Similar to many other work facilities, the building where I work has a security system where you have to swipe in before the door will open for your entrance or exit. Today, that system was down for a few moments and it happened to be down when I was leaving.

I saw this on the cover the Wall Street Journal last week and had to share it. I think it does a good job of showing how far beyond reasonable government we have gone and are going to. I had no idea that banks were forced to take the loans from the government - both stable and unstable banks were forced to take them. I also think it intresting how the banks were forced to receive the money and therefore they were forced to accept the strings attached as well - such as regulations on executive compensation.

I can understand the need to save the financial system and support certain efforts to do so. However, I can't understand how the Government has the right or the ability to compel institutions and people to receive money and the regulations along with it. This is the equivalent of marketplace emminent domain - a place where they have no emminent domain capabilities. What happened to Freedom? What happened to choice and accountability? Goldman doesn't even have to ask for help now - the government will step right in before they need it. At any rate, I thought it was worth sharing.

By SUSANNE CRAIG, KATE KELLY and DEBORAH SOLOMON

Goldman Sachs Group Inc., frustrated at federally mandated pay caps, has been plotting for months to get out from under the government's thumb.

On Monday, Goldman took fresh steps to break free: It announced, as expected, that it plans to raise $5 billion by selling new common shares to investors, and that it would like to use the money to repay government bailout money received last year. The firm also reported stronger-than-expected first-quarter earnings of $1.81 billion.

Goldman managers have a big incentive to escape the state's clutches. Last year, 953 Goldman employees -- nearly one in 30 -- were paid in excess of $1 million apiece, according to people familiar with the matter. But tight federal restrictions connected to the financial-sector bailout have severely crimped the Wall Street firm's ability to offer such lavish pay this year.

At a meeting President Barack Obama hosted with bank executives at the White House in late March, Lloyd Blankfein, Goldman's chief executive, argued that banks needed freedom to repay the loans the U.S. forced them to accept in October. Eight large institutions received a total of $165 billion in capital, including $10 billion for Goldman. The pay restrictions were tied to those loans. The banks were told then that everyone had to accept the money so it wouldn't be obvious who needed it most.

"Those who could pay it back have an obligation to do so," Mr. Blankfein urged the president, according to attendees. Mr. Blankfein, who was paid $68.5 million in 2007, added that the pay caps and other factors are "going to limit our ability to compete, both here and abroad."

The federal government's management of the financial crisis is entering a new phase. The trillions of dollars Washington has committed to help stabilize companies and thaw frozen credit markets have enmeshed the government deep in the affairs of investment banks, insurers and auto companies. Now that stock and bond markets have rebounded a bit, and pressure is easing for some financial firms, the government has to begin deciding how tight a grip to maintain on some companies, and for how long.

If Goldman is permitted to repay its loan, it would be the first big bank to do so. That would set the stage for the firm to once again pay its executives, traders and bankers -- long among Wall Street's highest paid -- as it sees fit.

But an early repayment could pose a risk to other banks that received government money, by rekindling investor concerns about their health. Morgan Stanley, for example, which is expected to report a first-quarter loss, isn't likely to quickly repay the U.S., according to banking executives and government officials. Will other profitable banks rush to repay, deepening the divide between the haves and the have-nots? And what would happen if there's another financial shock and banks are forced to ask for more U.S. funds?

A handful of smaller banks already have taken steps to repay the government. The U.S. has indicated it won't allow any major banks to do so before the government considers the results of financial "stress tests," which are expected by April 30. The tests measure banks' ability to continue lending through a severe and prolonged economic downturn. Because of the technicalities of the loans, it could take months before Goldman or any other big bank that repays will escape the government's clutches.

The 140-year-old firm long has boasted a culture of lucrative compensation. Although overall Goldman pay fell last year, the firm, which has about 30,000 employees, paid 953 people more than $1 million in salary and bonus, according to people familiar with the matter. No one got more than $1 million in cash; much of the pay was through stock grants that vest in the future, these people say. (At Merrill Lynch & Co., which had roughly twice as many employees, 696 executives were paid more than $1 million last year, according to data released by New York Attorney General Andrew Cuomo.) In 2008, the pay of Mr. Blankfein and three top Goldman lieutenants fell 97%, to a total of $9.3 million.

Firms are chafing under new legislative rules dictating that bonuses can account for no more than one-third of the total annual pay to top earners at companies receiving government money. The Obama administration also has endorsed capping salaries at $500,000 at some firms receiving significant U.S. aid. The government also restricts companies accepting U.S. funds from increasing dividends and from buying back their own stock, among other things.

Mr. Blankfein now uses Amtrak's Acela Express train to shuttle between New York and Washington to make his case with government officials. That's a far cry from the private plane Goldman executives have used in the past. Some Goldman partners, careful not to appear to be spending taxpayer money, now use their personal credit cards when paying for client entertaining. Employees visiting New York now stay at an Embassy Suites hotel rather than the tony Ritz-Carlton where they used to bed down.

Goldman has fared better than most rivals during the crisis, but was hammered nonetheless after Lehman Brothers Holdings Inc. filed for bankruptcy protection in September. Goldman's stock sank to $108 on Sept. 18, less than half its high of more than $247 a share in October 2007.

Even then, Goldman executives didn't believe the firm needed U.S. money. On Sept. 23, as the financial crisis intensified, Goldman raised $5 billion from Warren Buffett's Berkshire Hathaway Inc. Goldman hoped the investment -- preferred stock with a steep 10% annual return -- would reassure investors. Goldman raised another $5.75 billion in a common-stock offering.

Mr. Blankfein spoke up when nine big banks were called to the emergency meeting in October where the Treasury Department unveiled its plan.

