Tag Archives: mortgage crisis
Except It Will Not Be The Change You Were Promised or Expecting.
I am a student of history. Professionally. I have written 15 books in six languages, and have studied it all my life. I think there is something monumentally large afoot, and I do not believe it is just a banking crisis, or a mortgage crisis, or a credit crisis. Yes these exist, but they are merely single facets on a very large gemstone that is only now coming into a sharper focus.
Something of historic proportions is happening. I can sense it because I know how it feels, smells, what it looks like, and how people react to it. Yes, a perfect storm may be brewing, but there is something happening within our country that has been evolving for about ten – fifteen years. The pace has dramatically quickened in the past two.
We demand and then codify into law the requirement that our banks make massive loans to people we know they can never pay back? Why?
We learn just days ago that the Federal Reserve, which has little or no real oversight by anyone, has “loaned” two trillion dollars (that is $2,000,000,000,000) over the past few months, but will not tell us to whom or why or disclose the terms. That is our money. Yours and mine. And that is three times the 700B we all argued about so strenuously just this past September. Who has this money? Why do they have it? Why are the terms unavailable to us? Who asked for it? Who authorized it? I thought this was a government of “we the people,” who loaned our powers to our elected leaders. Apparently not.
We have spent two or more decades intentionally de-industrializing our economy. Why?
We have intentionally dumbed down our schools, ignored our history, and no longer teach our founding documents, why we are exceptional, and why we are worth preserving. Students by and large cannot write, think critically, read, or articulate. Parents are not revolting, teachers are not picketing, school boards continue to back mediocrity. Why?
We have now established the precedent of protesting every close election (now violently in California over a proposition that is so controversial that it wants marriage to remain between one man and one woman. Did you ever think such a thing possible just a decade ago?).
We have corrupted our sacred political process by allowing unelected judges to write laws that radically change our way of life, and then mainstream Marxist groups like ACORN and others to turn our voting system into a banana republic. To what purpose?
Now our mortgage industry is collapsing, housing prices are in free fall, major industries are failing, our banking system is on the verge of collapse, social security is nearly bankrupt, as is medicare and our entire government, our education system is worse than a joke (I teach college and know precisely what I am talking about)–the list is staggering in its length, breadth, and depth. It is potentially 1929 x ten. And we are at war with an enemy we cannot name for fear of offending people of the same religion, who cannot wait to slit the throats of your children if they have the opportunity to do so.
And now we have elected a man no one knows anything about, who has never run so much as a Dairy Queen, let alone a town as big as Wasilla, Alaska. All of his associations and alliances are with real radicals in their chosen fields of employment, and everything we learn about him, drip by drip, is unsettling if not downright scary (Surely you have heard him speak about his idea to create and fund a mandatory civilian defense force stronger than our military for use inside our borders?
No? Oh of course. The media would never play that for you over and over and then demand he answer it. Sarah Palin’s pregnant daughter and $150,000 wardrobe is more imporant.)
Mr. Obama’s winning platform can be boiled down to one word: change.
I have never been so afraid for my country and for my children as I am now.
This man campaigned on bringing people together, something he has never, ever done in his professional life. In my assessment, Obama will divide us along philosophical lines, push us apart, and then try to realign the pieces into a new and different power structure. Change is indeed coming. And when it comes, you will never see the same nation again.
And that is only the beginning.
And I thought I would never be able to experience what the ordinary, moral German felt in the mid-1930s. In those times, the savior was a former smooth-talking rabble-rouser from the streets, about whom the average German knew next to nothing. What they did know was that he was associated with groups that shouted, shoved, and pushed around people with whom they disagreed; he edged his way onto the political stage through great oratory and promises. Economic times were tough, people were losing jobs, and he was a great speaker. And he smiled and waved a lot. And people, even newspapers, were afraid to speak out for fear that his “brown shirts” would bully them into submission. And then, he was duly elected to office, a full-throttled economic crisis at hand [the Great Depression]. Slowly but surely he seized the controls of government power, department by department, person by person, bureaucracy by bureaucracy.
The kids joined a Youth Movement in his name, where they were taught what to think. How did he get the people on his side? He did it promising jobs to the jobless, money to the moneyless, and goodies for the military-industrial complex. He did it by indoctrinating the children, advocating gun control, health care for all, better wages, better jobs, and promising to re-instill pride once again in the country, across Europe, and across the world.
