You are currently browsing the category archive for the ‘Fall of Rome’ category.

High Price of Gas At the Pump

Yesterday, before Judge Pauley of the United District Court of the Southern District of New York, a motion was filed by the US Commodity Futures Trading Commission, against a consortium of hedge funds that ran up the price of oil during the winter of 2008.

The defendants manipulated the market by buying up roughly two thirds of the supply passing through the Cushing terminal, holding on to it to create the impression supplies were short, then dumping it onto the market, after betting it would sell short.

They performed the caper in January 08 and March 08. They were unable to find funding to finance it during February 08. Once they were notified in April that they had been placed under investigation, this consortium stopped.

This is just one group. imagine 30 to 40 groups all doing the same thing…

That this is done is now common knowledge, Out there are those who still erroneously believe supply and demand affect oil prices.. They refuse to acknowledge that oil was $145 a barrel, then $45 dollars once the funds got sold off to keep from going bankrupt..

There are those out there who still think we need to drill, drill, drill, like drilling will lower the price at the pump… It won’t, It can’t, . But instead of opening ocean floor to drilling, there still is something the Federal Government can do to make our lives easier when it comes to putting gas into our cars…

They can bet the entire Federal Debt on the fact that gas will rapidly drop in price, then dump a considerable amount of the Strategic Petroleum Reserves onto the Market… As the price of gas plummets from $3.87 to $1.47 a gallon, and bankrupts each and every hedge fund, both domestic and international, so much so, that across both sides of Wall Street, the sound of light caliber pistol fire echoes from building to building, cubicle to cubicle, … it forces the price of oil to again become determined by supply and demand. As all the moneys of the hedge funders start back-flowing into the US Treasury, and as each of us breathe easier every time we pull up to the pump, we, by pursuing this action, take care of the problem of high prices at the pump once and for all.

I mean if private companies can do it to take money out of our pocket each time we pump gas, the Federal Government can do the opposite to put money back into our pockets…

This is the second time… The first was 2008, but now, because of Republican gains in Congress, it is happening again… It would be wise to remember: just as we had to fight Germany twice in half a century because we didn’t finish the war the first time… this time, in our second war with the hedge funds, it would be wise to accept nothing less than unconditional surrender on their part.

A lesson needs to be taught! That lesson is: you don’t screw over everyday Americans.

Yesterday’s small step in US District Court, begins the process of educating America as to just exactly why, and by who, they are paying over $2.40 a gallon higher than they should……

And let us all stop this nonsense that gasoline prices are not manipulated…. They are. I’ve shown you the proof.

Next time someone tells you they aren’t, do them a huge favor. punch them hard and hurt them a little….

Advertisements

Video and Transcript

Coons: Yes I think climate change is real, I think human activity has contributed significantly to it, and I think that the short and long term consequences of failing to act both by United States and many of the other industrial nations of the world could be tragic. I would act to make sure we make appropriate progress in reducing our emissions and in moving our economy to one that has less of a long term negative environmental impact. But I also believe we have to balance that, that obligation to act in the long term interest of our community, our country and our children, with not, in the short term shackling American businesses and American industry, because if our major competitors around the world do not make comparable steps, we could simply deepen the recession and put American companies at a greater disadvantage, So I would move to end what I think is the impasse on cap and trade or on climate change and vote for us to move forward. but I’d be sensitive and move to try to amend the legislation that’s up in the Senate in a way that doesn’t disadvantage American businesses..

Carney: Climate change is real I think the science on that is pretty clear and well accepted, so the challenge for us is what are we going to do about it. Obviously the first step is to come up with global agreements, it’s one of those very difficult problems that is many years out in the future but we have to start doing things today:. with global agreements , national policy, and individual action. I agree with our senate candidate with respect to the framework for that. particularly keeping our eye on the ball with respect to businesses here and their impact on employment and that’s why I strongly support investments in tax credits and incentives for green energy technology, particularly for establishing manufacturing facilities here in the United states and in the state of Delaware. We have tremendous opportunity, but we are falling behind. We are falling behind the Chinese, we’re falling behind the Europeans, because we are not making that commitment that we need.

