much regulation stifles innovation and growth, but there are behaviors and practices that are strictly parasitic or needlessly risky which should be reined in

The history of the housing meltdown is long and tortured - but it began in the 70s under Carter and culminated in the 90s under Clinton. When Clinton's admin repealed Glass-Steagall it lit a slow fuse on the economy which finally blew in 2008.

Congress (both Dem & Repub) wanted more people "in houses" because it got them votes. AIG and other financial houses lobbied for the changes because they saw they could make money by selling financial packages. I remember VERY well in the 90s the rancorous debates on this subject. People who opposed the repeal of Glass-Steagall were labelled by political opponents as 'evil rich fat cats' who 'oppressed the poor' and who wanted to 'deny the American dream to the working class...'

Do you remember that rhetoric? I sure do. They were able to argue very strongly that they were doing a GOOD thing and that opposing them made you a lousy, slimy, no-good dirtbag who hated the working poor.

So the law changed, and ALL BANKS (not just the lobbyists) were forced to deal with new market realities. If you didn't complete - you died. So they opened up financial options for 'the poor' they never would have DREAMED of messing with before. Now the poor could get loans. But in most cases the 'poor' SHOULDN'T have gotten loans because they couldn't afford them. But everyone was told, "Don't worry - Freddie Mac & Fannie Mae will get your back." So they did it anyway not because they were irresponsible or malicious. It was what they were TOLD to do because that's what government wanted, and as such it created a marketplace reality they couldn't avoid.

Moreover, it wasn't just the poor for whom financing got easier. The middle class could make a quick buck by flipping multiple properties. Speculation went wild. Housing prices skyrocketed. People got rich quick for virutally nothing. It was all going great until people overseas finally decided they couldn't keep make money on financial packages built on poisonous debt forever. POP!

I'm hesitant to lay the blame for this all on 'risky practices' of 'parasitic financial companies'. They played a big part - very true. But I've always said the housing problem was a THREE part problem. I list the problems here in order of culpability...

1. Government arranged the banquet and set the table.
2. Financial houses provided the food and sold the meals.
3. Stupid consumers gorged themselves on food they didn't need and couldn't afford.

Most people ONLY look at #2. I think that is a foolish & myopic approach that ignores the most important player (government) and gives a free pass to #3 (consumers).

Yeah, so far Satan is coming out of this looking like a hero according to right-wing talking head pundits. The crazy uncles, which seem to be a-lot like AIG last year, are trying their darndest to coax people into political and religious demagoguery to make light all of it.

I'm just awaiting the Glen Beck stuff to come soon...

Coming from the guy who appointed Tim Geitner as treasury secretary and let him pay out massive bonuses to AIG execs. Also who isn't too concerned about bringing in a single payer - sorry - public option, a reform that could save your economy ~$150 billion over 10 years. Ohh.. and also coming from the guy who just RE-appointed Ben Bernanke to the head of the Fed!

Please don't get me started about his second troop increase in Afghanistan...

Indeed. A sight to see.

i agree wholeheartedly on your points on corruption in politics but i disagree that corporations should not be held accountable

Define what you mean by 'held accountable'. Held accountable for what, specifically? Folks keeps saying "hold companies accountable" but then in the same breath they freely acknowledge that the companies "did nothing illegal". I'm all for holding companies accountable when they break laws. But that's not what some of you are talking about. The tenor of the commentary here is to hold companies "accountable" for engaging in protected, legal free speech and commerce just because you find thier exercise of those rights unlikable. I find that sort of subjective application of 'accountability' more than a little creepy.

you are correct that much of what these lenders did was lawful.laws in which these institutions spent billions in either redressing or outright dismissing

I could go on for hours on this - but VERY briefly this was not started by banks. This was started by GOVERNMENT who was upset that more people were not being qualified for loans. It was a very convenient political target. Back then banks were 'evil' for DENYING loans! But a few financial institutions (such as AIG) saw a way they could make money by debt repackaging. Hmmmm...

The lobbyist arguments 'for' the change were not without merit. Proponents argued that loans would inject money into communities, increase wealth, reduce blight, increase education, generate tax revenue... The list of "pros" was not hard to conjure up. Politicians and lobbyists were convinced they were actually doing a GOOD thing.

