Obama's Economic Guru Resigns

Christina Romer, chair of Obama's Council of Economic Advisers, is resigning her post. Romer, said to be an expert in the Great Depression, has done her best to get us into another Great Depression.

Romer's economic guidance has been devastating to the country. Never before has this nation had so much long term unemployment, not even under Carter's devastating tenure.

Roemer was the chief architect of Obama's great economic failure, the Obama Excessive Government Spending and Debt Plan (a/k/a the "Stimulus"). Romer co-wrote a justification paper saying the Obama Stimulus would keep unemployment rates from rising above 8%. She was, predictably, dead wrong. Liberals who call themselves economists always are. Even so, she has advocated a path of "doubling down" by borrowing yet more Chinese money and increasing government spending even more.

Her failure will almost certainly be rewarded with an appointment as the chairwoman of the San Francisco Federal Reserve Bank. Such is the path of the liberal elite.

The Inevitable Result of Health Care Centralization

Rationing. It is all a government can do when consumers are not allowed to self-ration based on disposable income and evaluations of actual need.

Headline: NHS bosses have drawn up secret plans for sweeping cuts to services, with restrictions on the most basic treatments for the sick and injured.

http://www.telegraph.co.uk/health/7908742/Axe-falls-on-NHS-services.html

Privatize or die. Literally.

Open Letter to Ed Whitacre

Dear Ed,

I've just seen Government Motor's (GM) new television advertisement (bought with taxpayer funds) where you claim "...we have repaid our government loan, in full, with interest..."

This announcement comes after GM paid less than 7 billion dollars to the U.S. Treasury.

Your commercial implies GM only had one loan from the US Government, that it was less than 7 billion dollars, and that you are now free and clear of taxpayer bailout funds. One might even reasonably imply from your commercial that the funds you paid were out of earnings from GM since the loan.

You and I both know that this is not the case at all. The "loan" does not even begin to cover the amount of taxpayer-funded bailout.

Off the top of my head, I can demonstrate that GM received all of the following taxpayer bailout funding for GM's "second chance":

Auto Supplier Support Program: GM received not less than 2.5 Billion dollars of taxpayer money

Automotive Industry Financing Program: GM received not less than 49 Billion dollars of taxpayer money

This does not even include the 13+ Billion dollars of taxpayer money received by GMAC, GM's financing arm.

Let's also be honest about where the "loan repayment" money came from: you have paid off taxpayer loans with other taxpayer "investment" dollars, not earnings from car sales. I can read your SEC filings.

As to your remarks about paying the "loan" back "with interest", after hearing of your statements, even the White House had to issue a statement saying that the taxpayers will almost certainly LOSE MONEY on the GM investments. That is not interest; it's a loss.

I also recall that one of the lynchpin arguments in support of the Automotive Industry Financing Program was that it was necessary to save American jobs. Yet since the socialization of GM, 65,000 jobs were cut by GM. It seems redundant to point out that GM could have accomplished the same thing in bankruptcy restructuring without requiring the taxpayers to foot the bill.

This commercial of yours will go down in history as one of the most disingenuous commercials ever to be aired on American television. I could not even characterize your statements has half truths - the lies by omission in this ad are monumental and inexcusable.

I challenge you, Ed Whitacre, to immediately pull this ad and replace it with an ad that correctly lays out what GM has received from the American taxpayers, what has been returned to the taxpayers due to actual profits generated by GM, and together with the UAW beneficiaries of all this American taxpayer largesse, thank all the taxpayers for the help and beg us to be merciful on your failing, disingenuous welfare case of a corporation.

The Devil Is In the Details

B. Hussein Obama has a plan to lease more offshore oil exploration in the East and Southeast along with Alaska. If that is as far as the plan went, fantastic.

But this is a socialist president, and his plan with come with strings attached. Let's see how he intends to nationalize the oil companies with his plan, because you know that is what he wants to do.

Also, this idea that the U.S. military is going to start using more vehicles using biofuel is a BAD IDEA. Military vehicles need to be able to use the most commonly available fuels appropriate to their use. That is not biofuel in any way, shape, or form.

