The AIG mess was big news over the last week, made so by a government that quietly monetized our debt to the tune of trillions of dollars (is anything done with less than a trillion anymore?). Forget for a moment that this government is making our country’s untenable financial position much worse. What happened between our government and the employees of AIG over the last two weeks is inexcusable.

     As the government appointed head of AIG sat before a congress that has made a habit of browbeating the leading businessmen of the country, Barny Frank demanded the names of the people who had received bonuses, bonuses that were paid under contract and approved under the stimulus bill (that no one read), bonuses that were to be paid under the AIG reorganization developed by Treasury Secretary Timothy Geithner.   When CEO Edward Liddy was reluctant to release those names because he said his employees had been receiving death threats, Barny Frank just shrugged it off. He didn’t care that the class warfare that has been a staple of his party and liberals everywhere was now resulting in death threats against the “wealthy”.   Mr. Cuomo wants the names as well and threatened to publish the names of those who did not return the bonuses. A senator called on the executives to kill themselves in their shame. The House of representatives actually voted to target these specific citizens, an official legislative action! ACORN then rented a bus to take protestors to the homes of these executives. Our government is using its power to shame and threaten (that would be extortion for us) law abiding citizens who were guilty of no crime into giving up property they received under legitimate contracts, contracts approved of by the very government perpetrating this outrage!

     It is time to turn the tables. It is time the fear was felt by those who supposedly work for us. It is time that we stopped being pushed around by our government and started pushing back.   If Barny Frank thinks it is funny that executives get death threats and have their homes picketed and are fearful for their children, perhaps it is time the executives we have elected to run our country had their feet held to the fire for screwing it up far worse that any executive at AIG. What if a mob showed up outside Barny Frank’s expensive home, or Nancy Pelosi’s, or Chris Dodd’s, or Harry Reid’s? What if we showed up as they did in the old days, with pitchforks and tar and feathers? What if we hung them in effigy?  What if we showed them we were not going to put up with their stupidity and incompetence any more? What if we insinuated, as Frank did, that we were not particularly interested in their personal safety? The arrogance of these second rate minds in our government will only grow if they continue to get away with it. They are just playground bullies grew up. Do you think Barny Frank was picked on in school? Do you think the pudgy little effeminate boy with the slobbering lisp got beat up as few times? How the people of Massachusetts ever looked at someone like him and said “you know, I think we should have someone like him representing us in congress”. Are you kidding? The same goes for half the dim bulbs up on the hill. Now the taunted ones are getting back at all the people they perceive as more powerful or successful than they are or could be, given their limited intellectual talents. If these people are going to engage in Mafia tactics and turn our great country into a banana republic, it is time we exercised the rights endowed by our Creator, recognized by our Founders and enshrined in our Constitution.

....whenever any Form of Government becomes destructive to these ends, it is the Right of the People to alter or to abolish it, and to institute a new Government, laying its foundation on such principles and organizing its powers in such a form, as to them shall seem most likely to effect their Safety and happiness.                 Declaration of Independence

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Why Socialism is Bad for YOU

     It is hard to get people to understand the inherent dangers of socialism when all they see are the benefits. President Obama promises to help people with their mortgages and provide their health care, we have relied of Social Security for our retirement, subsidized loans and grants for education, corporate and individual welfare, bailouts and stimulus checks. But as even President Obama admits, there is no free lunch. What is the real danger of a socialist relationship between the citizen and his government?

     To illustrate this, consider this analogy. America and its citizens are an army, organized into privates, officers and generals. The generals are our leaders in Washington. The officers are business owners, be they lieutenants or colonels. The rest of us are privates. When the army was assembled everyone provided their own equipment and carried their own supplies. The generals gave general directives to the officers who used their own intelligence and initiative to carry them out (every analogy has its limits and this is one. Under the constitution Washington does not direct business leaders or private citizens but bear with me, this is not the point of the analogy). The privates were well trained, in good shape, knew how to live off the land and knew their duty. The army marched forward, every step brining them closer to a glorious future. If a platoon or even a division got into trouble, the rest of the army could move in to help. Incompetent officers or individuals were removed or killed in battle. The American army was a lean, effective force for over one hundred years.