Oh - and leave us not forget the tarring and feathering of anyone who dared OPPOSE the changes. Such people were called racists. 'Red liners'. They were 'evil bankers' who wanted to 'starve children', 'keep people uneducated', and 'stop the poor from having the American dream'. To pretend that this was some sneaky, sinister, secret scheme that NO-ONE knew about is bunk. This was aggressively marketed by politicians all through the 70s and 80s.

When Glass-Steagal was repealed, everyone was forced to deal with the law AS IT EXISTED. Who should be punished for it all blowing up? The Banks who were operating within the legal framework that was dumped on them? Or the politicians who changed the law and made this whole crap-fest possible? My opinion is that politicians must be the FIRST to be held responsible, not the last.

I'm not saying companies should walk away clean. What I am saying is that you should only hold them responsible for violations of the law - not for exercising their free speech. It is the politicians you have to hold responsible when the law is bad. Put the blame where it belongs.

Hi Yes i agree that the net had a major influence on everything localized, and it has been globalized to an extreme (bound to happen) AND here in the usa (lower case) we have moved torwards quantity and not quality . Auto industry, schools, aig (and all the others), wall street, on and on .... you get the idea.And this was started long ago during the 1960's and has progressed to this point. we are after short term progress (money, power etc) and disregard long term consequences.

Frank

The wage conversation is a bit of a tangent, but from my point of view the right answer is to expand unemployment benefits and welfare, rather than reduce the minimum wage. I might be convinced that yes, people in certain situations should be able to work for less, but I'd rather the market just adjust to knowing that projects that rely on cheaper labor can't be done here.

As for your assertion that the entire housing asset bubble was caused by Fannie and Freddie and the 1977 Community Reinvestment Act...I'm disappointed. I'd thought you were more well-read than to believe that story.

Here's the most basic, simplistic response -- if it was all Fannie and Freddie's fault (two formerly privately-owned and operated companies, BTW), why are other banks in trouble? Why is AIG in trouble?

I agree that the problem here was moral hazard, but I disagree that it was government that created that situation. It seems that the market's own mechanisms for accurately gauging risk failed utterly.

>> ^gtjwkq:
Money spent by govt is, in principle, rarely spent as wisely as money spent by people, because people work to earn and therefore value their money, they usually have to be productive to earn it (which isn't easy), while govt is just politicians and bureaucrats deciding over money they easily appropriate from productive people. I don't know how I can put this in simpler terms.

I hear this a lot from Austro-libertarians. If this were true, banks should never work right, either. The people making the investment choices, and choices about loans are not the people who own the banks. The most risk they have to bear is getting fired, and often they get lavish severance packages even when they are fired, and are almost immediately rehired by another bank.

I agree that having some skin in the game helps motivate people to be more wise with their money, but I don't think there are any people in government who're casually disinterested in how taxpayer money is spent -- on the contrary, I think they're highly interested in either spending it on altruistic things (like unemployment, healthcare, green technology incentives) or spending it on selfish things (tax cuts/subsidies for industries that donated to you, aid in skewing regulation to benefit donors). I like to vote for the former, and call for the latter to be jailed (though it seems they're all guilty of both in varying ratios).

I also think government spending is best directed at things that are unlikely to turn a direct profit, but are useful for humanitarian purposes, or a general positive impact on the economy (e.g. infrastructure).

I would like to see less military spending, but I think that will be politically difficult when there are two wars going on, and a recession. I like the way Obama/Gates have shuffled the military budget in terms of reallocating money between different military projects, but I'm annoyed that the budget did still get an increase for next year.

As for the bank bailouts, I feel like they were a necessary evil. I would rather they'd asked more in the way of concessions from the bank in return, but I do think letting them fail would have just made things worse.