Urquhart: Climate has been changing; it has been changing for eons, getting colder, getting warmer. Right now, we’re in a period where science says we are getting colder. I don’t think there is any settled science according to David Legates, the Delaware State climatologist, there is no relationship that is documented between human activity and climate change, as is say right now it is getting colder. But the essential issue is what, what can we do something about. I mean, I support the reduction of pollutants like mercury and things like that, but carbon dioxide it not a pollutant…We have a Cap ant Trade bill that will cost Delawareans each about $2000 a year if it passes. It has massive penalties in it and it doesn’t affect the rest of the world. It simply is another bailout of billionaires; its a bailout for Goldman Sachs, for Al Gore, and for lots of people who are exploiting it. But those businesses will move to China; the jet stream brings carbon dioxide this direction just as well, and until we address this globally, there isn’t a solution, and we shouldn’t penalize American jobs…

Compare and Contrast:

Is their a current Global warming crises that is the result of human activity?

Coons: Yes…. Carney: Yes…. Urquhart: No….

Will you act to reduce Carbon Dioxide?

Coons: Yes…. Carney: Yes…. Urquhart: No….

Will you support incentives to move America to cleaner, greener energy?

Coons: Yes…. Carney: Yes…. Urquhart: No….

Will you support Cap and Trade as it is in the Senate?

Coons: No…. Carney: No…. Urquhart: No….

Do you support Global Agreements to control global pollution?

Coons: Yes…. Carney: Yes…. Urquhart: Yes….

Is carbon dioxide a pollutant?

Coons: Yes…. Carney: Yes…. Urquhart: No….

Fact Check…

Your choice on this issue will depend on whether believe what you see: that Global warming is real, or believe what someone wants you to believe so they can still keep receiving their paycheck… Here is reality…

Urquhart's Downfall:  basing policy on false premises
Courtesy of NASA

If you believe in thermometers, global warming is real. If you don’t, only you can subscribe to the notion that Al Gore made it up and it has nothing, nothing to do with the constant removal of carbon from inside the earth and belching it back out into the atmosphere…

Urquhart emphatically says the world is getting colder…. And this was just day’s after the news that we have just experience the 2nd hottest summer ever!

Here is real data with accomplishing grafts.

Data from 1891 till now
Courtesy of NOAA

Imagine pulling up to your private home and seeing thick black smoke pouring out of the roof of your house… Chris Coons is standing outside, and tells you “your house is on fire and you should call 911.” John Carney rushes over and tells you “your house is on fire, and hands you his phone.” Urquhart strolls up and tells you to “wait, there is no conclusive proof yet that your house is on fire. In fact, what you are seeing is condensation… because your house is actually getting cooler… He tells you David Legates said so.” You then get a call from your old Realtor that says someone with a hard to pronounce name, just put a super low bid roughly 10% of its worth, on your property…

Would you trust a broker who didn’t pay attention to the stock market? No?
Would you trust your child’s education to a teacher who couldn’t read? No?
Would you trust your life to a doctor who practiced witchcraft? No?
Would you trust a scientist who made up results out of nothing? No?

Then how can we trust someone to do what is right, when they won’t look at facts?
How can we trust to be represented by our leadership when they lie to our face?
How can we put someone into office who refuses to accept the truth?

Bottom line: you can’t.

This goes on every Democratic paid for billboard October 1st

Reading a recent old copy of the News Journal, I saw an article where some Republican buffoon, said something like: “yeah, we’re gonna stick it to Chris Coons that he’s a tax and spend Democrat.”

I laughed out loud…

Go ahead … Make us draw attention to you..

Times are hard for people. And there are two genetic strains of personalities reacting to those hard times.

The first is dominated by the selfish gene. They are the ones who say “hey, look at me! I’m doing just fine. If I could do it, you can too. I’m blessed. And don’t take anything of mine, unless you’re willing to pay me back a very high rate of return!”

The second is dominated by the selfless gene. They are the ones who say, “look, that could be me. Hey, I have something here I’m not using. Take this. Maybe you can find some use for it. And don’t worry about paying me back… When you get on your feet, return the favor to someone else who is down on their luck..”