"This is pretty vague," Mr. Blankfein told then-Treasury Secretary Henry Paulson, attendees say. "What are the terms?"

The U.S. did more than give the banks money. In exchange for the capital, it also received warrants, a security that gives the holder the right to buy common stock at a certain price. Paying back the money doesn't end the government's ability to exercise those warrants and own common stock in the banks. To formally end the government's involvement, the Treasury must sell the warrants back to the bank or to private investors.

It didn't take long for Goldman investors to raise concerns about Washington's grip. At a Nov. 11 conference at New York's Grand Hyatt hotel, an audience member grilled Mr. Blankfein.
"Some of the politicians are questioning companies who have accepted...money as to whether they should be paying bonuses this year," the attendee said. "And I'm wondering...how you're thinking about your ability to continue to compensate your staff the way you have in the past?"
Mr. Blankfein replied: "We hear those voices and we take it into account."

Six days later, Goldman said its board decided that senior executives would take no bonuses. The numbers were released in mid-December. Money set aside for pay and benefits fell 46% to $10.93 billion. Most partners, the firm's elite, saw bonuses fall by about 70%, according to people familiar with the matter.

All costs were being scrutinized by then, due to heightened public scrutiny and declining profits. Goldman employees working late now are entitled to only $20 in reimbursement for dinner, a 20% reduction. Car-service rides home aren't free until 10 p.m., an hour later than before.
At a Goldman partners meeting in early January, Mr. Blankfein said repaying the federal money was a priority.

The firm took the message public at an investor conference on Feb. 4. "Operating our business without the government capital would be an easier thing to do," said David Viniar, Goldman's chief financial officer. "We'd be under less scrutiny and under less pressure." Goldman's shares rose 6.2% that day, to $87.97.

Goldman aimed to spin the message more broadly at a congressional hearing on Feb. 11. It was Mr. Blankfein's first-ever congressional appearance, and he spent hours preparing.

Mr. Blankfein played diplomat. "When conditions allow, and with the support of our regulators and the Treasury, we look forward to paying back the government's investment so that money can be used elsewhere to support our economy," he testified.

On Feb. 26, the Treasury sent an email to Goldman's finance department containing the financial stress test. Mr. Viniar, Goldman's CFO, ordered his staff to work around-the-clock so Goldman could return the questionnaire by Monday, four days later.

But the Treasury told the firm it had to wait until its review was concluded later this month before the U.S. would entertain a repayment of the money, according to people familiar with the matter.

A public uproar last month over bonuses paid to American International Group Inc. employees only heightened Goldman's urgency. The AIG bonuses prompted a House bill to slap a 90% tax on bonuses for those receiving pay of $250,000 or more at firms that received more than $5 billion in government funds.

Some Goldman executives privately discussed repaying $5 billion -- half its government loan -- or more, say people familiar with the matter. That would have exempted Goldman from the bill taxing bonuses.

The bonus-taxing measure fizzled after President Obama expressed reservations.

Soon, a prominent government official indirectly suggested a course of action that might pave the way for a payback. On March 15, Federal Reserve Chairman Ben Bernanke said in a "60 Minutes" television interview that the day a bank could raise private capital would be an important milestone. "Right now, all the private money is sitting on the sidelines saying: 'We don't know what these banks are worth. We don't know that they're stable,'" Mr. Bernanke said.

Two days later, at a monthly meeting of Goldman's nearly 400 partners, Mr. Blankfein said it may be "prudent" for Goldman to raise capital, say attendees.

He has sought political backing. Mr. Blankfein has met twice with Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee. Messrs. Blankfein and Frank discussed repaying government funds, among other things, says Mr. Frank.

"I think it's a sign of strength" for Goldman to seek to repay U.S. money, Mr. Frank said in a recent interview.

Some Goldman rivals are less likely to repay their loans right away. At the March 27 White House meeting with President Obama, Morgan Stanley's Chief Executive John Mack struck a different tone. Analysts estimate that his firm faces a first-quarter loss of approximately $100 million. A quick payback of U.S funds would "undercut the purpose" of the Treasury's Troubled Asset Relief Program, or TARP, for large banks, Mr. Mack told President Obama, attendees say.

Treasury Secretary Timothy Geithner indicated recently that healthy banks will be able to repay bailout money, and that the Treasury was considering those repayments in its calculations about how much TARP money remains. The Bush administration had said that even healthy banks had to keep the money until the crisis passed.

A provision in the recently passed stimulus bill mandates that TARP recipients be allowed to repay the funds, as long as their primary regulator approves the move.

At least one Goldman shareholder has benefited with the government in the picture. The 10% annual payout Mr. Buffett's Berkshire Hathaway receives on its $5 billion investment earns it more than $1.3 million each day.

As long as Goldman holds the government's money, it can't pay off Mr. Buffett without U.S. approval.—Damian Paletta, Susan Pulliam, Jon Hilsenrath and Aaron Lucchetti contributed to this article.

Found at http://online.wsj.com/article/SB123966372945715013.html on April 20th, 2009.

This is an excellent read from the AEI. I highly recommend it.

In an effort to address the Federal Reserve's ballooning balance sheet, bank officials are arguing for the institution to issue its own debt. While this might effectively curtail inflation in the future, the best way to ensure the bank is on sound financial footing--in a democracy--would be for Congress to appropriate the funds to acquire troubled assets, and for Treasury to borrow the money that it needs.

Senior Fellow Kevin A. Hassett

The wise men of Washington keep finding more core beliefs that we have to give up. First it was free markets. Now it's democracy.

