Hedge Fund Manager:  OMG, i snorted how much blow last night? and then crashed my Bimmer into *what*?  OMG LOLZZ!!1!

Junior Investment Banker:  duderz, it was a homeless guy, plus you probly got AIDS from that hooker!

Hedge Fund Manager:  im still drunk, and its 11:30am and im at work LOL!  howd i get home>?

Junior Investment Banker: u drove home - EPIC WIN, FOR GREAT JUSTICE!  im on like my 8th martini now!

Obama economic advisor Robert Reich recently made a few comments about economic stimulus.

At one point, he advocated paying out stimulus money for jobless relief in...  Food stamps.  Yes, as Reich calls it, it's "a two-fer."  Because people need food, and we need to make sure they spend that money, so we'll pay them in food stamps.  Here's the quote:

"Food stamps. Talk about a way of getting money to people they will spend, they will spend -- you know, the more people are in need the more likely they are to turn around and spend whatever money they get. Again, a two-fer."

No seriously, how about we pay people in "_____" stamps?  That way the government can totally control everything we buy.  There's no "saving" anymore, just "stamps."  Need shoes?  Well, just spend your "shoe stamps."  Need a high-definition TV?  Well, just pool your family's "LCD TV stamps," and get one.  Forget "money" or "gold," or "objective value."  It's all stamps.  Stamps, stamps, stamps.  Need to mail a letter?  Go to the Post Office with your "Stamp Stamps" to buy some stamps.  Need to buy some of those ink-stamps for your office?  Well, just go to Office Depot with your..  uh..  "Stamp Stamps..."

OK, so there are still a few kinks to be worked out, but this system is genius, and so is Rob Reich.  All Hail Obama the Emperor.

http://newsbusters.org/blogs/noel-sheppard/2009/01/22/obama-adviser-stimulus-shouldnt-only-aid-white-male-construction-work

A successful free market requires five preconditions.  Each of these preconditions requires government regulation:

First, individuals must be free to engage in any transaction they choose.  In order to ensure this, a government must not infringe on the fundamental rights of the individual - life, liberty, and property, and it must prevent others (including itself) from doing so.

Second, individuals must be protected against being forced to conduct a transaction against their will.  In order to provide this guarantee, a government must prevent the use of force in the market by empowering the executive with the authority and resources to find and punish robbers, thieves, and extortionists.

Third, individuals must be protected against entering into a transaction under fraudulent pretenses.  In order to provide this protection, the government must enforce proper and transparent accounting procedures, and identify and punish those who utilize fraud as a means of doing business. 

Fourth, the market must be protected from attempts to artificially control prices from within.  In order to prevent artificial price control from within the market, government must, in the true spirit of the laws that exist to prevent monopoly and collusion, use those laws to protect individuals.  It must also prevent the abuse of those laws by failing corporations who would use, and have used them to further their own corporate interests to the detriment of individual citizens.

Fifth, the government must prevent itself from attempts to artificially control prices.

Capitalism is defined as:  "an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market."

Since capitalism requires the existence of a free market, and the existence of a free market requires government regulation, then capitalism necessarily requires government regulation.

This refutes the straw man argument of "unregulated capitalism," which is commonly used as the basis of arguments opposing the theory of the free market economy.  There is no such thing as an "unregulated free market economy."  An unregulated market economy is most definitely not free (i.e., Road Warrior-style anarchy, where the only rule is "Might-is-Right").

The ability to engage in trade in a truly free manner requires the existence of some overarching framework that provides that freedom through the creation and enforcement of regulations.

A recent Time magazine article had this to say about the Fannie Mae and Freddie Mac financial meltdown and bailout:

"Devastated by a legacy of bad management, rampant fraud and inept Government supervision ... had fallen into insolvency as of the beginning of last year. Because the U.S. failed to own up to the problem and launch a major rescue soon enough, the cost has now grown higher than almost anyone had imagined. Says Michigan Democrat Donald Riegle, chairman of the Senate Banking Committee: "We've never faced a problem of this scale. The answers aren't going to be happy ones." Last week President Bush came forward with a long-awaited bailout plan in which he sought to spread around the unhappiness in an evenhanded way. Said Bush: "Nothing is without pain when you come to solve a problem of this magnitude.""

