Adam Smith and the Ruin of Nations

April 25, 2008 at 11:55 am | Posted in Political | Leave a comment
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April 18 – Associated Press (Alan Zibel): “Sallie Mae says it cannot write money-losing student loans indefinitely. Top executives are holding ‘daily deliberations’ about just how long the nation’s largest student lender can afford to sacrifice its bottom line for the sake of college-bound Americans, Sallie Mae CEO Albert J. Lord said… Experts said that, unless the government intervenes or market conditions rapidly improve, Sallie Mae could have no choice but to stop writing new federally backed loans… Even though the majority of student loans are highly rated and carry a federal guarantee, investor demand for securities backed by these assets has plummeted — a sign of just how nervous investors are about securities backed by mortgages, student loans and other debt.”

What should one make of a nation whose young people are not considered virtually assured of having easy power to repay their student loans following graduation? What is the “be all, know all” market (and its famed magic) saying here?

The message is a loud and clear vote of no confidence in the capacity of young Americans to prosper.

Vocal defenders of grossly unregulated financial markets are, indeed, responsible for an incredibly imbalanced economic environment in which money-changing has gained ascendancy over the means of producing lasting wealth. The diminishing of educational opportunity is, in fact, the natural outcome of a world-view where the elevation of human potential is held captive to sheer greed. And now the endless chain of evidence forming since Richard M. Nixon was President is moving to crush even our children’s hope.

This, Adam Smith’s moneychangers have made reality through their devoted worship of the magic of the marketplace. Livelihoods be damned!

The solution, really, is simple. Read the Constitution’s Preamble. Everything in this country must serve the good of the People.

And this includes capital…

The Empire Pimps Back

April 20, 2008 at 9:23 am | Posted in Political | 1 Comment
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April 15 – Financial Times (Krishna Guha): “The credit crisis represents nothing less than a loss of confidence in the financial system, Federal Reserve governor Kevin Warsh said yesterday, warning that the healing process ‘is unlikely to be swift or smooth’. ‘Market participants now seem to be questioning the financial architecture itself,’ he said. The fragility in short-term credit markets was ‘a manifestation of that loss of confidence’… He warned ‘public liquidity is an imperfect substitute for private liquidity’. The markets would return to normal only when private sector institutions were willing again to lend each other money and make markets in financial securities.”

Public liquidity is an imperfect substitute for private liquidity, Mr. Warsh? Tell that to Alexander Hamilton. Tell it to Henry Clay. Tell it to Mathew Carey.

What kind of American are you, sir, to make Lincoln and FDR roll in their graves?

21st Century Bank Robbery

April 18, 2008 at 11:38 pm | Posted in Financial | Leave a comment
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April 7 – Bloomberg (Jeremy R. Cooke): “U.S. state and local borrowers from Denver to Atlanta, battered by rising interest costs from the collapse of the auction-rate bond market, now face rising fees to replace the debt. Denver found only five banks willing to provide backing for new variable debt to replace $208 million of auction bonds, down from 30 five months ago… The cost to line up a buyer of last resort in case such bonds, variable-rate demand obligations, go unsold when yields are reset jumped as much as fourfold to $400,000 on $100 million of securities a year, borrowers say.”

The First Bank of the United StatesSuch is the state of finance under the British system of free market usury…

We ought to find courage to return the Bank of the United States, so finance based on the principles enunciated in our Constitution’s Preamble might be reinstated.

Legislation like HR 3400 — The Rebuilding America’s Infrastructure Act — comes to mind. Check it out. It makes financing available at minuscule rates of interest to states and municipalities.

Contrast this to the schemes being hatched by such neo-fascists as Mayor Bloomberg, Governor Schwarzenegger, Governor Rendell, Senator Dodd and others. Their Public-Private Partnerships are not to be confused with the American System of Political Economy. Rather, the arrangements these so-called “leaders” promote are straight from the play book of Benito Mussolini’s Fascisti.

Sound banking obviously is a cause for which we have yet to wage the final war against tyranny…

Financial Regulation To Serve Liberty?

April 17, 2008 at 2:07 pm | Posted in Financial | Leave a comment
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April 10 – Bloomberg (Patricia Kuo and Bei Hu): “Billionaire George Soros said the seizure in global credit markets caused by the subprime collapse will get worse before it gets better. Lack of oversight is partly responsible for problems in the financial markets, Soros told reporters… He said regulators and the U.S. administration ‘failed to perform their job’ in a crisis that began in the U.S. housing market… ‘This is a man-made crisis and it’s made by this false belief that markets correct their own excesses,’ Soros, 77, said. ‘It will take much longer for the full effect of the decline in the housing market to be felt.’”

U.S. Press, Publishing MagnateContrast this to Wall Street investment bankers who, instead, talk up their books. Thus, the question becomes:

Why is the so-called free press dissing the arrangement they have otherwise so dutifully helped promote?

What perception is purposely being cultivated here, and to what end?

Is this all damage control meant to strengthen the myth the United States conducts its affairs in harmony with the principles for which it was formed … that a few bad apples have spoiled the pie?

Or is the next big lie — following the one about the magic of the marketplace — about to be sprung?

Now to Dumb Down America

April 16, 2008 at 4:10 pm | Posted in Political | 1 Comment
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April 8 – The Wall Street Journal (Keith J. Winstein): “Education Resources Institute Inc., a Boston nonprofit that insures more than $17 billion in privately issued student loans, filed for bankruptcy-court protection, beset by defaults, delinquencies and shrinking revenue. … The filing … adds more tumult to the shaky student-loan market, where some lenders have been taking write-downs and dropping or curbing their lending programs amid broader problems in the credit markets.”

SUNY PotsdamWhen “competition” does not live up to its oft-marketed capacity of offering consumers “more choice” … and instead closes opportunity … what should we make of this?

Unregulated free markets are a fraud … benefiting the few at the expense of the many.

And while we are on the subject, let’s get something straight. There is no such thing as a free market. “Someone” always controls every market’s workings.

So, we are left to wonder for whose benefit should this control serve in the nation whose government is constitutionally charged to “promote the general Welfare.”

(Note to insurance industry: Thank you for showing the People how profitable your business can be. We shall have your business model in mind when revenues are squeezed.)

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