suggests more of that. It will not fix the situation, it will aggravate it!

I hope you take at least five minutes to seriously think about what I just wrote.

I am furious. I cannot believe what is going on. Especially since we have had this kind of rush scenario again and again. And every time we asked ourselves afterwards: “How could they approve that?”

Sincerely,
Name
Phone Number

(This was first posted on 09/25/2008)

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