Ponderstorm My Brainstorm on Life & Politics

In my opinion, after the recent massive financial bailouts and other interventionist federal actions (and in some cases nationalizations) within our economy (i.e. the private sector), several pressing questions remain unanswered. I have been pondering on five of them for some time now. These are listed below in no apparent order.

1. If bad loans got us into this situation, then why is there so much effort to get banks to loan even more money?

If there is a dollar to be made and people are free to act in rational ways, then somebody creative will find a way to earn that dollar. My thinking is that in spite of the negative news regarding financial markets right now, there remains a market for loaning money to people with good credit. If this is the case, then there must be people willing to make a profit in such a market and so they will loan money to those with the means to pay them back. No crisis there.

On the other hand, the market for people with bad credit (i.e. people who you shouldn’t loan money to) has dried up and rightfully so. That should be a good thing. It made no sense to make risky loans but such actions were encouraged by foolish government policy that distorted reality and created an artificial market for bad loans. No loans to people who should not get loans means no crisis there either.

So let’s fast forward to now. I want to know why there is all the fuss about banks not loaning money then? It’s good banks are not making more bad loans. To push them to loan on a large scale again seems to me to further push us into the mud. We’re supposed to be getting ourselves “unstuck” but loaning more would seem to do just the opposite and compound our already bad situation. That doesn’t make a bit of sense.

2. Bailouts rewards bad performance.

Corporate leaders are paid to lead. Part of leading means avoiding problems. It seems to me that we have a bunch of bad leaders at many financial institutions (and in government) since they led their companies (and federal policy) on a path of suicide. Why should the government reward these guys with a bailout? Seems to me that such actions simply reward their poor judgment and punish those who kept their companies out of trouble.

As for the auto industry in particular, I have some specific thoughts along these lines. They were on an Read More…

Posted under Business, Government, Politics

Here’s an insightful political cartoon by Rick McKee that a Ponderstorm reader sent me. It does a great job of putting Barack Obama’s socialistic income redistribution notion into perspective.

As the rich candidate, would Barack Obama want his “spread the wealth around” scheme applied to his campaign contributions? What do you think? Should the government force the successful Barack Obama to share his campaign contributions with John McCain who is behind on fundraising? Wouldn’t that give John McCain a chance at success just like Barack Obama told ‘Joe the Plumber’ he wanted to do for those who earned less? (Click image to enlarge.)

Posted under Barack Obama

The recording below contains a stunning admission by Barack Obama regarding the redistribution of wealth. It seems he is not arguing about whether we should or should not redistribute wealth but how best to do it. The recording is taken from a 2001 interview segment with the Odyssey radio program on WEBZ (91.5 FM) in Chicago. At that time Obama was an Illinois state senator from the 13th district and a senior lecturer in the Law School at the University of Chicago.

Please listen to this 4:17 audio segment and notice how Obama laments that the Warren Court was not that radical and failed to bring about redistributive change. He also said he was “not optimistic about bringing about major redistributive change through the courts.” He does seem to think that it can be done legislatively, though, as an administrative function. Note his lack of opposition to the idea of wealth redistribution by government. Contrary to that, he seems to wholeheartedly support that notion.

Unfortunately the above recording contains just snippets of Obama’s redistribution of wealth statements. Does anybody know where a recording of the rest of the interview can be found?

My thoughts on this: Read More…

Posted under Barack Obama, Video

Sometimes a picture really is worth a thousand words. I think the example on the left does just that regarding the seemingly complex concept of socialism and wealth redistribution. In my opinion, it sums up the functional basics of socialism very well.

Under a socialistic system, government (or the “community,” as socialistic proponents like to say) collects resources through “progressive” taxation. Stated another way, government levies an increasingly higher tax burden on those earning or owning more assets. In reality, though, socialism looks a lot like armed robbery since the threat of collective force is used to confiscate a person’s wealth.

It is also worth noting that, according to Marxist theory, socialism is the transitional stage between capitalism and communism.

Please note: I do not know who produced this graphic and thus cannot provide appropriate credit.

Posted under 60 Seconds, Government

Let me clearly state that I don’t like or approve of the recent federal intervention in the United States economy. Government policy over the past three decades, pushed to extremes by left-leaning and radical groups like ACORN and using the Community Reinvestment Act, created the corrupt lending environment that was exploited by Fannie Mae and Freddie Mac to produce the toxic mortgage situation in which we find ourselves. So, since government is primarily responsible for this crisis, why should we then trust government to fix the problem they created?

This unfavorable economic environment is not a shortcoming of capitalism. It is a direct result of government manipulation within our economy for the benefit of a few people. Sometimes manipulation gives an unfair advantage to the rich and sometimes the poor. In this current environment, those who should not get a loan it were encouraged to borrow beyond their means.  While historically no bank would loan money under such terms, Fannie and Freddie created an unnatural market for banks to offload risky mortgages. The result was the poisoning of our entire financial system.

Unfortunately, as is often the case, the federal government stepped in and removed even more of our individual freedoms and made our economic system less of a capitalistic one and more like a planned economy under socialism. To give you an idea of the extent of the change, we’re now talking about the government owning or nationalizing large portions of our banking system. We’re also talking about government confiscating taxpayer money to buy up and refinance failing mortgages. We’re also talking about government, not shareholders, owners or investors, telling companies how much they can pay their employees and how to run their businesses. Sounds more like the old Soviet Union than what the Founding Fathers set up, doesn’t it?

This is an extremely dangerous precedent that will severely damage our economy in the long run. It makes the American taxpayer the ultimate holder of risks that the market should allocate to willing investors. It also gives government enormous control over our economy, our money and our everyday lives. In effect, a government bureaucrat will soon be deciding who can borrow, how much they can borrow and under what terms. In the name of fairness and environmentalism, other factors will probably be imposed later like how large our house can be and whether we really need what we can afford.

Instead of the massive bailout that was adopted, I wish government had essentially stepped out of the picture and removed Read More…

Posted under Economy, Government