We both know individuals and groups of individuals who follow these two pursuits…. To those of us who study history. a parallel can be drawn between the two camps. The selfish first stems from Old World philosophy. The selfless second originated in the New World.

The European nations were at that time founded upon the principals of mercantilism. Each nation used militaristic methods to acquire capital in the form of gold bullion. Stealing gold from South Americans was the principal cause of wealth formation throughout Europe during the colonial age. Those nations without territory in South America, stole their gold from those who had territory and were stealing South America blind. And then of course, you could trade some of your products for their gold if they were inclined to buy. That in a nutshell, was the European economic system existing at the time of this continent’s discovery.

You did not aid and abet your enemy. You charged, kept records, and used your military to collect, if those owing you money failed to meet their obligations. Needless to say, this mentality flowed downhill throughout each nation’s respective economies. If someone defaulted, you threw that person into prison where they could never acquire the means to pay you back.. You were vindictive, demanding, and cruel…. You had to be, so they feared you. Many of our early settlers were these poor locked up souls, filling up debtor’s prisons, only to be shipped over here, dumped and left to die..

Instead they prospered and from them, came the other line of treating those less fortunate: helping them get back on their feet by making them productive enough to earn money. The money then earned, was subsequently returned to those generous souls who gave them a break, by being spent in their stores on their own goods or services.

As the frontier expanded Westward, this philosophy spread with it. If a neighbor’s house burnt, you and your neighbors had a house raising party. If Indians stole their horses, you gave up some of yours. If your neighbor needed a plow, you lent him yours. The benefit was obvious. Should you befall poor circumstances, they would do the same for you, without asking. People were a rare asset as America’s frontier expanded; natural resources were abundant. So naturally, people gave up what they had, to help other’s if that meant they all had a better chance of surviving… After all, natural resources couldn’t come to your aid or load your weapon, should your family be attacked by a scalping party out on a raid.

This concept of banding together to help others is a very American trait. It would be one not so well widespread today, if it hadn’t been the greatest generation of Americans who brought it to the forefront. WWII drove home this idea to the rest of the world, It showed all that America was very different. Over here, people stood for something and because of that, they were willing to invest valuable resources to help right injustice, and even better, once winning? They packed up and went home. And one even better? They used their own precious resources to help their former enemies get back on their feet again… Gee what a great country..

Today we hear that same philosophy about helping others, being used across our health care debate This great debate of this decade is, at the core, a debate between helping people survive, or… helping people get rich off of helping people survive… All National Health Care arguments boil down to that one sentence… Whatever side you are on, whatever plank you hide behind, whatever argument you make, at its core is either the belief that we should be selfless, or selfish.

There is no way around it. If as a nation we should be selfless in our treatment to our unfortunate, our own citizens, then we need some form of governmental input. If as a nation we should be selfish in our treatment to our unfortunate, our own citizens, then we need to maintain the current status quo system of for profit private health care…

History has a funny way of playing tricks. We think of Socialism as a European tradition. However it was from America that socialism derived its inspiration during our nation’s growth over the 19th Century. Socialism was a contrived as a method calculated to achieve those values visible on the American frontier, by redirecting the wealth that for so long, had been locked down by a very few. Socialism was the way to pry open the coffers of one or two rich guys, thereby allowing help to flow outward to areas where it needed to go.. One should note, that the rise in Socialism was most prominent after WWII when the populations of broken nations looked to America as a model, and said we want to be like them… Combining the resources of government and business was their quickest avenue to achieve that goal.

It’s time we pool our resources over on this side of the ocean. Our financial system was stripped bare, and we need to grow our way back to prosperity. We also need to bring along the global economy with us..

One could argue that capitalism, free markets with no regulation, is exactly what collapsed our global financial system. AIG taking insurance payments and spending them, simply because they weren’t regulated, is exactly what capitalism calls for…

Americanism, on the other hand does just the opposite. Americanism is simply the pooling of resources for a short time only, to help a neighbor in need. It comes with no attachments, save the deep understanding that should the shoe be on the other foot, we would be the beneficiaries of their good fortune. We need Americanism if we are to continue our role as the greatest nation on earth. Our experimentation with the old world order these past eight years, led us to disaster… just like it has led European nations to disaster every twenty years, up until Americanism took over after 1945.