    At the turn of the twentieth century, however, the lean mean fighting force that had been so successful and prosperous started to change. First, some of the strongest officers and privates were forced to carry the packs and equipment of some of the others (Graduated Income Tax). Although inconvenient for a few, it didn’t slow the army very much. Twenty five years later, however, a big change came to the army. A lot more of the officers and privates were being forced to carry the equipment of others and a new concept was introduced. Wagons were built to carry some of the privates who were not as fit as some of the others and in addition to carrying the equipment, the stronger officers and privates were now forced to pull the wagons (the New Deal). This slowed the army considerably and because the people in the wagons were not contributing to the provision and success of the army, everyone else had to take up the slack. Even the generals started to pull the wagons and since they were concerned with this, they spent less time planning strategy and overseeing the health and welfare of the whole army.

     Thirty years later, the generals decided to put even more people in the wagons and as a result, even more wagons were built. Now there were a whole new crop of privates who never even went through basic training, had no idea how to contribute to the army and no motivation to do so (The Great Society). They just rode in the wagons and often derided the officers and privates who were pulling the wagons, officers who were becoming fewer and fewer. This slowed the army even more and made it very difficult for it to maneuver effectively to meet any new challenges.  

     Over the next forty years, more wagons were added, more people climbed on and fewer people were left to pull them. Now we come to the age of General Obama who has invited everyone to climb on the wagons in the belief that a few officers, privates and generals like himself can pull wagons full of untrained, lazy troops wherever they are needed and then deploy them effectively. The generals berated and beat the few officers and privates who remained to pull the wagons until they gave up and either deserted or climbed in the wagons as well. Soon the whole army is in the wagons and the only ones pulling it are the generals. The people in the wagons, if they had any training to begin with, have lost it. They are relying of the generals to do everything. The generals feed them, carry their supplies and transport them where they need to go. With a fat, lazy untrained army being pulled by generals who spend all their time on the details and none on strategy. The army cannot be deployed with any effectiveness and with no coherent strategy, they end up going in circles.

     The army was never designed to operate this way and the generals cannot pull all the weight indefinitely. One of three things will happen to the generals. Enemy snipers will take them out, they will drop dead from exertion or they will turn on each other. Either way, when the generals are gone, panic will follow among the troops. Suddenly they are no longer being fed and cared for, they find they have to carry their own equipment in their poor physical condition and it is equipment they have no idea how to use, and they have no direction. If the enemy attacks or the elements turn against them, most of them will die. 

     The point is this. People who put all their money in Lehman Brothers or gave it to Bernie Madoff found out the hard way that when you put all your money in one basket, the risks are very great. That is why diversification is recommended when investing. America is doing the same thing with the Federal Government. When the country was founded the federal government had a minimal role in our everyday lives and power was shared with the states and the people. The American people were tough and self reliant. Today, we rely on the Federal Government for so much. Our “Safety Net” has become an integrated support system that we all partake of. We depend of the Federal Government for our retirement, unemployment, health care, subsidies, insurance and a myriad of other things. What happens when the federal Government no longer has the money for these things? What if we can no longer sell our debt to the Chinese, when we have taxed the “rich” into giving up, when the interest on our huge debt crowds out most other expenditures or when we have printed so much money it becomes worthless? What happens when the Social Security and welfare checks stop coming or are paid in worthless dollars? What happens when doctors no longer receive payments or the next hurricane comes through and there is no federal aid? What happens when all the federal regulatory agencies can no longer be funded? We have turned over so much power and responsibility to Washington for so long that too many Americans no longer have the common sense and initiative to fend for themselves. It is bad for the country and it is dangerous for you and I.   The question you need to ask yourself now is “Am I in the wagon?” and “What am I going to do when the general stops taking care of me?” For too many Americans the answer to the first question is “Yes” and to the second is “I have no idea”.

www.patricksamuels.com

The Real Revolution-Sweden or Stalin

     In case you haven’t noticed, there is a real revolution happening in the US of A.   No, I’m not talking about a revolution led by NRA types or the many disgruntled conservatives and libertarians who are unhappy with the course of this nation. Yes, there are a lot of angry people out there and there are talk radio hosts and political commentators who reflect, and at times, encourage, that anger but there is no revolution brewing there. Revolutions require political power and leadership and right now conservatives and libertarians have none and as cowardly and spineless as Republicans have shown themselves, they are unlikely to recapture it anytime soon.

