Under Clinton, responsible lenders were accused of discriminatory practices, such as "profiling," and "redlining."  Clinton's own pitbull (sans lipstick), Janet Reno, threatened U.S. Justice Department investigations of lenders who didn't ignore their statistically-based, time-proven lending criteria.  So they did what Democrats forced them to do and loaned money to people who might not be able to pay it back.

When the failure of a critical mass of those people to pay back the money these beleaguered financial institutions loaned them under duress caused a worldwide economic meltdown, Democrats claimed it was the greed of the lenders (not the fact that they, themselves, had threatened them to lend, "or else") that caused the problem.

So, now, lenders are being more cautious about who they lend money to.  Even credit card companies are reticent about handing out credit cards, and some have started to reduce credit limits of their existing customers.  This is a good thing, right?

Not according to NPR:  Their spin on a resurgence of responsible lending practices is that these companies (who have been burned twice already) are, 'engaging in credit-line profiling.'  (Emphasis mine.)

This is a partial transcript of a NPR story from today about this horrible practice of "predatory responsible lending":

Dennis Perry lives in Lacome, Louisiana ... At the beginning of this year, he had a credit card with a $40,000 limit.  Then he says it was cut to just above what he owed:

"And then I paid it down to about $32,000 and they dropped my credit limit again, to $33,200 now, this time."

Perry says the company told him it didn't want him to get into trouble.  But he feels like he's just being 'chased down.':

"Lemme ask you this:  What is my incentive to pay down my credit card now?  If I make extra payments to bring down my balance, what's going to happen?  They're going to penalize me by, um, dropping my maximum!  You know what I mean?"

Consumer advocates say that this practice of 'following customers down' as they trim their balances is unfair.

I don't know anything about Perry, except what he said in this brief interview.  But based on his understanding of economic "incentive," I wouldn't loan him a dollar!  If the fact that he borrowed money that he agreed to pay back isn't incentive enough to, well, pay it back, then I pity the people he owes!

This NPR story tries to make credit card companies look like the bad guys for lowering credit limits, and making rational judgments about extending credit, calling it "credit profiling."  How far behind can accusations of "racial-credit-profiling" be?  How long before these lenders are called "predatory non-lenders?"  Let's take a look at the Democrat "narrative" on lending in recent history:

1993:  "You're not lending money to these people, and it's because you're racist.  Lend money to them or we'll 'investigate' and legislate you into the ground.  Your intolerance is causing so much suffering!" 

2003-4:  "There's nothing wrong with our system of lending money to those who those intolerant, short-sighted lending institutions wouldn't lend to.  It's all sound."

2005-6:  "Why are you so worried?  There's nothing wrong with our government influence on the lending market!  Who cares that nobody's seen their books in decades?  We trust them!"

Mid 2008, post Fannie-Mae/Freddie-Mac meltdown:  "You're so greedy, for lending money to these poor people who couldn't pay you back!  Your greed caused all our problems!"

Now:  "Why aren't you lending money to people?  You're profiling based on credit-worthiness!  How non-progressive of you!"

Seriously?  We've been through this, we know how it ends, and we're still, in fact, dealing with the consequences!  We haven't even had enough time to fix the problems that Democrats have caused, and already, the fringe media is crying, "Discrimination!  More credit!"

I understand that history, for most libs, begins "this morning," but this is ridiculous, even by their own standards.

American liberal Democrats adapt quickly, I'll give them that.  Ever since John Edwards was effectively laughed off the stage in 2004 during a Vice Presidential debate, where Cheney schooled him on why it's a really bad idea to increase taxes on small business, Obama and leading Democrats have modified their talking points in an attempt to obscure their Marxist (yeah, I said it) ambitions.

Unfortunately for them, anyone who pays attention to recent history can easily see through their laughably transparent facade.  Even worse, anyone who's paid attention to actual history (you know, all that "old stuff" that happened, like forty or fifty years ago) knows what happens to nations when they use Obama's proposed economic policies of, 1) income-quintile-based (i.e. "Class"-based) antagonism and, 2) "spreading the wealth."  The most recent and spectacular failure of a nation run by Obama's proposed policies would be the USSR, who managed to, in total, starve and/or murder over 100 Million people in the name of "equality" and "fairness" before it imploded.

In fact, to observe great examples of the ongoing collapse of Socialist-run economies, one has to look no further than western Europe, where citizens die of cancer while waiting to see doctors thanks to "Universal Health Care."  Entrepreneurs limit themselves to maybe one or two employees at best (if any at all) because if they earned any more, it'd all be taken away in taxes.  Your ability to get and keep a job is based not on your ability to create value, but on your ability to charm individuals on the local Works Council (these are common in European nations, especially Germany - think Labor Unions, writ large) into liking you, personally, enough to give you favors.  This is not ancient, irrelevant history.  These are current events, and they are evidence that the modern American left's plan of "Spread the Wealth," and their focus on "fairness," and "equality of outcomes," leads to personal suffering, economic stagnation and national despair.

Early in the presidential race during his appearance at Orange County's Saddleback Church, Obama was asked to define "rich."  Without hesitation Obama said, "I would argue that if you are making more than $250,000, then you ... are doing well.”  Obama, in effect, declared that there is such a thing as "enough" money, that he knows exactly how much "enough" is, and God help you if you make more than "enough."

