And Ron Paul says

[Hotrod]

Wednesday, September 24, 2008
Dear Friends,

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

The events of the past week are no exception.

The bailout package that is about to be rammed down Congress' throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."
That describes the current bailout package to a T. And we're being told it's unavoidable.

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

• The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.

• Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.

• Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.

There goes your country.

Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.

Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.

Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.

The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?

When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?

Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.

In liberty,

Ron Paul

[Hotrod]

Personally I think were ****ed

[Rohirrim]

Americans need to understand that this entire bail-out is based on the hope (and that's all it is) that those properties (for which we are buying up all the defaulted loans) will somehow regain their value which will repay this $700 billion, plus make a tidy profit. We were also once told that Iraq would pay for the war with their oil revenue. Sounded good at the time. We should wander to the outskirts of Las Vegas and look at some of these collapsed housing developments we'll be buying. We should ask ourselves, "Who is going to move into these houses?" The jobless rate is going up and more jobs are moving overseas. This $700 billion is supposed to reengergize capital. Aren't the new loan requirements going to be more stringent? Isn't part of the deal that banks will no longer throw loans around like candy? Then, if that's the case, who is going to qualify for the new loans to buy these defaulted properties? Where is this pie in the sky profit going to come from? There is no capital in the U.S. to buy these properties. Who are we going to sell them to? China? The Saudis? They already own more of us than they want. When you apply cold logic to what's going on here, it's not pretty.

[Hotrod]

Americans need to understand that this entire bail-out is based on the hope (and that's all it is) that those properties (for which we are buying up all the defaulted loans) will somehow regain their value which will repay this $700 billion, plus make a tidy profit. We were also once told that Iraq would pay for the war with their oil revenue. Sounded good at the time. We should wander to the outskirts of Las Vegas and look at some of these collapsed housing developments we'll be buying. We should ask ourselves, "Who is going to move into these houses?" The jobless rate is going up and more jobs are moving overseas. This $700 billion is supposed to reengergize capital. Aren't the new loan requirements going to be more stringent? Isn't part of the deal that banks will no longer throw loans around like candy? Then, if that's the case, who is going to qualify for the new loans to buy these defaulted properties? Where is this pie in the sky profit going to come from? There is no capital in the U.S. to buy these properties. Who are we going to sell them to? China? The Saudis? They already own more of us than they want. When you apply cold logic to what's going on here, it's not pretty.

I agree 100%

[SonOfLe-loLang]

I dont know a ton about economics, but buying devaluing assets for more than they are worth seems like a horrible idea. The Dodd plan seems more comprehensive at least

[socalorado]

Americans need to understand that this entire bail-out is based on the hope (and that's all it is) that those properties (for which we are buying up all the defaulted loans) will somehow regain their value which will repay this $700 billion, plus make a tidy profit. We were also once told that Iraq would pay for the war with their oil revenue. Sounded good at the time. We should wander to the outskirts of Las Vegas and look at some of these collapsed housing developments we'll be buying. We should ask ourselves, "Who is going to move into these houses?" The jobless rate is going up and more jobs are moving overseas. This $700 billion is supposed to reengergize capital. Aren't the new loan requirements going to be more stringent? Isn't part of the deal that banks will no longer throw loans around like candy? Then, if that's the case, who is going to qualify for the new loans to buy these defaulted properties? Where is this pie in the sky profit going to come from? There is no capital in the U.S. to buy these properties. Who are we going to sell them to? China? The Saudis? They already own more of us than they want. When you apply cold logic to what's going on here, it's not pretty.


Do you agree with what RP is saying in his article?

[ak1971]

a gem from Ron Paul...

"An asset is illiquid because is isn't worth anything,"

[baja]

Americans need to understand that this entire bail-out is based on the hope (and that's all it is) that those properties (for which we are buying up all the defaulted loans) will somehow regain their value which will repay this $700 billion, plus make a tidy profit. We were also once told that Iraq would pay for the war with their oil revenue. Sounded good at the time. We should wander to the outskirts of Las Vegas and look at some of these collapsed housing developments we'll be buying. We should ask ourselves, "Who is going to move into these houses?" The jobless rate is going up and more jobs are moving overseas. This $700 billion is supposed to reengergize capital. Aren't the new loan requirements going to be more stringent? Isn't part of the deal that banks will no longer throw loans around like candy? Then, if that's the case, who is going to qualify for the new loans to buy these defaulted properties? Where is this pie in the sky profit going to come from? There is no capital in the U.S. to buy these properties. Who are we going to sell them to? China? The Saudis? They already own more of us than they want. When you apply cold logic to what's going on here, it's not pretty.