     No, the revolution I am talking about is happening in Washington DC as you read this.   The United States has been the victim of a bloodless coup whose aim is no less than the replacement of the constitutionally limited government on which our nation was founded and replacing it with a one party socialist, or dare I say, communist, political system. I know that is a loaded statement but after observing President Obama and the other Democrat leaders for the last six weeks and considering their proposals, I have come to believe it’s true. After observing their words and actions since the first of the year there are two possible conclusions. First, these people are really stupid and totally incompetent and their first few weeks in office have demonstrated an ignorant disregard of the history of this country and basic common sense. Although my opinion of politicians in general is very low, I don’t think any group can be that stupid. The second possibility is that they are choosing to set common sense and this nation’s history aside because they are pursuing a malevolent agenda in which they desire to replace that which has gone before with a system that will ensure their own power. I have come to accept this as the truth based on the following evidence.

     Exhibit A is the fact that everything they are doing is aimed at destroying the personal wealth of the citizens of this country.   Economic freedom is the basis for all freedom. The founders understood this.   It was economic freedom over which they rebelled and it was to ensure the greatest personal freedom in economic spheres and all others that they formulates a constitutionally limited government. Look at the first two amendments to the Constitution. Without the wealth that results from economic freedom, your freedom to speak will mean little. It takes money to make yourself heard beyond the sound of your natural voice. Without wealth there will be no exercise of your right to keep and bear arms for the poor cannot afford such things. Then there are our everyday choices. Economic freedom allows us to choose which businesses we support and which charities we give to. This creates an efficient and compassionate society, two things that have made this country great and two words that are never applied to government.

     All socialist/communist governments limit or eliminate the economic freedom of their citizens. Some will confiscate it, literally stealing their citizens money and throwing them out of their homes. We are not there...yet. This revolution is content to literally destroy our wealth, hoping that we will not blame them but look to them as our savior when we have nothing left. Sound too harsh? I don’t think it’s harsh enough. Consider this, where do most Americans have their wealth? Two places, their homes and their retirement-the stock market. The destruction of the housing market can be tied directly to Barny Frank and Chris Dodd and their coddling of Fannie Mae and Freddie Mack and their desire to encourage, and at times, threaten, banks to give loans to people that shouldn’t have qualified. That wealth is disappearing and what is left is very difficult to tap with credit markets being tight. To make recovery difficult, the administration is removing the incentive to buy by removing some of the mortgage deduction. Only someone stupid or malevolent would look at the present housing market and increase costs on people who may be in a position to buy.   Only someone stupid or malevolent would attempt to empower judges or force banks to throw out signed contracts and reduce actual principle amounts on loans which will only raise interest rates for all and make home buying more difficult.   

     What about the stock market? The majority of Americans that have money have money there, mostly in retirement savings. Certainly the bursting housing bubble contributed to the market’s decline but that is not the whole story. Larry Kudlow rightly describes President Obama’s policies as a “war on investors”.   Just as the way to turn the housing market around is to let it finds its bottom and encourage people to buy, so it is with the stock market. But President Obama’s statements scare people. Nobody wants to buy stock when the president tells them the crisis will be getting a lot worse. Then there is all the tax hikes on investors, dividend tax increases, capital gain increases, income tax increases, the double taxation of corporations. Who wants to invest when the government has its hand in your pocket before you do? Then there are the policies of running the printing presses full time and begging unfriendly foreign governments to continue to fund our enormous debt. Haven’t these people heard of Argentina or any number of other governments that have tried to spend and borrow their way to prosperity? It doesn’t work and Wall Street knows it.   But the Democrats don’t want the market to recover. They are at war with the successful people in this country because wealth is power and they want it all. I personally predict the Dow will drop to triple digits before it is all over and all the retirement and pension wealth of this country will be wiped out. The the government security net will be all that’s left for everyone.  Everyone equally dependent and equally miserable.    

     That is not all. Not only does the government now want to destroy wealth, it wants to make sure no new wealth is created. It would appear that they are doing everything they can to make sure the economy never again becomes the wealth creation engine for the world. Both Ronald Reagan and George Bush “inherited” recessions but they didn’t go to these depths. History can be a good teacher but the Obama administration is ignoring it in favor of a course of action that most economists (and the administration!) agree is the opposite of what should be done during an economic downturn. Exhibit B. It is a very bad idea to raise taxes during a recession, particularly on those who are the engine of the economy. Just when we need people to spend money, the government is going to take more of it. But this is just the “down payment” on the administrations war on the “rich” which includes many more of us that we realize. There are a lot of taxes that the other “95%” of us are going to pay. If cap and trade passes, energy costs will go up over 50%. The 634 billion dollars that comprise the “down payment” on a universal health care program we haven’t seen yet will cost trillions of dollars that we will all have to pay.    As spending goes up, interest payments skyrocket, entitlement spending increases exponentially, the money will have to come from somewhere. We can only borrow and print so much, eventually, it will have to come from all of us. Soon, those high rates on “the rich” will affect all of us and we will be left with a small allowance while the great bulk of our income is confiscated to pay for all these “free” government services.

