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From The Mailbag

20 years

hat happens when the whole economy sinks underwater like Atlantis? Other than fading into oblivion, that is. The tsunami-like impact will closely resemble what happens to a home owner with a mortgage that is construed to be underwater—only on a much grander, and much more devastating, scale. When the balance owed on the home's mortgage exceeds the appraised value of the home, that mortgage is said to be underwater. Conversely, when the aggregate sum of the debts owed by a nation to its creditors exceed the ability of the nation to repay those debts, one can honestly say that nation is "underwater" and risks becoming a 21st century version of Atlantis.

Think in terms of the money owed to the bankers who financed the debt compared to the ability of ensuring generations of taxpayers to pay back the largess of the State. Congress just enacted what the politicians called a "stimulus bill"—the American Recovery and Reinvestment Act of 2009. Rhetoric aside, Public Law 111-016 won't stimulate anything except more corporate welfare and a larger monkey on the backs of the middle class taxpayers who are expected to repay it.

The legislation that was supposed to save the economy cost the taxpayers $789.5 billion. It was preceded by the $700 billion Emergency Economic Stabilization Act of 2008, which was preceded by HR 5830, the housing bailout bill that was supposed jumpstart the housing industry. (Buried in HR 5830 was a provision that would make permanent a temporary rule from 1988 [which expired last year] that let the IRS engage in a undercover sting operation in order to trap tax cheats. In 1994, the Clinton Administration reported that the IRS had 126 field agents involved in this program. The IRS was allowed to open tax preparation centers where IRS agents posed as civilian tax preparers. In the sting, the tax preparer tells his customer that "...I'm not sure that this deduction is entirely legal, but it will save you $1,000. Want to take it?") If you said "yes" you just got stung in a tax sting. Within a matter of weeks you would be notified by the IRS that your filing was flagged. So, if your vocally anti-IRS tax preparer tells you something like that next month, just say, "No thanks. I believe every American should pay their fair share. After all, someone has to pay back the three trillion, five hundred and seventy-nine billion dollars that Congress just saddled our children, grandchildren and great-great grandchildren with. We might just as well start paying it back now before accumulated interest turns that sum into real money."

The Barney Frank [D-MA] Housing and Economic Recovery Act of 2008 that started the current rash of "stimulus giveaways," pledged $300 billion to let the banks cherry pick the worst subprime mortgage loans in their portfolios and shift the burden of paying them to the taxpayers—up to $300 billion. Now, add those "stimulus" programs together and we have a whopping $1,789,500,000,000 before adding in the $450 billion currently being voted on in Congress—HR 1105, the Omnibus Appropriations Bill for 2009—that was passed in the House on Feb. 25. It was an almost party line vote—245 aye votes and 178 nays. The Senate now takes up the measure. With a virtually filibuster-proof upper chamber that will march lockstep with the socialist drumbeat of the Obama Administration on spending someone else's money and growing the size of government, its passage is virtually assured. (For the benefit of conservatives who believe there is no difference today between Republicans and Democrats, let me give you one real important distinction. The Democrat believes that all of the money in your pocket belongs to the government and that its merely taking a circuitous route through your checking account before it ends up in the Treasury. The Republican understands that the money you earn belongs to you and the economy grows when you are allowed to keep most of it. Think about that next November when you vote for third party candidates that can't win. You can tell yourself you did the right thing as you scour the help wanted ads looking for a part-time job to earn the extra money you will need to pay your fair share of phase two of Obama's redistribution of wealth—that is, if you still have your full-time job.)

Appropriation bills for the following fiscal year are usually enacted each year in October. The far left Congress delayed the FY2009 funding bill because President George W. Bush threatened to veto it because it contained 8,570 earmarks. When Obama won the election the Democratic leadership simply tabled the measure until their guy made it to the Oval Office. When Obama railed against earmarks in the appropriations bill he failed to tell the American people that he had a few in this piece of legislation. When the Republicans revealed that fact that then Sen. Barack Obama had earmarks for his favorite contributors in the Appropriations Bill, the Obama White House took an eraser to the legislation. No, they didn't remove the earmarks—they removed Obama's name as the sponsor of the earmarks so that he doesn't appear to be the hypocrite he actually is when he rails against them. Earmarks, if you will recall was a major campaign issue between Obama and his GOP opponent, Sen. John McCain [R-AZ] when Obama told cheering crowds across the country that "...we need earmark reform," assuring voters that when he was elected, he would "...go line by line to make sure we are spending our money wisely." Except a DC US District Court Judge ruled that the line item veto enacted by Congress during the Clinton years was unconsititutional, so presidents can't go line by line and eliminate pork.