The wave of the future is not a free for all, money grabbing fiasco; it is an evolution. And evolution is at its most successful when the gene pool available is maximised. As for the healthcare debate, the more players allowed at the table, the better chance we have at evolving our healthcare system into the best option. That best option, will be determined not by plan or directive, but by individual purchases across every state of this nation…

Even if you have great distaste for a government entity entering itself into the health care insurance field, you can have no fear of letting it compete in the free market of health coverage… It is after all, a free market. If it can’t compete effectively, it will become extinct. On the other hand, if it is the better option and receives a much better reception than its private competitors do, it would be wrong to deny this nation’s citizens something that benefits them so greatly… It would be flat out wrong..

So the American thing to do, is to allow this governmental insurance entity to compete on the free market with private competitors. Americans helping Americans. It’s the only American thing we can possible do..

And as an aside, the next time you hear the word socialism patsied about, set them straight. It is Americanism they’re against.. Socialism died with fall of Lehman Brothers and Merrill Lynch. Now, its Americanism. Helping ones neighbor who can’t help themselves..

But then again… there are those with the selfish gene.

Two workforce housing meetings occurred this week. The first on Tuesday was at the Cornerstone Church off 896, and the second one took place with the New County Council in the Gillian building just off New Castle Commons…

The first meeting was put on by the new found work-group..Stay Out Of My Pocket. This group coalesced out of the early September meeting off Vance Neck Road…. Apparently citizens did not like what the County told them there…. (You can refresh your memory here to find out why…) Since that time research was done and an action and plan of attack has been determined…

The tone between this meeting and the last, was different as East Delaware is from West Delaware…(lol) Whereas the star of the last meeting was a map, this meeting was owned by a power point. In fact walking in ones’ first impression was “wow… this is a nice church..” complete with cafeteria, hotel informational desk, and gift shop. The inner sanctum gave new meaning to echo chamber, since only those who used a mike, could be understood, unless one was quite near the speaker…

But with little contention worth mentioning, here is the scoop from the meeting… Work force housing is a done deal. Stays can be executed but we can never go back and undo the bids that were placed before and between the first and last meeting… However, legislation can be passed in the General Assembly and signed by Jack Markell which can be retroactive before the bids were placed, and that can undo the damage… An arduous process to be sure. But a lawsuit in Chancery Court can stop it cold…

There are several reasons for following through with Chancery Court… First, the Chancery Court revolves around “equity”. And the current workforce housings provisions provide developers, as well as county government, some prime plums to be picked… But.. it penalizes every other citizen and homeowner in the county by doing so… It is not equal and therefore the Chancery Court is where it needs to be heard…

Furthermore, William Chandler III stated that our current rate of development will DESTROY DELAWARE FOR GENERATIONS TO COME…

The unions sent some representatives, not wanting to be blindsided as the were by the Vance Neck meeting, where in September they figured that workforce housing was a done deal, so why bother… They did get anxious and their blood pressure soared during the part where “slowing down the process” was discussed, either by filing historical claims, environmental claims, or more or less using every law on the books, to slow down the development until the court case could be heard… was mentioned…

That then is the way to start…

Most importantly was the implicit implication to Sussex and Kent Counties… Mark Baker, who is running for Sussex County District 3, himself on Maria Evan’s show stated that workforce housing, if he was elected, was to be Sussex Counties next big priority…..

