DigestFriday, April 23, 2010
The Foundation "The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create whatever the form of government, a real despotism. A just estimate of that love of power, and proneness to abuse it, which predominates in the human heart is sufficient to satisfy us of the truth of this position." --George Washington
Government & Politics Democrats and Crony Capitalism
Democrats in Washington, fresh from their conquest of the health industry, are now greedily eyeing another power grab on Wall Street. After all, why should they stop with just 17 percent of the economy?
At issue is legislation crafted by Rep. Barney Frank (D-Fannie Mae) and Sen. Chris Dodd (D-Countrywide) that would ramp up regulations of financial firms in an effort -- so Democrats claim -- to avoid a recurrence of the collapse and ensuing bailouts of 2008. The bill is scheduled for a first test vote Monday.
As The Wall Street Journal1 reports, "The legislation would grant the federal government the power to seize teetering financial giants and dismantle them the same way the Federal Deposit Insurance Corporation now can seize failing banks. It would create a new financial consumer regulator, would boost the strength and budget of the Securities and Exchange Commission [SEC] and would impose new transparency rules on the trading of derivatives, the complex financial instruments that helped bankrupt Lehman Brothers and nearly wipe out American International Group and Merrill Lynch."
On Thursday, Barack Obama, who has never held a real job, declared, "Now, there is a legitimate debate taking place about how best to ensure taxpayers are held harmless in this process. But what is not legitimate is to suggest that we're enabling or encouraging future taxpayer bailouts, as some have claimed. That may make for a good sound bite, but it's not factually accurate. In fact, the system as it stands is what led to a series of massive, costly taxpayer bailouts. Only with reform can we avoid a similar outcome in the future. A vote for reform is a vote to put a stop to taxpayer-funded bailouts. That's the truth."
On the contrary, Investor's Business Daily2 notes, "[T]he bill institutionalizes the doctrine of 'too big to fail,' a major reason why American taxpayers will be paying off the $700 billion TARP bailout fund for decades to come. Under Dodd's bill, every financial institution that might have a 'systemic' impact if it failed would be given the too-big-to-fail treatment. This is an invitation to bailouts without end."
The bailout trough would be filled with money from a new bank tax, which, in the end, would be paid by consumers.
In light of this regulatory effort, it's almost too obvious to point out the convenient timing of the SEC's mortgage-related fraud charges against financial giant Goldman Sachs -- charges leveled just as the Frank-n-Dodd monster bill was set to take the spotlight. Never let a crisis go to waste...
"The timing was perfect," said Sen. Dick Durbin (D-IL). "We're about to take up the financial regulatory reform bill. The banks are saying, 'Oh, this is totally unnecessary. We have everything worked out.' Now we find out the Securities and Exchange Commission has stepped up and charged Goldman Sachs, one of the biggest, with involvement in some trading that really turns out to be very suspicious." Barney Frank, chairman of the House Financial Services Committee, added that the fraud charge "reinforces the need for much of what we were doing."
Naturally, the White House and the SEC deny collusion, but the SEC commissioners brought the lawsuit on a 3-2 partisan vote, signaling that evidence may be thin.
None of this is to say that Wall Street is opposed to Democrat regulation. In fact, these crony "capitalists" are lobbying (and paying) to get the field tilted in their favor. As one candid financial services lobbyist put it, "Obtaining a carve-out isn't rocket science. Just give Chairman Dodd and Chuck Schumer a s---load of money."
Obama took $994,795 from Goldman for his 2008 campaign, as well as $701,290 from Citigroup, $695,132 from JP Morgan Chase, and $514,881 from Morgan Stanley. (John McCain's biggest donor among this Big Four was Citigroup, which gave him $322,051.) Obama has numerous other ties3 with Goldman. Also, while Goldman lawyers negotiated with the SEC, its Chief Executive, Lloyd Blankfein, visited the White House four times.
Thus, this financial "reform" bill is like every other big government power grab in the last two years. The goal is to further the Left's agenda, and to reward Democrat constituents, who, these days, include the very Wall Street "fat cats" that Obama has been cynically denouncing. Besides, the root of all these problems was, and is, government itself, starting with the subprime mortgage mess, and the subsequent collapse of Fannie Mae and Freddie Mac. Why are they not covered by this so-called reform?
This Week's 'Alpha Jackass' Award "Good bill, tough bill with teeth. It constrains risk taking so these guys can't take on this huge risk which [would] imperil the system again. But if they do, we get to put them out of their misery, unwind them, you know, organize the elegant funeral for them." --Treasury Secretary Timothy "Tax Cheat" Geithner on the "elegant funeral" for free-market capitalism
News From the Swamp: Climate Bill on the Burner The Project on Climate Science, a coalition of environmental zealots, released a report just in time for Earth Day4 claiming that "global warming is unequivocal and primarily human induced." The release of the report was timed to influence the upcoming Senate debate over legislation being introduced by Sens. John Kerry (D-MA), Lindsey Graham (R-SC) and Joe Lieberman (I-CT) and, formerly, John McCain.
