The following piece appeared in the Wall Street Journal. This piece is an eye-opening and gives readers a true view of Obama's view of education.
Cathy
Obama and Ayers Pushed Radicalism On Schools
Despite having authored two autobiographies, Barack Obama has never written about his most important executive experience. From 1995 to 1999, he led an education foundation called the Chicago Annenberg Challenge (CAC), and remained on the board until 2001. The group poured more than $100 million into the hands of community organizers and radical education activists.
The CAC was the brainchild of Bill Ayers, a founder of the Weather Underground in the 1960s. Among other feats, Mr. Ayers and his cohorts bombed the Pentagon, and he has never expressed regret for his actions. Barack Obama's first run for the Illinois State Senate was launched at a 1995 gathering at Mr. Ayers's home.
The Obama campaign has struggled to downplay that association. Last April, Sen. Obama dismissed Mr. Ayers as just "a guy who lives in my neighborhood," and "not somebody who I exchange ideas with on a regular basis." Yet documents in the CAC archives make clear that Mr. Ayers and Mr. Obama were partners in the CAC. Those archives are housed in the Richard J. Daley Library at the University of Illinois at Chicago and I've recently spent days looking through them.
The Chicago Annenberg Challenge was created ostensibly to improve Chicago's public schools. The funding came from a national education initiative by Ambassador Walter Annenberg. In early 1995, Mr. Obama was appointed the first chairman of the board, which handled fiscal matters. Mr. Ayers co-chaired the foundation's other key body, the "Collaborative," which shaped education policy.
The CAC's basic functioning has long been known, because its annual reports, evaluations and some board minutes were public. But the Daley archive contains additional board minutes, the Collaborative minutes, and documentation on the groups that CAC funded and rejected. The Daley archives show that Mr. Obama and Mr. Ayers worked as a team to advance the CAC agenda.
One unsettled question is how Mr. Obama, a former community organizer fresh out of law school, could vault to the top of a new foundation? In response to my questions, the Obama campaign issued a statement saying that Mr. Ayers had nothing to do with Obama's "recruitment" to the board. The statement says Deborah Leff and Patricia Albjerg Graham (presidents of other foundations) recruited him. Yet the archives show that, along with Ms. Leff and Ms. Graham, Mr. Ayers was one of a working group of five who assembled the initial board in 1994. Mr. Ayers founded CAC and was its guiding spirit. No one would have been appointed the CAC chairman without his approval.
The CAC's agenda flowed from Mr. Ayers's educational philosophy, which called for infusing students and their parents with a radical political commitment, and which downplayed achievement tests in favor of activism. In the mid-1960s, Mr. Ayers taught at a radical alternative school, and served as a community organizer in Cleveland's ghetto.
In works like "City Kids, City Teachers" and "Teaching the Personal and the Political," Mr. Ayers wrote that teachers should be community organizers dedicated to provoking resistance to American racism and oppression. His preferred alternative? "I'm a radical, Leftist, small 'c' communist," Mr. Ayers said in an interview in Ron Chepesiuk's, "Sixties Radicals," at about the same time Mr. Ayers was forming CAC.
CAC translated Mr. Ayers's radicalism into practice. Instead of funding schools directly, it required schools to affiliate with "external partners," which actually got the money. Proposals from groups focused on math/science achievement were turned down. Instead CAC disbursed money through various far-left community organizers, such as the Association of Community Organizations for Reform Now (or Acorn).
Mr. Obama once conducted "leadership training" seminars with Acorn, and Acorn members also served as volunteers in Mr. Obama's early campaigns. External partners like the South Shore African Village Collaborative and the Dual Language Exchange focused more on political consciousness, Afrocentricity and bilingualism than traditional education. CAC's in-house evaluators comprehensively studied the effects of its grants on the test scores of Chicago public-school students. They found no evidence of educational improvement.
CAC also funded programs designed to promote "leadership" among parents. Ostensibly this was to enable parents to advocate on behalf of their children's education. In practice, it meant funding Mr. Obama's alma mater, the Developing Communities Project, to recruit parents to its overall political agenda. CAC records show that board member Arnold Weber was concerned that parents "organized" by community groups might be viewed by school principals "as a political threat." Mr. Obama arranged meetings with the Collaborative to smooth out Mr. Weber's objections.
The Daley documents show that Mr. Ayers sat as an ex-officio member of the board Mr. Obama chaired through CAC's first year. He also served on the board's governance committee with Mr. Obama, and worked with him to craft CAC bylaws. Mr. Ayers made presentations to board meetings chaired by Mr. Obama. Mr. Ayers spoke for the Collaborative before the board. Likewise, Mr. Obama periodically spoke for the board at meetings of the Collaborative.
The Obama campaign notes that Mr. Ayers attended only six board meetings, and stresses that the Collaborative lost its "operational role" at CAC after the first year. Yet the Collaborative was demoted to a strictly advisory role largely because of ethical concerns, since the projects of Collaborative members were receiving grants. CAC's own evaluators noted that project accountability was hampered by the board's reluctance to break away from grant decisions made in 1995. So even after Mr. Ayers's formal sway declined, the board largely adhered to the grant program he had put in place.
Mr. Ayers's defenders claim that he has redeemed himself with public-spirited education work. That claim is hard to swallow if you understand that he views his education work as an effort to stoke resistance to an oppressive American system. He likes to stress that he learned of his first teaching job while in jail for a draft-board sit-in. For Mr. Ayers, teaching and his 1960s radicalism are two sides of the same coin.
Mr. Ayers is the founder of the "small schools" movement (heavily funded by CAC), in which individual schools built around specific political themes push students to "confront issues of inequity, war, and violence." He believes teacher education programs should serve as "sites of resistance" to an oppressive system. (His teacher-training programs were also CAC funded.) The point, says Mr. Ayers in his "Teaching Toward Freedom," is to "teach against oppression," against America's history of evil and racism, thereby forcing social transformation.
The Obama campaign has cried foul when Bill Ayers comes up, claiming "guilt by association." Yet the issue here isn't guilt by association; it's guilt by participation. As CAC chairman, Mr. Obama was lending moral and financial support to Mr. Ayers and his radical circle. That is a story even if Mr. Ayers had never planted a single bomb 40 years ago.