Equally chilling was a video, made by developers in America’s most royalist state, Virginia, which told other developers how to game the local system in order to put up workforce housing.. To paraphrase…”having trouble with getting a project passed through County Council?…Just mention workforce housing (formerly known as low income housing) and poof, it gets passed”…  Equally telling was that Hawaii had shut down workforce housing in that state… because the outcome was so horribly different from what they had been promised…So it is possible.  Success can be accomplished…

As an aside, Cathcart and Lofink both stated emphatically that they were against the work force ordinance changing forever the quality of New Castle County.  Steve Amick (retired) also was against the plan.. Bethany Hall-Long, no doubt due to an acknowledgment towards the union,  hemmed and hawed until rousing discontent from the audience made her too see the light… (If she was ever to be elected…..) she too came out against the ordinance..  Earl Jacques stood up in back and said he too was against the ordinance… Four for four against was the call made by the moderator…

Again more can be found on their site:  Stay out of my pocket.

The following day County Council met to hear the public’s view.. In fairness to all, it should be disclosed that your humble reporter chose to spend the evening behind third base at a certain athletic event that took place that evening… So I apologize for any inconsistencies and if notified, will correct them… (Fifteen years… man…) But from what I heard, the following is what took place…

To begin we had a presentation describing work force housing….. put on by the county.. You can see that display here….

Then came the citizenry up to the open mike…

Bill Williams blamed Democrats and organized labor that goes “whoop, whoop” at county meetings.
Next Mark from Caravel Farms had questions to be answered later..
Then a fisherman’s daughter from Seattle stepped up in support of Work Force Housing…
Appoquinimink School Board President said at $30 million per school, and 1000 new kids being the thresh-hold for a new school, and a net gain of 500 students over this past summer, schools could not be built fast enough if work force housing goes into effect… He stressed he was unaware that plans had been changed regarding density levels. Next a resident complained of traffic on his road, and wondered if Deldot could ever be counted upon to fix it.. Then a rep from Stay Out Of My Pocket asked three questions to be answered in full, later… We did find out that $4200 is assessed per household for educational needs, but costs could be much higher, with the difference impinging upon taxpayers.. A visitor from the State Education stood up an said he had pertinent information, if he could speak… He jumped the line and spoke.. He was in charge of determining the assessment fees for developments across the state… His formula was simple.. take the cost of building a school..divide it by the number of houses…. for Appoquinimink…around $4200 per unit.. (someone verify that formula?)  The formula is determined by state law…that finger point was repeated a lot… so today,even as commodities rise, the cost is mandated at that low level meaning that is all the developers pay… the rest is paid by your taxes…

Then Chuck Mulholland, head of Southern New Castle County Alliance, gave his opinion that work force housing was a costly endeavor… for nothing.. There are 300 properties in Claymont sitting empty… put the workforce into those houses, before moving them down to Boyd’s Corner… an idea that makes sense…  Brandywine school district is cutting back due to lack of students, and Appoquinimink can’t build schools fast enough…

Several other speakers spoke as well.

On resident of Denny Road decried the condition of his highway in front of his house, and that with several new developments, no work was anticipated to widen the road… “The shoulder is crumbling away”, said this resident. “Deldot’s answer was to zig-zag the white line edging the holes already formed on the highway’s edge… Boggles the mind… and density rates were doubled?

Jim Spencer, running against Earl Jacques in the twenty seventh,  who is well acquainted with Deldot… said he lives on Porter Road… It takes ten minutes for him to leave his driveway because of all the traffic… Deldot is broke… they just paid 20 million for a pile of sand at Indian River… Don’t count on Deldot to do anything to alleviate your congestion, he said.. they can’t… and density rates were doubled?

One resident of Rose Hill, (always reminds me of that scene in the Wizard of Oz… oh,.. that was poppies.) had some good questions.. Forgetting what they were, perhaps they will show up later…

Several citizens said they were raised in the city, and left on their own…  They agreed with the principal of work force housing, but not with the method which it was sprung upon them in their new developments…

Several plants were called in support of the principal of work force housing, creating a controversy over whether workforce housing was for fireman and policeman, or was for slum lords and riff raff..  One wife of a policeman contested workforce housing was necessary for them by stating “the families of policemen, don’t need workforce housing… we can find housing on our own”.  One lawyer from New Jersey spoke until the audience began challenging her, then walked off…. but not before giving Penrose Hollins a hug….XOXOXO

A couple of liberal types spoke on the “egalitarian principles” of why we need work force housing, thereby giving liberalism a bad name…

Andy Taylor, a lawyer for the County, who occasionally shows up in the comment sections of these blogs, said he lives in Claymont, where the density level is higher than what is being proposed in and around MOT. And he is a happy person. Great.