You forgot to mention what is going to happen to those citizens, and there are millions of them, that are the signers of those defaulted loans, they will be ruined, unable to qualify to buy those empty homes. This move will poison all the fish (the great middle class) in the barrel.

Are you all starting to see just how bad this all can get?

[broncofan7]

Americans need to understand that this entire bail-out is based on the hope (and that's all it is) that those properties (for which we are buying up all the defaulted loans) will somehow regain their value which will repay this $700 billion, plus make a tidy profit. We were also once told that Iraq would pay for the war with their oil revenue. Sounded good at the time. We should wander to the outskirts of Las Vegas and look at some of these collapsed housing developments we'll be buying. We should ask ourselves, "Who is going to move into these houses?" The jobless rate is going up and more jobs are moving overseas. This $700 billion is supposed to reengergize capital. Aren't the new loan requirements going to be more stringent? Isn't part of the deal that banks will no longer throw loans around like candy? Then, if that's the case, who is going to qualify for the new loans to buy these defaulted properties? Where is this pie in the sky profit going to come from? There is no capital in the U.S. to buy these properties. Who are we going to sell them to? China? The Saudis? They already own more of us than they want. When you apply cold logic to what's going on here, it's not pretty.

REP!!!

[c_lazy_r]

Dear Friends:
The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.
The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
In liberty,


Ron Paul

[Hotrod]

Were ****ed

[baja]

Did I mention buying gold was a good idea?

[Hotrod]

Did I mention buying gold was a good idea?

:nono:

[Rohirrim]

This is how finance works... we are buying these assets between .30-.70 on the dollar. Obviously places like Las Vegas are going to be toward the .30 range. Give those places 3-5 years and demand will return. Demand brings the value back and allows the treasurey to sell said asset at a premium. Additionally, something that very few people are talking about is that these homes do have value... that value is to the person living in them. Give good hard working american families the ability to stay in their homes and and reasonably service their debt and they will.

Keep in mind, new home construction is is a fraction of what it was just a few years ago. Homes are still needed and still have value. When you look at RE stats no where does it say that purchasing has dropped to 0 it's just that it is lower than it was and is being consumed by the massive amount of inventory. As long as this plan slows/stops inventory levels from rising the current purchase rate will close that gap in fairly short order.

This plan should work and should at the very least break even.

What worries me about this is that unemployment figures are going up. Companies are announcing more layoffs in the coming quarter. HP is going to layoff 27,000. This entire buyout hinges on the idea of demand kicking back into gear and raising the value of these assets. What if it doesn't?

[Arkie]

http://www.jsmineset.com/cwsimages/inventory/59089_image001_-_20080925_091307.jpg

[theAPAOps5]

we're ****ed

[ak1971]

Did I mention buying gold was a good idea?

It is, but not right now.

[baja]

The Fed just went on the hook for 1 Trillion dollars ya think that will depress the value of the dollar?

[baja]

Wait until we get the details of this bail out and watch gold soar.

[ak1971]

Japan..

[elsid13]

What worries me about this is that unemployment figures are going up. Companies are announcing more layoffs in the coming quarter. HP is going to layoff 27,000. This entire buyout hinges on the idea of demand kicking back into gear and raising the value of these assets. What if it doesn't?

Yes unemployment is rising. But we are lower then our historical average. The other problem without credit, (which is the big underlying issue here) a lot of companies don't have the ability to expand or meet payroll thus they start laying folks off.

[Rohirrim]

Yes unemployment is rising. But we are lower then our historical average. The other problem without credit, (which is the big underlying issue here) a lot of companies don't have the ability to expand or meet payroll thus they start laying folks off.