When I give you money, the money is now yours, what you do with it is your own business. But when I'm the govt, and I give you money, I'm giving you money that IS NOT MINE and that I SHOULDN'T BE GIVING TO YOU (at least that's what I'm arguing, a keynesian might think differently). So there lies the root of the problem: govt is to blame for handing out free money, not what people did with it, because it's expected that people will be careless about money that is freely handed to them, as opposed to money that is earned.
People with guns don't inevitably commit murder. About the bus driver, it's expected that he'll drive poorly and crash when drunk (maybe not though if he's lucky), even though I said he was force-fed the alcohol, which is not accurate since I'm not sure investment banks were legally obligated to accept govt money, but it's easy to imagine how a bank might be strongly influenced to accept money if it has no strings attached and it's also offered to its competitors.

This, I think is a crucial part of our disagreement. Say you're a well-known investor who's made ridiculous profits through shrewdly investing in successful business. I walk up to you, give you a million dollars, no strings attached. Are you going to necessarily be reckless and wasteful with that money, simply because it was a gift? What if the money had come from some investment that simply performed better than your expectations? Does that make you unwise?

Would it make any difference how I got the money I gave you? Even if I conned it out of a bunch of nice old ladies, wouldn't you still invest it correctly? That's why I think the Austrian theory doesn't make sense, especially on this topic.

It would make sense if the government, before the economy went haywire, said "do whatever ya like, we'll absorb all your losses" -- but it didn't do that, implicitly or explicitly.

All that said, I disagree with your characterization of there being a qualitative difference between money given to companies being theirs, but that money given to government to pay taxes still somehow remains yours. It's this whole idea that government is operating as a giant racketeering organization (which seems utterly incorrect). It's like the managing corporation of a condominium. By living here, you agree to a contract with the government, and you have to abide by the obligations in the contract, like obeying the laws, and paying taxes.

Regardless of how you think government got the money to give away, I don't see why money government gives to banks somehow will automatically be frittered away, especially if they say "this is yours, no strings attached".

Even though I think Ben Bernanke is an idiot, he's smart enough to be the current chairman of the Fed and even he thinks the Fed helped cause the Great Depression. The conclusions one can take about what happened in the 20's and 30's are not as clear cut as you'd think. What is important to understand are the motivations behind those that acted and those who interpret what happened.

I think you should perhaps read that speech of his more carefully -- I find what Bernanke says about the Great Depression persuasive. He's mostly talking about how much he loves Milton Friedman, but the key paragraph is:

Friedman's emphasis on avoiding monetary disruptions arose, like many of his other ideas, from his study of U.S. monetary history. He had observed that, in many episodes, the actions of the monetary authorities, despite possibly good intentions, actively destabilized the economy. The leading case, of course, was the Great Depression, or as Friedman and Schwartz called it, the Great Contraction, in which the Fed's tightening in the late 1920s and (most importantly) its failure to prevent the bank failures of the early 1930s were a major cause of the massive decline in money, prices, and output. It is likely that Friedman's study of the Depression led him to look for means, such as his proposal for constant money growth, to ensure that the monetary machine did not get out of order. I hope, though of course I cannot be certain, that two decades of relative monetary stability have not led contemporary central bankers to forget the basic Hippocratic principle.

He doesn't go into why the Fed thought what it was doing was the right idea here, but it should sound refreshingly Austrian -- they were worried about deviating from the gold standard too much, and weren't concerned about bank failures because they figured, as you do now, that banks failing is a blessing in disguise: ownership just moves from incompetent managers to competent ones, no muss, no fuss (liquidationism, it's called these days).

What Bernanke believes is that the Fed should have known better and reacted by massively expanding the money supply to stave off deflation, and rescuing the failing banks. What it actually did was contract the monetary supply and let them fail, and that was pouring gasoline on the fire (or as one economist said of Austrian advice at the time, it was "to cry, 'Fire! Fire!' in Noah's flood.")

I don't contest that the Fed has a lot of power, and that if wielded incorrectly it can cause a lot of damage. But I think the period of time between the Great Depression and now is a testament to the stability a central bank can create. There were recessions, but no Depressions, or Panics. There's already a debate about whether Greenspan could have prevented this one, but so far that debate is leaning towards the relaxation of banking regulation being at fault, rather than a FRB monetary policy error.

I don't really think debate on the history of the Great Depression is over; Keynesians and Monetarists are still fighting about aspects of it. But Austrian economics fell out of the mainstream in the aftermath of the Great Depression, largely because their policy prescriptions were carried out, to disastrous results. Present-day Austrians don't even deny that a contractionary monetary policy in the late 20's was a bad idea, they just deny it was their idea, even though it's what people like Hayek and Schumpeter were calling for at the time, and what they're calling for now.