The financial rescue may be the least popular big-ticket government program in history. If the U.S. Treasury decides it needs more money to keep the bailout going, it is anybody's guess whether Congress would provide it.

As a result, Treasury and the Federal Reserve have been running what feels to this lifelong student of fiscal policy like a scam.

Many economists believe that helping financial institutions turn their less liquid assets into hard cash is a key step toward returning them to good footing. The best way to achieve that in a democracy would be for Congress to appropriate the funds to acquire the assets and for Treasury to borrow the money that it needs.

It might be that voters are too stupid to understand that government officials should get as much bailout money as they desire.

But Congress is unwilling to appropriate enough money, so Treasury and the Fed have cooked up a work-around: the Fed buys the assets instead. Since the Fed exists outside of the normal budget process, no permission from elected officials is required.

Here's a sketch of how it works. Many financial institutions have reserve accounts with the Fed. If one of them shows up with an asset it wants to ditch, the Fed takes it and ratchets up the balance in the reserve account. This means that the Fed is effectively summoning cash out of thin air to purchase the assets.

In isolation, such a move might be inconsequential. But the scale of this end-around is enormous. The Fed's balance sheet is closing in on $2 trillion and stands ready to skyrocket above that. Last month, for example, the Fed committed to buy more than $1 trillion in mortgage-backed securities.

Printing Cash

This means that the Fed is printing cash at a rate that, while not threatening historic records set in Weimar Germany, promises to create substantial inflationary pressures once the economy revives.

Therein lies the problem. At some point, when the economy begins to pick up again, the Fed will have to withdraw some of those reserves from the system before they ignite an inflation bonfire.

Traditionally, the Fed might withdraw reserves by selling some of the Treasuries it owns. But the scale of the money creation is so grand this time that the Fed might not be able to sell enough Treasuries to meaningfully affect inflation without running up against the debt limit that Congress sets when it gives Treasury the authority to borrow money.

The Fed could, in principle, sell some of the assets it has been buying--but if these assets were liquid, the Fed wouldn't have been buying them in the first place. Which means it may be extremely difficult to get the cash out of the economy before it is too late.

"Fed Bills"

The Fed has cooked up a solution, though. Vice Chairman Donald Kohn, told an audience at the College of Wooster in Ohio that a possible solution would be for the Fed to issue its own securities, which might be called "Fed bills." Kohn argued that a key attraction of these bills is that they wouldn't be subject to the debt ceiling set by Congress.

In other words, the Fed wants to have unbounded authority to borrow money and buy assets without the inconvenience of having to explain itself on Capitol Hill.

The actions that have been taken already may indeed necessitate granting the Fed that authority. The cash is out the door, and at some point, the Fed will have to rake it back in. Congress may have to choose between giving the Fed the authority it wants, or having the mother of all inflation episodes.

Crowd Out Spending

Should the Fed's balance sheet climb to $6 trillion, then its losses might be enormous and threaten to crowd out spending on defense, education and health care. And it would do so without Congress ever voting on the increase in the debt ceiling that would have been required if Treasury were performing the rescue.

If the Fed receives the authority to issue debt whenever it wants to, then future bureaucrats can, in principle, play whatever financial games they want. The powerlessness of voters will be codified into law.

We can't let that happen.

It might be that voters are too stupid to understand that government officials should get as much bailout money as they desire. The financial rescue might have been precisely what the doctor ordered.

But the public might be right as well. Our founders didn't construct a democracy because voters are always right. Rather, they viewed democracy as better than the alternatives.

While fully legal, the steps that have been taken by Treasury and the Fed have clearly been designed to insulate those institutions from the will of Americans' elected representatives. In that regard, the damage from these actions probably exceeds the benefits. If we accept the view that we can be democratic in some areas but not others, then democracy will wither and die.

Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.

Found at http://www.aei.org/publications/pubID.29695,filter.all/pub_detail.asp on April 13, 2009.

I read this this morning and found it troubling. Does anyone else?

WASHINGTON (Reuters) – Cyberspies have penetrated the U.S. electrical grid and left behind software programs that could be used to disrupt the system, the Wall Street Journal reported on Wednesday.

The spies came from China, Russia and other countries, and were believed to be on a mission to navigate the U.S. electrical system and its controls, the newspaper said, citing current and former U.S. national security officials.

The intruders have not sought to damage the power grid or other key infrastructure but officials said they could try during a crisis or war, the paper said in a report on its website.

"The Chinese have attempted to map our infrastructure, such as the electrical grid," a senior intelligence official told the Journal. "So have the Russians."

The espionage appeared pervasive across the United States and does not target a particular company or region, said a former Department of Homeland Security official.

"There are intrusions, and they are growing," the former official told the paper, referring to electrical systems. "There were a lot last year."

The administration of U.S. President Barack Obama was not immediately available for comment on the newspaper report.

Authorities investigating the intrusions have found software tools left behind that could be used to destroy infrastructure components, the senior intelligence official said. He added, "If we go to war with them, they will try to turn them on."

Officials said water, sewage and other infrastructure systems also were at risk.

Protecting the electrical grid and other infrastructure is a key part of the Obama administration's cybersecurity review, which is to be completed next week.

The sophistication of the U.S. intrusions, which extend beyond electric to other key infrastructure systems, suggests that China and Russia are mainly responsible, according to intelligence officials and cybersecurity specialists.

While terrorist groups could develop the ability to penetrate U.S. infrastructure, they do not appear to have yet mounted attacks, these officials say.

(Writing by Eric Beech; Editing by Jon Boyle)

Found at http://news.yahoo.com/s/nm/20090408/us_nm/us_cyberattack_usa on April 8, 2009.