Epic Threat Weekend

This weekend is a huge pivot point for the future of the United States and the Obama-Reid-Pelosi government takeover plan for 17% of the economy.

In their typically deceptive way, the Democrats have pointed to the crushing amount of unfunded future "obligations" imposed on the projected Federal budgets by the socialist Medicare program, and then said they needed to tackle the cause of this burden: private health insurance. Talk about kicking the dog because the cat made a mess.

Certainly the only completely wrong way to reduce the future costs of socialized medicine is to create more socialized medicine.

I am left to ponder the question: Do we need health care insurance reform, or do we really need government reformed?

Obama to Double Down on Socialism

For nearly half a year, the American people have pointed out the most outrageous and costly elements of the Democrat's socialist health care nationalization plan. And for half a year, Obama's lackeys have claimed "that's not the President's plan."

This week, B. Hussein Obama is set to reveal his plan. It turns out that the Reid-Pelosi plan was not costly or socialist enough for a true Statist like the Anointed One.

To the extent the Federal government should be involved in health care "reform", it must be to reduce the Federal role in health care -- after all, everyone agrees that the existing health care projections and expenditures in the Federal budget are unsustainable. But only in a Statist's wildest Socialistic dreams could an exercise in cost reduction result in the quintupling of the size of the program and budget.

Unlike most of the Conservative commentators, I hope the GOP does meet with B. Hussein Obama on television this week, and they should launch a principled and unrelenting critique of the Anointed One's plan, destroying it element by element. The American people do not want Socialized medicine, do not want a Federal takeover of health care, and do not want Washington DC running their lives.

The GOP does not need to propose an alternative plan to win this. Doing nothing is better than enacting any Democrat's plan. It is appropriate and instructive to recall the first principle of the Hippocratic oath -- first do no harm.

Update: As more details come out, the Anointed One's plan has all the tried and failed socialist remedies: higher taxes, higher government spending, higher deficits, more government control over citizen lives and medical decisions, prices controls, a huge new bureaucracy, and illogical reasoning: we're spending your money to save it.

Additional Update: Follow this media talking point: "Mandating insurance coverage for all Americans will mean that the insured will stop paying for the medical expenses of the uninsured. And there are government insurance vouchers to pay for insurance for those who can't afford it."

Massachusetts: Nope! Keep the Change

Tonight, none less than the Peoples Republic of Taxachusetts voted to reject the Obama-Pelosi-Reed Democrat plan to socialize health care in the United States.

The nation is on day 25 of the Democrat-only behind closed doors plotting to socialize the nation’s health care system, take away your medical insurance, increase taxes, and degrade the health of all United States citizens and really, the world.

And 364 days after the Anointed One occupied the Office of the President, the nation, through the election of Scott Brown, gave a clear message to Washington and the Democrats – HANDS OFF OUR HEATHCARE.

Not that liberals will listen. Being a liberal means never having to say you are sorry because you know better than voters how to spend their money and run their lives.

For the citizens watching their nation being spent into bankruptcy and their freedoms being lost, they did the only thing they controlled.

Scott Brown reminded the Democrats that the Massachusetts Senate seat belonged to the people, not the Democrats. The Democrats better keep in mind that our healthcare insurance, our relationships with our doctors, and our money belong to US, not THEM.

This is a stinging defeat of the Democrat’s socialist agenda. With double digit unemployment, and declining dollar, and out of control government spending, let me remind the Democrats what they once knew – It’s The Economy Stupid! Government takeovers must stop now. Scott Brown in the Senate will make it harder for Obama to keep socializing our economy.

UPDATE: Democrat Senator Jim Webb of Virginia, a supporter of socialized health care, tonight called for a suspension of Senate votes on health care until Scott Brown is seated in the Senate. I sense that Jim Webb's views of socialized medicine are "evolving."

The Price of Freedom

Thomas Jefferson opined that "The price of freedom is eternal vigilance." This was uttered in a different place and time, before the advent of National Socialism, Communism, and the nanny state.

Today, I suggest that the price of freedom is self-reliance, for it is only with a national belief of self-reliance that a nation may keep its freedom from a dictatorial government.