Joann Christian, Asst. Appoquinimink Superintendent, spoke a little about how the plan had blindside them within the school district… One of the criteria for work force housing was that it be pre-approved by the school board.. Not quite… A call comes to the school board… Can you accept “X” number of new students?”  “uh… no.”  “Ok, we’ll assess the fee then…”  and the houses are built anyway, with part of the fee assessed upon the developers, and the children get dumped on overcrowded schools…

After seeing his former opponent speak, State Senator Bruce Ennis signed in and stepped up to the mike… Upon opening his folder, he knocked the red, yellow, and green time clock on the floor, prompting county officials to holla’  “send him the bill.”….  Bruce discussed how he was unaware that the laws for development had been changed.  He cited statistics showing that of all the new plans brought before the state… those in New Castle County were in single digits… That was because a circular had been circulated saying that the county ordinance overrode the state law, which had been changed to be subordinate to county law, by the same group of Democratic Senators who backed Minner’s veto on eminent domain… led, of course, by Tony DeLuca… (no wonder he is against open government).

Laura Brown, who is running against Bill Bell, the council person responsible for putting lower New Castle County in this predicament, spoke out that she was against work force housing moving into that region, and would fight to limit its extent…  Bill Bell WILL have developers and union support.. It will take everyone in District 12 who is not union or a developer, to vote for Laura Brown if Bell is to be unseated… Remember, it was Bell who sat quietly in Hooters, sipping beers while looking out the window at the scenery (yeah right), while this controversy was brewing… He talked to no one about it before it blew up… It was his seat which was hottest during the August meeting… “psssss”.

Bill Dunn, hero extraordinaire, had a couple of questions…. Almost more important than what he said, was the reaction of one Paul Clark, who leaned against the wall… As Bill spoke, Paul Clark snickered, hardly unable to contain his glee… If he is ever put in jail, he not only would be a Clark bar, but a Snicker’s bar as well.  As Paul turned his head, one could see where Pam had pulled a hair for each time he had failed to do what she wanted….

Attending but not speaking, were candidates Rebecca Walker, and Bethany Hall-Long who could be overheard at the end, “where can I get a program”….

This is probably Delaware’s next big battle: citizens against the developers.. affecting Sussex and Kent Counties, as well as New Castle County…  It is time everyone begin to acquaint themselves with just how bad work force housing will affect them personally, and then “get themselves a program…”

Again the best start would be with Stay Out Of My Pocket.

If Washington Mutual could collapse overnight with assets numbering well over $307 billion,…….. how many hours would it take a $700 billion bailout, to collapse as well?

If Congress agrees to the bailout, things will go on, our jobs won’t disappear, and we can still continue working. But, over time, we will have to pay more and more out to taxes and wind up taking home less and less… If everything collapses, then we will have no money …. If we are not going to have money…. what’s the sense of working?

When I think about what has been said about the bailout, it comes down to this…. We are being asked to cough up $700 billion to give to people who really don’t need it, and to do so for reasons we can’t be made aware of……yet….

What’s the rush?

Figured out why.

Tuesday September 30th ends the third quarter… Fixing the deal by Friday, gives every financial company the opportunity to make their adjustments over the weekend; adjustments like shifting their bad debt over to the Federal Government.

Only then their third quarter will look rosy… and the market’s confidence will be restored.

The Great crash of 1929 was caused by rather bad third-quarter financial reports… Like this year, the financial year of 1929 was full of ups and downs… But there was always hope…  After the third quarter performed far less than expectations, most decided the ride was over and it was time to get out.

All at the same time.

The first collapse took place the first Thursday after the quarter ended, the second on the Monday after (apparently Friday was a good day),  and the third, the most famous… a day later….. The bubble had burst.

Apparently the Financial Institutions have been holding back.  What they report for this third quarter will drop everyone’s jaw…(look for a mind blower in the hedge fund department with leverages at levels 40:1)

That is why this administration is pushing too hard for and is so adamant that by this Friday, the deal must be done… “It must be done by this Friday!”

