Socialism's BIG Lie of the Day

"I have not said that I am a supporter of a single payer system." - Barak Hussein Obama, August 12, 2009

"I happen to be a proponent of a single payer universal health care program." - Barak Hussein Obama, June 30, 2003

"I don’t think we’re going to be able to eliminate employer coverage immediately." - Barak Hussein Obama, May 2007

Geithner and Obama Fail Economics 101

Today, Treasury Secretary Timothy Geithner is proposing a new program that will allow banks and finance houses to sell upside-down mortgage-backed investments to a "private-public partnership" entity. In this deal, Geithner says that the private sector must take "risks." Of course, the public part of the "private-public partnership" is taxpayers.

Geithner must have failed Economics, or Geithner and Obama intend to blackmail the "private sector" and rip off taxpayers.

Banks can make loans only to the extent they have assets to back the loans. For years, banks made loans based on the present value of a bundle of mortgages. When the housing prices fell, the mortgages became less secure, and thus less valuable. As a result, the banks were losing asset value, and with their asset base value diminished, their ability to loan money was likewise diminished.

Geithner and Obama's proposed plan today has the stated goal of removing "toxic" assets off the books of the banks, so that they can start making loans again.

Here is the problem with that: the "toxic" assets are not valueless. Merely taking these assets off the books of the banks is not going to free up one nickel in available loan capital; in fact, it lowers it. The only way loanable capital is increased for these banks is if the “toxic” assets are purchased by this “private-public partnership” at greater than the present market value.

Do Obama and Geithner expect savvy private investors like hedge fund operators will pay greater than market value for “toxic” assets? Market value already factors in the “risk” Geithner wants the private investors to take, so who in their right mind would do so?

This might occur in two ways:

First, as a sweetener, the public part of the partnership - the taxpayers - could give interest-free loans to these private investors who would then purchase “toxic” assets. This means playing with house money and betting on the come. The assets may improve their value over time to cover or exceed the loan value, and if they don’t, you just bankrupt the entity receiving the loan and walk away. Either way, Geithner’s promotion to Treasury Secretary pays handsome dividends to his Wall Street buddies at the expense of the taxpayers.

Second, Obama could use the various regulatory arms of government to threaten/blackmail healthy financial institutions to purchase some of these toxic assets at greater than market value, and these institutions might do so chalking up the government shakedown as a cost of doing business.

While some of the first two options will undoubtedly occur, the biggest part of the “toxic” asset removal will be the third route: the public part of the “partnership” - the taxpayers - will buy the lion’s share of these bank assets. Thus Geithner and Obama (on your behalf, of course, since you don’t know how to spend your own money wisely) will own and control a solid hunk of the real estate market. And why would Obama seek to maximize that investment for the taxpayers when ACORN would like to use those houses for “underprivileged” families who just need a little hand up?

Under this plan, you would not just be paying other peoples’ mortgages; you would be buying their entire house for them.

Welcome to Obama’s Socialist Utopia.

Marxist Action in the Senate Today

Longing for the good old days of Jimmy Carter’s gas shortages and cars lining up for blocks for empty gas pumps, the Democrats in the Senate brought a bill to the floor to day to levy additional, higher taxes on the “unreasonable profit” of the oil companies.

The stench of socialism, communism, and Marxism is all over this bill. When people engage in an arms-length transaction, there is no such thing as a reasonable or unreasonable profit. While the intellectually crippled elitist John McCain believes there may be such a thing as an “obscene” profit, I contend that in economics, the only obscenity is bankruptcy. Profits do not put people out of work; profits do not harm people’s retirement accounts; profits do not fall on businesses that are managed poorly. Losses are harmful and obscene. Profits are good.

Of course, Congress does was doing what it knows best – engaging in subterfuge. The fundamental cause contributing to the rise in the price of oil is Congress! For Congress to point a finger at any other body (let alone punish any other party) for oil prices is the pinnacle of hypocrisy. Congress prohibits United States energy independence by their overbearing environmental laws and regulatory morass. Congress makes more profit on a gallon of gasoline than the oil companies do. Congress permits illegal cartel price setting for oil.

Furthermore, the concept that the leftists could raise taxes on producers and somehow lower the price of the product flies in the face of all common sense.

Of course, the real goal of the socialists and communists in Congress is that they wanted to further increase the price of gasoline, in order to further enrage the populace, and then move on following their hero Hugo Chavez’s move to nationalize the oil companies. This from a Congress that cannot manage its own dining facility in a break even manner!

Yes, the socialists and communists in Congress are exposing themselves over oil. Maxine Waters D-CA told oil execs “This liberal will be about socializing; would be about -- about -- about basically -- taking over and the government running all of your companies!”

There you have it, the Democrat/socialist/Communist/Marxist agenda of the majority party in Congress laid bare for all to see.

If Congress’ reckless deficit spending had not so devalued the dollar, oil prices would not seem so high, but that is a subject for a different post.