The modern American Democrat has long known that their power is based upon expanding the class of people who are dependent on the government for their way of life. The larger the dependency class, the greater the power the Democrats will possess.

Controlling the nation's health care is the ultimate power grab. Not just because controlling health care means providing Democrat-appointed bureaucrats the power of life and death over everyone, but also because it creates a dependent class of all citizens who cannot afford to leave the country for appropriate medical treatment.

Furthermore, it will create a direct dependency class of those citizens who are directly employed by a nationalized health service. Currently, the third largest single employer in the world is the National Health Service in England, behind only the PRC Army and Indian Rail (the employment numbers for the entire UK would be higher, as you add the numbers servicing Scotland, Wales, and Northern Ireland). The English National Health Service has more than 1.2 Million employees, less than half of which are actual care-givers, and only 109,000 of which are English doctors.

Applying this ratio of NHS employees to the English working age population, it would be extrapolated that in the United States, a government run health care system would employ Eight Million Americans, over Four Million of which would be administrative employees. The Democrats know that there would be Eight Million citizens whose livelihood would be dependent upon the preservation of that nationalized health system, and Eight Million votes to preserve such a system once it was put into place.

I had the pleasure of speaking with several English doctors on holiday a couple of years ago. What we should understand is that NHS doctors are not college and medical school trained doctors at all, but identified during high school as having a competence for medical learning, and diverted to medical training in what Americans would call a trade school. At best, the standard NHS doctor would be a physician assistant in the United States. This mirrors my experience in the other government-provided health care service I have experienced first hand, the United States Army.

How Participatory Democracy Scares Democrats

As more and more people come to read the liberty destroying portions of the House version of the Obamacare Health Reform bill, the members of the Democrat party are becoming uncomfortable with hearing from their constituents. The whole thing reminds me of an interchange between Count de Monet and King Louis XVI in the Mel Brooks film History of the World Part 1:

Count de Monet: It is said that the people are revolting.
King Louis XVI: You said it! They stink on ice!

Watch the clip on Youtube: http://www.youtube.com/watch?v=TYpYs9GBXwY

Democrats have been participating in rent-a-mob politics for so long they believe any group of people that show up at a political meeting focused on a single issue MUST be organized by some puppet master, just as they play puppet master to their “constituents.” To a Washington liberal, it is beyond the realm of the possible that citizens – of their own volition -- might come to a town hall meeting or other public forum to challenge the permanent political class. The voting/tax-paying class is clearly not politically savvy enough to behave in such an effective manner! Don’t we have our willing sycophants in the mainstream media telling them that this “reform” is good for the children?!?

The reaction of the Democrat political class is at once laughable, predictable, and hypocritical. When a Bush was president, it was “patriotic” to “speak truth to power.” Now that Obama is in the White House, Senator Boxer says that “organized groups" are planning to "harm our President!” With AIG execs were being paid pursuant to their contract, liberals bussed agitators into the neighborhoods to stand on their front lawns. When Conservatives show up to voice opposition to an unconstitutional Federal power-grab, they are called “well-dressed Nazis” or “racists”, or more likely, both.

Even the White House is behaving like a Chicago thug, issuing a video clip calling accurate quotes from Barak Obama about ridding the nation of private insurance “fishy” and a “distortion.”

The direct quote from Barak Obama was as follows: ““I happen to be a proponent of a single payer universal health care program. I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14 percent of its Gross National Product on health care cannot provide basic health insurance to everybody. And that’s what Jim is talking about when he says everybody in, nobody out. A single payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.”

Clearly, this is at odds with both what Obama is saying about “choosing” your insurance, and at odds with the terms of the House bill Obama is pushing. But, apparently believing Obama means what he says and says what he means is a “distortion.”

Additionally, the White House, through Macon Phillips, the director of new media for Mr. Obama, also issued the following request for snitches: “Since we can’t keep track of all of them here at the White House, we’re asking for your help. If you get an e-mail or see something on the Web about health insurance reform that seems fishy, send it to flag@whitehouse.gov.”


Most hypercritical of all is that while Obama’s political allies are accusing some shadowy group of Republicans and evil insurance companies of paying people to show up to voice their displeasure at the unconstitutional Federal healthcare power grab, Obama is sending out emails to his ACORN buddies to get ready to mobilize to support Socialism.