Sorry to post two things in one day, but since I posted about China's currency proposal Geithner has responded about it. Again, very interesting and important knowing that Bretton Woods 2.5 is happening in a few weeks. Here it is:

NEW YORK (Reuters) – Treasury Secretary Timothy Geithner said on Wednesday the U.S. dollar is still the world's reserve currency and will remain so for a long time, though he also expressed openess to expanded use of an IMF currency basket.
Geithner, when asked during an audience question-and-answer period following a speech in New York, whether he foresaw a change in the dollar's global role, he said, "No, I do not."

"The dollar remains the world's dominant reserve currency and I think that's likely to continue for a long period of time."

He also said, "as a country, we will do what's necessary to make sure we're sustaining confidence in our financial markets and in this economy's long-term fundamentals."

The comments came shortly after Geithner, in response to another question, said he was "quite open" to a recent Chinese suggestion to move toward greater use of a IMF-created global currency basket comprising dollar, euros, sterling and yen.

Zhou Xiaochuan, China's central bank governor, earlier this month said the world should consider the IMF's Special Drawing Rights basket as a super-sovereign reserve currency.
Geithner said he hadn't read Zhou's proposal, but added, "as I understand it, it's a proposal designed to increase the use of the IMF's Special Drawing Rights. I am actually quite open to that suggestion."

He also said he had "tremendous respect" for Zhou. China's foreign exchange reserves are the largest in the world at nearly $2 trillion and China is the biggest holder of U.S. Treasury debt.

The U.S. dollar initially fell against the euro on Geithner's remarks regarding China's SDR proposal but pared those losses after the U.S. treasury secretary reiterated his faith in the dollar as world reserve currency.

"Geithner admits to not having read China's proposal, and President Obama's comments on the dollar yesterday -- no need for another reserve currency and that the dollar was fundamentally strong -- was more of the underlying signal," said Marc Chandler, senior currency strategist at Brown Brothers Harriman in New York.

(Reporting by Pedro Nicolaci da Costa)

Found on http://news.yahoo.com/s/nm/20090325/bs_nm/us_financial_usa_geithner;_ylt=AnPmD2xZsAYriXkqxeu3pdp2wPIE;_ylu=X3oDMTJzcW4za2VjBGFzc2V0A25tLzIwMDkwMzI1L3VzX2ZpbmFuY2lhbF91c2FfZ2VpdGhuZXIEY3BvcwM1BHBvcwM1BHNlYwN5bl90b3Bfc3RvcmllcwRzbGsDZ2VpdGhuZXJzYXlz on March 25, 2009.

This was a fascinating read and I recommend it to you. Necessity and difficulty is the birthplace of innovation and ingenuity. In the world financial markets, there is much difficulty and the necessity to find a better way. It is good to know at the very least one of the innovations being pushed. Something very similar was pushed in the original Bretton Woods - it may be gaining traction and was proposed at the recent Bretton-Woods. I know too little of this to say whether it is good or not - but being aware is the first step in making those judgements.

BEIJING – China is calling for a new global currency to replace the dominant dollar, showing a growing assertiveness on revamping the world economy ahead of next week's London summit on the financial crisis.

The surprise proposal by Beijing's central bank governor reflects unease about its vast holdings of U.S. government bonds and adds to Chinese pressure to overhaul a global financial system dominated by the dollar and Western governments. Both the United States and the European Union brushed off the idea.

The world economic crisis shows the "inherent vulnerabilities and systemic risks in the existing international monetary system," Gov. Zhou Xiaochuan said in an essay released Monday by the bank. He recommended creating a currency made up a basket of global currencies and controlled by the International Monetary Fund and said it would help "to achieve the objective of safeguarding global economic and financial stability."

Zhou did not mention the dollar by name. But in an unusual step, the essay was published in both Chinese and English, making clear it was meant for a foreign audience.

China has long been uneasy about relying on the dollar for the bulk of its trade and to store foreign reserves. Premier Wen Jiabao publicly appealed to Washington this month to avoid any response to the crisis that might weaken the dollar and the value of Beijing's estimated $1 trillion in Treasuries and other U.S. government debt.

For decades, the dollar has been the world's most widely used currency. Many governments hold a large portion of their reserves in dollars. Crude oil and many commodities are priced in dollars. Business deals around the world are done in dollars.

But the financial crisis has highlighted how America's economic problems — and by extension the dollar — can wreak havoc on nations around the world. China is in a bind. To keep the value of its currency steady — some say undervalued — the Chinese government has to recycle its huge trade surpluses, and the biggest, most liquid option for investing them is U.S. government debt.

To better insulate countries from the ills of one country or one currency, Zhou said the IMF should create a "reserve currency" based on shares in the body held by its 185 member nations, known as special drawing rights, or SDRs.

He said it also should be used for trade, pricing commodities and accounting, not just government finance.

President Barack Obama described China's proposal as unnecessary during a prime-time news conference Tuesday.

"I don't believe that there's a need for a global currency," Obama said.

The president also pointed to the current strength of American money. "The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world."

Earlier in the day, both U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke took similar positions at a congressional hearing. They were asked by Rep. Michele Bachmann, R-Minn., if they would "categorically renounce the United States moving away from the dollar and going to a global currency," and both said they would.

And the European Union's top economy official said the dollar's role as the international reserve currency is secure despite China's proposal.

"Everybody agrees also that the present world reserve currency, the dollar, is there and will continue to be there for a long period of time," EU Commissioner Joaquin Almunia said Tuesday after a meeting of the European Commission.