Mr. Kurtz is a senior fellow at the Ethics and Public Policy Center.
Please add your comments to the Opinion Journal forum.
Saturday, September 27, 2008
Friday, September 26, 2008
Union Bosses in it for Family Members
There was a time and a place for unions but now is not the time or place for unions. Unions have become political organizations that serve the bosses and their families. Unions destroy competition, increase the cost of goods and services and waste millions of employees hard earned dollars. Unions promote mediocrity and protect bad employees.
The following piece appeared in the LA Times. To find out more about unions go to UnionFacts.com.
Cathy
Union paid millions to companies with family ties
An SEIU spokeswoman says there's nothing improper about the payments.
By Paul Pringle, Los Angeles Times Staff Writer
September 26, 2008
The Service Employees International Union's headquarters has paid millions of dollars to consulting firms, political nonprofits and individuals with family ties and other personal connections to some of the labor organization's top officers, records show.
One company partly owned by a union director also received more than $1 million in SEIU consulting fees.
The nation's fastest-growing union, the SEIU bills itself a standard-setter in the drive to reform and modernize the labor movement. It has adopted a code of ethics that bars officers from directing business to their relatives, although a spokeswoman said no competitive bidding process is required when such contracts are awarded.
Labor Department https://cslxwep1.dol-esa.gov/Disclosure/OnlineSR30.jsp?ReportId=LM30 from 2003 through last year show that:
* The SEIU and its political affiliate contributed $3 million to America Votes, an advocacy organization that was headed by Cecile Richards, wife of an aide to SEIU President Andy Stern, at the time the payments were made.
* Melissa Mullinax was an SEIU political director when the political consulting firm she held a 20%-to-25% stake in, The Edison Group, was paid more than $1 million, including expenses. In addition, the SEIU has spent about $41,000 on a graphic design company owned by Mullinax's husband, Jason Abbott.
* The union paid about $520,000 to a consulting firm co-founded by Democratic Party and labor strategist Steve Rosenthal, the husband of another SEIU director, Eileen Kirlin. Rosenthal, a longtime friend of Stern, also headed America Coming Together, a get-out-the-vote nonprofit that received $23 million from the union.
* Pamela Kieffer, wife of a third union director, David Kieffer, has received about $70,000 in consulting fees and in separate payments from a firm that provided recruitment services to SEIU.
In addition, the SEIU and an associated nonprofit paid roughly $210,000 in consulting fees over four years to Don Stillman, husband of the union's outside legal counsel, Judith Scott. Stillman helped edit a 2006 book written by Stern, a publication that has generated controversy because of how the union president profited from it.
Although she is not an SEIU staffer, Scott disclosed her husband's relationship with the union on U.S. Labor Department disclosure forms filed by officers.
SEIU spokeswoman Michelle Ringuette said there was nothing improper about any of the payments, which also were reported in the union's annual financial filings with the Labor Department.
She said the expenditures comply with rules against nepotism and self-dealing that the union adopted in 2005. The officers had no input in the hiring of spouses or in their compensation, she said.
"They did not work for, nor were they retained by, their spouses, and they did a good job," Ringuette said.
The SEIU represents about 2 million healthcare workers, government employees, janitors and others in the private and public sectors. Ringuette said the union received excellent services from Rosenthal's organizations, America Votes, the consulting firms and the individuals, Mullinax among them.
"She is a respected political consultant," Ringuette said.
She said the money paid to America Coming Together was particularly well spent, considering the group's widely applauded efforts to turn out Democratic voters in the 2004 presidential election. Ringuette added that Rosenthal more than earned the $520,000 that his consulting firm received for political work.
Rosenthal said any criticism of his relationship with the union would be "almost stunning." "I hold the work I do up to anybody's," he said.
And Richards, now president of Planned Parenthood, said in a statement that America Votes is a coalition of more than 40 groups, and that its financial records are "transparent."
Richards is the wife of former Stern chief of staff Kirk Adams, now a union director.
Attempts to reach other officers and their spouses were unsuccessful.
The SEIU's policies also require transparency in decisions to give union business to relatives. But the number and size of the SEIU payments were unusual, said a leader of a labor reform group.
"This is very uncommon in unions," said Ken Paff, national organizer of Teamsters for a Democratic Union. "We've had a lot of that in the Teamsters. . . . It's a bad indicator about a union when you have a pattern of husband and wife in that kind of role."
The SEIU has come under scrutiny recently by federal criminal authorities, following Times reports last month that its largest California local and a related charity paid hundreds of thousands of dollars to firms owned by the wife and mother-in-law of the local's president, Tyrone Freeman.
The local spent similar sums on a golfing resort, expensive restaurants and a Beverly Hills cigar lounge. According to the union, Freeman also spent union money on his Hawaiian wedding.
Fallout from The Times' reports spread to other SEIU chapters, prompting Stern to call on all locals to impose a code of ethics similar to the national office's.
The SEIU has brought internal charges against Freeman, who was initially appointed by Stern. The union alleges that the payments could not be justified for the services received, and instead were part of a broad corruption scheme. Freeman, who has been removed from the union payroll pending a hearing, has denied any wrongdoing.
Unlike the national officers, Freeman did not file disclosure forms until after The Times inquired about the expenditures, which are required for union payments to spouses, Labor Department officials say.
Two other SEIU local presidents have gone on paid leave, including Annelle Grajeda, an executive vice president of the national organization.
Grajeda, a Stern appointee who heads the SEIU's California council, stepped aside because of allegations that her former boyfriend received improper payments from the union. She has said she did nothing wrong.
Nelson Lichtenstein, director of UC Santa Barbara's Center for the Study of Work, Labor and Democracy, said the SEIU headquarters' payments to officers' relatives could set a bad example for locals, even if the business relationships are out in the open and ultimately beneficial to union members.
"Clearly, there's a kind of double standard at work," he said.
Stern's harshest critic within the SEIU, Sal Rosselli, the president of a Bay Area local, says the 2006 book deal amounted to self-dealing. Stern received a six-figure advance for "A Country That Works," which the union helped fact-check and promote, and which union locals bought in bulk.
"The money should have gone to the union workers," Rosselli said.
In denying any impropriety, Stern has said that the SEIU's board voted independently to promote the book and urge locals to buy it, and that he received no royalties from sales to the union.
