Monday, September 29, 2008

Bailouts Vs. The Old-Fashioned Way

Last night I happened to catch radio talk show host, David Ramsey, as a guest on a new talk show on the FOX TV news channel, hosted by Mike Huckabee.

Dave Ramsey has a nationally syndicated radio talk show that probably ranks within the top 20 nationwide. I occasionally listened to his show while driving across the country. His theme is always the same. The slogan of his show is "Around here, the paid home mortgage has taken the place of the BMW as the status symbol of choice". Ramsey is a practicing Christian who has a talk show about personal finance. Ramsey believes that everyone should make being "debt free" their financial goal. Of course this is completely contradictory to most popular wisdom in the financial and political world. He encourages listeners to pay off all of their debts, including home loans, car loans, student loans, credit cards, etc. During each program I have listened to, several callers proudly proclaim that they are now totally debt free. Often these callers are of modest income. They explain how they achieved this goal over a period of years while paying off their various creditors, and are now living in a home that is totally paid off, drive an automobile that belongs to them with no lien-holders, have education accounts for their children and retirement accounts for themselves.

In many ways, Dave Ramsey's advice is similar to the way previous generations of Americans have led their financial lives. Dave often recommends that people sell their luxury cars privately (not as a trade in to a dealer) and purchase an economy car in it's place. Often when people are stuck with one or more homes that they can not afford, he recommends that they forget about the cheese and "get out of the trap". He tells them that they have now become motivated sellers and they must sell immediately, even if it is at a loss. Ramsey recommends that families write out a budget for the following month so that they know where each and every dollar will go. If something is not on the list, they simply can not afford it that month. He recommends a 10,000 dollar emergency fund, should unexpected emergencies arise. If a decline in income should occur during a month, the list should be written with priorities on top, such as food, rent, gasoline, etc., sometimes circumstances call for low priority items to be sacrificed. Ramsey's followers are happy, content and enjoy all of the luxuries of the 21st century, however, they have learned to live within their means and become debt-free.

If you compare Ramsey's tried and true recommendations, with the way the our federal government does business, you will see a stark contrast. Ramsey's recommendation is to maintain the prosperity of our nation by putting the government's financial house in order. First we must drastically cut the size of government by listing our priorities in order of the most important, and only fund what we can afford as a nation each year. He also recommends that we pay off the national debt, and that we encourage business investment by eliminating capitol gains taxes. We should let the markets self-correct themselves without government intervention. This will leave the strongest institutions standing and will eliminate businesses that have become burdensome and corrupt. This will also clear the financial dead wood out of the economic forest and make room for new, young, vibrant and effective new players. On the other hand, to prop up what has already proven to be a failure, will leave no room in the market for the necessary changes, improvements and growth to take place.

Everything that the federal government is recommending with their 700 billion dollar bail-out program will exacerbate the financial difficulties that we find ourselves in today. A bailout will reward all of the players who have caused this economic downturn, including the politicians.

The politicians unwittingly encouraged the current downturn in financial markets with the Community Reinvestment Act, so called "Fair Lending Laws", and other well intentioned but misguided programs. The government and community activist organizations, pressured banks to give mortgages to people who had no down payment and who could not afford to make the payments. Politicians did this in an effort to make home ownership possible for all Americans. Unfortunately, in the booming economy of the 90's, the reasons why many people could not afford to own their own homes, was usually due to lack of income, lack of discipline or lack of a sound economic plan. Either way, the Community Reinvestment Act did not address these concerns and was doomed for failure from it's very inception.

However, banks were encouraged to make many loans that were not likely to be paid back. The government offered banks incentives for lending to poor people and minorities. The banks were protected against loss from risky loans, because two investment banks were chartered by the government, that would buy these loans from private banks. These government chartered investment banks were called Fannie May and Freddie Mac. It was understood from the start that the government would not allow these institutions to fail.

This made the entire mortgage industry ripe for corruption, because the risk was taken out of the free market, because it was understood that Fanny May and Freddie Mac would not be allowed to fail. "Risk vs. reward" is the foundation of our capitalist system. When risk was removed by Fannie May and Freddie Mac buying up theses risky mortgages, providing government bail-outs and not allowing certain critical businesses to fail, the entire economic system became corrupted. This is where we stand now.