What follows is an email to his activists sent by Barak Obama. I’ve included the whole thing so I cannot be accused of a distortion.

from President Barack Obama info@barackobama.com
reply-to info@barackobama.com
date Wed, Aug 5, 2009 at 10:21 AM
subject This is the moment
mailed-by bounce.bluestatedigital.com

This is the moment our movement was built for.

For one month, the fight for health insurance reform leaves the backrooms of Washington, D.C., and returns to communities across America. Throughout August, members of Congress are back home, where the hands they shake and the voices they hear will not belong to lobbyists, but to people like you.

Home is where we’re strongest. We didn’t win last year’s election together at a committee hearing in D.C. We won it on the doorsteps and the phone lines, at the softball games and the town meetings, and in every part of this great country where people gather to talk about what matters most. And if you’re willing to step up once again, that’s exactly where we’re going to win this historic campaign for the guaranteed, affordable health insurance that every American deserves.

There are those who profit from the status quo, or see this debate as a political game, and they will stop at nothing to block reform. They are filling the airwaves and the internet with outrageous falsehoods to scare people into opposing change. And some people, not surprisingly, are getting pretty nervous. So we’ve got to get out there, fight lies with truth, and set the record straight.

That’s why Organizing for America is putting together thousands of events this month where you can reach out to neighbors, show your support, and make certain your members of Congress know that you’re counting on them to act.

But these canvasses, town halls, and gatherings only make a difference if you turn up to knock on doors, share your views, and show your support. So here’s what I need from you:

Can you commit to join at least one event in your community this month?

In politics, there’s a rule that says when you ask people to get involved, always tell them it’ll be easy. Well, let’s be honest here: Passing comprehensive health insurance reform will not be easy. Every President since Harry Truman has talked about it, and the most powerful and experienced lobbyists in Washington stand in the way.

But every day we don’t act, Americans watch their premiums rise three times faster than wages, small businesses and families are pushed towards bankruptcy, and 14,000 people lose their coverage entirely. The cost of inaction is simply too much for the people of this nation to bear.

So yes, fixing this crisis will not be easy. Our opponents will attack us every day for daring to try. It will require time, and hard work, and there will be days when we don’t know if we have anything more to give. But there comes a moment when we all have to choose between doing what’s easy, and doing what’s right.

This is one of those times. And moments like this are what this movement was built for. So, are you ready?

Please commit now to taking at least one action in your community this month to build support for health insurance reform.

Let’s seize this moment and win this historic victory for our economy, our health and our families.

Thank you,
President Barack Obama
-end-

You know, this email from President Barak Obama looks fishy to me. I think I will send this on to the White House.

When a community organizer objects when a community organizes in opposition to his policies, that is pure, naked, unadulterated liberal hypocrisy --particularly when he is in fact organizing to support himself.

Obama has given marching orders to his ACORN minions and his Ministry of Truth lackeys Linda Douglass and Macon Phillips. Contrast that with Conservatives, who are independent, self-motivated, and aware. Conservatives do not need marching orders, trinkets, or payments to make their voices heard. The Tea Party Movement lives on. Liberty may yet be rescued. If not, the nation will surely fail.

Popping Up in the Los Angeles Area

THIS poster is political fair use at its best.

Update: The Washington Post charges in to the rescue: this poster is "racist". WaPo proving their lack of relevance and objectivity again.

Reflections upon the Notion of American Independence

I’ve spent a fair part of this month - the month in which we Americans celebrate Independence Day - thinking about the meaning of Independence. I am struck by the irony of celebrating a national holiday commemorating cutting the ties of dependency upon a government while at the same time laboring under a Presidency and Congress leading the nation toward greater government dependence, even subjugation, of its people.

Independence is what is celebrated in this Nation, and with good cause. We have no national Dependence Day celebration.

Independence Day does not celebrate the mere notion of being independent. Independence Day celebrates the act of declaring our Independence. Independence in the United States is not just an ideal, a philosophy, a goal – it is our national birthright. The act itself founded a confederation of independent states.