When it was pointed out that taxing those Obama felt were "rich" would hamstring our economy because most of those individuals were actually small business owners (the creators of 70-80% of new jobs), Obama enlightened his narrative to say that his tax plans would only tax the upper 5% of "small businesses," leaving the less successful 95% relatively tax-free.  When it was pointed out that the upper 5% of those small businesses were the ones that created the vast majority of new jobs and that Obama's policies regardless of their sophomoric number-mangling, would still hamper America's economic growth, the left reacted strangely.

Rather than providing further enlightmenment of the Obama narrative, the Democrat Party Official Press Office (i.e., ABC, CBS, NBC, CNN, MSNBC, the Associated Press, Reuters, The View, The New York Times, etc.) claimed that Obama's detractors were accusing him of being a Socialist.  The American Socialist Party immediately declared that, despite the fact that Obama's economic policies are manifestly Socialist, Obama isn't a Socialist.  (Oddly enough, according to their statements in the article, they're all still voting for Obama).

How remarkable is it that when we as a nation have finally muddled through Obama's smokescreen to expose him for the Socialist he is, we start hearing claims from the mainstream media of "Red-baiting?"

To the uninitiated, the accusation of "Red-baiting," is the last-ditch defense of Socialists.  Once you've managed to reduce their convoluted words and speeches to their actual ideology, and realize, "Wait a minute...  This system of economics is fundamentally flawed.  I can explain why.  In fact, I can not only explain the flaws in an abstract manner, I can also provide recent concrete historical evidence that 'Spread the Wealth' policies just don't work, like in the Soviet Union, Cuba, Venezuela, China..." you're guilty.

The Obama political machine's current denial of Obama's naive Socialist tendencies is, "Oh-ho-ho, certainly nobody could possibly support a Communist economic policy.  Even though Obama's economic policy appears to be the same in nature, it's actually more, like, totally Change-oriented.  If you point out the fact that Obama's totally Change-oriented economic policy is actually just a rehashed, revamped version of Socialism, then...  Well, you're clearly anti-Change."

As a rose by any other name would smell just as sweet, a Socialist by any other name would govern just as badly.

The purpose of an economic system is to optimally allocate scarce resources to fulfill unlimited demands.  Economic systems that do this well improve quality of life and minimize human suffering among the individuals who participate in such an economy.  In fact, the success of entire nations is based not on the resources they possess, but on their ability to match those resources to their most valued uses. 

Economic systems from total anarchy to socialism to the free market exist solely for the purpose of allocating resources.  The ability of an economic system to minimize human suffering and improve quality of life is a secondary, but important, characteristic of that system, that can only be accurately evaluated when it is left to operate according to its own rules and provided the necessary preconditions.

A free market requires government regulation that ensures that individuals can conduct economic transactions free from the external artificial influences of force, fraud, and price control.  Provided these protections and otherwise left alone, a free market exhibits an astounding array of emergent, self-organizing behaviors that solve the problem of how to allocate scarce resources to fulfill unlimited needs.  Among the varied economic systems that have been tried over the course of human history, there exists no better system of optimally allocating resources, and therefore maximizing quality of life and minimizing human suffering than a free market.

The way that a free market economy distributes information about supply and demand is through prices.  Prices are not arbitrary numbers;  they are an indicator of both global and local realities, whose accuracy is a critical.

The problem with prices is that, while they convey critical information, they also have real impact on individuals and their choices.  Higher prices prevent individuals from having the things they want.  It's very easy to get popular support by giving people the things they want, and a common method for politicians (liberal Democrats, mostly) is to artificially influence prices so that people can get things they want, but normally wouldn't choose to buy at their natural prices.  Democrats also have a track record of artificially raising prices when by doing so they can get more votes (and then later providing bailouts to those industries failing due to their previous attempts at artificially manipulating price).

What they don't realize is the terrible impact such artificial price controls have on a free market and its participants.  Democrats frequently mistake "regulation" with "control."  The argument that the free market has failed usually goes something like this:

"Our efforts to artificially control the economy resulted in a tremendous failure.  Those efforts would have been prevented in a properly regulated free market, but we prevented any regulation that might have mitigated the consequences of our artificial meddling.  The answer is to further violate the preconditions of a free market by introducing more extensive price controls." 

This is the same logic that would lead firefighters to try to quench a fire with gasoline.

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.

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.

and he wants the sellers of this valuable service to justify their increased prices.

Thanks to Democratic Senator Kohl for bringing this to national attention, but I'm more interested in why the consumers of cellular text messaging haven't complained yet.  Apparently, the people who use and pay for this service are OK with the current (Democratic-Senator-disapproved) price increase of sending and receiving a text message on their cell phones.

It's actually pretty easy to choose to not participate in the potentially economically-ruinous practice of receiving and sending text messages.  Your first line of defense is to not have a cell phone (ah, completely unrealistic, some might say, but I think it just might be possible to survive without one.).

Should you choose to have a cellular telephone, but you don't want to be exploited by the exorbitant prices that cell phone carriers charge for text messaging, you must go through the taxing process of saying, "No thanks, I don't want to send, or receive, text messages," when you purchase your service.

If you happen to have children (who, invariably and inconveniently like to *constantly* TXT their BFF), you can actually ask the cell phone company who provides you with cell phones and cell service to limit the number of outgoing and incoming text messages that you'll have to pay for.  If not, I suggest you choose a cell carrier who'll let you.

...

Regardless, I'm glad that there are Democrats like Herb Kohl out there who are watching over us to figure out when the price of stuff is "too high," and we're all just "too stupid" to figure it out on our own.

I guess that's what we pay Congress for.