On Tuesday night this nation watched as Obama made a calculated pitch for the biggest power grab in this nation’s history! With carefully chosen words our President was insulting the intelligence of this nation, and counting on the media’s love affair with him, to get away with it. Praying on current fear, anger, and insecurity over the financial crisis, Obama wants Congress to grant unprecedented powers for the government to take control of financial institutions when it determines they are failing.
For starters, the Congress can not give something it does not have. Article 1 of The United States Constitution deals with the powers and limits on the legislative branch of our government, Congress. Article 1, Section 9, paragraph 3 states that, “No Bill of Attainder or ex post facto Law will be passed.” A Bill of Attainder is a legislative act that singles out an individual or group for punishment without a trial. This type of legislative act was common in English law at the time of America’s Revolution, and was seen as repugnant by the framers of our Constitution, as they believed it was the role of the courts to decide punishment, if found guilty of a crime, and only after a fair trial. Adding this clause was to further ensure the separation of powers by not having the legislature perform the duties of the judiciary. Quite simply, they wanted to safeguard against trial by legislature.
Ex post facto law refers to making something illegal after the fact, then punishing someone retroactively. As we have watched Congress’s outrage theater on television, it would seem that this certainly plays a part in the current crisis. First, our government passed laws forcing banks to reduce lending standards to meet set governments goals of home ownership quotas. After all, the more homeowners there are, the more people paying property tax. They did this by saying banks were discriminatory in their lending practices, and pushed banks to lend more to low and moderate income brackets, and set up rewards for doing so, and also punished banks severely who didn’t. This is one of the main issues at the heart of the current financial meltdown. The Democrats were at the forefront of pushing for, and passing the Community Reinvestment Act, and then making those laws even more strict during the Clinton Administration. Banks were rewarded for volume of loans, not quality of loans.
Now that the folly of that thinking has borne its full fruit in this financial fiasco, it is the Congress who is marching banks and financial CEOs in front of the media vilifying and making them the scapegoats in front of the American public. The banks and financial institutions of this nation fought against such regulation were forced to obey it, and now that they have, the Congress wants to punish them retroactively! It seems they are practicing both trial by legislature and ex post facto.
Realizing that the best defense is a good offense, Congress’s strategy is to distract the voting public from their own role in creating this mess. Instead of obeying the Constitution that they took an oath to uphold and defend, their decisions are based on the wind of public outrage, as they sacrifice the laws of this nation at the alter of self-preservation. I’m beginning to wonder how many people elected to Congress have actually read the Constitution!
The 5th Amendment to the Constitution also states, “…nor shall private property be taken for public use, without just compensation.” This means that if government takes a company over for the “public good” they will have to pay fair market value to the shareholders of that company. They can not just take it. The Constitution forbids it.
Secondly, who gets to determine when a financial institution is failing? What measuring stick will be used? Who’s role in the government will it be to determine financial soundness? In his speech, Obama called for broader authority to deal with all financial companies the way the FDIC deals with banks. He said, “We should have obtained that authority much earlier so that any institution that poses a systemic risk that could bring down the financial system we can handle and we can do it in an orderly fashion that quarantines it from other institutions.”
There are a few problems with this line of thinking. Many of the investments at insurance companies, hedge funds, and investment banks, are not as cut and dry as a deposit in a bank. The securities are often liquid in value, and the investments so complex that a true dollar value can’t be added up like a tally of bank deposits. Also, deposit banks enter into that agreement with the FDIC voluntarily. The relationship gives the FDIC authority to take the bank over if they feel the bank does not have sufficient liquidity to cover the deposits. In exchange, the banks benefit from having a pacified public feel safe when depositing money at their institution. The same relationships do not exist with institutional investors who seek out hedge funds and investment banks specifically to speculate in the market. Besides, I don’t know how much insurance the FDIC really can offer when they only have tens of billions of dollars in reserves to cover $10 trillion in deposits in U.S. banks.
When is the last time the government handled money and finances responsibly? Is the government really the custodian you want to run this nations entire financial system? This is the same government that screwed up the bailout of AIG! They have proven that they can’t manage one financial company, let alone the entire financial system. The government is made up of politicians who have their own agendas, and rarely do those involve looking after what is best for a free market. To demonstrate just how bereft of financial savvy he is, Obama said, “The most critical part of our strategy is to ensure that we do not return to an economic cycle of bubble and bust in this country. We know that an economy built on reckless speculation, inflated home prices, and maxed-out credit cards does not create lasting wealth. It creates the illusion of prosperity, and it’s endangered us all.”
