Why the different standards?

We seem to have different standards about evaluating problems. We have a major problem with ARORN and vote registration fraud. Thousands of registrations are being received from fictitious people, dead people (a long tradition in the land of Obama) and double registrations. nearly all of them produced by ACORN. The liberal democrats assure there is no organized attempt to defraud, just a few misguided people.

Now lets look at the Sub Prime loan cum liquidity mess. We are told by the liberals and the media (is there a difference?) that capitalism has failed and must be regulated. Lets do some comparison shall we? In the voter registration fraud actual crimes are committed. These people are breaking laws. Will ARORN suffer any consequences? Not bloody likely. In the banking crisis in most cases no crimes were committed. Bad judgment was committed all over the place but in most cases no laws were broken.

In the banking crisis the Congress put into place laws that allowed people to take nearly unlimited risk with the assurance that all would be backed by the government. Since government intervened to try to alleviate risk and therefore pervert capitalism how exactly has capitalism failed? It sounds to me like government has failed. So in effect we are going fix a problem with the same medicine that made the patient sick.

Now taking the two scenarios together it sounds to me like crimes on the left are to always be excused, but bad judgement, not even on the right because to assume that all bankers and borrowers are on the right is absurd, but these things are to be blamed on capitalism. Pretty scary to me!! Wake up and smell the socialism, oops I forgot that is now code word for Black. Wake up and smell the statism.

So how did we get here?

How did we get to the financial mess we are in? It is being asserted by some people in the political world that unfettered capitalism caused the mess we are in. Many people believe it is the deregulation of the banking industry.

One word is how we got here. Consequences!! Members of both parties in Congress have embraced market economics, but only so far as markets keep raising. That is not market economics. Nothing could be further from the truth.

Since Fannie and Freddie are backed by the government investors believed there was no downside to investing in mortgage backed securities. They knew that when the bottom fell out, and it had to fall out, the government would step in and make it whole. They were right by the way. Since the government would be standing there to bail things out there was no reason to temper their enthusiasm to take on risk.

Mortgage applicants had no reason to temper their enthusiasm. Fannie and Freddie programs were pushing money. The higher the loan the better the deal. Ability to pay never entered into the equation. Money was cheap and the sky was the limit. The government has not yet become the knight in shining armor yet for individual mortgage holders but both candidates are pledging to do just that. Once again no reason to hedge risk because they will be bailed out.

Where the upside is high and no risk needs to be factored in, buy buy buy!

Here is another case. Through the summer speculators bought up crude futures to all time highs. The Democrats and more populist Republicans said the answer is to ban speculation. What excessive speculation tells us is this, either all these traders knew something we didn't. Either they had inside information, which there is no evidence of, or they saw something in the trends that showed them that downside risk was low. What did these traders see? They saw continually upward demand curve with flat supply curve. Why is the supply curve so flat? Foreign oil operators see no reason to increase supply. Our domestic supplies are off limits. Off shore drilling and ANWR have been put in a lock box. If we began to develop our resources they would feel the need to increase supply. Given the fact however that many of these sources are glad to see the United States squirm and they know with certainty that we will not allow domestic stockpiles to be developed why would they limit their ability to enjoy high incremental rates? They have a nearly sure thing. Speculators see this and see the same thing. Nearly no downside risk., Why not bid it up. The trend down did not start until President Bush reversed his executive order and put pressure on Congress to do the same. Without a drop of crude being pumped the speculation slowed. The downturn in the economy and the end of the peak driving season took care of the rest.

So what happens to us from here? I am not an economist nor play one on TV, don't use this advice for investing purposes. I believe given the meddling that has been done with the addition of horrible tax policy that an Obama White House would implement with the help of the Democratic Congress that will almost certainly happen in the upcoming election, I see a long down turn. I believe it will be a deeper recession that we have experienced recently, but not depression. The tax rates even under Obama will not cause a capital strike like we saw under Roosevelt. As long as Obama does not do more and more to declare war on business entrepreneurs will prevail and we will have recovery, just not as quickly as we could under a pro growth president and congress.

The important thing to understand is that markets did not cause this, only politicians trying to take logical consequences out of the outcomes. Markets will bring us out but probably despite the progressives best efforts to crush it.

Is this really what you want?

With Barak Obama ahead in the polls I have to ask the title question, is this what you really want. First a couple of truths, the lead is not so large that it cannot be over come. In the last two and a half weeks we could see a change. It will be much tougher though since there is no chance to see the candidates together. This is synonymous with a football team that needs help to get into the playoffs.

I must say I am flummoxed by this. Either the country is starting to embrace leftist principles or the country is so bored by the campaign that they are not paying attention to what the candidates are truly proposing.

Some voters want change. Both candidates are promising change. Personally I think this is like Madison Avenue selling soap. Every politician from the beginning of politics has promised change. It has no meaning. I want change too. I want smaller government, less looting by the government and more responsibility. To examine the backgrounds, Obama has promised change. He came to prominence in the most corrupt cesspool of politics known to man, Chicago. In his years practicing politics there he changed nothing. John McCain has been the definition of change. He has gone against his party constantly (many times he has driven me nuts by the way). He criticized the President of his own party when the Iraq war was not going well. McCain was right. When the Republicans had control of the Senate and were promising to change the rules of filibuster because of the horrible policy of the Democrats to filibuster all judges. At the time I thought McCain was wrong. In retrospect he was right. They got a large majority of the held up judges passed and still have the filibuster intact to use in the case of a despicable nominee in the future.

Some people are obsessed with universal health care. Obama proposes to impose a tax for employers that do not provide health care coverage. Depending on the tax rate (he never tells us) employers will drop their coverage and turn it over to the government. My personal opinion is that this is what Senator Obama and his accomplices in the Senate intend. Senator McCain on the other hand changes the system in favor of the free market. He proposes tax credits for those that do not have the privilege of employer paid health coverage. The Obama campaign accuses him of putting employer paid health care at risk. I say good! We need to remove it from the employer. Let my employer pay me what he pays me for my insurance and together with the tax credit, I will get a pretty good plan. How do I know that? I know that the market will fill the gap and provide what is needed. Through competition the appropriate level of coverage will be provided. Of course not every person will have a perfect plan, but we don't now. The difference is the telling difference in the two candidates. Senator Obama trusts the government and Senator McCain trusts the market. We have been taught by the looters in government and their mouthpieces in the media not to trust the market, but that is the only correct way to handle it. Any other method puts our trust in a monopoly accountable to no one.

Some make up their mind through tax policy. Senator Obama promises tax cuts to 95% of people making under $250,000. Since some 40% of people who will receive these 'cuts' don't pay taxes how can they be cuts when they don't pay taxes? Simple the government sends them checks. I have a word for that: Welfare. Again the difference clarifies the candidates. Senator Obama makes his arguments based on fairness. Senator McCain makes his arguments based on what will help the economy. Since I don't trust the economics knowledge of anyone in government including Senator McCain I will trust the guy who wants to help the economy and leave it to entrepreneurs.

The choice is ours very shortly. I am having trouble believing that the country is leaning left, so I have to assume they are bored.