Independence is not a death rattle, it is the cry of life! Independence has been the goal of self-conscious humans since humans achieved self-consciousness. Hundreds of Thousands of Americans have lost their very life and all they own in the pursuit and preservation of Independence, and with it, Liberty and Opportunity.

The pursuit of Independence is what fueled the rush of immigrants to this nation. The pilgrims were pursing Liberty from oppression. Later waves of immigrants were pursuing Opportunity – Enterprise – a better life for themselves and their descendants.

Government dependency is antithetical to Independence. Statism is antithetical to Independence. Blame shifting is antithetical to Independence. Failing to speak out against a power hungry, all-powerful central government is antithetical to Independence.

Where are our Patriots today? Where are the successors of Jefferson, Franklin, Washington, Madison, and Adams in our government? Where are the successors of Thomas Payne in the press? Where are the successors of Samuel Adams in the grassroots?

Whither courage? Whither conviction? Whither truth? Whither self-reliance? Whither our frontier spirit? Whither the United States.

A government which seeks to make slaves of its people is no successor of our Founders. Such a government – such men and women -- cannot legitimately govern a free nation founded in Independence.

This nation has never celebrated or feted those who would not or cannot do for themselves. They are pitied, and with good cause. Not because their lives are valueless, but because their independence is lost.

Socialism is slavery. A government that issues intrusive decrees is a tyranny.

Conor Clarke Does Not Understand English

Conor Clarke, confirmed eco-Statist and blog poster on Andrew Sullivan's Daily Dish banner, has a disingenuous headline today regarding Sarah Palin's critique of the Obama energy policy and the Mandate, Cap, and Tax bill.

Clarke's disingenuous headline reads "Sarah Palin Does Not Understand Cap and Trade". From an eco-Statist like Clarke, that really means "Sarah Palin Understands the Cap and Trade Bill Perfectly", but I digress.

As evidence of Palin's ignorance, Clarke holds up the following Palin quote: There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources."

To which Clarke responds: "I don't think cap and trade has many supporters who think it's the best way to become 'less dependent on foreign energy sources.'"

Of course, that was not Palin's point, and anyone who can read plain English can understand that. Fact will not get in the way of eco-Statists like Conor Clarke trying to smear Sarah Palin.

I have posted a considerable amount about the damage Mandate, Cap, and Tax will visit upon the economy of the United States, and it has been made clear by the EPA that Mandate, Cap, and Tax will not change their projected air temperatures one degree. Mandate, Cap, and Tax is about government control of the economy and nothing else. Communists, Socialists, Fascists, and Statists support Mandate, Cap, and Tax. Anyone who values freedom, ordered liberty, and a strong economy must opposed this bill at all costs.

Simple Lesson Tuesday - The Value of GM

This morning, I will provide a simple lesson about why Socialists, Marxists, or Statists should not be trusted with your money at any time.

Before bankruptcy, there were 610 million shares of outstanding GM stock. The stock was trading at about a dollar a share, meaning GM had a total market value of about 610 Million Dollars. Even arguing the sum of all its parts exceeded the market value of the corporation, GM could not possibly be worth more than 2 Billion, and that is being very, very generous.

Yesterday, B. Hussein Obama agreed to purchase only a 70% stake in a corporation for $50 Billion. In what economic universe was this even arguably a rational deal for taxpayers?

This purchase is intellectually defensible only in two situations:

1. Because a Statist wishes to place a large corporation under government control; and/or
2. Because it is a political payoff to the UAW from the UAW's candidate of choice.

Under what concept of governance is this Administration operating? These actions are completely foreign to the written compacts establishing the United States. The United States are being torn asunder by current government right before our eyes.

Obama's Socialist Forces March On

Today is Black Monday.

GM today becomes Government/UAW Motors. Obama will NOT be distributing the stock to the taxpayers who now own the majority of the shares of GM. You cannot go down to the local dealership and pick up your car, even though you may own it.

In further news, it appears that my predictions were right, and Citigroup will become government owned as a result of the "stress tests" imposed on banks by a takeover minded government. I'm sure government bureaucrats will apply their nimble and intelligent management to the bank and kill it.

If you have assets managed by Citigroup, bail out now.

