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Government against the People

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  • Government against the People

    Government against the People by Richard W. Rahn
    In May 2009, the Financial Crisis Inquiry Commission was established to investigate the causes of the financial and economic crisis. Six of the 10-member commission were chosen by the congressional Democrats, and four were picked by the congressional Republicans. (Rather than truly being independent, the commission was designed to protect the political flanks of many of those who had caused the problem.) The 500-page report that was sent to the president was only endorsed by the six Democratic members. Three of the Republicans filed one joint dissent, and the remaining Republican member, Peter Wallison, former general counsel of the Treasury under President Reagan and now a fellow at the American Enterprise Institute, filed his own 100-page dissent.

    In explaining his dissent, Mr. Wallison wrote: "Like Congress and the Obama administration, the Commission's majority erred in assuming that it knew the causes of the financial crisis. Instead of pursuing a thorough study, the Commission's majority used its extensive statutory investigative authority to seek only the facts that supported its initial assumptions — that the crisis was caused by "deregulation" or lax regulation, greed and recklessness of Wall Street, predatory lending in the mortgage market, unregulated derivatives, and a financial system addicted to excessive risk taking. The Commission did not seriously investigate any other cause and did not effectively connect the factors it investigated to the financial crisis."
    On Wednesday, Ralph Nader wrote in the Wall Street Journal that the government had ripped off the Fannie/Freddie stockholders, of which he was one. What delicious irony that the man who has been telling us for decades to trust the government instead of private business was abused by the government. I wonder if he has learned anything.

    Another no surprise last week was a report issued by the Congressional Budget Office that the budget deficit is even larger (a mere $1.5 trillion larger) than previously forecast and financial doomsday is getting closer. Again, having learned nothing, President Obama responded in his State of the Union address by proposing more government spending. He seems to be making a real effort to have the collapse occur in his first term.

    Meanwhile, more reports surfaced about the fact that many state and local governments have not been disclosing relevant information about their finances to their bondholders. Executives in private firms would be fined or sent to jail for similar lapses, but government officials are largely immune to rules that the rest of us must follow. Municipal bonds are often held by retirees and others seeking low-risk investments, so reckless government officials are endangering the income of the people they claim to care about most.
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