The cause of this crisis?  Inappropriately risky investment in housing loans and other real estate, allowed by lack of government oversight of the accounting practices of the companies at fault.  A number of U.S. Senators had received contributions from the companies in question, and that was thought to have influenced them to oppose regulation.

...

Actually, that's a quote from a "recent" Time article published in 1989 in the wake of the S&L scandal.  After the collapse and bailout of the S&L industry, and the imposition of regulation and oversight of accounting practices that would prevent future harm, guess who stepped in to take over?  If you guessed Fannie Mae and Freddie Mac, go to the head of the class.

Now, you'd think that we would have learned about letting big segments of the financial industry conduct themselves with little-to-no oversight, but Fannie Mae and Freddie Mac's status as Government Sponsored Entities guaranteed no governmental oversight.  Democrats, such as Maxine Waters (D-CA), Gregory Meeks (D-NY), Lacy Clay (D-MO), Artur Grey (D-AZ), and Barney Frank (D-MA) defended Fannie Mae and Freddie Mac famously in hearings in 2004.  They were "pissed off," called the hearings a "lynching," and insisted that there was nothing wrong with the conduct of Fannie Mae and Freddie Mac.  If you watch the video, you'll see Democrats accusing Republicans of calling for oversight as "looking for an excuse" to shut down FDR's pet project.

Given our recent history of massive failures in this very industry due to fraud and misconduct, you'd think that our legislators would have been thinking, even the Democrats, "Huh...  Something about this seems kinda familiar...  Maybe we should check into it."  But no, this time it was different, because these GSEs were created with the intent of providing "affordable housing," in the form of affirmative action-style lending.  And then again, four of the "Keating 5" were Democrats, so maybe they suspected where the trail would inevitably lead this time around, too. 

To put this in perspective, the "Keating 5" received around a total of $1.3 Million, while the "Fannie and Freddie Three-Hundred-and-Fifty-Two" received just under a total of $5 Million.  209 were Democrats, receiving total contributions of about $2.8 Million, and 143 were Republicans, receiving a total of around $2.0 Million.  The S&L bailout cost taxpayers just over $100 Billion, whereas this mess is going to cost us seven times that.  I guess Frank Raines knows how to make smart investments after all.

At this rate, the next Democrat-caused financial sector scandal should cost us a trim $4.9 Trillion.  German philosopher Friedrich Hegel was right:

"The only thing we learn from history is that we learn nothing from history."

The cause of our current financial crisis is not complicated.  Aside from holding our money safely, banks provide another service:  They rent you something you don't currently have (money) so that you can do something of value with that thing (like buy a house), and charge you a nominal price that you agree is worth the use of that thing you don't currently own.

A lot of other companies provide services like that.  Blockbuster Video is one.  Hertz Rental Cars is another.  Have you ever lived in an apartment?  If so, you've done business with an entity like this.  Their business model is equivalent to that of money-lending institutions:

1)  We give you the use of something for a period of time.
2)  You agree to return that thing to us after that period of time is over.
3)  In exchange for the use of that thing, you agree to pay us for its use.

Now, if you've ever rented a movie, or a car, or lived in an apartment, you know that the renters in all of these cases have established mechanisms to ensure that if you're unable to return whatever it is you've borrowed from them in the same condition you got it (or at all) that they won't lose the initial value of whatever they've given to you.  They all require you to provide means by which they can recoup their losses if you don't return what you borrowed in the same condition it was when you got it (or at all).

But the key difference between the "rental agencies" we've probably all dealt with and banks is that the means by which the "rental agencies" recoup their lost value in the event that you fail to return their property is that they receive money from you to replace the value of the thing they lost, which you freely agreed to pay if such a situation arose.

Unlike Blockbuster or Hertz, banks "rent" the use of money itself, and so they must protect themselves against the risk of a borrower's inability to return what they've lent in a slightly different way.  If an individual that's renting the use of money from them can't return that money (or pay for its rental fees) according to the agreement they both freely agreed upon at the loan's inception, what can the bank do?  Charge them a "late fee?"  Charge "penalties?"  If a borrower can't return the actual money they've rented, then why would it be reasonable to expect that they could somehow magically give you money as a penalty for not being able to give you money?

So ask yourself this:  If you were in the business of "renting" the use of money, how would *you* solve this problem?  In fact, given this fundamental problem of renting the use of money, why would *anyone* do it?

The answer is simple:  If you only rent the use of your money to people who will pay it back, plus the rental fees, you can benefit both yourself, and your renters.  So the ideal solution is to only rent money to people who will pay it back.  Unfortunately, to do this perfectly requires the ability to see the future - will the person I loaned money to pay it back?  But banks and other lending institutions have been doing this for centuries, and successfully!  How do they do it!?  Is there some magical Banker's Eight Ball that provides them the answer of who to lend money to and who to deny?

Well...  Yes, kind of.  It's called statistics.  Using the constant, ongoing accumulation of historical data, banks had somehow managed to figure out, based on an individual's income, assets, and their personal history of success or failure at paying back debts, the likelihood of that individual's ability to pay back the loan for which they were currently applying.  Since there were no other means of recouping their losses if the recipient of a loan defaulted, banks were necessarily careful about the people, families, and corporations to which they agreed to lend money.  And everything was right with the world.

Enter the Democrats. 

Noting that a higher percentage of white loan applicants were approved than black loan applicants, Democrats cried "Racism!" and demanded that the system be overhauled because it discriminated against minorities (except for Asians, who were approved for loans at a higher rate than any other ethnic group, including whites), ignoring the banks' claims that they gave loans to the people who were statistically more likely to be able to repay them, and that that was the only lending criterion that the loan industry could obey if it were to survive.

Ignoring reality, Democrats declared the socially and economically responsible business practices of lending institutions to be "racist discrimination," and hollered that "The Government" needed to step in to rectify this cosmic injustice, and provide "affordable" housing to everyone.  And it did.

Through threats of violence (Janet Reno and the Clinton Justice Department threatened banks with Federal investigation if they didn't meet racial quotas for lending), and promises of money (Democrat legislators ensured that Fannie Mae and Freddie Mac would be required to buy mortgage-backed securities from banks, regardless of the abilities of the borrowers to return the rented money), Democrats meddled with the inherently self-regulating nature of the market.

In order to illustrate the absurdity of the Democrats' plan, let's see what would happen if, say, Blockbuster Video were subjected to the same sort of artificial market manipulation:

To get a membership at Blockbuster video, you have to provide them with the assurance that, if you fail to return a movie, that they can recoup the cost of replacing that movie.  The way they do that is by requiring you to give them access to your personal assets through a debit or credit card account number. 

But let's say that the Government decides that this practice is somehow "Racist" or "Discriminatory," maybe because not everyone has a bank account or credit card, and to fix the "problem," they decide that they'll provide a "guarantee" for every Blockbuster Video renter who can't otherwise provide sufficient guarantees that they'll return the movie, so you don't have to worry about the risk of not having movies returned.  In other words, if a renter doesn't return a movie, we'll pay you for it, guaranteed.

Given these conditions, why wouldn't Blockbuster Video just give away their movies to whoever wanted them?  They'd be stupid not to take advantage of it!  Just like banks would be stupid not to give loans to, well, pretty much whoever had a pulse and walked through their front door, since Freddie Mac and Fannie Mae were legally obligated to buy that loan from them.

...

OK, so back to reality, just like you might have expected, a lot more people freely chose to not "return their movies" (in other words, "Pay their mortgage") than Democrats predicted, and so we Americans are now the proud owners of a lot of empty promises.  Unfortunately, empty promises aren't returned DVDs, and they definitely are not Dollars.

So who's to blame?  Irresponsible individuals who entered into agreements they couldn't fulfill.  Democrats who didn't trust banks to decide for themselves about who to lend money to (this includes Obama).  Democrats who voted to artificially manipulate the market (this includes Obama).  Democrats who obstructed efforts to stop the madness through regulation (this includes Obama).  Politicians who were bought and paid for by the fraudsters who benefited from this failed socialist Democrat experiment at manipulating the free market (.... Dum da da DUMMMM! : Obama).

But ultimately, we're all to blame.  If you're in personal debt now, you're part of the problem.  If you've declared bankruptcy, you're definitely part of the problem.  If you're losing your home to foreclosure, you're part of the problem.  Bottom line: If you don't have control over your personal finances, you're part of the problem.

Another key part of the problem is that we've given "Government" leeway to be irresponsible.  That's not OK.  The laws of economics apply just as surely to the budget of the United States of America as they do to the budget of John Smith of Peoria.  There's no free lunch, and you shouldn't buy things you can't afford.

We must elect representatives that understand this.