Zhou also called for changing how SDRs are valued. Currently, they are based on the value of four currencies — the dollar, euro, yen and British pound. "The basket of currencies forming the basis for SDR valuation should be expanded to include currencies of all major economies," he wrote.

Beijing has been unusually bold in recent months in expressing concern about Washington's financial management and pushing for global economic changes. That reflects both its relative financial health and growing concern that increased globalization means missteps abroad could harm its own economy.

Zhou's comments are also part of China's longstanding push to reform the IMF, World Bank and global financial system to give greater voice to China and other developing economies — another theme that will be heard from China, Brazil, Russia and India at the summit of Group of 20 major economies next week.

"Overdue reforms should give proper representation to and increase the say of the emerging and developing economies," Yi Xianrong, a researcher with the Institute of Economics and Finances at the Chinese Academy of Social Sciences, a government think-tank, wrote in the government newspaper China Daily.

"Proper representation and a bigger voice for the developing countries are the need of the hour. For instance, being the world's third-largest economy and the largest foreign reserves holder, China should get its due place in the monetary body."

Another idea Yi raised was that the U.S. and Europe should give up their traditional privileges of appointing the heads of the World Bank and the IMF.

The idea of a creating a new global reserve currency isn't new. But analysts say the proposal isn't likely to gain much traction because it faces major obstacles. It would require acceptance from nations that have long used the dollar and hold huge stockpiles of the U.S. currency.

"There has been for decades talk about creating an international reserve currency and it has never really progressed," said Michael Pettis, a finance professor at Peking University's Guanghua School of Management.

Managing such a currency would require balancing the contradictory needs of countries with high and low growth or with trade surpluses or deficits, Pettis said. He said the 16 European nations that use the euro have faced "huge difficulties" in managing monetary policy even though their economies are similar.

"It's hard for me to imagine how it's going to be easier for the world to have a common currency for trade," he said.




Found at http://news.yahoo.com/s/ap/as_china_global_currency;_ylt=AsRGullY0NX5bnWrdQuewGnZn414 on March 25, 2009.

One of the common themes I often hear when discussing our oversized and bloated federal government is "State's Rights." That theme almost kept us from becoming the United States and almost broke our Union during the Civil War. It was the battle cry of the South in the "War Against Northern Aggression" or the "War for State's Rights." It is the battle cry of many even today - especially among the very conservative. I do not fault them for that belief. However, they should think twice about ever promoting such a thing.

Governments were instituted by God for the benefit of man. Their proper role is to ensure the safety and domestic tranquility of its citizens, support interstate commerce, and support the general welfare of the People.

Do you believe that?

The goverment has the powers to enact laws that are necessary and proper to ensure that it can fulfill the responsibilities and powers delegated to it (Article 1 of the US Constitution).

Do you believe that?

The survival of the Government at the local, state and Federal levels is tied to the survival of the financial system. Without a functioning financial system public credit would be gone, the money system destroyed and the whole system of our country would be gone thus leaving our country open to foreign invasions, turmoil from within and a cessation of all public and therefore private services.

Do you agree with that?

If you believe these things then you should, in some way, support government intervention in the free market when it's lack of involvement would mean the destruction of the system that supports our government and therefore it would destroy our government as well.

If you believe that, then you must ask yourself, "What level of intervention then is necessary and proper?" Was and is the financial system at that level of risk where it required and requires the government's involvement to keep it from falling apart? Also, at what point does Government involvement increase the likelihood of its destruction?

We must do our research and answer that question for ourselves.

One additional area I would focus on if I were the leader of this Nation at this important time would be a return to the virtues of Freedom and Accountability. Across this Globe the word "America" is synonyms with "Freedom." America is, or should be, Freedom. I would remind the citizens of our great land that America was founded by men and women who craved for personal responsibility. They craved the opportunity to be able to enjoy the fruits of their labors because they had been deprived of them by a Colonial Empire. They craved the opportunity to succeed - even if in the attempt they would fail. I would remind our people that this country was founded to reduce government - not to embolden it. I would tell the leaders of business and industry that the very bedrock of America is not the government but the Freedom the government is to sustain and that Freedom cannot exist without Accountability. They are two sides of the same coin. Once cannot exist without the other.

One of the key areas we, as a Nation, must focus on is Education. Bill Gates makes some great points in this short talk on Education. The first part is on Malaria, the second part is on Education.

I highly recommend you watch it.

http://www.ted.com/talks/view/id/451

For the long term, we must begin to prize education again as not only a means to an end, but an end to itself. Learning should be an objective because we love it and because it makes us better human beings - more able to love, listen, understand, share, build, play and create. Education today is too much of a rite of passage, an obstacle in a way on the course of life rather than life itself. It is not an obstacle - it is the prize at the end of the course. When we look back on our lives, we should be filled with gratitude for what we learned, that we learned everything we possibly could, and that we loved learning it. Life is more than movies, video games and extra-curricular activities. Life is about learning. We need to change our mindsets and help change others as well.

I watched an interview with Ron Paul today and he mentioned how there were only five copies of the final bill circulated among the house and the senate on the day the bill was voted on. Unbelievable.

If you want to be one of the lucky few to actually see what is in the bill for yourself (instead of reading the cliff notes version), click here:

http://thomas.loc.gov/home/h1/Recovery_Bill_Div_A.pdf

As you look through you will be amazed.

Do we need more domestic attention? We do - absolutely. However, you can't cut taxes and increase spending. You can't cut taxes and wage two wars. We can't cut taxes and continue planning yet another $100 billion bailout bill. We can't have it all - we need to sacrifice for our country. We all need to pull together as individual Americans and sacrifice. Some might say that this bill is that sacrifice. However, this bill doesn't require any sacrifice of us - at least not for quite some time. It requires a sacrifice of our children and our unborn and their unborn. This bill also doesn't do anything for them. It arguably won't make things better for them as it doesn't change the fundamentals of what has and is going wrong in America. Taxing the future for the status quo is reckless, dangerous and irresponsible. What is the sacrifice we must make? No one has asked us for one.