True it is bad fiscal policy to max out your credit cards to buy things you can’t afford. True, home prices have been ridiculously high for years, but many financial experts as far back as 2002 were saying that it is a bubble and it can’t last. At some point its going to burst they warned. The public didn’t listen and decided themselves to speculate by buying homes they couldn’t afford, assuming they could just refinance endlessly into another option ARM mortgage before the rate on theirs reset higher. It is exactly that kind of speculation that drove prices up into a bubble in the first place! As far as having an economic cycle of bubble and bust – that is what an economic cycle is! There is not one thing wrong with speculation in the stock market, or any other market, if you have the depth of finances to weather the down cycles, and the financial fortitude to be on the loosing side of the speculation if your strategy doesn’t work out. The real problem is that many people decided to speculate who had no business being speculators. They were playing with money they didn’t have, and gambling their own house and financial savings, and they lost the bet. By tying in a couple of true statements to a broad generalization, he tried to give some credibility to the broad “bubble and bust-speculation” argument he tried to make. If markets don’t fluctuate up and down, no one would ever make any money. There is no such thing as economic growth in a flat line economy.
Looking at the history of the stock market going back as far as you want to go, it is clear that the up periods in the market last much longer then the temporary down markets. Also, when the market is up, it has always been up higher then how far down a down market goes. Over time, investment in the stock market will almost always yield a return that outpaces inflation. You have to be smart about it, and have a portfolio that is well diversified, and you have to work the plan, not letting the temporary down periods get you off of your investment strategy. In the market, risk is mitigated over time. The stock market is not the place to park your money that you will be using for a purchase in the next two years. It is perfect for long term growth that outpaces inflation. Hmmm, I wonder if that is why almost all 401(k) plans are invested in mutual funds?
While answering questions from the press, Obama actually said that growth that comes from the financial sector is not a model for sustainable economic growth. WHAT? It has worked for hundreds of years. Where else is it supposed to come from? That is like saying addition and subtraction have no place in math. By seeking to sterilize financial markets and limit up and down volatility in those markets, Obama and his socialist cronies will wipe out capitalism, replacing it with a system of government controlled universal handouts. Your wealth, or lack of, will be completely dictated by the government who will decide how much you get, when you get it, how you use it, and how much you could possibly make. Your dreams, your goals, and hopes will be wiped out by government mandated reality. In short, he will completely wipe away everything that is America and replace it with the same tried and failed system of the Soviet Union! Their socialist state lasted only 72 years and collapsed in on itself. They have since become a democracy with a free market. They learned their lesson the hard way. Now, The socialists have come to roost on our doorstep seeking to make the nation that is the beacon of democracy and free markets a nation of big brother! It would seem that George Orwell was right after all, he just got the year wrong.
Article 2, Section 1, paragraph 8 of the United States Constitution states, “Before he enter on the execution of his office, he shall take the following oath or affirmation:–’I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.’ ”
Unfortunately, this nation is so gripped by panic and fear over the economic downturn that many just may be ready to hand over all of their Constitutional rights to a very left-leaning bunch of socialists while they have you looking away. By vilifying everyone on Wall Street, and all of the financial services industry during their dog and pony show, this government is stirring the public into a mob rule frenzy, so that when you are so mad and looking for a scapegoat to hang, Congress and Obama will happily serve them up to you while you hand all of your power over. You may actually applaud their actions as they take your rights away. In Tuesday’s speech he actually said, “ We don’t have that power right now; that’s what Secretary Geithner was talking about. And I think that there’s going to be strong support from the American people and from Congress to provide that authority…” It is reminiscent of the scene from Star Wars Episode 3- Revenge of the Sith when Chancellor Palpatine tells the Galactic Senate, “In order to ensure the security and continuing stability, the Republic will be reorganized into the the first Glactic Empire!” As the Senate erupted in boisterous cheering, Padme sadly notes, “So this is how liberty dies, with thunderous applause.”
This nation’s founding fathers were very wise to the problems of too much government control, and saw big government as odious. They carefully and painstakingly wrote a Constitution that put limits and restraints on what government could and could not do. Their heart was for individual freedom, and the role of government to safeguard it. For the first time in world history, the “government derived their just powers from the consent of the governed.” That is what has always made this nation great, and a beacon of light to the whole world. People have risked life and limb just to reach our shores and have that chance. Don’t let our legislators and Barack Obama take one single right away. They have absolutely no business grabbing power they are not authorized to have according to the Constitution. You and I as taxpayers and voters are responsible for safeguarding our rights. Remember, we elect them to act on our behalf and their jobs exist only by our grace. When they become destructive of those rights it is our duty to remove them from office by not re-electing them, and by letting them know while serving how unhappy we are with the job they are doing. If they continue to ignore the law of the land, trampling on the Constitution, then they should be forced to face charges of treason.
“Bills of attainder, ex post facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation… Our own experience has taught us, nevertheless, that additional fences against these dangers ought not to be omitted. Very properly, therefore, have the convention added this constitutional bulwark in favor of personal security and private rights; …The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, … They have seen, too, that one legislative interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceding. They very rightly infer, therefore, that some thorough reform is wanting, which will banish speculations on public measures, inspire a general prudence and industry, and give a regular course to the business of society.” ~ The Federalist #44, James Madison