The SEIU has accused Rosselli and his board of financial malpractice for using members' dues to set up a nonprofit and legal defense fund to wage an internecine battle with Stern.
Rosselli labels the charges retaliation. They are the subject of an internal hearing that begins today and could end in the SEIU's placing the local into trusteeship.
Quote of the Day - "They and their members and officials have acquired the power and the right to commit wrongs to person and property, to deprive individuals of the means of earning a livelihood, and to commit many other acts which no one can do with impunity." Ludwig Von Mises
The following piece appeared in the LA Times. To find out more about unions go to UnionFacts.com.
Cathy
Union paid millions to companies with family ties
An SEIU spokeswoman says there's nothing improper about the payments.
By Paul Pringle, Los Angeles Times Staff Writer
September 26, 2008
The Service Employees International Union's headquarters has paid millions of dollars to consulting firms, political nonprofits and individuals with family ties and other personal connections to some of the labor organization's top officers, records show.
One company partly owned by a union director also received more than $1 million in SEIU consulting fees.
The nation's fastest-growing union, the SEIU bills itself a standard-setter in the drive to reform and modernize the labor movement. It has adopted a code of ethics that bars officers from directing business to their relatives, although a spokeswoman said no competitive bidding process is required when such contracts are awarded.
Labor Department https://cslxwep1.dol-esa.gov/Disclosure/OnlineSR30.jsp?ReportId=LM30 from 2003 through last year show that:
* The SEIU and its political affiliate contributed $3 million to America Votes, an advocacy organization that was headed by Cecile Richards, wife of an aide to SEIU President Andy Stern, at the time the payments were made.
* Melissa Mullinax was an SEIU political director when the political consulting firm she held a 20%-to-25% stake in, The Edison Group, was paid more than $1 million, including expenses. In addition, the SEIU has spent about $41,000 on a graphic design company owned by Mullinax's husband, Jason Abbott.
* The union paid about $520,000 to a consulting firm co-founded by Democratic Party and labor strategist Steve Rosenthal, the husband of another SEIU director, Eileen Kirlin. Rosenthal, a longtime friend of Stern, also headed America Coming Together, a get-out-the-vote nonprofit that received $23 million from the union.
* Pamela Kieffer, wife of a third union director, David Kieffer, has received about $70,000 in consulting fees and in separate payments from a firm that provided recruitment services to SEIU.
In addition, the SEIU and an associated nonprofit paid roughly $210,000 in consulting fees over four years to Don Stillman, husband of the union's outside legal counsel, Judith Scott. Stillman helped edit a 2006 book written by Stern, a publication that has generated controversy because of how the union president profited from it.
Although she is not an SEIU staffer, Scott disclosed her husband's relationship with the union on U.S. Labor Department disclosure forms filed by officers.
SEIU spokeswoman Michelle Ringuette said there was nothing improper about any of the payments, which also were reported in the union's annual financial filings with the Labor Department.
She said the expenditures comply with rules against nepotism and self-dealing that the union adopted in 2005. The officers had no input in the hiring of spouses or in their compensation, she said.
"They did not work for, nor were they retained by, their spouses, and they did a good job," Ringuette said.
The SEIU represents about 2 million healthcare workers, government employees, janitors and others in the private and public sectors. Ringuette said the union received excellent services from Rosenthal's organizations, America Votes, the consulting firms and the individuals, Mullinax among them.
"She is a respected political consultant," Ringuette said.
She said the money paid to America Coming Together was particularly well spent, considering the group's widely applauded efforts to turn out Democratic voters in the 2004 presidential election. Ringuette added that Rosenthal more than earned the $520,000 that his consulting firm received for political work.
Rosenthal said any criticism of his relationship with the union would be "almost stunning." "I hold the work I do up to anybody's," he said.
And Richards, now president of Planned Parenthood, said in a statement that America Votes is a coalition of more than 40 groups, and that its financial records are "transparent."
Richards is the wife of former Stern chief of staff Kirk Adams, now a union director.
Attempts to reach other officers and their spouses were unsuccessful.
The SEIU's policies also require transparency in decisions to give union business to relatives. But the number and size of the SEIU payments were unusual, said a leader of a labor reform group.
"This is very uncommon in unions," said Ken Paff, national organizer of Teamsters for a Democratic Union. "We've had a lot of that in the Teamsters. . . . It's a bad indicator about a union when you have a pattern of husband and wife in that kind of role."
The SEIU has come under scrutiny recently by federal criminal authorities, following Times reports last month that its largest California local and a related charity paid hundreds of thousands of dollars to firms owned by the wife and mother-in-law of the local's president, Tyrone Freeman.
The local spent similar sums on a golfing resort, expensive restaurants and a Beverly Hills cigar lounge. According to the union, Freeman also spent union money on his Hawaiian wedding.
Fallout from The Times' reports spread to other SEIU chapters, prompting Stern to call on all locals to impose a code of ethics similar to the national office's.
The SEIU has brought internal charges against Freeman, who was initially appointed by Stern. The union alleges that the payments could not be justified for the services received, and instead were part of a broad corruption scheme. Freeman, who has been removed from the union payroll pending a hearing, has denied any wrongdoing.
Unlike the national officers, Freeman did not file disclosure forms until after The Times inquired about the expenditures, which are required for union payments to spouses, Labor Department officials say.
Two other SEIU local presidents have gone on paid leave, including Annelle Grajeda, an executive vice president of the national organization.
Grajeda, a Stern appointee who heads the SEIU's California council, stepped aside because of allegations that her former boyfriend received improper payments from the union. She has said she did nothing wrong.
Nelson Lichtenstein, director of UC Santa Barbara's Center for the Study of Work, Labor and Democracy, said the SEIU headquarters' payments to officers' relatives could set a bad example for locals, even if the business relationships are out in the open and ultimately beneficial to union members.
"Clearly, there's a kind of double standard at work," he said.
Stern's harshest critic within the SEIU, Sal Rosselli, the president of a Bay Area local, says the 2006 book deal amounted to self-dealing. Stern received a six-figure advance for "A Country That Works," which the union helped fact-check and promote, and which union locals bought in bulk.
"The money should have gone to the union workers," Rosselli said.