That's why I can be perhaps a bit over the top when trying to quash Austrians as quacks; in my opinion their policies caused both Depressions.

I agree, it's not my power, it's the power of lots of people working together. Not everyone wanted what I want.

For now, I'm willing to trust that we've stopped torturing. I'm content (but not happy) with how we're drawing down from Iraq. I'm discontent with the silence we're given about Afghanistan.

I wouldn't call what's happening nationalizing labor and industry. While government has bought shares in several major companies, they have studiously avoided giving themselves controlling interest, and have no interest in maintaining ownership. If I get a whiff that they plan on keeping GM or AIG, or any of the banks, I'll get unhappy fast.

As for the debt and deficit, I'm numb to it. It's been insurmountably large, and increasing since before I could walk. I want it fixed, but really, it wasn't so bad until Bush, and it's not nearly as bad as it was after WW2 and the Great Depression. I'm not so worried about deficits now as I am concerned about things like health care and global warming. Putting plans for both in place will likely help out a lot with the debt, and our trade imbalances, and the environment, and people's willingness to start their own business, etc.

As for the empire, I'm not in favor of sustaining it. But there's only so much I think is possible to fix right now. There'd be a public outcry if we tried to cut "defense" spending, especially when every Republican screams "OOGA BOOGA, TERRORISM" into every open mic around.

I don't think that the Democrats are perfect, but I'm never going to be interested in being a libertarian. I think in Europe I might be a conservative (maybe), but here and now I'm trying to make the Democrats live up to their platform, which is a big step in the right direction on all fronts as far as I'm concerned. I want more, more quickly but I don't see anything changing quickly under our constitution (and I'd rather not see Obama take up the Bush tactics for ramming things through).

Personally the main issue I face in "purifying" the Democrats is big business bribing our guys to the dark side, and self-identified conservatives ramping up hatred for everyone else in the world. Trying to tell everyone that business is the sweetest, most wonderful thing in the world is like the sickest kind of joke, especially if you want some sort of lasting anti-war and anti-corporatist movement to succeed.

When there's a country where 20-30% of the people think QM is right every time he opens his mouth (and 30% more who're willing to give up anything to feel safe from the feverish horrors they dream up), things like ending a global hegemony gets very, very hard, especially if you spend more time fighting with people like me, than people like him.

Seriously man, we're on the same side with most of the important stuff.

In reply to this comment by blankfist:

Before I get into a more serious commentary, I just want to point out that blankfist, supposed proponent of Austrian economics, upvoted this comment:

>> ^deedub81:
More about the Merril Lynch investment bankers I met with today:
In short, they felt that we don't need to worry too much about inflation unless a few more things go wrong. As things stand, we shouldn't worry. Because of all the debt that is being absorbed and written off through the bailouts and the slack that has been created in the economy due to the trend toward smaller leveraging raitos, the amount of money that the government is creating is balanced out.

Which leads me to wonder, blankfist, why are you now upvoting someone who's using Keynesian theory to say inflation won't be a problem? You're supposed to declare that the Fed, and everything the government does leads to inevitable ruin!

>> ^deedub81:
I just spent the last 3 hours (I just walked in the door) with Merril Lynch associates and had the whole economic mess explained to me in great detail. I think I get it pretty well now. I'm all good with the whole AIG bailout. I'm clear that the government's hands were pretty well tied there. I'm all for re-instating some of the restrictions that were loosened in the 90's and in 2004.

This is good news. I'm not sure why you believe it when it comes out of Merrill's mouth, since it's government action that stands to directly benefit them, and not the governments' when it said the exact same thing, but I'll try not to look the gift horse of common ground in the mouth.

(I would quibble slightly about the necessity of bailing out AIG vs. bailing out their counterparties, but it's water under the bridge now)

I'm not so sure about bailing out GM, Cap and Trade, Health Care (horrible timing is just one reason), and no help for the small businesses.