      Exhibit C.   The federal government is working hard to eliminate competition to its power and doing its best to make sure that everyone looks to it for their needs. C1. The debate among some governors as to whether to take the stimulus money because they rightly understand that taking the money now will make them dependent in the future and federal money always comes with strings attached. By making the states beholden to federal money they can be brought under federal control and will bend to federal will when necessary even though the constitution reserves most power for the states and the people. C2. The reduction of the tax deduction for charitable giving. Just when the economy is in a downturn and charities are seeing a drop in contributions and a rise in demand, the government wants to reduce the incentive to give by those who have the money to give. Sure, the budget includes a small percentage of the projected loss but make no mistake. If a lot of charities fold, the government is more than willing to take up the slack. Those that don’t fold and find it necessary to take federal money will find themselves effectively regulated and run by the government. Its all about control and concentrating it in Washington.

     Exhibit D. Control of the economy. The nationalization of several banks and the money we continue to pour into AIG and Detroit are the early stages of this. The fact that lawmakers have shamed and scolded the leaders of whole industries by dragging them before congress is easily compared to the attitude communists havealways had toward capitalists. The fact that there are already a myriad of regulatory agencies and complicated tax law that give Washington control over business will pale in comparison to what is coming. If no one is allowed to fail and our money is used to prop up businesses that made bad decisions, our whole economy will suffer. Innovation is a result of competition and risk. If risk of failure is removed competition becomes meaningless, innovation goes out the window and corporations, particularly large corporations, will become...just like government. The consumer suffers because prices will rise and quality will go down. What did the Soviet Union ever produce that the world wanted? Do we really want to follow that model?

     Some of these things have been described as “temporary”, that these measures are necessary now and will be removed when the economy recovers or the businesses involved can stand on their own two feet. If anyone believes that I’ve got some foolproof investments to sell you that are guaranteed to return 200% per year for ten years.   Ronald Reagan said that the closest thing to eternal life we know is a government program.   There are government programs that have long outlived their usefulness, government programs that have demonstrated themselves to be detrimental and still go on. Government never relinquishes control once it has it. What about welfare reform, you say? A rare reduction which is about to be reversed in a big way. This is perhaps the scariest part of all of this. Once these things are implemented, putting Republicans back in power isn’t going to change it. They have shown themselves inept and spineless and will not rescind these programs. Do you really think that once people have “free” health care, the Republicans are going to take it away? I don’t think so.

      The question is, will there be a change in party again or are we becoming, effectively, a one party country? Exhibit E. There is a two pronged approach to securing power among the Democrats. The first is to silence the opposition. This will be done through some form of the “Fairness Doctrine”, even if it is called something else. Most of the media is already in Lord Obama’s pocket, no better than the Pravda of the old Soviet Union. The media makes the party look good whenever possible and will defend or minimize mistakes. Talk radio, unfriendly media outlets and the Internet must be controlled or silenced. The Democrats and liberal Republicans will then be able to get their message out and count on a friendly media to destroy their opponents. The second prong is to expand their voter base. Both parties have been fighting for the illegal immigrant vote but with more goodies to hand out, the Democrats will win this one. This can be the only reason both parties have refused to control illegal immigration even though it has proven destructive to the economy, violent and divisive. If twenty million illegal are given amnesty under the Democrats, there is no doubt those that aren’t already registered will do so as Democrats, many in Texas, Arizona and other “red” states.   Then there is the expansion of unions under the so called “Freedom of Choice Act” which is just the “Freedom to Bully People into Joining a Union Act”. If this passes, unions will muscle there way into a myriad of other businesses, prices will go up and competitiveness will go down. Just compare domestic car plants run under the UAW and those that aren't. Which are competitive and which are not? Add all those union workers to all the federal union workers that will be added to run all these new programs and the voter base for the Democrats and the amount of money they receive will increase exponentially.