When Obama signs the Omnibus Appropriations Act into law, it will bring the current bailout of everyone except the middle class taxpayers who are expected to pay for it, to $2,239,500,000,000. Just so you can really appreciate those mind-boggling numbers, let's put those numbers into words. That's two-trillion, two hundred thirty-nine billion, five hundred million dollars in real words—and in real money—or, at least, in real fiat money. Add in the interest we get to pay to the transnational bankers who own the Federal Reserve, and we're finally talking about real money here because, by the time our great, great, great, great grandchildren finish paying for our stupidity, "we-the-people" will have collectively been saddled with compounded debt totaling around $71,664,000.000, 000.00 and some change. Again, in real words, that's seventy-one trillion, six hundred sixty-four billion dollars. In one dollar bills, evenly stacked on top of one another, that's one humonguous mess of greenbacks to pick up off the floor when someone kicks it over.

As the Bush-43 banking regulators began examining the collapsing subprime mortgage industry, they discovered that in at least 46,717 cases, the loans that Congress wanted credit worthy taxpayers to absorb through the Housing and Economic Recovery Act of 2008 were obtained by minority buyers through misrepresentation and/or out-and-out fraud—loans they could not get without lying. In most cases, the income levels, debt ratios, or other pertinent data needed to determine credit worthiness were never verified. Loans, arranged by commissioned mortgage brokers, that should never have been granted were given. For the most part, the loans granted were toxic adjustable rate mortgages that were, in and of themselves, ticking time bombs, waiting for the first ARM adjustment to implode.

Under the Housing and Economic Recovery Act of 2008 , Uncle Sam was supposed to buy all of the foreclosed subprime mortgages, remove them from the banks' bad debt inventories, and with an influx of new money, restore liquidity to the banks and mortgage companies and jumpstart credit buying by consumers. Sounds simple. And, it was. Had Congress mandated that was what was supposed to happen with the $700 billion, and had it happened that way, this would have been a very short article because the financial crisis would be over, the stock market would have rebounded and the American people who voted for Barack Obama would all have bumper stickers on their cars that said: "Thank me, I voted for Obama." Instead, in a few more months you'll be seeing bumper stickers that say: "Don't blame me. I voted for Sarah Palin" or, my favorite: "Obama, 2008; Depression, 2009."

That's what happens when the American people elect a completely inexperienced novice as president. Obama lacks even the most basic rudimentary skills in the diplomacy of governance at this level. The man had slightly over one year's experience as a junior Senator when he threw his hat in the ring for the Oval Office. As of this writing, the man's been president for about 40 days and, giving him the benefit of doubt on the learning curve, 40 nights. Instead of governing, he's still campaigning against George W. Bush. Had the nation's Chief Executive, its politicians and the newly-installed bureaucrats on Pennsylvania and Constitution Avenue known what they were doing, they could have solved the financial debacle caused by the subprime mortgage mess before it became a mess. Had they invested enough dollars early on (not $2,239,500,000,000.00)—probably about $800 billion total—and sold the bad debt to the Resolution Trust Company, swift action would have restored liquidity to the nation's banks, there would be no crisis today. But, mess—and more mess—is what the far left needed to create a Rooseveltian "national emergency" that would require massive socialist government invention to fix. That is, after all, why Obama chief-of-staff Rahm Emanuel laughingly told the media: "You never want a serious crisis to go to waste."

No one understood that quip better than Franklin D. Roosevelt. With a mirror economy of 2008 in 1932, FDR had no intention of letting the Recession of 1929 go to waste. Roosevelt knew when people are hurting, you can do just about anything to them as long as they think you're trying to make life easier for them. FDR knew he could manipulate the economic and societal structure of America and create a socialist democracy in which all men would share equally in the cornucopia of the land of plenty. But they would share it at the expense of the middle class, not the rich. In every socialist society, the rich and the poor prosper. Only the middle class suffers.

The program that was supposed to fix the financial crisis in America is known by the acronym TARP (Troubled Asset Relief Program), Public Law 110-343, and is part of the refurbished Emergency Economic Stabilization Act of 2008 that was originally voted down and then enacted. TARP was supposed to be run by the newly created Office of Financial Security in the Treasury. The $700 billion "stimulus" was split into two parts. Under the first part, $250 billion of TARP money (with the President having the prerogative to add an additional $100 billion) was supposed to fund a mortgage-backed securities purchase program to offset the loses investment companies suffered when the subprime mortgage industry collapsed.

The second part of TARP was the "whole loan buyback program." This program—which was never implemented because it would have ended the crisis before it became one—would have unclogged the credit crunch and reopened the credit pipeline to consumers. The question is, when money was allocated for this project TWICE, why were the foreclosed subprime mortgages that clogged the credit pipeline never sold to the Resolution Trust Corporation? Two reasons.