In denying any impropriety, Stern has said that the SEIU's board voted independently to promote the book and urge locals to buy it, and that he received no royalties from sales to the union.
The SEIU has accused Rosselli and his board of financial malpractice for using members' dues to set up a nonprofit and legal defense fund to wage an internecine battle with Stern.
Rosselli labels the charges retaliation. They are the subject of an internal hearing that begins today and could end in the SEIU's placing the local into trusteeship.
Quote of the Day - "They and their members and officials have acquired the power and the right to commit wrongs to person and property, to deprive individuals of the means of earning a livelihood, and to commit many other acts which no one can do with impunity." Ludwig Von Mises
Thursday, September 25, 2008
Information about the bailout
As I stated before CRAFT typically sticks to education issues and local politics however this election and now the bailout will have a great impact on the economy and our taxes. A friend of ours wrote the piece below.
Cathy
Dear Friends: I rarely send out an email on purely political matters, but I feel compelled to do so tonight. I’ve been listening to radio broadcasts of Nancy Pelosi constantly spewing her pro-regulation hogwash morning and night and I guess I’m totally sick of it. Too bad most people are ready to swallow this mush whole … namely her implicit notion that there are some extremely prescient people in government (no doubt herself included) who would have passed legislation that would have prevented this. How utterly preposterous. I find it interesting that despite their having enjoyed leadership of two Democrat-controlled houses of Congress for the past two years, Pelosi and regulation-happy friends must have managed to overlook this little matter. What a joke.
I have an apparently novel idea about what caused this mess. To explain it I must first ask you to guess who were the two biggest financial institution failures so far this year. Here are some possibilities:
Merrill Lynch
Bear Stearns
American International Group (AIG)
Lehman Brothers
Countrywide Financial
IndyMac
Thinking hard? Really hard? Well if you guessed any of the above, even AIG, you are not even close. You’re not even in the ballpark.
Now I’d like for you to read up on a “bank” called Fannie Mae. Here’s an excellent summary on Wikipedia: http://en.wikipedia.org/wiki/Fannie_Mae. If you don’t have to read this all, let me extract some salient sentences for you:
Fannie Mae was founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States.
Fannie Mae (and Freddie Mac) buy loans from mortgage originators, such as banks and non-bank mortgage firms. It repackages the loans, as mortgage backed securities, and sells them on the secondary mortgage market, with a guarantee that the interest and principal will be paid, whether or not the original borrower pays. Also, Fannie Mae may hold the purchased mortgages for its own portfolio. By purchasing the mortgages, Fannie Mae and Freddie Mac provide banks and other financial institutions with fresh money to make new loans. This gives the United States housing and credit markets flexibility and liquidity.[6].
OK got that? Now I’d like for you to look up another huge “bank”: Freddie Mac, at http://en.wikipedia.org/wiki/Freddie_Mac. Once again I’ll provide excerpts for the time-stressed:
From 1938 to 1968, the secondary mortgage market in the United States was monopolized by the Federal National Mortgage Association (Fannie Mae), which was a government agency during that period. In 1968, to help balance the federal budget, part of Fannie Mae was converted to a private corporation. To provide competition in the secondary mortgage market, and to end Fannie Mae's monopoly, Congress chartered Freddie Mac as a private corporation.
The Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA") of 1989 revised and standardized the regulatory mechanisms for both Fannie Mae and Freddie Mac. Prior to that, Freddie Mac was owned by the Federal Home Loan Bank System and its member thrifts and governed by the Federal Home Loan Bank Board which was later reorganized into the Office of Thrift Supervision. FIRREA severed Freddie Mac's ties to the Federal Home Loan Bank System, created an 18-member board of directors to run Freddie Mac, and subjected it to HUD oversight.
Freddie Mac's primary method of making money is by charging a guarantee fee on loans that it has purchased and securitized into mortgage-backed security bonds. Investors, or purchasers of Freddie Mac MBS, are willing to let Freddie Mac keep this fee in exchange for assuming the credit risk, that is, Freddie Mac's guarantee that the principal and interest on the underlying loan will be paid back regardless of whether the borrower actually repays.
Alright let’s do a time line here:
Franklin Delano Roosevelt, the guy who brought us the New Deal (including Social Security) and whose policies probably extended the Great Depression for 10 years unnecessarily, created a government “bank” called Fannie Mae, whose purpose was to back financially irresponsible loans (i.e. loans that no private enterprise in its right mind would undertake).
In 1968 the federal government decided that we didn’t have enough of this, so it created Freddie Mac to help vastly increase the number of irresponsible loans by providing competition to Fannie Mae. Both of these “companies” were subject to the direct government supervision, regulation, and oversight by HUD (a federal agency).
Both Fannie Mae and Freddie Mac were in the business of vastly distorting the home mortgage market by making it far too easy to get money to buy houses. This was their charter, their stated purpose. They did this by functioning as a guarantor for investors who saw no risk in investing in the packaged mortgages that these two “government corporations” were offering. This in turn made enormously unnatural amounts of cash available for primary mortgage lenders (i.e. your local banks) to lend to irresponsible borrowers, at no apparent risk to either the local banks or the borrowers.
By 2008 these two “government corporations” together indirectly held half of all the residential mortgage debt in America. One could say that it was almost exclusively through the irresponsible policy of these two “corporations” that the current debacle was made possible at all.
If you would like some further data on this, please read this very interesting article written in 2005. It seems to me that if we are going to listen to anybody about this issue, we should be listening to people who understood the problem years ago (like this article’s author) and not to the jaw-flapping jokesters (both presidential candidates and our Speaker of the House included) who are now telling us about closing the barn door after all the horses have escaped, and the wrong door at that.
So to summarize:
The financial impact of the failure of Fannie Mae and Freddie Mac dwarfs all the other bank failures combined.
Fannie Mae and Freddie Mac were both federal-government-created entities that artificially inflated the demand for mortgages in a way that no consortium of privately-owned firms could even imagine doing.
True to the pattern of most government-run debacles, these “companies” caused enormous mis-investment and irresponsibility due entirely to the lack of accountability that is inherently built into almost all government agencies.
Now that the catastrophe is in full bloom, the supporters of these government-created monstrosities are running around blaming the supposed lack of private sector regulation.