Last night I posted what I would do if I were expected to do something. Two of the points I said that would need our attention would be fiscal policy and inflation. Both are obviously related but in the short term, we can make immediate changes to reduce the coming hyperinflation. The current bailout bill is the wrong direction for the short and long term.

http://www.youtube.com/watch?v=zdVP_sgCETo

To watch a short presentation on the point I made regarding the money supply increasing by 24% annually, you will need to watch this:

http://www.youtube.com/watch?v=YDEe0Ai6lTM

Not that Glenn Beck is a good source of backup, but the data from the Federal Reserve is.

Finally, AEI has a great article called "The Second Coming of Keynes." I recommend it to you. If you look at the proposed bailout relative to anything that has ever been undertaken by the government in our history, you will see how crazy this plan is.

The author closes: "The truth is that there is very little empirical support for policies such as these. They will likely provide a small boost, at an enormous cost. When the boost is gone, the cost will remain.

For those economists who are more skeptical of the theories of John Maynard Keynes, there is but one consolation: An experiment this large will provide ample opportunity for study. "

Indeed it will and we have good reason to suspect the outcome won't be pretty. Amending the Federal Reserve Act to allow money to be printed only at the rate of productivity would be the best and most sound fiscal policy for our country - gold should not be our standard nor should the great experimental ideas of the Fed bankers. Gold and the Fed are not the wealth of the nation. Smith was right - it is labor.

There are two enemies to our future - Government spending and the Federal Reserve system of unbridled freedom to set America's monetary policy. Both must be reigned in.

In response to a friend's question about what would I do regarding the economic stimulus plan and the current situation, I put this forward as a possible solution. At first pass, this is the direction I think we should go:

Communicate with Hope and Vision

It is the role of all leaders to lead us to a better place. The words we say have a powerful effect on the feelings we feel and the actions we take. If I were responsible for the country, I would hope that I would recognize this important trust and communicate the truth of the present and a vision of optimism and hope for the future.

Understand the Long Term Issues Facing the Country

One of the primary problems I see with the current economic situation is that the TARP and current stimulus plan being debated is, as most legislation is, very reactionary. Politicians are never voted in for their 10-20 year plans. They are voted in for what they can do for the problems people were facing yesterday. As a result, the actions in congress are very reactionary and sadly do little to avoid problems and create strategies for the future.

It is important to note that I believe that for those long term needs for the safety and general welfare of the People that the free market has failed to see profit in, the Government has a role to ensure the need is met. Please know up front that I do not believe that the role of government is to interfere in the marketplace where there is a marketplace but in those places where there is not one. The government cannot be, and should not be, the be all and end all of everything as it is quickly becoming. The place of government is not to prop up crippled institutions, cap executive salaries, flood markets with endless streams of cash, nationalize institutions, purchase private equities in firms or place an impossible burden of debt on the backs of the People for immidiate, short term boosts.

I would therefore not take any short term action that would adversely affect the long term future of our nation's children. Those issues that must be addressed to ensure long term success for the nation are:

1. The Breakup of the Family as the Basic Unit of Society

It is in the interest of the citizens of our nation to help ensure that each child born into our country is born to a father and a mother who honor their marital vows. Children that are raised in a loving home gain the self confidence they need to succeed in life, a foundation of love and respect for their fellow man, and a commitment to generally a sense of personal honor and commitment. The breakdown of the family will be a country of individuals whose hearts have grown cold through abuse and neglect and who will desire love but not know how to find it. The dissatisfaction with this kind of life leads many to a life of a relentless pursuit of selfishness. Selfishness only brings more misery and heartache along with the other ills of an uncivilized people. As a leader I would promote fidelity and the virtues of honor, commitment, love, respect, and forgiveness.

2. The Growing Lack of Creativity

Western civilization has primarily grown out of our ability to create. Inventions that bless the lives of individuals whether for increased work productivity or leisure are desired commodities. The United States is producing fewer and fewer creative inventions. This decline in America's ability to create will cause a real shift in global positioning that is concerning for our children.

The government must actively be finding ways to help more people become interested in engineering and the sciences. The government must understand its place in funding the sciences of all kinds and in removing barriers to the country remaining competitive on this front. Creativity in renewable energies is a key area for our nation to gain core competencies. This leads us to the next long term problem.

3. Education

Natural born citizens have fallen far behind the rest of the world in education. Our children do not learn much in school and our parents are not concerned or trying to help them learn more. Instead, they want their children's lives to be dominated by extra-curricular activities rather than academic ones. Learning must be enshrined as part of our culture - not just entertainment. As a leader, I would work with leading business and education leaders to help re-shape the American education system to help our children be prepared for and to help shape the 21st Century.

4. Immigration Reform

Because our schools are not producing the number of graduates that are needed to fill the creative jobs in our country, we must make it easier and not harder for the dreamers, the creators, the engineers of today in foreign countries to become American citizens. The doors of our country should open to the people of all nations and we should welcome them into our nation and culture.

5. Energy Independence

The long term success of the west is dependent on energy independence. The government must take a strategic role in helping our country leave behind its dependence on foreign oil. The country must enact true, long term energy policy that would greatly reduce or entirely eliminate our need for foreign oil. Just yesterday it was announced that China purchased more cars last month than the United States for the first time. Imagine what a billion more cars on the road will mean for the oil supply. We are in an insecure place if we are all relying on the same source of energy. America must see the greater need for long term energy policy. The safety of our nation largely depends on this one piece - energy independence.

