The Binary Circumstance

Ron Paul is the only person who seems to understand that we can’t escape our current financial problems by borrowing and printing more money. That’s what created the problem in the first place.

The latest proposed bailout, which politicians are trying to scare us into accepting just like they did with the Iraq war, is like giving more credit cards to a person who has already maxed out all the cards he currently has even though he can’t afford the payments. And since he’s not making enough money to pay off his debts, let’s also give him a printing press so he can print all the money he wants as well.

Lest we forget, the current meltdown on Wall Street, started with deflation of the housing bubble. The bubble was created in large part by Fannie Mae and Freddie Mac buying up loans that should never have been made in the first place, packaging them as mortgage backed securities and selling them around the globe.

Both Barack Obama and John McCain have received money from people connected with Fannie and Freddie and both have relationships with lobbyists for the two firms. This came from the transcript of Bill Moyers Journal:

BILL MOYERS:Speaking of good journalism, check out the front page story in the NEW YORK TIMES by Jackie Calmes. We’ll post it on our website at pbs.org. Calmes joined the TIMES after 18 years at the WALL STREET JOURNAL covering politics, economics and public policy.

In the TIMES this week, she tells an important back story to the government’s takeover of the mortgage banks Fannie Mae and Freddie Mac. This is a move that could drive up the national debt by as much as $200 billion. To come up with the cash, the Bush Administration is reaching deep into your and your kids’ pockets. With the help of the Center for Responsive Politics, Jackie Calmes came up with facts to help us try to understand how, over so many years, such wild mismanagement of both corporations was allowed to happen. Why weren’t the watchdogs barking? Where were the people’s representatives? The answer? Follow the money.

Both Barack Obama and John McCain say the Fannie and Freddie mess is the result of the cozy ties between lobbyists and politicians, the very thing they will “change” if elected. But guess what? Neither one of them has ever had, quote, “A record of directly challenging the companies.”

To the contrary, Obama is second among members of Congress in donations from Fannie Mae and Freddie Mac’s employees and political action committees, even though he’s only been in the Senate since 2005. The former chairman of Fannie Mae originally led Obama’s vice presidential search committee but had to step down in a controversy over favorable loans he received, while at Fannie, from a company doing business with Fannie.

Among Obama’s contributors are three directors and one senior vice president of the two companies. Furthermore, Obama’s fellow Democrats in Congress have long been enablers of both corporations.

And what about John McCain? His entire campaign team stepped right out of a predator’s ball. His confidante and top adviser lobbied several years for Freddie Mac. His deputy fundraiser lobbied Fannie Mae, and his campaign manager lobbied for both of them, leading a coalition of beltway insiders whose goal was to “stave off regulations” that might have short circuited this nightmare.

One wealthy member of Freddie Mac’s board has contributed more than $70,000 to McCain and Republican Party members working for McCain’s election.

Even the guy who vetted John McCain’s vice presidential options is a former lobbyist for Fannie Mae.

This week, both Obama and McCain are speaking up for taxpayers, like you and me, who have to foot the bill. But locking the beltway barn door after the horse is gone leaves the stable smelling like you know what.

Now, Senator Obama denounces “golden parachutes” for the deposed execs of the two institutions. Now, John McCain blames Fannie Mae and Freddie Mac’s troubles on “cronyism” and “special interest lobbyists.” Beg pardon? Does McCain know that if he really intends to throw the bums out he’ll have to start with his own inner circle. As we’ve heard, you can rewrite the myth but you can’t rewrite the facts.

Just think. In less than two months either Obama or McCain will be elected our next president. It doesn’t give people who hope for genuine reform of government much to look forward to. Sigh.

As expected the Feds moved in to seize Fannie Mae and Freddie Mac to prevent collapse.

Under the plan, the Treasury will receive $1 billion of senior preferred stock in coming days, with warrants representing ownership stakes of 79.9 percent of Fannie and Freddie. The government will receive annual interest of 10 percent on its stake.

As a condition for the assistance, Fannie and Freddie eventually will have to reduce their holdings of mortgages and securities backed by home loans.

The portfolios “shall not exceed $850 billion as of Dec. 31, 2009, and shall decline by 10 percent per year until it reaches $250 billion,” the Treasury said. Fannie’s portfolio was $758 billion at the end of July, and Freddie’s was $798 billion.