So please, the next time some brain-drain tries to drill into your head the idea that markets don’t work (kinda like saying that the laws of physics don’t work) please think before accepting the argument as some sort of obvious truth backed up by current circumstances. This country hasn’t had anything resembling a free mortgage market since FDR’s reign of socialism, made worse by LBJ’s exacerbation of FDR’s policies in the late 60s. To lay this problem at the feet of our supposedly unregulated markets is like blaming Bigfoot. Sorry, there hasn’t been a free market in mortgages during the lifetimes of anyone reading this.
Nancy Pelosi, please take note.
Dave Ziffer
Batavia, IL
P.S. If you find this analysis interesting, please circulate it to your friends, politicians, and the press. Thank you.
Bush warned congress a number of times about impending failure congress choose to ignore his warning. Read about it in several places.
Cathy
Dear Friends: I rarely send out an email on purely political matters, but I feel compelled to do so tonight. I’ve been listening to radio broadcasts of Nancy Pelosi constantly spewing her pro-regulation hogwash morning and night and I guess I’m totally sick of it. Too bad most people are ready to swallow this mush whole … namely her implicit notion that there are some extremely prescient people in government (no doubt herself included) who would have passed legislation that would have prevented this. How utterly preposterous. I find it interesting that despite their having enjoyed leadership of two Democrat-controlled houses of Congress for the past two years, Pelosi and regulation-happy friends must have managed to overlook this little matter. What a joke.
I have an apparently novel idea about what caused this mess. To explain it I must first ask you to guess who were the two biggest financial institution failures so far this year. Here are some possibilities:
Merrill Lynch
Bear Stearns
American International Group (AIG)
Lehman Brothers
Countrywide Financial
IndyMac
Thinking hard? Really hard? Well if you guessed any of the above, even AIG, you are not even close. You’re not even in the ballpark.
Now I’d like for you to read up on a “bank” called Fannie Mae. Here’s an excellent summary on Wikipedia: http://en.wikipedia.org/wiki/Fannie_Mae. If you don’t have to read this all, let me extract some salient sentences for you:
Fannie Mae was founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States.
Fannie Mae (and Freddie Mac) buy loans from mortgage originators, such as banks and non-bank mortgage firms. It repackages the loans, as mortgage backed securities, and sells them on the secondary mortgage market, with a guarantee that the interest and principal will be paid, whether or not the original borrower pays. Also, Fannie Mae may hold the purchased mortgages for its own portfolio. By purchasing the mortgages, Fannie Mae and Freddie Mac provide banks and other financial institutions with fresh money to make new loans. This gives the United States housing and credit markets flexibility and liquidity.[6].
OK got that? Now I’d like for you to look up another huge “bank”: Freddie Mac, at http://en.wikipedia.org/wiki/Freddie_Mac. Once again I’ll provide excerpts for the time-stressed:
From 1938 to 1968, the secondary mortgage market in the United States was monopolized by the Federal National Mortgage Association (Fannie Mae), which was a government agency during that period. In 1968, to help balance the federal budget, part of Fannie Mae was converted to a private corporation. To provide competition in the secondary mortgage market, and to end Fannie Mae's monopoly, Congress chartered Freddie Mac as a private corporation.
The Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA") of 1989 revised and standardized the regulatory mechanisms for both Fannie Mae and Freddie Mac. Prior to that, Freddie Mac was owned by the Federal Home Loan Bank System and its member thrifts and governed by the Federal Home Loan Bank Board which was later reorganized into the Office of Thrift Supervision. FIRREA severed Freddie Mac's ties to the Federal Home Loan Bank System, created an 18-member board of directors to run Freddie Mac, and subjected it to HUD oversight.
Freddie Mac's primary method of making money is by charging a guarantee fee on loans that it has purchased and securitized into mortgage-backed security bonds. Investors, or purchasers of Freddie Mac MBS, are willing to let Freddie Mac keep this fee in exchange for assuming the credit risk, that is, Freddie Mac's guarantee that the principal and interest on the underlying loan will be paid back regardless of whether the borrower actually repays.
Alright let’s do a time line here:
Franklin Delano Roosevelt, the guy who brought us the New Deal (including Social Security) and whose policies probably extended the Great Depression for 10 years unnecessarily, created a government “bank” called Fannie Mae, whose purpose was to back financially irresponsible loans (i.e. loans that no private enterprise in its right mind would undertake).
In 1968 the federal government decided that we didn’t have enough of this, so it created Freddie Mac to help vastly increase the number of irresponsible loans by providing competition to Fannie Mae. Both of these “companies” were subject to the direct government supervision, regulation, and oversight by HUD (a federal agency).
Both Fannie Mae and Freddie Mac were in the business of vastly distorting the home mortgage market by making it far too easy to get money to buy houses. This was their charter, their stated purpose. They did this by functioning as a guarantor for investors who saw no risk in investing in the packaged mortgages that these two “government corporations” were offering. This in turn made enormously unnatural amounts of cash available for primary mortgage lenders (i.e. your local banks) to lend to irresponsible borrowers, at no apparent risk to either the local banks or the borrowers.
By 2008 these two “government corporations” together indirectly held half of all the residential mortgage debt in America. One could say that it was almost exclusively through the irresponsible policy of these two “corporations” that the current debacle was made possible at all.
If you would like some further data on this, please read this very interesting article written in 2005. It seems to me that if we are going to listen to anybody about this issue, we should be listening to people who understood the problem years ago (like this article’s author) and not to the jaw-flapping jokesters (both presidential candidates and our Speaker of the House included) who are now telling us about closing the barn door after all the horses have escaped, and the wrong door at that.
So to summarize:
The financial impact of the failure of Fannie Mae and Freddie Mac dwarfs all the other bank failures combined.
Fannie Mae and Freddie Mac were both federal-government-created entities that artificially inflated the demand for mortgages in a way that no consortium of privately-owned firms could even imagine doing.
True to the pattern of most government-run debacles, these “companies” caused enormous mis-investment and irresponsibility due entirely to the lack of accountability that is inherently built into almost all government agencies.
Now that the catastrophe is in full bloom, the supporters of these government-created monstrosities are running around blaming the supposed lack of private sector regulation.