If you have a loan or mortgage held by Citigroup, beware the change in your terms -- interest rate increases are on the way. It is easier than raising taxes!

Obama is following the Marxist revolutionary manual to the letter; the methodology he learned from his Marxist father.

Obama Admits: We're Broke

In an interview with C-SPAN broadcast timed for the news blackout that that is Memorial Day weekend, B. Hussein Obama said “We are out of money now. We are operating in deep deficits.”

Obama has thus admitting that the Tea Party protestors are absolutely right. He has spent more than the Treasury can or will take in.

Naturally, he will use this crisis to further erode free markets and impose Statism. One thing about Communists, they know how to make the same mistakes over and over and over and over.

GM to be Socialized; Taxpayers to be Fleeced

According to Obama administration sources today, B. Hussein Obama intends to use the bankruptcy courts and taxpayer money to buy GM for the UAW and GM bondholders.

Is this the Hope and Change the nation was waiting for? Naked socialism, fleecing taxpayers, and paying off political cronies like the unions? Really? Is this what that nation wanted?

If Obama is allowed to steal the taxpayer's money like this, we owe Richard Nixon an apology.

If you support Obama’s administration, you are a Socialist. Period. A red, a commie, a pinko.

Some Memorial Day this will be. Obama and his supporters are completely devaluing the lives of all who fought and died to protect the world from the slavery of Socialism. Obama is urinating on the graves of tens of thousands of servicemen who gave their last and final measure of devotion to their country to stop the onslaught of Fascistic Socialism.

Obama is foisting it on the United States with a big, red bow.

Government-Run Universal Health Care Fails

Last October, Hawaii is dropped the only state universal child health care program in the US just seven months after it launched. All children were eligible for the program (it truly was universal). The reason it dropped the program is because it was too expensive, costing the state about $26 per child per month.

The sad truth is that the State was paying less than half the actual expense – the remainder came from corporate “donors” that taxed their paying customers by increasing fees. The universal health care system was free to the end users except for copays of $7 per office visit.

Why did this service fail? The plan undercut the market prices for children’s insurance. As a result, families dropped their commercial insurance for their children and enrolled in the lower cost universal program. Put another way, the parents in Hawaii acted rationally.

State health officials complained that most of the children enrolled in the universal child care program previously had private health insurance, indicating that it was helping those who didn't “need” it. "People who were already able to afford health care began to stop paying for it so they could get it for free," said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. "I don't believe that was the intent of the program."

This is the very definition of an unintended consequence of liberal lawmaking, and reason number one why it should be avoided. Universal Health Care is by definition universal. It is not needs-based, and its creators sowed the seeds of its own destruction by attempting comprehensive reform. They achieved comprehensive failure.

Two good things came out of this experiment. First, the State acted in the best interest of the children and the State taxpayers when they realized it was a failure – cancelling the plan was the right thing to do.

Second, and most important, this experiment is demonstrates that low cost high quality Universal Health Care with doctor choice and no rationing – what Barak Obama claims he wants – is not achievable through government efforts. Increasing the scale of the exercise will only increase the scale of the failure.

You cannot legislate past the laws of economics.

"Compassionate" Cannibalism

Previously, this blog reported that after the bank grab, B. Hussein Obama would set his sights on taking over the health care industry -- here is the link.

http://redwarning.blogspot.com/2009/04/capitalisms-destruction-imminent.html

Yesterday, several medical associations tried to throw a virgin into the volcano and stave off their destruction. They promised to reduce the rate of growth of health care costs by 1.5% a year. Their pathetic attempt to co-opt a committed Socialist Statist like Obama reflects their complete underestimation of B.O. and his ilk. These medical industry "leaders" will soon find themselves tied up over a cooking fire while the cannibals sharpen their eating utensils.

Even today, the Senate Finance Committee will be holding hearings on how it can increase taxes to pay for Obama's "health care" plan. The Statists have not detailed their legislative proposals yet, but they know already they need to raise taxes!

You can bet the nanny state Nazis will be out in full force to propose adding punitive taxes to anything they consider unhealthy -- sodas and beverages, fast food, meat, cheese, milk, etc. Naturally, all these proposals would violate B.O.'s promise to not raise taxes on those making less than $250k per year, but what is a promise to a Democrat other than something to be broken?