In 1995 and 1999 laws were changed that permitted investment banks to purchase mortgage backed securities on margin, with a very small cash reserve. This encouraged speculation in the real estate market. Also, many families who did not qualify for mortgages in the past, were now qualified, thus the demand for housing rose sharply. Home prices rose sharply as a result of increased the demand, and speculation. As long as real estate prices were rising, everyone was making money. However, since investment banks were so highly leveraged, a small drop in real estate prices would wipe out all of their equity. Common sense dictates: "what goes up, must come down", and that is exactly what happened.

The laws that they changed, that now allows small cash reserves, were originally enacted in 1930, in order to protect against future devastating stock market crashes. If the definition of insanity is: "making the same mistake and expecting different results", our lawmakers are truly insane.

The government has already bailed out Fannie May and Freddie Mac to the tune of 300 billion dollars. This in itself is corrupting to our economic system. If the government guarantees additional mortgage backed securities, to the tune of 700 billion dollars in the pending bail-out, we will no longer be a capitalist society. The government will have ownership and control over much of our financial industry. Centralized government control of industry has never worked over the long run. This is what led to the fall of the Soviet Union and caused poverty in Cuba, North Korea, China and other communist nations.

This bail-out plan is nothing more than politicians trying to maintain their power and stave off investigations, when what is needed is a correction in government and the financial industry. Our entire group of lawmakers in Washington has become so misguided by their own self-interest, that they can no longer govern effectively. They feel that it is in their own self-interest to gin up a financial emergency, that was years in the making, a month before a presidential election. If passed, this bail-out, will only buy some time before a more serious consequences will take hold. This plan only offers more of the same policies that created this economic turmoil in the first place. Since our federal government is operating at a deficit, they will either have to borrow or print over a trillion dollars to pay for this bail-out. This is sure to have unintended negative consequences.

Politicians are using emotion to sell their bail-out plan. They are forecasting unprecedented worldwide economic failure if they don't get their plan passed this week. This is the most blatant example of fear-mongering that I have ever witnessed. I am suspect of anyone who pressures me to buy now, or else it will be too late. Common sense and experience tells me that a bill that calls for 700 billion in spending, should not be rushed through the Congress in one week. They are also ginning up angst against executives of troubled firms for their high level compensation. Executive pay packages had nothing to do with the predicament that we find ourselves in today, yet the media and the politicians spend much time chastising these executives for high pay, bonuses and golden parachutes. They are using jealous emotions in order to sway the public's opinion, while keeping our attention diverted from the actual reasons why our financial systems are in turmoil.

The current meltdown in our financial institutions is the direct result of the unintended consequences of liberal social engineering policies, the inevitable corruption that followed and the gutless inaction of intimidated conservatives.

Conservative radio talk show hosts have varying opinions on what to do about the current meltdown of the financial markets. However, they all seem to agree on how we ended up in this predicament in the first place. I found an excellent music video which sums up the conservative prospective about how we arrived at this place. This video has few spoken words. It is mostly printed words and newspaper articles flashed on the screen that describe the history that led to the current financial mess in our banking industry. Rock and roll music is played in the background. The name of the video is "Burning Down the House".

This video names only Democrats as culprits, and describes how some republicans tried to bring about reform, but failed. Of course, I think that this video is overly one-sided politically. Republicans too, were obviously complicit in allowing this to happen. Republicans controlled the House, Senate and the Presidency between 2000 and 2006. I'm sure that some republicans were also corrupt, and many other republicans have been intimidated into silence. As I have written in previous articles, the left often uses intimidation and demonetization to stifle opposing views. In this case, politicians who called for reform and investigation, were labeled as heartless bigots and racists who cared only about the rich banks and not the poor people. To fight the Democrats on this issue would have been political suicide. In a society that places emotion above reason, I see no other outcome possible.

In my opinion, the only plan that will see us through this economic and moral crisis, is the one that Dave Ramsey recommends. It is unlikely that Ramsey's plan will be considered because it requires sacrifice, self-discipline, courage, and patience. Although these spiritual principles are what made our country great, I'm afraid that they are no longer revered in today's America.

Tuesday, September 9, 2008

Should We Legalize Crack or Outlaw Ritalin?