I'm not so sure about GM either, but really the "bailout" is just government providing credit for them to go into Chapter 11, rather than having them be forced into Chapter 7. When you look at it that way, it makes a lot more sense. Fewer people lose their jobs, and lots of small businesses that supply/support the auto industry's infrastructure get to keep their businesses as well.

Health care is probably worthy of it's own full-length discussion thread, but here's the short version of why I think it's desperately necessary, and the timing is perfect for it. We pay more per capita for healthcare in this country than any other. However, our healthcare outcomes rank somewhere down below mid-pack for industrialized nations. In countries with a more intrusive government plan for healthcare, people never go bankrupt for the care they receive, and never have an incentive to avoid getting treatment or preventive care. There are lots of different systems out there, and all of them combine government and private programs in varying degrees (including ours). Most of what's different in other countries is that they have made explicit changes to try to keep a lid on costs, and to remove perverse incentives from the system (such as a profit motive for denying care).

The key pillars of the Democratic proposals are a) an employer mandate to provide insurance (small business excluded), b) laws against denying insurance coverage, c) a public option, where essentially the government sells medicare to people under 65. I bolded the word sells, because it will not be taxpayer subsidized. There would be a separate subsidy for people with low incomes, but they are free to purchase a private plan with the subsidy if they so choose.

This is already longer than I wanted, but lastly the reason why it's important now is because if we don't do anything, the costs will just continue to increase, and more and more people will lose their coverage as their employers drop their plans. Also, we have a huge number of people who've lost their jobs, and are unlikely to be able to afford COBRA payments for very long. There's also the problem with medicare and medicaid -- if costs keep rising like they are, we're headed for a huge set of tax increases in the future, or a huge cut in benefits (and no one will want either). If we fix the cost problem, we may have fixed our long-range deficit issues. There's also the matter of Democrats having the House, 60 votes in the Senate, and the White House, and who knows when there will be a better chance to finally get this done.

Cap and trade I'm worried about the timing on. The plan as it is now is very weak though, and most of the carbon "credits" are being given away for free. CBO says the current plan will cost people an average of $175/yr over the next 10 years. That's about the price of mailing a letter a day. In return it will reduce emissions by 20% by 2021. There's a bit of progressive wealth distribution going on in terms of who pays for it, the bottom 20% income group will receive a tax credit which should actually more than offset the costs of the cap.

As for small business, the American Clean Energy and Security (ACES) Act (the cap & trade bill), yours may not get special treatment, but there will be subsidies offered to businesses who will work on clean energy technology (e.g. carbon offsets, wind, solar, battery tech, etc.).

Personally, I think it's a shame we didn't put that in place 30 years ago, and I don't think we can put it off any longer, but the timing will definitely work against it.

Large corporations use auctions and corporate bonds to increase liquid assets, small businesses use credit card and bank loans. Because of the bailouts, large corporations and banks are starting to thaw and we're seeing movement and lending between banks. What we don't see is increased loans and cash flow to the lifeblood of America: small businesses.

Why do you think we aren't seeing that happen?

How can you not see how terrible Obama's timing is? How can he promise that he won't raise taxes on people who make under $250,000/year with all of the government expansion that he's heading up? How can you not see that congress is out of control?

I've already given my answer on timing, and the "out of control" bit too. The problem with the accusation of "expansion of government" coupled with concern about taxes is a bit misplaced. The goal with healthcare is to make it revenue neutral, and stave off large future expansions. Ditto for Cap and trade. We'll see if Obama can keep his tax promise, but remember, us under $250k people have had our taxes go down so far under Obama.

Knowing how this goes, Obama will almost certainly be accused of breaking that promise by 2012 (The "OMG, he raised taxes on cigarettes!!!" is already making the rounds), but I suspect that he's going to bend over backwards to keep it.

I feel like we've got a bunch of ignoramuses and corrupt punks running the show. They act in behalf of the highest bidder. They cheat on their wives, they cheat on their taxes, they lie through their teeth, and they're stealing food right off of my family's table!

So find better politicians and get 'em elected. In the meantime I would suggest that Republicans have Democrats beat on ignorance, corruption, influence peddling, cheating on wives, cheating on taxes, lies, and theft (from us and other nations).

