Tag Archives: Government

Yes, It Was The Government’s Fault All Along

Today, Rep. Watt (D. NC), the incoming FHA director admitted the housing bubble was orchestrated by the Federal Government, and even after the disastrous housing collapse, he and Pres. Obama want to “roll the dice” some more. That is the logical conclusion to draw from Watt’s declaration that irresponsible lending standards will remain the rule.

To most of Washington, both GOP and Dem, houses are not objects to be purchased by families who can afford them. Rather houses are tools for social engineering. Deemed a prima-face and incorruptible good, home ownership was promoted for all without considering that they are expensive and require a long term commitment. Franklin Raines amassed an alleged $90MM fortune lobbying the government to lend to anyone with a pulse, and the likes of Rep. Frank was happy to comply. The government balance sheet was insolvent at the crash, and it has only become worse. FHA mortgage insurance is now a Ponzi scheme where if it were privately administered, its CEO would flee to a nation without extradition.

Believe in minor miracles, the CFPB clamped down on reckless lending at the public expense. Buyers with imperfect credit would pay more, and everyone would have to make a down payment. Banks were still free to lend as they wished with their own money, but government guarantees were no long available to anyone with a pulse – a mere five years after the housing collapse.

Pres. Obama has never courted the buzz-kill title, so this uncharacteristic act of responsibility did not stand. Fresh off of Sen. Reid’s nuclear option, Watt was confirmed. A member of the Congressional Progressive Caucus (read socialist), Watt was previously an attorney specializing in suing anyone who only lent money on the basis of who could pay it back. In short, Watt is comfortable with the idea that money is to be shared. The lending reforms did not last even a day, as Watt announced before taking office that the loose lending standards would continue.

Even the tiniest reforms cannot withstand the onslaught of Obama’s socialist army. Even now, Fannie Mae’s collapse’s total cost is unknown, yet Obama will not relent until he forces another crisis. AG Holder can fine JP Morgan all the tea in China, but when the government allows unworthy people to buy houses with 2% down, there will be a bubble and eventual collapse.

The crisis of 2008, upon which Obama glided into office, is being recreated thanks to radical socialists like Rep. Watt. This time, however, look for the banks to steer clear of buying impaired bond portfolios. Having been blamed, prosecuted, and fined for bailing out the government five years ago, the next crisis will rest solely upon Washington.

Let The Gas Loose

The price of oil is basically the same the world over. This is because fleets of ships and miles of pipelines transport oil from where it is plentiful to where it is needed (although a Carter era law bans the export of US oil). The only difference in oil price is due to its varying quality and the cost to transport it. Not so for natural gas. In the US, gas costs around $4 per MMBtu (million BTU, about a million cubic feet). In England, the price is $8, and in Japan, the price is $16. Why wouldn’t someone liquefy US gas, ship it to Japan and sell it for a profit? Of course because the government basically outlaws the practice.

The DOE and other authorities do authorize limited gas exports, but they are nowhere near enough to right the world pricing imbalance. Why should exports ever be limited, especially considering the US’s notorious trade deficit? Politics as usual.

Leftist politicians like Sen. Robert Menendez (NJ) want to outlaw the exportation of all energy. While saying they want the oil and gas to benefit the US, they really want control over the factors of production (hint: that is communism). Contrary to Menendez’s caucus, a free market sends efficient signals to energy producers and consumers. Banning trade has two inevitable results – wealth destruction and war.

The Obama administration is basically outlawing coal electricity, and contrary to enviro hype, the only technology capable of picking up the slack of the many retiring coal plants is gas. Wind and solar are pleasant fairy tales, but when renewable mandates hit the pavement, they are paid for with gas.

Outlawing coal, as is surely going to happen in June, can only work if gas is cheap, really cheap. Coal is a stable cost input for electricity, while gas has until recently been volatile. Enviros are in the tricky position of hating coal, hating fracking, hating drilling, and somehow often blaming everyone but themselves when energy prices spike.

If gas exports were unlimited, as the export of any civilian private property should be, foreign gas prices would fall more than US prices would rise, but US gas could rise perhaps 50%. If so, electricity would increase by about 30% depending on the simultaneous shutdown of coal plants. However, lifting of the de facto drilling ban on federal land and various fracking bans around the US would counter these pressures.