So please, the next time some brain-drain tries to drill into your head the idea that markets don’t work (kinda like saying that the laws of physics don’t work) please think before accepting the argument as some sort of obvious truth backed up by current circumstances. This country hasn’t had anything resembling a free mortgage market since FDR’s reign of socialism, made worse by LBJ’s exacerbation of FDR’s policies in the late 60s. To lay this problem at the feet of our supposedly unregulated markets is like blaming Bigfoot. Sorry, there hasn’t been a free market in mortgages during the lifetimes of anyone reading this.
Nancy Pelosi, please take note.
Dave Ziffer
Batavia, IL
P.S. If you find this analysis interesting, please circulate it to your friends, politicians, and the press. Thank you.
Bush warned congress a number of times about impending failure congress choose to ignore his warning. Read about it in several places.
Wednesday, September 24, 2008
Who Knew Chuck Norris Could Write.
I was delighted to run across such an inspirational article that was written by Chuck Norris. I found the following piece on Townhall.com.
America is broke. Wall Street is going out of business. The government is borrowing and bailing like there is no tomorrow. Americans anxiously await the full impact of a second Great Depression. And we all are longing and looking for solutions and saviors.
Who will deliver us from our certain financial despair and ruin? The president? The secretary of the Treasury? The Federal Reserve? Congress? An ad hoc committee of Harvard MBAs? Some of America's best and biggest financial moguls? A new president? Have no fear. Our Founders are here.
It's true that we can't repeat the past eight years of government. But it's even truer that we can't repeat the past 38 years of the government's financial mismanagement, especially when only four of them since 1970 haven't been deficit-building years. What we need is to turn back the financial clock 200 years and return to the fiscal prudence of our Founding Fathers.
With small variances, our Founders agreed on five basic approaches to fiscal management, which I describe in far more detail in the third chapter ("Stop America's nightmare of debt") of my new New York Times best-seller (as of the list of Sept. 28), "Black Belt Patriotism," in which I resolve eight major problems facing America with our Founders' solutions. If we're going to awaken America from its economic slumber, then we must go back to those who discovered and established the American dream. Their financial principles were:
--Restrict spending within constitutional limits. The 10th Amendment restricts the size of government, and that always should bear out in spending and the federal budget. That means cutting hundreds of billions the Fed shouldn't be spending. That means following congressional protocol. That means understanding that income and export taxes were unconstitutional to our Founders.
--Don't bail out debt with more debt. George Washington wrote in 1799 to James Welch, "To contract new debts is not the way to pay for old ones." Thomas Jefferson similarly admonished Samuel Kercheval in 1816, "To preserve (the) independence (of the people), we must not let our rulers load us with perpetual debt." (Some are quick to point out that Thomas Jefferson financed the Louisiana Purchase with government loans, but they overlook the fact that Jefferson's administration lowered the federal deficit by nearly one-third during his eight years in office.)
--Have a pay-as-you-go government. If we don't have the money, we shouldn't spend it. Period. No more debt. No more bailouts. No more spending. As Thomas Jefferson wrote to Fulwar Skipwith in 1787, "The maxim of buying nothing but what we (have) money in our pockets to pay for … (is) a maxim which, of all others, lays the broadest foundation for happiness."
--Minimize taxes to citizens. Our earliest government's primary tool to raise revenue was from tariffs, not through the countless taxes placed upon citizens today. That is one reason I say to abolish the unconstitutional Internal Revenue Service and implement a "fair tax," which doesn't penalize productivity and will bring American manufacturing back within our borders. As James Madison said in 1783: "Taxes on consumption are always least burdensome because they are least felt and are borne, too, by those who are both willing and able to pay them; that of all taxes on consumption, those on foreign commerce are most compatible with the genius and policy of free states."
--Get over the greed. We're in this financial mess because of greed. Why is government spending out of control? Greed. Why do we, as individuals and as a nation, keep falling deeper into a pit of debt? Greed. Alexander Hamilton, the first secretary of the Treasury, believed that a government that could use greed to motivate its people would become powerful and wealthy. Unfortunately, we've taken it to the extreme. We've become a nation that confuses our needs and greeds, and we've got to get back to the basics if we're ever to understand and overcome the heart of this financial crisis.
Call me altruistic; say the plan is oversimplified. But even mom always taught me when I was young, "If you get in a pinch, go back to the basics." It works in martial arts. It works in the movies. It works in marriage. It works in financial markets. And it worked for our Founding Fathers.
What we need today are far more men and women in government with our Founders' financial forethought, cautiousness and discipline. But that is not what we have. That is why I've joined the voter revolution across this land to oust political corruption and stalemate. If you're ready to join millions of other Americans in that commitment, then give me three steps: Make a pledge to bring about political change in future elections; recall unconstitutional congressional incumbents; and rise up and elect above-reproach, non-greedy and selfless representatives who aren't afraid to stand up to governmental status quo and corruption, will vote for constitutional restrictions of government, reduce big government (deficits, budgets, spending and taxes), reform the tax code (by providing a "fair tax" or its equivalent) and fight for a constitutional amendment that would mandate a balanced federal budget.
Just imagine how much better our Country would be if people follow through with Mr. Norris's suggestions.
America is broke. Wall Street is going out of business. The government is borrowing and bailing like there is no tomorrow. Americans anxiously await the full impact of a second Great Depression. And we all are longing and looking for solutions and saviors.
Who will deliver us from our certain financial despair and ruin? The president? The secretary of the Treasury? The Federal Reserve? Congress? An ad hoc committee of Harvard MBAs? Some of America's best and biggest financial moguls? A new president? Have no fear. Our Founders are here.
It's true that we can't repeat the past eight years of government. But it's even truer that we can't repeat the past 38 years of the government's financial mismanagement, especially when only four of them since 1970 haven't been deficit-building years. What we need is to turn back the financial clock 200 years and return to the fiscal prudence of our Founding Fathers.
With small variances, our Founders agreed on five basic approaches to fiscal management, which I describe in far more detail in the third chapter ("Stop America's nightmare of debt") of my new New York Times best-seller (as of the list of Sept. 28), "Black Belt Patriotism," in which I resolve eight major problems facing America with our Founders' solutions. If we're going to awaken America from its economic slumber, then we must go back to those who discovered and established the American dream. Their financial principles were:
--Restrict spending within constitutional limits. The 10th Amendment restricts the size of government, and that always should bear out in spending and the federal budget. That means cutting hundreds of billions the Fed shouldn't be spending. That means following congressional protocol. That means understanding that income and export taxes were unconstitutional to our Founders.