Yes, but you have to agree that the Obama administration AND the Congress are completely missing small business and that they've picked a horrible time to increase the size of government and tighten environmental restrictions!

I just spent the last 3 hours (I just walked in the door) with Merril Lynch associates and had the whole economic mess explained to me in great detail. I think I get it pretty well now. I'm all good with the whole AIG bailout. I'm clear that the government's hands were pretty well tied there. I'm all for re-instating some of the restrictions that were loosened in the 90's and in 2004. I'm not so sure about bailing out GM, Cap and Trade, Health Care (horrible timing is just one reason), and no help for the small businesses.

Large corporations use auctions and corporate bonds to increase liquid assets, small businesses use credit card and bank loans. Because of the bailouts, large corporations and banks are starting to thaw and we're seeing movement and lending between banks. What we don't see is increased loans and cash flow to the lifeblood of America: small businesses.


My fiancee works in a doctor's office. Just today, the doctor saw a young boy whose mother had fake nails and a 'coach' purse. What insurance did she have? You guessed it, MedicAid. Basically, this means I am paying for this lady's fancy clothes and salon visits!!!???

How can you not see how terrible Obama's timing is? How can he promise that he won't raise taxes on people who make under $250,000/year with all of the government expansion that he's heading up? How can you not see that congress is out of control?

I feel like we've got a bunch of ignoramuses and corrupt punks running the show. They act in behalf of the highest bidder. They cheat on their wives, they cheat on their taxes, they lie through their teeth, and they're stealing food right off of my family's table!


>> ^NetRunner:
I'll give a nutshell answer for the moment, and a more in-depth answer when I have time to do this topic proper justice.
The short answer is that only some 10% of the stimulus, aside from the tax cuts, have been put out into the economy, and the economists' equations pretty much said we'd need a $2 trillion stimulus to halt the decline in unemployment from the get-go. Unemployment did go up more than the Obama team predicted in the short run, but I can't recall any of the pro-stimulus economists thinking their prediction was anything but a best-case scenario.
As for the health care plan, the main point of it is to cut costs overall. Part of what makes the 20+ year budget predictions so bleak is the skyrocketing cost of medical care. The CBO recently came back with the scores on a bill with a strong public option, and it showed both a massive increase in the number of people covered as well as cutting the cost by nearly 50%.

Ah yes, the GOP. They are like Shakespear when it comes to words. I mean who else would put GOP Party on a ballot instead of Republican? That's just genius. They really know how to change things up...just like AIG. I mean AIU. I mean VALIC.

The 100-Day Assault on America

by Larry Elder

Has it really been 100 days?

Aided by an eagerly compliant Democratic-controlled Congress, a sycophantic media, and a bunch of squishy Republicans, President Obama has taken the country on a radical, mind-boggling leap into collectivism.

Obama -- to use one of his favorite expressions -- doubled down, no, tripled and quadrupled down on Bush's "stimulus" and "rescue" packages, spending trillions of dollars to "bail out" financial institutions, too-big-to-fail businesses, and even deficit-running states. Obama promises to use taxpayer money to rescue "responsible homeowners" -- whatever that means -- from foreclosure, thus artificially propping up prices that shut out renters who would love to buy now-much-cheaper houses.

Obama proposes spending billions (or trillions?) more on "creating or saving" -- whatever that means -- 4 million, 3.5 million or 2.5 million jobs. Pick a number. Given the government's vast business expertise, Obama proposes spending gobs of money to "invest" in green jobs. And he's just warming up. He wants taxpayers to guarantee, presumably to all who request it, a "world-class education" -- whatever that means.

Firmly in charge of much of the domestic car industry, Obama effectively fired the CEO of General Motors. He threatens to fire still more executives in the parts of the financial services industry currently under the management, direction or control of Uncle Sam -- that eminent, well-regarded banker.

Obama blames the financial crisis on "greed" and the "lack of regulatory oversight." Funny thing about greed. Celebrated investor-turned-Obama-supporter/adviser Warren Buffett says, "Be fearful when others are greedy, and be greedy when others are fearful." Apparently, some practice good greed, while others engage in greedy greed.