The bill seeks to curb supposed planet-heating emissions by introducing crippling new taxes on energy producers and manufacturers, fees that will ultimately be passed on to consumers. The report offers clear support for the bill, claiming that human activity has led to a steady rise in global temperatures, rising sea levels and vanishing glaciers. The disgraced UN climate scientists reached these conclusions in 2007, though their own research fell into disrepute after it was discovered that they hid, altered and destroyed evidence in order to achieve outcomes favorable to the global warming contingent.
This latest fictional account only reintroduces a question asked when the UN scandal first broke. If the data supporting global warming is so "unequivocal," then why is it necessary to manipulate the evidence achieved from the research?
New & Notable Legislation The District of Columbia once again missed its opportunity to have full-fledged voting representation in the House of Representatives. The Associated (with the Left) Press5 reported the development with a bitter note: "The House has abandoned plans to take up legislation giving residents of the District of Columbia a vote in Congress that has been denied them for over two centuries."
The only reason the House "abandoned" the legislation is that it contained a rider that would have further loosened draconian gun restrictions the District modified slightly after the Supreme Court ruled them unconstitutional last term. House Democrats thus refused to allow the District's 600,000 residents congressional representation since that would have meant recognizing their Second Amendment rights. Priorities, anyone?
The Senate passed a bill by unanimous voice vote to deny members of Congress a pay raise next year. The House will most likely follow suit in this election year. Members of Congress earn (in the loosest sense of the word) $174,000 a year. Leaders make even more. We wonder if they know they can freeze the budget, too.
Around the Nation: GOP Primaries Florida Gov. Charlie Crist is entertaining the possibility of dropping out of the August 24 Republican primary against former state House Speaker Marco Rubio and running as an independent in this year's Senate race. Read more here6.
Another Round of Criticism Many guys, when faced with a Sunday suddenly opened up due to a change of plans, find it a convenient excuse to head to the golf course. So when the volcanic ash cloud enveloped Europe and forced the cancellation of thousands of air flights over the continent, including Barack Obama's plan to attend the funeral of Polish President Lech Kaczynski7, Obama grabbed his clubs and his caddy and hit the links8. It was his 32nd round since taking office. (Yes, someone counts these things.)
This is not to criticize Obama for something that was beyond his control. Several other world leaders were either forced to send their regrets or drive to the service. However, it's worth noting that the press hounded Obama's predecessor for taking too many vacations when there was important work to do. Bush played 24 times before giving up the game in 2003, remarking, "I think playing golf during a war just sends the wrong signal."
At a time when there are all sorts of items needing Obama's attention, his signal may also be the wrong one. Then again, when he's on the golf course, he's not enacting more disastrous policies for the nation, and that's definitely in America's best interest.
National Security Iran -- The Ongoing Problem Hope 'n' Change is not a plan. So said Defense Secretary Robert Gates in a recent secret memo regarding long-term U.S. policy toward Iran's nuclear program. According to officials who have seen the memo, Gates worries that the Obama administration has no viable options for preventing Iran from going nuclear, or dealing with them after they go nuclear. After wasting a year attempting to change Iran's behavior with nothing but his irresistible charm, and with Russia and China as recalcitrant as ever when it comes to sanctions, Obama and his party must decide -- soon -- whether they have the stomach for taking military action.
Iran is openly bragging about enriching uranium to 20 percent; it is probably even now equipping its new underground enrichment facility at Qom with centrifuges; it has mastered multi-stage solid-fuel ballistic missiles; it still has not answered IAEA questions dating from 2004; it has threatened to withdraw from the Nuclear Non-Proliferation Treaty ... and still Obama and his team prefer talk over action.
A nuclear Iran presents all the headaches of nuclear North Korea, with one enormous difference. While North Korea is not positioned to interfere with much beyond its border with South Korea, Iran sits astride the single most important piece of water in the world -- the Strait of Hormuz. Roughly 35 percent of the world's oil passes through this waterway every day, with no backup options to get the oil out if the Strait is closed.
Just to reiterate its ability to inflict economic pain, on Thursday Iran launched a large Revolutionary Guard Corps Navy exercise in the Strait. Imagine a future crisis in which Iran applies a limited blockade in the Strait while holding nuclear weapons in its arsenal should the U.S. attempt to re-open the Strait by force. Would any of our regional allies provide basing or logistical support in such a situation? Would the Europeans allow us to move troops or materiel through their nations under a nuclear threat and without missile defense? Would $9-per-gallon gas force America to accept Iran's demands? The United States simply must not allow Iran to go nuclear, and it falls to the president to deal with that problem. More: http://patriotpost.us/edition/2010/04/23/digest/print/