--Don't bail out debt with more debt. George Washington wrote in 1799 to James Welch, "To contract new debts is not the way to pay for old ones." Thomas Jefferson similarly admonished Samuel Kercheval in 1816, "To preserve (the) independence (of the people), we must not let our rulers load us with perpetual debt." (Some are quick to point out that Thomas Jefferson financed the Louisiana Purchase with government loans, but they overlook the fact that Jefferson's administration lowered the federal deficit by nearly one-third during his eight years in office.)
--Have a pay-as-you-go government. If we don't have the money, we shouldn't spend it. Period. No more debt. No more bailouts. No more spending. As Thomas Jefferson wrote to Fulwar Skipwith in 1787, "The maxim of buying nothing but what we (have) money in our pockets to pay for … (is) a maxim which, of all others, lays the broadest foundation for happiness."
--Minimize taxes to citizens. Our earliest government's primary tool to raise revenue was from tariffs, not through the countless taxes placed upon citizens today. That is one reason I say to abolish the unconstitutional Internal Revenue Service and implement a "fair tax," which doesn't penalize productivity and will bring American manufacturing back within our borders. As James Madison said in 1783: "Taxes on consumption are always least burdensome because they are least felt and are borne, too, by those who are both willing and able to pay them; that of all taxes on consumption, those on foreign commerce are most compatible with the genius and policy of free states."
--Get over the greed. We're in this financial mess because of greed. Why is government spending out of control? Greed. Why do we, as individuals and as a nation, keep falling deeper into a pit of debt? Greed. Alexander Hamilton, the first secretary of the Treasury, believed that a government that could use greed to motivate its people would become powerful and wealthy. Unfortunately, we've taken it to the extreme. We've become a nation that confuses our needs and greeds, and we've got to get back to the basics if we're ever to understand and overcome the heart of this financial crisis.
Call me altruistic; say the plan is oversimplified. But even mom always taught me when I was young, "If you get in a pinch, go back to the basics." It works in martial arts. It works in the movies. It works in marriage. It works in financial markets. And it worked for our Founding Fathers.
What we need today are far more men and women in government with our Founders' financial forethought, cautiousness and discipline. But that is not what we have. That is why I've joined the voter revolution across this land to oust political corruption and stalemate. If you're ready to join millions of other Americans in that commitment, then give me three steps: Make a pledge to bring about political change in future elections; recall unconstitutional congressional incumbents; and rise up and elect above-reproach, non-greedy and selfless representatives who aren't afraid to stand up to governmental status quo and corruption, will vote for constitutional restrictions of government, reduce big government (deficits, budgets, spending and taxes), reform the tax code (by providing a "fair tax" or its equivalent) and fight for a constitutional amendment that would mandate a balanced federal budget.
Just imagine how much better our Country would be if people follow through with Mr. Norris's suggestions.
Tuesday, September 23, 2008
Obama's Tax Plan Will Hurt Everyone
There are a ton of stories out there about how Obama's tax plan will effect the economy. But just don't look at the stories look at history.
The following piece appeared on News Max.com.
Time to Slam Obama's Tax Plan
By: Dick Morris & Eileen McGann Article Font Size
Whatever is left of the economy after the current round of crisis interventions by the Fed could go down the drain if Obama is elected and carries out his plans for sharp increases in taxation.
Even if Obama does not understand the linkage, most Americans do and will turn sharply against Obama's tax plans if McCain hammers away at the risk they pose for us all.
During the Great Depression, Congress raised taxes sharply in the Revenue Act of 1932. The top rate went from 25 percent to 63 percent. As a result, the real GDP dropped by 13.3 percent, and unemployment rose from 15.9 percent to 23.6 percent.
In 1990, Bush-41 famously broke his "Read my lips — no new taxes" pledge of the 1988 campaign and raised the federal gasoline tax, federal excise taxes, and imposed 10 percent surtax on the top income bracket, raising its taxes to 31 percent. The recession that followed in 1991-1992 cost him re-election.
It is obvious that increasing capital gains taxes by a minimum of one-third and possibly doubling them, both of which Obama has proposed during his campaign, would send a clear signal to investors to keep their money under the mattress.
Who would buy stock now knowing that the tax on any profits is going to go up sharply if Obama becomes president?
Look at what happened just last year in Michigan. Democratic Gov. Jennifer Granholm raised taxes on almost everything in 2007. Income taxes shot up 11.5 percent and the state's 6 percent sales tax was expanded to dozens of new services like investment advice, janitorial services, landscaping, ski lifts, carpet cleaning, and tanning.
The $1.75 billion tax package shook the economy to its foundations. Michigan became the only one of the 50 states with a shrinking gross domestic product (GDP). The value of all goods and services produced in the state fell by .5 percent while the national GDP rose by 3.4 percent. The state fell from 23rd in GDP to 35th. Taxes caused a disaster.
In a strong economy, Obama's tax hikes would raise questions. In a weak economy, they portend a catastrophe. It would be like bleeding a sick patient, the medicine of 200 years ago, depriving him of blood even as he needs more not less circulating through his arteries.
McCain's populist rhetoric, including his pledge to fire SEC chairman former Rep. Christopher Cox, is important for a Republican candidate. But his focus should shift to the tax issue.
With firms suffering, withering, and dying for a lack of capital, tax increases on those who invest would be a horrible mistake. Americans will realize this obvious fact and McCain should use it to gain the advantage in discussing the economy.
There is no reason for the economy to work to Obama's advantage when he is committed to a doctrinaire program of tax increases and spending hikes. McCain can use the issue to run rings around him.
© 2008 Dick Morris & Eileen McGann
As always we are not endorsing a candidate but rather providing information for readers. If you are looking for an alternative to Obama another option is Chuck Baldwin.
The following piece appeared on News Max.com.
Time to Slam Obama's Tax Plan
By: Dick Morris & Eileen McGann Article Font Size
Whatever is left of the economy after the current round of crisis interventions by the Fed could go down the drain if Obama is elected and carries out his plans for sharp increases in taxation.
Even if Obama does not understand the linkage, most Americans do and will turn sharply against Obama's tax plans if McCain hammers away at the risk they pose for us all.