First, several very large banks—Citibank, Bank of America, Wells Fargo and JP Morgan Chase among them—didn't want the crisis to end before the profit-taking was done. Like Rahm Emanuel, none of them wanted to let a good crisis go to waste. Eight of the nation's leading banks received $176 billion to jumpstart the economy by feeding the money into the credit stream. Instead, they used the money to buy banks declared insolvent by the Fed. Let's understand how that works since none of the insolvent banks were actually insolvent. When the subprime crisis happened, the housing market died overnight. As hundreds of thousands of defaulted mortgages became 2.25 million foreclosures, mortgage money virtually dried up and the value of homes across the country plummeted, making it virtually impossible for troubled home owners to sell out from under teetering mortgages they could no longer afford. Homes that cost a half million dollars or more were suddenly only worth their pre-housing boom values which many times, was only 25% to 40% of the balance owed on those existing mortgages.

On paper, banks like WaMu and IndyMac and mortgage companies like Countrywide, which invested heavily in subprime mortgages, were in trouble. The collateral guaranteeing the mortgages was suddenly diminished by anywhere from 40% to 75% or more, destroying the banks' asset to debt ratios. Under the model known as fractional reserve banking, banks are allowed to keep only a fraction of their deposits (assets) on hand to meet depositor demand while they loan out the balance. This is done with the tacit understanding that the banks are required to keep enough liquidity on hand to meet all depositor demands. When Fed officials feel a bank is in jeopardy of being unable to meet those demands by borrowing on its own collateral from the Fed (even if a demand for payment by depositors has not been made), the Fed has the authority to declare those banks to be insolvent. Those banks are deemed to be "underwater"—just like the asset-to-debt ratios of the homeowners when the values of their homes plummeted as the housing boom imploded. The value of millions of homes across the country—not just those in default—were suddenly worth only a fraction of the balances still owed on them. Tidying up after themselves, the Fed declared those banks to be underwater. They were officially insolvent. And rather than risk the possibility of those banks actually closing and the collapse cascading like falling dominos across the land, the Fed quickly found buyers for the troubled banks and before the boards of those banks could say, "We don't want to be sold," the Fed seized their assets and sold them.

Second, using Roosevelt's 1932 playbook, Obama knew that before the socialist far left could get away with re-engineering democracy in America by erasing even more of the Bill of Rights, there would have to be a crisis of such monumental proportions that he could disguise the redistribution of wealth as a necessary stimulus to jumpstart our failed economy in order to stave off what doomsayers believed might be another job-crushing decade-long depression. And, like FDR, Obama knows the crisis has to be severe enough that society fears the catastrophe more than the "cure." Between Woodrow Wilson and Roosevelt, the one-worlders stole the American dream and tried hard to replace it with the Orwellian one-world nightmare that today's New World Order, steered by the USS Obama, is close to implementing.

In 1993 the Democratic trifecta (House, Senate and Oval Office), at the urging of Treasury Secretary Lloyd Bentson and then Assistant to the President for Economic Policy Robert Rubin, amended the Community Reinvestment Act of 1977 (Public Law 95-128, Title VIII, 91 Stat 1147, 12 USC § 2901) to "solve" the problems of the inner cities and distressed rural communities by eliminating what they called the "redlining" of minority applicants for home mortgages. Under the new law, banks that denied loans to minority credit applicants because they were low-income minorities in blighted areas, face civil and possibly criminal penalties. Bentson argued in the media that "...the only thing that ought to matter on a loan application is whether nor not you can pay it back, not where you live." That's true. It was also smoke and mirrors since the home buyers Bentson was speaking of were people with poor payment histories.

These were the specific type of concessions that Southside Chicago community activists Barack Hussein Obama and Rahm Emanuel fought for in 1992-94—and won. Subprime mortgages for low income minorities who may not be quite as credit-worthy as the bill-paying middle class applicants for home loans. Between 1993 and 1997 (just before the subprime housing boom that began that year) $497 billion in mortgage loans that should have been redlined were granted based on demands in 1993 by the Clinton Administration to "...reform the Community Reinvestment Act based on the demands of community activists for the White House to solve the problems of racial inequality in the nation's inner cities." Banks would no longer be allowed to redline minority applicants buying homes in distressed areas. The underlying message was, redlining minorities by the nation's banks and mortgage companies—for any reason—would not be tolerated by that White House. Beginning in 1992, community activist Obama (and then, in 1994, Illinois State Senator Obama) worked very closely with Fannie Mae's vice chairman Franklin D. Raines to guarantee the mortgage loans of not-quite credit worthy minority home buyers, jumpstarting the subprime mortgage industry. By 1998, when Raines, who served from 1996-98 as Clinton's Office of Budget Management director, returned to the GSE (Government-Sponsored Enterprise) Fannie Mae, he worked directly with newly-elected Illinois State Senator as the guarantor of subprime loans to minorities. Obama was clearly instrumental in creating that industry through his Jesse Jackson-type strongarm Chicago street advocacy. The simple truth is, while the Obama Administration blames the subprime mortgage crisis on the Bush-43 Administration, the American people need to place the blame where it belongs—on Presidents Jimmy Carter and America's first black president, Bill Clinton and, most of all, the current occupant of the White House, Barack Hussein Obama whose strongarm advocacy in Chicago forced the banks to underwrite bad loans that would be guaranteed by Fannie Mae.