Understand the Short Term Problems Facing the Country

As I see it, the true short term problems of our nation are:

1. The Housing Market

The housing market was one of the primary sources of our current economic problem. In the short term, relief must be given to those deserving home owners who are facing foreclosures. Rather than give hundreds of billions to banks to compensate them for their losses, the government should step in and force a renegotiation of contract and interest rate that ensures the people of this great country are served as well as the interest of the banks.

2. Inflation

The Government and Federal Reserve have already spent or committed nearly $10 Trillion on the economic bailout. That is a lot of extra money that has gone into the economy. Additionally, M2 - the Nation's money supply - is growing at a rate of 24%. That is scary - do you want to see 20% inflation? I don't - that is a very dangerous thing. The Federal Reserve must stop flooding the markets with money and the government must stop this as well or else I fear our economy would be incredibly hurt. So, not just those who have been unwise would be hurt - but those who have been wise as well. As a leader I would make this hard decision.

3. Credit

The lending institutions who have been given money in the TARP funds should be required to use the funds or return them to the government. The only way they will return to solvency is by earning money and they cannot do that by "strengthening their balance sheets" alone. They have to produce something and that "something" is financial services and credit.

4. Reaction

As a leader I would urge Congress to not react with haste but with positive energy and a long term strategy to create the right solutions for our nation's current and future issues.

5. Energy Costs

In reality, many people and businesses were hurt over the recent high energy costs which is a result of the country's complacency in creating alternative fuel sources. The government has a place to ensure that monopolies on energy are charging fair and reasonable prices for the fuel they provide. There needs to be some government oversight for industries where there is not a true free market.

6. Out of Control Government Spending

I need to say nothing more than the banner at the top of this page. By living way beyond our means we are quickly laying the foundation for certain economic, long term doom.

For an infrastructure bill we should understand the key structural issues that need addressing.

I do not believe that roads and bridges are a huge problem to our country's present and future growth. If there are real problems with some roads and bridges we should by all means fix them. However, the current financial crisis is not the time to be working on roads that simply need widening or freeways that need expanding for no real reason other than to create jobs.

The real structural problems that need addressing are as follows:

1. Fiscal Policy

It is my belief that the Federal Reserve Act should be amended to allow the Fed to only increase the money supply according to the increase in productivity. Any exceptions to this should be approved by the House of Representatives. Allowing a private bank to control the wealth of the nation, which is the labor of the people, puts the people at odds with business and slaves almost to the wealth they should own. The People of this nation are the wealth thereof and should be the ones responsible for the money supply.

2. Tax Reform

Our government must look at true tax reform and investigate a more representative tax system.

3. Government Oversight

For the country to not repeat the same problems that led to this, the White House should investigate and find the places where oversight failed or was non-existent and propose corrections. We have laws and police to enforce those laws. This is a place that certainly needs some attention. As a good friend posted a comment on dirivities, this would certainly be the area to monitor that.

4. True government fiscal reform

To save our country we must end the entitlement state, allow market forces and the common descency of our people to fill in the gaps, and restore Government to its proper place. By following the Long Term plan I put forth above, we would be able to better position our country for future economic success and help to create a better and safer world.

Conclusion

If I were responsible for such a monumental task, I would like to think this is where I would start. This is what I feel the proper role of government is. There are those that believe that any government involvement is bad involvement (I have found that to be mostly partisan rhetoric). I disagree and know that history would disagree along with some of our greatest founding fathers. Hamilton, Madison (as they wrote in the Federalist) and Washington would have believed in some limited involvement for the benefit of all in these types of situations.

I do not believe the government should be hands off but I also do not believe it possesses the solutions to the problems. It can only work by communicating with optimism and creating the proper structure for the true creative forces to work - the People of our great land. To do this, the government should avoid destroying the people by stealing their wealth through inflation, taxing them for their whole lives for a benefit that will last a few months, and creating a nationalized system that takes the true creative forces out of the market that blesses our lives.

The answer lies in the People and if we are true to the principles of individual liberty and justice for all, we will make tomorrow better than today for you, me and our children.

A good friend of mine received this letter from Senator Dodd yesterday. It is in response to the Economic Stimulus Bill being debated presently. His response, like that of Senator Lieberman, shows that his mind is made up. Imagine what your life would be like if you, in times of trouble, with your income going way down, took out a massive loan to support yourself and hedge your bets that you would one day be able to pay off the loan. First, no bank in their right mind would loan to you. Second, that was what brought you here in the first place. And third, it wouldn't fix the behavior that got you here in the first place.

My only point in this is to document for anyone reading (all two of you (my wife and I)), that this is just more of the same. I am certain that the intent is to bring change but the motives and the rhetoric are the same of the past 16 years. Here is the headline from the political sports coverage by Politico:

This article is another example of why we are not on course for change. Just look at the headline:

"Obama losing the stimulus message war"

Rather than having the media focus on the who is winning and who is losing the political game like it's some type of sports coverage, the media should focus on the facts, the policy, the motives, the possible outcomes, costs and benefits. The media has colluded with our elected officials to make our government little more than a horse race. One quick scan of this paragraph illustrates my point:

"At this crucial juncture in the push to pass an economic recovery package, President Obama finds himself in the most unlikely of places: He is losing the message war. Despite Obama’s sky high personal approval ratings, polls show support has declined for his stimulus bill since Republicans and their conservative talk-radio allies began railing against what they labeled as pork barrel spending within it. "

I think the media has this one wrong. They should inform the viewers - not give a play by play of the game of politics. In a way, the parties use this type of coverage to keep from doing what we need them to.