During the Great Depression, Congress raised taxes sharply in the Revenue Act of 1932. The top rate went from 25 percent to 63 percent. As a result, the real GDP dropped by 13.3 percent, and unemployment rose from 15.9 percent to 23.6 percent.
In 1990, Bush-41 famously broke his "Read my lips — no new taxes" pledge of the 1988 campaign and raised the federal gasoline tax, federal excise taxes, and imposed 10 percent surtax on the top income bracket, raising its taxes to 31 percent. The recession that followed in 1991-1992 cost him re-election.
It is obvious that increasing capital gains taxes by a minimum of one-third and possibly doubling them, both of which Obama has proposed during his campaign, would send a clear signal to investors to keep their money under the mattress.
Who would buy stock now knowing that the tax on any profits is going to go up sharply if Obama becomes president?
Look at what happened just last year in Michigan. Democratic Gov. Jennifer Granholm raised taxes on almost everything in 2007. Income taxes shot up 11.5 percent and the state's 6 percent sales tax was expanded to dozens of new services like investment advice, janitorial services, landscaping, ski lifts, carpet cleaning, and tanning.
The $1.75 billion tax package shook the economy to its foundations. Michigan became the only one of the 50 states with a shrinking gross domestic product (GDP). The value of all goods and services produced in the state fell by .5 percent while the national GDP rose by 3.4 percent. The state fell from 23rd in GDP to 35th. Taxes caused a disaster.
In a strong economy, Obama's tax hikes would raise questions. In a weak economy, they portend a catastrophe. It would be like bleeding a sick patient, the medicine of 200 years ago, depriving him of blood even as he needs more not less circulating through his arteries.
McCain's populist rhetoric, including his pledge to fire SEC chairman former Rep. Christopher Cox, is important for a Republican candidate. But his focus should shift to the tax issue.
With firms suffering, withering, and dying for a lack of capital, tax increases on those who invest would be a horrible mistake. Americans will realize this obvious fact and McCain should use it to gain the advantage in discussing the economy.
There is no reason for the economy to work to Obama's advantage when he is committed to a doctrinaire program of tax increases and spending hikes. McCain can use the issue to run rings around him.
© 2008 Dick Morris & Eileen McGann
As always we are not endorsing a candidate but rather providing information for readers. If you are looking for an alternative to Obama another option is Chuck Baldwin.
Sunday, September 21, 2008
I admit it I am a news and information junkie
I admit it I am a news and information junkie, I have been that way since childhood. Growing up I hung out with a group of girls who carried around dictionaries and we named our dictionaries mine was "Herman." I know I am a nerd.
During graduate school I had a graduate assistanceship working at the main library's reference desk at the University I attended. I did not study library science but I did get the position over all the library science majors. I loved assisting people with seeking out information and answering difficult questions.
I like to read but prefer non-fiction over fiction.
I like to get up before the kids and read the newspaper. I surf various sites on the net for information. At times I enjoy listening to the radio. When we had our television hooked up to cable I was a TV NEWS junkie as well. I will listen to left, right and neutral news sources as to get both sides of the story. As Judy Paris (former WNTK talk show host) would say "Any story sounds true until someone tells the other side and sets the record straight." (Proverbs 18:17 TLB) Bring back Judy Paris, bring back Judy Paris, bring back Judy Paris.... but I digress.
Actually I could probably get a lot more BLOGGING done if I were not sure a big NEWS and information junkie. But I digress again..
Although the primary focus of CRAFT is local politics and government I think it is important to focus on the election because of the economy and the tax implications of certain candidates.
First Jim and I grew in Illinois Obama came from Illinois so we are aware of his politics if you are not you need to check out stories about him in the local paper the
Chicago Tribune specifically John Kass has some great articles. Do the research yourself and make up your own mind. Because the Chicago Tribune is one of Obama's hometown papers I think it is important to read that paper.
I ask only that you listen to two sides of the story before making up your mind. If you are a Huffington Post reader read the flip side and read Michelle Malkin.
Take note of how well sources are documented. On either side I do not suggest reading the comments as many are rants, feel free to but be sure to delve into the information with an open mind on both sides.
As I said before I am not happy with either candidate but I hope the candidate elected for president will do as little damage as possible to our country.
As Ronald Reagan would say "Trust but verify." You owe it to your family and the fellow people you share the earth with because your vote should be an educated voted as it will truly be an election that will change the direction of America's future.
Cathy
During graduate school I had a graduate assistanceship working at the main library's reference desk at the University I attended. I did not study library science but I did get the position over all the library science majors. I loved assisting people with seeking out information and answering difficult questions.
I like to read but prefer non-fiction over fiction.
I like to get up before the kids and read the newspaper. I surf various sites on the net for information. At times I enjoy listening to the radio. When we had our television hooked up to cable I was a TV NEWS junkie as well. I will listen to left, right and neutral news sources as to get both sides of the story. As Judy Paris (former WNTK talk show host) would say "Any story sounds true until someone tells the other side and sets the record straight." (Proverbs 18:17 TLB) Bring back Judy Paris, bring back Judy Paris, bring back Judy Paris.... but I digress.
Actually I could probably get a lot more BLOGGING done if I were not sure a big NEWS and information junkie. But I digress again..
Although the primary focus of CRAFT is local politics and government I think it is important to focus on the election because of the economy and the tax implications of certain candidates.
First Jim and I grew in Illinois Obama came from Illinois so we are aware of his politics if you are not you need to check out stories about him in the local paper the
Chicago Tribune specifically John Kass has some great articles. Do the research yourself and make up your own mind. Because the Chicago Tribune is one of Obama's hometown papers I think it is important to read that paper.
I ask only that you listen to two sides of the story before making up your mind. If you are a Huffington Post reader read the flip side and read Michelle Malkin.
Take note of how well sources are documented. On either side I do not suggest reading the comments as many are rants, feel free to but be sure to delve into the information with an open mind on both sides.
As I said before I am not happy with either candidate but I hope the candidate elected for president will do as little damage as possible to our country.
As Ronald Reagan would say "Trust but verify." You owe it to your family and the fellow people you share the earth with because your vote should be an educated voted as it will truly be an election that will change the direction of America's future.
Cathy
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