He did it with a compliant media–did you know that? And he did this all in the name of justice and . . . change. And the people surely got what they voted for.
(Look it up if you think I am exaggerating.)
Read your history books. Many people objected in 1933 and were shouted down, called names, laughed at, and made fun of. When Winston Churchill pointed out the obvious in the late 1930s while seated in the House of Lords in England (he was not yet Prime Minister), he was booed into his seat and called a crazy troublemaker. He was right, though.
Don’t forget that Germany was the most educated, cultured country in Europe. It was full of music, art, museums, hospitals, laboratories, and universities. And in less than six years–a shorter time span than just two terms of the U. S. presidency–it was rounding up its own citizens, killing others, abrogating its laws, turning children against parents, and neighbors against neighbors. All with the best of intentions, of course. The road to Hell is paved with them.
As a practical thinker, one not overly prone to emotional decisions, I have a choice: I can either believe what the objective pieces of evidence tell me (even if they make me cringe with disgust); I can believe what history is shouting to me from across the chasm of seven decades; or I can hope I am wrong by closing my eyes, having another latte, and ignoring what is transpiring around me.
Some people scoff at me, others laugh, or think I am foolish, naive, or both. Perhaps I am. But I have never been afraid to look people in the eye and tell them exactly what I believe–and why I believe it.
I pray I am wrong. I do not think I am.
By John Galt
The photo of the JP Morgan Chase building in Houston, TX with all of the broken windows thanks to Hurricane Ike is the perfect metaphor for our shattered financial system. The symbolism of the fractured chunk of a window in the photo above is the ultimate image for describing what is happening to our economy and worse an indication of the destroyed solvency of the Federal Reserve banking concept. The irony is that it was good old J.P. Morgan who concocted and promoted the very system which is now at risk.
The transparency that glass is supposed to provide for those on the outside and inside is often smoked over or tinted by these financial towers so Joe Q. Public can not look in to see what is happening inside. This same discoloration of the glass to diffuse or block the ability of the public to see what is happening also obstructs these “Masters of the Universe” and their view of Main Street, U.S.A. These “giants” of our financial industry have absolutely zero perception or understanding of how the average man or woman lives in this nation. To make matters worse, the majority of them have little if any empathy for the small or mid-sized entrepreneurial businessman or the jobs their enterprises create. Now, after a disaster of such monumental economic proportions, we are not asked, but told it is our duty to trust what is happening behind these darkened buildings and pay for their mistakes.
Today, that window is broken, as is our banking and financial system.
Jagged glass falling from a damaged skyscraper can cut or kill a person or in this case, an economy. The destruction of the credit establishment and expansionist enterprises in our banking sector will eventually result in a deflationary depression unless action is taken to expunge the bad paper or debts immediately. The question is the path that will be chosen to reach this final result. The logical solution would be for the central banksters of these United States, our Federal Reserve, and their partners in crime, the politicians, to protect their Ponzi scheme and inflate their way out of this mess, passing badly devalued dollars off between each other and foreign powers to eliminate the overhanging corporate sector and government debt. This action would cause great distress domestically and internationally but who cares about the citizens of these nations and the pain they would suffer? The main thing in the eyes of the politicians and banksters is to protect the system, not the nations involved in this system.
The alternative path which in their eyes protects their fiefdoms, is to deflate and unwind the overhanging issues, eliminating competition and contracting the size of the banking system, once again inflicting unmentionable pain on citizens not just in the United States, but worldwide. Unfortunately for these Princes and Lords, the world political situation and level of civility is far different than in years past. America is no longer an overwhelmingly dominant geopolitical power with unending military resources to plant the flag and push or persuade our friends and enemies into a desired outcome. The theory that our money is the greatest thing since gold no longer holds true. The purity of our motives when our military is used can no longer be trusted. And sadly, the arrogance of our political class has soured some alliances while encouraging old enemies of the once discounted Marxist bloc to re-establish new alliances to counteract our hegemony.
A deflationary decline and depression this time would not be another Ma and Pa Kettle version of The Grapes of Wrath with Americans pulling together in every corner of the nation and living off of the resources of the land. The technocrats who have distributed our bounty and manufacturing capabilities world wide have seen to that outcome being null and void. The ideal by these theoretical heretics who figured that giving America’s dominance in economic affairs to our friends and enemies alike to maintain world peace and allow economic expansion to defeat the natural business cycle now comes with a price. When the fraud the government and Federal Reserve foisted on the world in 1973 with Nixon’s closing of the gold window allowed the acceptance that our paper was as good as gold and we would never issue a fiat currency scheme that was inflationary nor manipulative (heaven forbid), some who studied economics for decades realized the risk that would be taken with our future.