Some things fundamentally have to change for us to really progress and one way is to have the media force the politicians to talk about policy, motives, philosophy and purpose rather than who's on first and what's on second.

To read the who article on the political game, click here: http://news.yahoo.com/s/politico/20090205/pl_politico/18444

As I read a few news articles on the stimulus package being debated in Congress and the President's response to the difficulty of getting it passed, I couldn't help but see some problems.

America is an amazing country. To see one leader that some called "King George" peacefully leave his office of power and to watch our new duly elected president take the solemn oath of office was a moving experience for me.

If you were troubled, or have questions about the different Church's involvement in defeating Proposition 8, please take a few moments to watch this. I found it an incredibly profound and insightful.

In our society of "freedom from religion", I was dumbfounded when I looked in this semester's Adult (15 years old and up) Continuing Education Courses offered by my local school district - Bristol Public Schools. I wasn't surprised when I saw classes like Computer Basics, Microsoft PowerPoint, Microsoft Word etc. I am even interested in taking the Web Page Design class - I think that can come in handy. However, my mood started to change from genuine interest to slight surprise when I saw "Shaping up With Belly Dancing." I thought that was interesting for continuing education but to each their own.

What really surprised me was when I saw the following:

"Divination -

This class will introduce the student to various forms of divination: psychic readings, mediumship, channeling, tarot, etc. Come and learn how to tell a fake from a genuine diviner. This class will also teach you how to sharpen your own intuitive skills and you will learn to do 3 types of divination yourself."

I thought that there is no way this could be sponsored by my public school system; therefore, surely this must be some kind of a scam. The next class I saw was no better:

"Past Life Regression -

Utilizing hypnotherapy techniques, the student will explore the possibility of past life scenarios. The instructor is certified by the American Board of Hypnotherapy. Come and experience a hypnotic induction."

Finally, I saw the best, or worst, one of them all:

"Ghosts, Spirit Guides, and Power Animals -

Have you ever seen a ghost or heard unexplained sounds? This class invites you into the world of the shaman: a world populated by the unseen. The class is taught by a shamanic practitioner."

By the way, what is a power animal anyway? All of these incredibly non-skill, non-career oriented, based classes (which I view the primary purpose of public education) were all proudly on the page right before this statement:

"It is the policy of the Bristol Board of Education that no person shall be excluded from participation in, denied the benefits of, or otherwise discriminated against under any program, including employment, because of race, color, religion..."

I would like to think so. However, I have to wonder what would happen if a local pastor or Rabbi would have offered a Bible study class for Continuing Education? I don't think it would have happened. When they allow, in the very least, moments of silence again in public schools I may not have such a hard time with Divination, Tarot Card readings, Past-life Regressions, Power Animals and Spirit Guides, but until then, I have a problem with them. I am not mad, I am amazed at the double standard. Something must be done. If we can recognize the place for these less-than-authentic forms of spiritual instruction, then surely we can recognize a place for Judeo/Christian teachings as well. They may not agree with them - but if there is a place for one, there must be a place for the other.

Where is the equal opportunity? It has yet to be tested, but it is likely they are there may not be as much equality in the opportunity.

Nevertheless, if you really want to know what a power animal is, how to sharpen your mediumship skills, or do some past life regression, Bristol has some great classes - just for you!

To read all of the Adult Continuing Education courses offered by the Bristol Public Schools, click here:

http://www.bristol.k12.ct.us/uploaded/Adult_Ed/ACE/WinterSpring_2009.pdf

I thought we were in the middle of a crisis, didn't you? If that is the case, why was the first item of business presented on the house floor yesterday the Resolution: Expressing the sense of Congress regarding the need to prevent the closure or consolidation of post offices? It gets better.

There were three resolutions for creating commemorative stamps:

http://thomas.loc.gov/cgi-bin/bdquery/D?d111:5:./temp/~bdmZsn::

http://thomas.loc.gov/cgi-bin/bdquery/D?d111:6:./temp/~bdmZsn::

http://thomas.loc.gov/cgi-bin/bdquery/D?d111:11:./temp/~bdmZsn::

And about 90 other resolutions proposed in the house. Absolutely no bills were proposed on the house floor - not a single one. And this is at a time of crisis.

One the contrary, the Senate had just a handfull of resolutions and took up about 20 different bills. Looks like the Senate is off to a better start.

There was a resolution proposing amending the constitution to do away with the electoral college - H.J. Res.9. I did like that one.

Nevertheless, if you can judge a book by its cover, not much is going to happen, we are going to have some awesome stamps this year and keep a few more post offices open. Looking forward to it - More of the Same.

I wanted to post the letter I received from Senator Lieberman on the newest economic recovery bill being debated in Congress. My letter to the Senator was urging him to not vote for any bill that increased government spending without having an already present way of paying for the new spending. I cannot see how the mismanagement of our own financial resources at the Federal level will be a tool to creating a sound financial environment for the private sector. I fear that these short sighted measures will cause longer term hardships or disasters. I see the need for help. However, "Disasters" are always causes for (and sometimes caused by) politicians to increase spending, win votes, and cause people to lose their liberties in the name of averting some greater disaster - one that they foresee but that never comes.

Anyways, clearly the Senator never read my letter and he only has one response for every letter and every view on this subject: I agree with you and that is why I am voting for it.

December 22, 2008

Here are some interesting excerpts from an article I saw today that was written from quotes obtained by Vanity Fair which is doing an oral history of the Bush White House. It's a quick read but telling: