Sunday, February 01, 2009

Bailout hypocrisy

Everyone is talking about how much money the government is spending, but very little attention is being paid to where they are spending it or what they are buying with it. The government is putting money into banks, even when the banks don't want it, in hopes that the banks will put it into circulation. But the latest statistics shows that banks are lending even less money now than they were before the government dumped all that cash on them. Even if it had worked, putting cash into banks, in hopes that they would put it into circulation, seems a rather roundabout way of doing things, especially when the staggering sums of money involved are being justified as an "emergency" measure.

Spending money for infrastructure is another time-consuming way of dealing with what is called an immediate crisis. Infrastructure takes forever to plan, debate, and go through all sorts of hearings and adjudications, before getting approval to build from all the regulatory agencies involved. Out of $355 billion newly appropriated, the Congressional Budget Office estimates that only $26 billion will be spent this fiscal year and only $110 billion by the end of 2010. Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.

If you cut taxes tomorrow, people would have more money in their next paycheck, and it would probably be spent by the time they got that paycheck, through increased credit card purchases beforehand. If all this sound and fury in Washington was about getting an economic crisis behind us, tax cuts could do that a lot faster.

None of this is rocket science. And Washington politicians are not all crazy, even if sometimes it looks that way. Often, what they say makes no sense because what they claim to be doing is not what they are actually doing. No matter how many times President Barack Obama tells us that these "extraordinary times" call for "swift action," the kind of economic policies he is promoting take effect very slowly, no matter how quickly the legislation is rushed through Congress. It is the old Army game of hurry up and wait.

If the Beltway politicians aren't really trying to solve this crisis as quickly as they could, what are they trying to do? One important clue may be a recent statement by President Obama's chief of staff, Rahm Emmanuel, that "A crisis is a terrible thing to waste." This is the kind of cynical revelation that sometimes slips out, despite all the political pieties and spin. Crises have long been seen as great opportunities to expand the federal government's power while the people are too scared to object and before any opposition can get organized. That is why there is such haste to do things that will take effect slowly.



Obama is watching you

Or some of his acolytes are with his permission

Back when he was campaigning for president, Barack Obama's skillful use of Web 2.0 technologies such as Facebook and YouTube enabled him to get his message out to new audiences of voters in an unprecedented fashion. But using the same technologies in his new role as president is already proving to be more controversial.

Not even 10 days into Obama's presidency, some privacy advocates are expressing concern about a White House decision permitting the use of persistent Internet cookies in YouTube video files embedded on the redesigned Web site. Letting third-party cookies be placed on the site is a deviation from established executive-branch policy that leaves site visitors open to being tracked and profiled without their knowledge, the privacy advocates claim.

In a letter mailed Tuesday to White House Counsel Gregory Craig (download PDF), the Electronic Frontier Foundation (EFF) questioned a waiver that was issued by Craig's office concerning the use of cookies on the site. The waiver, which is now part of the site's modified privacy policy allows the use of persistent cookies by "some third-party providers to help maintain the integrity of video statistics."



The wonderful power of regulation again

Once again we see that the principal function of regulators is to give people a false sense of security while they are being ripped off

An Indiana financial manager who parachuted from a small plane in a suspected bid to fake his death handled lucrative accounts in several states for years despite repeated accusations that he was bilking investors. Regulators in at least three states were warned about Marcus Schrenker, in one case as early as 2002. But it took nearly seven years - and suspected losses reaching into the millions of dollars - before Indiana launched a criminal investigation of Mr. Schrenker, whose high-flying lifestyle included planes, luxury cars and a 10,000-square-foot home. Officials say he deliberately switched his licensing from state to state to create confusion about who should have been watching him.

Mr. Schrenker's wife filed for divorce Dec. 30, a day before Indiana police served a search warrant on his home and office, seizing computers, tubs full of financial documents and evidence of recent document shredding. This was within days of his loss of a $533,000 judgment to an insurance company.

With his personal and financial woes mounting, Mr. Schrenker, 38, bailed out of his plane Jan. 11 near Birmingham, Ala., and sped away on a motorcycle. The plane, left on autopilot, continued for another 200 miles before crashing near homes in the Florida panhandle.

On Jan. 13, Mr. Schrenker was arrested at a Florida campground where a suspected suicide attempt left him hospitalized with a self-inflicted gash to a wrist. He was released Sunday from a Tallahassee hospital. Mr. Schrenker was being held Monday in the Escambia County Jail, though a court date had not been set. Federal court records did not list an attorney for him.

Felony charges from his financial dealings are pending in Indiana, where authorities have frozen Mr. Schrenker's assets and those of his wife. He also faces nearly $9 million in potential and actual judgments and legal claims, some filed in other states, on complaints that he failed to refund unwarranted commissions and charged exorbitant fees. "That guy's house of cards is falling rapidly," said Charles Kinney, an airline pilot from Atlanta who has made formal complaints that Mr. Schrenker scammed up to $135,000 from his parents' retirement fund. "We knew this day was coming."

Authorities in Indiana and Georgia have received at least nine complaints since 2002 against Mr. Schrenker and his companies - Icon Wealth Management, Heritage Wealth Management and Heritage Insurance Services. A financial industry regulatory group says there were two other complaints filed in 2001.

Georgia's insurance department worked with five people who filed complaints over Mr. Schrenker's handling of annuities - including charging exorbitant "surrender fees" the investors didn't know they'd face - starting in late 2006, said spokesman Glenn Allen. The department eventually obtained $2.5 million in refunds for the investors, working with insurance companies that issued those annuities.



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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