I don't think that legalizing drugs is a good idea. I believe that legitimizing psychotropic medications, whether legal or illegal, will have negative unintended consequences. I spelled out some of the negative consequences that have arisen from the medical and pharmaceutical industries pushing medications on the general public in an article called "Legal Drug Pushers and Their Victims". Also, not mentioned in this article, are millions of children that are now being put on Ritalin and other stimulants to treat so called attention deficit disorder (ADD) in an effort to control unruly behavior by school-age children.

I believe that a feminized school system is attempting to reduce boys' natural unruly, defiant, masculine nature with medication. The unintended consequence, is to stifle the natural inquisitive, adventurous, and mischievous behavior of young men. Albert Einstein was unable to concentrate on his schoolwork as a boy, he got bad grades and was quite restless. If Ritalin was available during Albert Einsteins youth, he could very well been diagnosed with ADD and putt on on this medication. This would have undoubtedly have affected his creativity and intellectual curiosity. If Einstein had been medicated as a child, he may never have made the discoveries which have had a profound positive impact on our country, and humanity. I think that encouraging and legitimizing the use of psychotropic medications, will have unintended consequences beyond our current understanding. Perhaps these unintended consequences would limit our ability to stand up to, and defeat, the "bad elements" in our global society. Another unintended consequence could be that we become, as a nation, one of these "bad elements". This is likely to happen if we drift away from the universal spiritual principles that this country was founded upon, and become a nation of people who chase thrills and pleasures, and seek to avoid confrontation and unpleasantness at all costs. Well intentioned liberals and libertarians often seek a quick fix, without considering the unforeseen and unintended negative consequences.

While an active member in the fellowship of Narcotics Anonymous (NA), I learned that drug addiction is a physical, mental and spiritual illness. The physical nature of the disease is the physical addiction. Physical addiction causes withdrawal symptoms, physical discomfort, and sometimes severe illness if you stop taking the drug. The mental aspect of the disease of addiction, leads the addict to continually make the same mistakes and expect different results. There is no rational or reasonable explanation for taking the risks that we do, yet no matter how severe the consequences, we continue to use drugs and put our families, our freedom and even our own lives in jeopardy. Although our lives are clearly unmanageable, we are often in complete denial of our apparent circumstance. The spiritual nature of addiction is the most insidious. We learned that we were addicts long before we took our first drink, drug or pill. Spiritual bankruptcy accompanies active drug addiction. This is is what allows us to do whatever it takes, to get our next fix. As practicing addicts, our whole life centers around the using of drugs and finding the ways and means to get more. As addicts we lie, cheat, steal, manipulate, deceive people, use people and put people around us in danger in order to get our next fix. Some of us have killed or rapped as a consequence of our addiction. There is no bottom the the depths of the spiritual depravity of an active drug addict. I have heard many personal stories in NA, and I have shared my own. Many of these aspects of addiction are true in all the stories that I have heard including my own.

The ongoing recovery offered by NA is based on spirituality as spelled out in the twelve steps and the twelve traditions of Narcotics Anonymous. In NA, we come to understand how our lives have become unmanageable. We come to see how drugs controlled every aspect of our lives. We were out of control. We had no control. Drugs had all control and power over us. At the same time we were powerless to stop using drugs. We tried to stop on our own over and over again but we couldn't. We were powerless. We could not stop or control our using them and once we were under the influence we could not control our actions. Our whole life centered around getting and using drugs and finding the ways and means to get more. After attending NA meetings for a period of time,with a sponsor, it became clear to me that drugs are a power greater than myself. The solution that NA offered was to believe that another power greater than myself could restore me to sanity. That power is God. I was taught to "Let go and let God". Don't fight it, just do God's will and all will be well. Basically those are the first 3 of the 12 steps in the NA or AA program. God is mentioned in most of the steps. The other 9 steps deal with practical ways that you can do God's will. First by taking a personal inventory, next by asking God to remove our shortcomings, then, when we were wrong we promptly admitting it, then making a list of people we have harmed and making amends to them all and then by helping other addicts get and stay clean. Thus, when your words and actions are in line with God's will, you will have serenity. Basically that is the NA program in a nutshell.