The continued "compassionate cannibalism" of the economy proposed by the Obama administration will have the same result as any other form of cannibalism -- the unwary are cooked, killed, and eaten.

Obama’s Bank Grab is ON!

As predicted by this Blog, as a result of heretofore unheard of “stress tests” described as “asinine” by super-banker and Wells Fargo Chairman Richard Kovacevich and “unnecessary” by Obama-lover Warren Buffet, sources at the Federal Reserve have made it known that Bank of America, Citigroup, Wells Fargo, and GMAC (among others) will have about a month to develop plans to increase their capital reserves. BoA appears to have the highest hurdle to overcome, in the neighborhood of $34 Billion dollars.

What is part of a disturbing trend, as it became clear that the Federal Reserve “stress tests” back in April would reveal that the banks were actually recovering, liquid, solvent, and in reasonably good shape, the Fed moved the standard on the stress tests so more banks would face a takeover by the US Government. For instance, the tangible common equity target was raised by 33% to snare Morgan Stanley, among 4 other banks that initially passed the stress test.

And if the banks are forced to convert the government-held preferred shares into common stock, the US Government does not intend to be a passive “investor”.

On May 5, Fed Chairman Ben S. Bernanke said that it will take steps to oversee the “effective” management of banks. Later, White House mouthpiece Robert Gibbs said Obama would sack bank management just as he forced the resignation of GM Chairman Rick Wagoner.

God help these banks and their management. Hopefully there is enough sidelined private investment capital out there to keep the government out of an ownership position.

My prediction, when these banks reach out to foreign sovereign investment funds for a a non-FDIC guaranteed cash infusion, the Fed and Obama will object to the foreign takeover of US banks, and block the deal, thus insuring that the affected banks will be socialized.

Obama and the Fed are quick to point out the stock conversion will be a quick way out of the stress test. What they have not said is precisely how the government will get OUT of the ownership position. That is because they NEVER want the government out of the bank ownership business. Ownership is control, ownership is power, and governments NEVER give up power without a fight.

UPDATE: I have paid off my Bank of America - issued credit card and asked them to lower my spending limit. Every little bit will help BoA. I'm trying to do my part.

Government Moving to Socialize Banks Now

The U. S. Federal government is now in it's final efforts to nationalize up to ten of the nation's largest banks, including Citigroup and Bank of America. This comes as a result of unprecedented “regulatory oversight” of the bank results arising from the Obama Administration’s highly theoretical stress testing.

This theoretical stress testing involved no testing at all, but in fact is a “what if” scenario applied against a heretofore unrecognized equity ratio never before used to take over an ongoing financial institution.

The stress test scenario is as follows: if the bank ceased operations today, what would the shareholders have left in a company if the company were liquidated. The new Federal standard for what the Feds are terming “tangible common equity” is a value of 4% of the institution’s assets, and such assets are arbitrarily assigned a lower value associated with the Fed’s expectation of risk of the asset.

Without saying so, the Feds want to take ownership interests in the banks by saying the preferred shares issued by the banks to the government as a result of TARP funds are held as liabilities, which weigh down the value of a bank’s assets. If the bank would merely convert these preferred shares into voting common shares, it will convert the TARP loans from a debt liability into shareholder equity, raising the asset value of the bank on the books, but not actually improving the bank’s operating position by even $1, since no actual new money is flowing into the bank either via loan or investment.

It is said that certain of the 20-odd banks suffering this unprecedented Federal scrutiny will not be permitted to increase the value of their assets in the normal ways, such as selling shares to private investors or issuing bonds or other debentures, but MUST convert the government preferred shares into common stock.

The Federal government, over this weekend, during the slow news cycle, is trying to socialize these banks by negotiation with weak willed bank officers. These idiots are finding out what happens to the unwary that lie down in the bed of vipers that is the Federal government.

The socialization of the capitalist system is well underway. The government is using as an excuse a what if, worse case scenario that is purely theoretical -- it is not responding to an actual bank failure.

Let’s see if the American public has been zombiefied enough to take it.