I will allow you to draw your own conclusions… (just make sure it is in a protected FDIC insured account).

Many thanks to James Butkiewicz, University of Delaware for filling in some blanks…

Today’s bailout plan was tried once before… It didn’t work.. Known as the RFC a government entity, provided loans to failing banks…

The RFC was funded through the United States Treasury.  The Treasury provided $500 million of capital to the RFC, and the RFC was authorized to borrow an additional $1.5 billion from the Treasury.  The Treasury, in turn, sold bonds to the public to fund the RFC.  Over time, this borrowing authority was increased manyfold.  Subsequently, the RFC was authorized to sell securities directly to the public to obtain funds.  However, most RFC funding was obtained by borrowing from the Treasury.  During its years of existence, the RFC borrowed $51.3 billion from the Treasury, and $3.1 billion from the public.

Financial Data Leading Up to and Through the Great Depression

After 1933, bank assets and bank deposits both increased. However, banks changed their asset allocation dramatically during the recovery years. Prior to the depression, banks primarily made loans, and purchased some securities, such as U.S. Treasury securities. During the recovery years, banks primarily purchased securities, which involved less risk. Whether due to concerns over safety, or because potential borrowers had weakened financial positions due to the depression, bank lending did not recover, as indicated by the data in Table 1.

The relative decline in bank lending was a major concern for RFC officials and the New Dealers, who felt that lack of lending by banks was hindering economic recovery. The sentiment within the Roosevelt administration was that the problem was banks’ unwillingness to lend. They viewed the lending by the Commodity Credit Corporation and the Electric Home and Farm Authority, as well as reports from members of Congress, as evidence that there was unsatisfied business loan demand.

As I understand it, (and I am relieved to hear the the guaranteed bonus clauses for fund mangers has now been removed) today’s bailout will protect the lending institutions and keep them from failing…

Now I don’t know about you… but if had just escaped a narrow brush with debt…I would be skittish about returning to the firefight of high stakes finance…. I would be tight fisted with my cash…. and loan only to those to whom I was guaranteed to be paid back… Credit would be tight. Really tight.

That does little to boost us out of the Depression… One gentleman who grew up during the thirties shared this memory with me recently…

“It was as if my whole life the same buildings had always been empty in my small town.. I remember the same sign, on an easel in one storefront, that said “Sale….5 pounds for 5 cents… I never knew what it was for, but I walked by it on my way to school between fourth grade and my senior year. Of course, it yellowed and faded in the sun as the years went by. When I came back from the war, it was finally gone… No one wanted to move in. There was just no money back in those days….”

We are setting ourselves up for the same… I need to pick up a phone and say can you give me 20 million more, like last year so we can open 5 more units…” and the answer needs to be “sure”.

Anything less and our economy grinds to a halt.

The Duffy-Kavipsian Plan does a better job with moving us to that time and place… It needs to be stove-piped into this week’s discussion ASAP.

I’m probably the only person in this blogosphere who is callous enough to think this is funny.  But after commenting on this blog, I happened to look up at their comment widget alongside the upper right of the screen and laugh out loud…….

I’m sure your minds are too clean to “get it”.  But here is what I saw.  I may regret posting it someday, but that has never stopped me before…….

It Just Happened........

To a chorus of “the economy is bad”, “the economy is bad”, we wake up every day… Yes, that may be true, but since most have already accepted it to be so, based on their own day to day experiences, what good does it do to harp on it?

I decided very little. Of course others can write reports on its demise and still others can read those accounts and weep. Whereas I will acknowledge that cries like this are very important before some actions are taken ie those actions leading us down dangerous paths, such as “let’s deregulate bundled loans”, or “let’s decrease the money received by the Treasury by Tax Cuts during an expensive war”; once those actions are taken, comments, though well meant, have no other use except to say, “See, I told you so”, and/or make Republicans wince.

Being vindicated may make one feel good, but it does little to alleviate the hardships being faced by all.

So as my title asks……how are we going to fix it?