As for regulation, the SEC already heavily regulates most of the troubled financial institutions. The world's largest insurer, AIG, operated under heavy regulation. The government-sponsored entities Freddie Mac and Fannie Mae -- blamed for irresponsibly buying, packaging and selling bad mortgages -- are regulated by a government agency, called the Office of Federal Housing Enterprise Oversight. Its sole responsibility is to oversee those two agencies. OFHEO, shortly before the government takeover of Freddie and Fannie, gave them two thumbs up.

Did the President, after campaigning against pork and earmarks, really sign bills that include both? Yes. Will the President's new budget really triple and quadruple the annual deficit? Yes. Will the President's budget really double the national debt within a few years and then increase still more beyond that? Yes. Do the President and members of Congress, many of whom never operated so much as a T-shirt concession booth, really believe that they can "modernize" health care, thus "saving" taxpayers buckets of money? Yes.

America traditionally represents the greatest possibility of someone's going from nothing to something. Why? In theory, if not practice, the government stays out of the way and lets individuals take risks and reap rewards or accept the consequences of failure. We call this capitalism -- or, at least, we used to.

Today's global downturn reflects too much borrowing and too much lending. But would borrowers and lenders -- at least in America -- have engaged in the same kind of behavior but for artificially low interest rates under the Federal Reserve System? Would borrowers and lenders have acted as precipitously but for the existence of Fannie and Freddie, which bought up their mortgages? Would banks have so readily lent money to those who clearly could not repay it but for the Community Reinvestment Act? That law pressured banks into relaxing their normal lending standards to help low-income borrowers.

Now let's turn to Job No. 1 -- national security. We no longer call the War on Terror the "War on Terror." We no longer call Islamofascist enemy detainees "enemy detainees." The President embarked on an I'm-not-Bush and we're-sorry-for-being-arrogant international tour. To the receptive, admiring G-20 nations, the President flogged America, calling us domineering and overbearing. What did the swooning leaders give in return? Virtually nothing. He wanted more assistance in fighting the war in Afghanistan. The NATO members offered more advisers and trainers, all, mind you, out of harm's way and only on a temporary basis.

The President offered a new relationship with Iran, provided Iranians "unclenched their fist." The President even sent a shout-out video to the Iranians on one of their holidays. What did he get in return? Iran promised to continue its march toward the development of a nuclear weapon and called Israel the "most cruel and racist regime."

Obama offered North Korea a kinder, gentler foreign policy. What did he get in return? The North Koreans, in violation of a United Nations resolution, attempted to launch a long-range missile. The President condemned the act. The United Nations Security Council convened an emergency session. What happened? Nothing. Well, not exactly nothing. North Korea kicked out the U.N.'s nuclear inspectors and announced the resumption of its nuclear weapons program. And North Korea, along with Iran, arrested and imprisoned American journalists.

On the other hand, Washingtonian magazine graced us with a spiffy, Photoshopped cover of a fit and toned swimsuit-wearing President Obama. So all is not lost.

At least he looks good.

The whole tea thing made sense when it was taxes on tea that they were protesting. Shouldn't these whiny, rich white people be throwing their AIG, GM, and bank stock shares into the river or something?

Good idea, but I'd expect more from Ron Paul. The bonuses at AIG didn't go to the people that ruined the company - he's repeating the Obamination lie.

@keitholbermann: Well, what do you expect from someone with a username like KeithOlbermann?

Ron Paul isn't really "of" the Republican party - he had his own presidential convention and everything. And it's criminals like Barney Frank that got us into this mess as much as anything. Sleeping with an executive of Fannie Mae while being head of the committee to regulate it? Yeah, that's criminal conflict of interest. (Google Herb Moses.)

What would auditing the fed accomplish? Personally, I'm curious where our trillions of bailout dollars are going, and who is getting them. It's not like raiding the petty cash stores.

Ya, the AIG bonus thing wasn't to bad for me. I understand paying out bonus's to people who really did go a good job for the company...IE high sales or great leadership (have to remember that AIG is a huge company with lots of different parts). But HUGE bonus's for the higher ups who ran the company into the ground seems ridiculous.

^ I'm pretty sure I saw something similar, but it wasn't the same lecture and I think it was before the recent AIG troubles.