Today, Obama has been President of the United States for about 40 days and his strongarm advocacy has already cost the taxpayers of this country, with generational interest, some $71 trillion in new debt that stemmed directly from his actions from 1992-98 that he successfully blamed on the occupant of the White House whose misfortune it was to be President when the subprime dyke broke and a tsunami of bad debt swamped the American economy.

Obama is already well on his way of keeping his campaign pledge to lead the United States into socialism as he redistributes the wealth of the American middle class to compensate the minority underclass for not prospering in the greatest nation on Earth while claiming he is making an equitable redistribution of the excess wealth of the rich (who allow only their disposable income to be taxed).

Buried in the Omnibus Appropriations Act of 2009 which the Democrats (who never could count that well) claim contains only $642 billion in new taxes are $1,634,902,000,000.00 in new taxes. Since some of the new taxes are sleight-of-hand maneuvers that reinstate old taxes or rolled back existing tax cuts, the left doesn't really count them as "new taxes." Obama and the Reid-Pelosi congressional cartel rolled back the tax cuts of the Bush-43 era by raising the income tax rates of single filers earning $200 thousand or more and married filers earning $250 thousand from 36% to 39%. This will raise $338 billion. Phasing out personal exemptions and limiting itemized deductions for the same group of "rich people" will add another $180 billion. And, finally, imposing a 20% capital gains tax on the same group for $115 billion more, will net the Treasury $633 billion to redistribute to those who prefer not to work for a living. The Obama Administration estimates that by eliminating the mortgage-interest deduction from this same group, Obama will raise another $318 billion in redistribution money, or a total of just under $1 trillion per year.

But the icing on the cake for the ecoalarmists is that the socialist Democrats finally succeeded in taxing the air we breathe. The Obama appropriations bill includes a "global warming" tax that will assess a levy on carbon dioxide emissions. Anyone with a rudimentary understanding of biology and chemistry knows that without carbon dioxide there would be no oxygen to breathe. Curtail carbon dioxide and you curtail fresh air. Plain and simple, 100% of the time, carbon dioxide is the food that is consumed by oxygen-producing plantlife. Photosynthesis. A metabolic process that converts carbon dioxide into glucose. The byproduct of the process is oxygen and water. Without oxygen and water, we die. The cycle continues as long as there is carbon dioxide. Eliminate carbon dioxide all all oxygen-breathing life is in trouble.

Which, of course, is precisely what the Democrats are stupidly trying to do. In their initial assault on human life, they've decided to tax the air we breathe by taxing carbon dioxide emissions as a means of capping those emissions. Over the next decade, companies in the United States (if there are any left) will have to buy permits before they can exceed established pollution emissions caps. That money will be used to provide tax credits for low-wage citizens. Companies that can't afford the permits will have to curb carbon dioxide proliferation, thus curbing the natural production of both oxygen and rain. The eco-wackos are not concerned about how their agenda impacts human life because the socialists who pretend they are concerned about the environment are actually concerned only about exerting control over everyone and everything in order to achieve their objective: a socialist world government.

Using the proverbial congressional shell game to make the American people think they are getting one thing when the communist far left that controls the Democratic Party is giving them something else—phase one of the Obama redistribution of wealth which is camouflaged as a rescue plan that will theoretically save the US economy from being overwhelmed by a tsunami of bad debt.

But like the subprime mortgage crisis in which toxic mortgages were used to provide first time home buyers with a new life and a promised share of the great American dream, the dream will eventually become a nightmare. Like all liberal myths of easy prosperity, when the toxic adjustable rate interest payments owed to the transnational bankers overwhelms the debtors, and the American people can no longer pay the bill, the great American dream will become the socialist nightmare as the US economy sinks into the briny depths. And the anchor that will permanently sink the economy to the depths is the Omnibus Appropriations Act of 2009 on top of the American Recovery and Reinvestment Act of 2009 on back of the Emergency Economic Stabilization Act of 2008 on top of the Housing and Economic Recovery Act of 2008 that promises to cripple the ability of the free enterprise system to grow the economy as Obama taxes the middle class job growers out of business, growing government with the sweat equity of the American taxpayers who, like the poor, will soon be shackled to the totalitarian feeding trough of the State. When that happens, true equality will have been achieved. Everyone will have nothing.