NA is a spiritual program, based on an all powerful God. NA and AA (Alcoholics Anonymous) have the best track record of success with drug and alcohol problems? Every rehab that I have been in, and I've been in about a dozen over the years, include NA or AA meetings as part of their treatment and they strongly recommend continuation of AA or NA meetings after leaving the program. Many drug and alcohol offenders are required by the courts to attend these spiritually based meetings as part of their probation. I was court ordered on several occasions. When the public sees Paris Hilton or Lindsay Lohan go off to rehab, do they know that the treatment is based on spirituality and a belief in God? Why is there no outrage on the part of the liberals and atheists because the state (the court) is ordering offenders to attend a spiritual program based on an all powerful God? Perhaps because the program works, but I think that the more likely reason is that the program is anonymous and it is not widely publicized that these programs are based on spiritual principles and God.

I know from my own 25 year experience as an active drug addict, that drug addiction is a spiritual disease, with serious consequences for the addict and everyone that he comes in contact with. I believe that widespread use of drugs in the US is only possible due to the spiritual depravity that is widespread in our nation. As with most problems, a solution that addresses the root cause of the problem is most effective. Legalizing and legitimizing drug use in our country will only exacerbate the spiritual depravity that we are experiencing and will undoubtedly lead to unforeseen, negative consequences. Addressing the spiritual depravity in our nation is the solution that I think will be most effective in fighting drug addiction. This solution will reduce the demand for illegal narcotics as well as reducing the widespread use of legal psychotropic medications . This is the only solution that has been proved to work as demonstrated by the fellowships of Narcotics Anonymous and Alcoholics Anonymous.

The US has grown into a situation of unprecedented economic abundance, coupled with spiritual depravity. This is what has led us to be the leading consumer of illicit drugs as well as legal psychotropic medications. This unique situation can not and will not be self sustaining. We must grow spiritually, as individuals and as a nation, or we will lose our individual and collective prosperity as well as our freedom.

Tuesday, September 2, 2008

An Irrefutable Case Against Abortion

Recently I spoke with a liberal woman distressing over the recent VP choice of John McCain. Although his VP pick was a woman, Sarah Palin, this liberal woman lamented that Palin was a horrible choice because she was against abortion. My sarcastic yet concise response was " you are right, we need more abortions". She had no comeback and I said no more, but I thought about it.

I came to the conclusion that choosing an abortion is an extremely selfish act. Three of the many spiritual principles that I frequently mention are "courage, selflessness and self-sacrifice". A woman who chooses to have an abortion is committing one of the most cowardly and selfish acts that I can think of. Abortion trumps child abandonment and child abuse, because the child has no chance. It is tantamount to killing another soul because he/she interferes with your own plans and dreams for your future.

Even in cases where a woman becomes pregnant as a result of rape, the child could be the one good thing to come from this horrific act. I have heard from children born from rape, who have grown up to lead happy productive lives due to their mothers courage, selflessness and self-sacrifice.

The authors of our Constitution and subsequent amendments, had no intention of legitimizing the snuffing out of human lives through abortion. Proponents of abortion rights often claim that a woman's right to choose is spelled out in the fourteenth amendment. I have read that amendment over and over again. I see no such words or intentions in the fourteenth amendment. Often liberals and feminized men and women make judgment based on emotions, rather than reason. The pro-choice lobby, as well as their lawyers, use convoluted reasoning to justify their selfish views. Only in a society where the ends justify the means and spiritual principles are trivialized as unnecessary impediments, can the highest court in the land rule that abortion is justified by the fourteenth amendment which states: "... nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." There is no question that as a result of the Roe Vs. Wade decision, forty million people have been "deprived of life", through the implementation of legal abortion.

Also, many states have enacted laws that charge assailants with murder, for the assault of pregnant women that results in the death of her unborn fetus. Harriet Ryan from Court TV wrote: There are fetal homicide laws on the books in more than two dozen states, but they vary widely. In some states, such as Missouri and Minnesota, a fetus is considered a living thing at conception. In others, like Georgia and Michigan, a fetus is only protected after "quickening" — when movement is first felt in the womb — occurs.

These laws are clearly inconsistent with federal law that claim an unborn fetus is not yet a human life. However, I have yet to hear any feminists or pro-abortion rights groups protest against these laws, which give unborn fetuses protection under the law. This inconsistency clearly proves that pro-abortion proponents are basing their arguments on emotion, based on selfishness, rather than on the spiritual principles of courage and selflessness.