First step is: make sure it doesn’t happen again or to be put another way: Cut off its source of fuel…..

Our current calamity occurred because of deregulation…. Rampant speculation was allowed to continue, further pushing a bubble outward until someone realized it was just a thin membrane, full of nothing but air…. Rampant speculation is always the problem behind a collapse of an economy…. Before we understood economics, the world had panics and bubbles bursting all the time…. Each time it burst we learned more and we regulated more. Then, someone eventually found a loophole, an area unregulated, and suddenly all resources race to that spot, creating another aneurysm until it too bursts. Afterwards, that area comes under regulation.

The Great Depression caused banks to be regulated. The Savings and Loan Crises and subsequent bailout, caused S & L’s to come under regulation. Obviously we need to now regulate the bundling of loans and other unregulated securities….

That….. is the first step, which helps us, the sufferers, very little. However it is needed to keep the trend from getting worse…

Next, we deprive the Depression of its oxygen: “we need to forgive us our debts…..” Right now as I write, the Fed’s are forgiving debts of several banks and financial corporations who speculated poorly. As we see with this year’s stimulus package, when money goes directly to financial institutions, there is nary a ripple in the economy…. I think we all knew this would happen…. It was all over the news when the stimulus package was announced.. Any smart person would use an unexpected bonanza to pay down debt instead of allowing it to grow exponentially as we spend it on trinkets….

But trinkets are what keeps our economy afloat…. So how does one stimulate an economy so heavily saddled with debt, that the debt just sucks up every attempt to jump start it? Easily…. You forgive the debt for a while until the economy seems healthy and then return to normal…. It’s just another form of stimulus package.

The first argument AGAINST doing so is this: you are teaching people that not paying back what you owe is ok… Valid point. But equally valid would be this rejoinder: by doing the alternative, bailing out insolvent corporations with taxpayers money, you are teaching corporations that making bad loans will cost them nothing, yet gain immense profits.

Under our current system we reward bad behavior from those giving out bad loans, which in turn, penalizes good common people who actually saved nest eggs, by wiping out a large portion of the value of their holdings. ( Anyone checked their 401K lately?)

Therefore what is needed is a simple way to rejuvenate the economy, in a way that rewards good behavior yet punishes those who misbehaved, not the other way around.

Unfortunately for Delaware, credit cards are one of the easiest way to accomplish that. Here is how it could be done.

A year of no interest. (this is theoretical, so finish reading before responding.) Pay back all principal owed, but not the reward that a bank receives for lending you its money….its interest.

What does this do to banks? For one, they stay open. They remain solvent; they do not have to shut down or get bailed out with money we are borrowing elsewhere from the Chinese… During that year, the financial institutions write off their books, all of the amount of interest they had anticipated receiving from all previous loans. Which means that we never have to pay that amount back. When the year starts anew, we pay the full amount again. As for the missing year of interest: the banks will eat it.

But…. new loans will not be part of the deal… Loans made during that year will be charged interest, or fees, as they normally are. This gives banks some form of income. And once this year has passed, banking returns back to normal…

Some safety nets can be provided. One, for example, would be to lend a small bank an interest free loan from the Fed, if it was unable to meet its payroll or other expenses and stay open due to its lack of interest coming in. After the interest-free year was over, that amount would be paid back in interest free installments as well…

What this interest-free year does, is keep institutions open, keep a Great Depression at bay, puts money into the hands of buyers, money which cannot be spent on debt, and which must go for goods and services.

As the demand for more products increase, so does commercial lending. For to increase production, new and newer loans will need to be negotiated, Each new loan thereby gives banks more income.

The bad news is that banks won’t make tons of profit. No problem, this year, they wouldn’t anyway, And without this new type of stimulus package, as we saw during the 10 year Great Depression (when there just wasn’t any money anywhere to get things started….). things stayed bad year after year after year.

And one additional side benefit? It would teach a lesson to all, that lending money to someone who obviously can’t pay it back….CANNOT now be done with impunity….. The burden is finally placed upon those who did the sin… and not on the innocent suffering silently….

(I look forward to your comments and challenges…..)