Officials are aiming “to prevent the mortgage market from falling apart,” said former Federal Reserve Bank of St. Louis President William Poole. The Treasury’s funds “will be flowing in for quite a long time,” Poole, a Bloomberg contributor, said on Bloomberg Radio.
[…]
Banks and insurance companies have typically purchased the two companies’ preferred shares. The Federal Reserve and three other bank regulators said that they will work to “develop capital restoration plans” with the “limited number” of smaller institutions that hold Fannie and Freddie stock as a significant portion of their capital.

There is not enough detail on what they plan to do with shareholders. Typically they come last in line when it comes to getting money back.

This and other articles seem to imply that the government is going to treat institutional shareholders differently than individual shareholders. Reportedly the Fed, FDIC and others are going to help smaller banks with significant stock holdings in the two seized GSE’s to keep them from failing.

Paulson urged banks to contact their primary federal regulator if they believe losses on holdings of common or preferred shares in Fannie Mae or Freddie Mac will cause them to fall below the government’s benchmark for “well-capitalized” institutions.

Besides the Fed and FDIC, the Office of the Comptroller of the Currency and the Office of Thrift Supervision also signed onto today’s release.

That would just be another transfer of wealth to the rich and powerful at the expense of average citizens. It keeps the shareholders in those banks afloat at the expense of the taxpayers, even when the FDIC is supposed to be adequate protection for the depositors.

The good news is that they are both required to become a lot smaller.

William Poole former president of the Federal Reserve Bank in St. Louis says that taxpayers may pay $300 billion for this bailout.

Given that the government has consistently understated the magnitude of the mortgage/banking crisis, I suspect that is a very conservative estimate.

Isaac Zamora, who is accused of killing six people in a Seattle-area shooting spree, gave his reasons at a hearing yesterday.

From the Seattle-PI:

MOUNT VERNON — Isaac Zamora, accused in the deaths of six people, says he kills for God.

“I kill for God. I listen to God,” Zamora said twice Friday, his first public words after being arrested in the killings of a deputy, two neighbors, two construction workers and a motorist.

Shackled, unshaven and dressed in an orange jumpsuit, he spoke while signing legal paperwork. He appeared in court for a complaint that prosecutors filed against him accusing him of six counts of first-degree murder and four counts of first-degree assault in Tuesday’s bloody rampage.

Now this is the part that I find interesting:

A 28-year-old housepainter with mental health problems, Zamora is accused of committing the deadly spree in the small community of Alger, violence that began with the fatal shooting of Skagit County Sheriff’s Deputy Anne Jackson. Jackson, 40, had been responding to a trespassing call about Zamora.

Prosecutors believe that Zamora also killed his neighbors Chester Rose, 58, and Julie Binschus, 48; carpenters David Radcliffe, 58, and Greg Gillum, 38, who were working in the area; and motorist Leroy Lange, 64, who was driving on Interstate 5.

Binschus’ killing was the only one in which prosecutors filed a premeditated murder charge.

Zamora is also accused of stabbing a 61-year-old neighbor, and of shooting Binschus’ husband and two other motorists. Those victims survived.

How is it that Zamora who apparently talks to God and gets his instructions to kill from God is considered to have “mental health problems” but people like President George W. Bush who has killed far more people in the name of God is considered to be sane?

Osama bin Laden kills in the name of God as well and millions of people around the globe consider him to be a moral authority. Why isn’t he considered mentally ill?

The law of identity says that A=A. Killing in the name of God equals killing in the name of God, no matter who does it. If it’s crazy for one person to do it, then it’s crazy for another.

But what defines mental illness is often determined by politics, not reason. A politically powerful person like Bush or Bin Laden can get away with killing in the name of God because they are really killing to satisfy a political demand for it–a political demand created by the existence of millions of people who think like Zamora: “I kill for God. I listen to God.”

Gov. Sarah Palin of Alaska, the VP nominee on McCain’s ticket also gets her order from God.

Interviews with the two pastors she [Palin] has been most closely associated with here in her hometown — she now attends the Wasilla Bible Church, though she keeps in touch with Mr. Riley and recently spoke at an event at his former church — and with friends and acquaintances who have worshipped with her point to a firm conclusion: her foundation and source of guidance is the Bible, and with it has come a conviction to be God’s servant.

“Just be amazed at the umbrella of this church here, where God is going to send you from this church,” Ms. Palin told the gathering in June of young graduates of a ministry program at the Assembly of God Church, a video of which has been posted on YouTube.

“Believe me,” she said, “I know what I am saying — where God has sent me, from underneath the umbrella of this church, throughout the state.”

Isaac Zamora has a lot of company in political circles. Who knows? Maybe that’s where he got the idea to listen to the voice of God in his head when it tells him to kill.