And then we have the hidden number: How many Americans are not working, but not in the numbers because their unemployment ran out? And how many Americans are underemployed? We know wages have been stagnating or retreating for years. I just don't see a reason to have a lot of faith in a system that has proved to be a failure, here we are making zero systemic changes, and yet the argument is that things will get better? How? What element in the big picture generates new growth? More credit?

[baja]

And then we have the hidden number: How many Americans are not working, but not in the numbers because their unemployment ran out? And how many Americans are underemployed? We know wages have been stagnating or retreating for years. I just don't see a reason to have a lot of faith in a system that has proved to be a failure, here we are making zero systemic changes, and yet the argument is that things will get better? How? What element in the big picture generates new growth? More credit?

The illegals are going home because there is no work for them so there will be some lettuce picking jobs coming up.

[Rohirrim]

The illegals are going home because there is no work for them so there will be some lettuce picking jobs coming up.

That's cool. Didn't McCain say those jobs pay $50 bucks an hour. ;D

[baja]

Well as you know lettuce is a slang word for money so I guess it's free for the picking.

[elsid13]

And then we have the hidden number: How many Americans are not working, but not in the numbers because their unemployment ran out? And how many Americans are underemployed? We know wages have been stagnating or retreating for years. I just don't see a reason to have a lot of faith in a system that has proved to be a failure, here we are making zero systemic changes, and yet the argument is that things will get better? How? What element in the big picture generates new growth? More credit?

Yes there is shadow unemployment. I believe the figure that I saw ages ago was add another 1% to the offical numbers.

For the second question. Think of as system with both negative and postive feedbacks. The lack of credit is so bad that it blocking the system from working and stopping the flow. If I have time I will upload the system thinking design.

[BABronco]

<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/GHW-nY229U0&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><embed src="http://www.youtube.com/v/GHW-nY229U0&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object>

[baja]

Wow hell just froze over, Ron Paul was interviewed on Fox Noise and treated with respect. people are coming around, too late but they are coming around.

We got one king size painful lesion to learn coming up.

[BABronco]

Wow hell just froze over, Ron Paul was interviewed on Fox Noise and treated with respect. people are coming around, too late but they are coming around.

We got one king size painful lesion to learn coming up.

if hell didnt freeze over then.... it sure as hell did now!
http://www.foxbusiness.com/

Look at there poll... by the time i voted paul was at 65%

[baja]

link doesn't work

[BABronco]

link doesn't work

worked fine for me...

http://www.foxbusiness.com/

see if that works ...

[baja]

Works now

Ron Paul 74%

[BABronco]

Works now

Ron Paul 74%

pretty interesting. the man has been in numerous interviews the past few weeks as well. media woke up a little too late there.

[baja]

That's because he is being proven right.

[BABronco]

That's because he is being proven right.

would have been nice if this happened a couple months ago ... that would be nice ... but it would be nice if it didnt happen at all.

Sometimes i really wish the guy wasn't right.

[baja]

Well he is so the question is what now?

[Taco John]

Wow hell just froze over, Ron Paul was interviewed on Fox Noise and treated with respect. people are coming around, too late but they are coming around.

We got one king size painful lesion to learn coming up.



Niel Cavuto always interviews Dr. Paul with respect, even when he's egging him on.

[kappys]

This is how finance works... we are buying these assets between .30-.70 on the dollar. Obviously places like Las Vegas are going to be toward the .30 range. Give those places 3-5 years and demand will return. Demand brings the value back and allows the treasurey to sell said asset at a premium. Additionally, something that very few people are talking about is that these homes do have value... that value is to the person living in them. Give good hard working american families the ability to stay in their homes and and reasonably service their debt and they will.

Keep in mind, new home construction is is a fraction of what it was just a few years ago. Homes are still needed and still have value. When you look at RE stats no where does it say that purchasing has dropped to 0 it's just that it is lower than it was and is being consumed by the massive amount of inventory. As long as this plan slows/stops inventory levels from rising the current purchase rate will close that gap in fairly short order.

This plan should work and should at the very least break even.

Correct except that instead of maximizing profits the government is more likely to sell the now expensive properties off in sweatheart deals to campaign supporters at a fraction of their true value.

Then again maybe I'm just cynical.