Even if the climate is warming, and the evidence is mixed, climate change should not be a religion wherein supplicants must accept the whole nut of enviro orthodoxy. There is no reason to believe outlawing US coal is going to stop or even slow global warming, and there certainly is no reason to believe the cost of outlawing coal is worth any environmental benefits. The only way to stop global warming within the largely artificial enviro construct is to keep China and the developing world in abject poverty.

So, let the gas loose on the world. Let electricity prices explode due to radical environmental policies such as drilling bans, fracking bans, and coal bans. Expose the folly of claims that wind and solar can replace coal. Force a complacent public to realize coal is a pillar of the US economy, and return environmental concerns to their proper framework, which is a balance between cost and benefit. Leftist enviros have lured many people into fool’s paradise wherein there are no costs or consequences to radical policies. It is time to grow up.

Nuclear Revolution

Revolutions are breaks from the norm; like a hand grenade in a room, their results are unpredictable. The ordinary coup in a third world nation is not a revolution, but rather the norm in power transfers. In a coup, the base rules of thuggary are unchanged, whereas a revolution requires a rewrite of the rules, usually with unintended results. This week, the US Senate opened the door to revolution by suspending decades of tradition regarding Presidential Advise and Consent. While the immediate results are clear – left-wing courts and agencies – nobody who voted to abolish Cloture likely understands the full possibilities.

After blocking Pres. Bush’s judicial and executive nominees for most of his second term, Democrats found turnabout unpalatable. After all, while the GOP does not see regulators as particularly useful, Dems and especially Obama see them as essential. Washington’s bureaucrat army invents new laws to stymie capitalism and industry in ways Congress never could. Coronating radical leftists like the EPA’s Lisa Jackson and the NLRB’s Richard Cordray is as critical to the Dem agenda as any Congressional seat.

Perhaps this asymmetric value in Senate confirmations is why the GOP never lifted the 60 vote cloture rule and were shocked when the Dems did. In any event, at least for the next several months the flood gates of leftist Presidential appointments are open. Pres. Obama will start by stacking the DC Circuit with anti-capitalist ideologues, followed by seeding the lower courts with the next generation of progressives.

Maybe the Dems think they can transform and perfect the US quickly and permanently, but eventually they will not be in power. When that day comes, the GOP will have free reign to dismantle the Dem’s power base of welfare, unions, and phony Hollywood environmentalists.

The best a modern GOP president has ever done is slow the pace of the US’s transformation from a constitutional republic to a socialist democracy. The US is on a sort of ratchet wherein every new program, even if unpopular or unworkable, can never be repealed. Few regulations are abandoned either, so the nation’s direction is only left, either fast or slow.

On reason the nation almost never turns toward individualism and free markets is the populace’s dependence and acceptance of free money – boiling the frog slowly. Another is the Senate’s former safeguard against rash action. Only once in a generation, as with FDR’s Social Security, JBL’s Medicare, and Obama’s socialized medicine, do the leftist stars align for great change. Once passed, enough time lapses before a GOP ascendance so that the free money becomes baked into families’ budgets and thereby sacred.

No more. Sen. Reid has torpedoed the cloture rule that impedes leftist progress, but opens the door for the GOP to eliminate the remaining rule that ratchets the nation ever further left – cloture on legislation. The GOP would be fools not to repeal the 60 vote cloture rule for new laws. Once gone, any manner of leftist milestones would become fair game.

The Davis Bacon act, which essentially funnels government contract money into unions and Dem coffers – gone. The NLRB, which has become a union organizing body – gone. Obamacare, which promises to empower tens of thousands of busybodies over individuals’ lives – gone. The Clear Air act, which allows the EPA to regulate carbon – gone or severely modified. Every one of Obama’s laws – gone. All of this is possible with a simple majority in the Senate. The Democrats have won the battle of turning the US into a European-style socialist democracy, but Reid’s latest maneuver has opened their biggest flank ever. It is as if he thinks he is playing the end game without concern for a reversal in the war for the soul of the US.

Lovers of liberty and observers of Washington rightly worried over Reid’s massive, generational power grab. However, his greed is sauce for his goose, and with Obamacare’s ever developing failure, it may not be too long before decades of progressivism are on the chopping block. True, the same approach might enable Dems to pass more of their agenda, but they have already won; the only direction remaining is back to center. Reid and his cronies have engineered a revolution that is likely to escape their control.