That future is now.
After thirty-five years of irresponsible economic policy by our government and the associated managers of the economy, the Federal Reserve, the failure to maintain a stable currency along with an inability to control the urge to spend money on any project or concept that lines the Imperial Senate’s pockets will have a major consequence. The full faith and credit ideal is about to see just how much faith the world has in our leadership and how much more credit they are willing to extend.
Thus the most dangerous idea, a deflationary unwind, might carry much more risk than the banking class is ready to endure. The societal instability it would create in America’s major cities is something the political class will not stand for, thus creating the final and over due conflict between the neo-capitalist class and the quasi-socialist elected officials. The instability this conflict is going to create as we migrate from a post-1970’s inflationary solution to a Franco-Chinese hybrid socialist-corporatist model will last at least one decade.
Japan experienced the “Lost Decade” as their never ending recession thanks to corporate fraud and government deceit destroyed the model Americans were told we should emulate. Then the Chinese who were willing to sacrifice everything for a better life, mainly because if they did not they could be shot, adopted a modified corporatist model where the political elite retained ultimate control via the fixed bayonet.
Thanks to the “We are the World” bunch and their perverted globalist economic theories, America will now have to restructure its entire economic model, configure a solution to replace a rapidly aging workforce, create a new economic growth model under government supervision, and fight off societal instability all while facing a revival of Marxism thanks to the re-emergence of Latin American classical revolutionary movements and the Russian Bear. The largest obstacle to our future, besides millions of furious and soon to be bankrupt retirees and investors who will open their statements and see “$0.00″ or worse “X,000,000,000,000,000.00″ like they do it in Rhodesia proper (Zimbabwe for the politically correct), will be the regionalized instability an American collapse will create. When, not if, we fall into a depression death spiral our neighbors to the south will probably have to deal with a full blown Civil War. This means our border states and those states with large “immigrant” and “illegal immigrant” populations will be directly or indirectly involved in the fighting.
Think I’m crazy? Think again. The vacuum created when a nation’s economic system collapses is one thing; when an Empire’s system collapses the void brings forth destructive forces that have been bubbling for years as the masses within the imperial borders enjoyed bread and circus, all the while dismissing problems in other nations as regionalized issues of little concern. The only logical outcome will be the one imposed by the political class to declare direct oversight of every aspect of our financial system and the liquidation of another U.S. Central Bank, the Federal Reserve, and the creation of some sort of modified European Union type regional banking system with direct political control of every aspect of its function and scope. The prospects of losing that type of control could motivate the Federal Reserve to begin monetizing the debts to prevent such an evolution in thinking, especially if a leftist regime seizes power in D.C., a given should economic conditions continue to accelerate over the next fifty something days.
Although I fear the risk of a deflationary depression does exist, the actual demand on raw commodities worldwide due to basic demographics in addition to the risk of major domestic and regional instability will ultimately lead to the Great Reflation which will lead to a monetization of debts and corporate structured instruments in an effort to buy more time and implement greater societal changes. In the eyes of the powers controlling our banking system, ten years of little or no economic expansion is a much more palatable outcome than to having their system replaced with a new financial and economic management model. The prospect of maintaining some leverage or control of the system’s future in cooperation with a new political regime is far more acceptable than losing a century of control. Power sharing and negotiation is the key thing to watch for and the one thing all of us will have to monitor to get some clue as to just how great a currency devaluation and redesign will be endeavored upon.
The people will be willing to tolerate a revision of our society’s structure or sacrifice of freedoms to maintain the illusion of wealth and security. That is the sad statement of fact that our Founding Fathers worried about when an undisciplined people elected scoundrels to office and bandits to run their finances. The only hope for our society now is that enough people will prepare themselves financially and spiritually to endure the hard times and take a leadership role to rebuild our system devoid of Lenin’s ideals and conniving leaders like Senator Nelson Aldrich. There will be a purge one day, but for now, the creators, the producers should consider the idea that the time to go on strike is near.
Just as the namesake of this editorial articulated in Atlas Shrugged.