Syndicated from iVoteAmerica
Well, by George, he’s given new meaning to “compassionate conservative” by federalizing the banking and capital systems on his way out of office!
Don’t let the swinging door slap you backside on your way back to Crawford, Mr. President.
According to the Bush Banking proposal, nine major banks have accepted the notion of partial government partnership. These banks are: Bank of America, Merrill Lynch, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, State Street and Wells Fargo.
Watch this video:
George Bush is implementing the G7′s recommendations for government partnership with American banks. In other words, free money from American taxpayers to shore up the international economy.
Is this the new federal socialization of our economy? Bush said, “The government’s roll will be limited and temporary…” Can anyone name a federal program which, after implemented, remained limited or was temporary?
For the full story, visit this morning’s (Tuesday, October 14, 2008) article by Washington Post Staff Writers Howard Schneider, David Cho and Neil Irwin, entitled “Bush Defends Government Bank Investment.”
We now own what we cannot control. We are witnessing the Federalizaiton of the Financial Systems of America. Backed by a fickle Congress and flanked by Federal Reserve Chairman Ben Bernanke, President Bush and Treasury Secretary Henry Paulson, contrary to their former political beliefs that government should stay out of the private sectors of the economy, took measures today to endorse the Federalization of our money systems.
Q1 - What does this mean to the real estate industry?
Clearly we are entering spooky waters wherein we dared never enter before. REALonomics believes the move by the government will paralyze the industry making home buying and selling incredibly difficult, if not impossible, in some already paralyzed markets. Home and commercial property values will assuredly decline even more, reducing the networth of the industry and its investor and home owner base.
Q2 - What does this mean to the mortgage industry?
Expect huge consolidations greater than the Bank of America’s absorbtion of Countrywide and Merrill Lynch. With this consolidation of the financial titans, mega titans will be created and essentially be required to submit to a new set of tightly regulated lending rules. It will be harder and harder to borrow and lend. This will create a over-regulation of the market and further drag on mortgage recovery.
Q3 - What does this mean to Americans?
Each of the more than 300 million people in America, including those born yesterday, will end up with at least a $100,000 debt hanging over their heads. This is the representative figure that is the accumulation of the current escalation of the national deficit and the new estimated $2 trillion dollar bailout of the financial markets.
The government bailout of the private sector of the market means that each of us was just handed a tax bill or, we might call it a “cash call” because we are collectively the new owners of the private problems of borrows and lenders.
Ron Paul (R, TX) was correct when he told Ben Bernanke, in essence, “you are going to bankrupt the American people with your money policies.”
The average American family is essentially, on paper, wiped out by this move and the impact on the real estate and mortgage industries was just extended to perhap a decade or even more.
Q4 - What does this mean in terms of the election?
This is the easy question and the answer is more finger pointing, more investigations, excessive government snooping (there needs to be some), lots of drama on the political stump and a great deal of harm to John McCain, who is already having difficulty coming out from the shadow of Bush’s foreign and domestic policies.
But it also means trouble for Barack Obama. He can forget about his national health care program for all Americans, he can forget about taxing anyone, much less those earning incomes above $250k and he can kiss his “no-new-energy-if-it-means-drilling-coal fired plants-and-nuclear-power” policy good by.
In essence the damage done to both candidacies is substantial and the next 45 days are going to be like the wild-wild-west as we run up to election time. To vote in the Presidential poll, visit www.iVoteAmerica.com.
The most remarkable thing about today’s move to “take-over” is that it represents a profoundly fundamental shift in our capital market value system and establishes a whole new mechanism for creating a way to further tax the American people. Make no mistake about it, you just got taxed and to pay the tax bill you were forced to financed the payments over time. There was paperwork, no disclosure and no recource for any of us. All of this is taking place right before our eyes without much of a whimper or a voice of protest.
Treasury Secretary Henry Paulson has outlined the Bush blueprint that proposes revamping the regulation of the nations financial oversight. Is this plan beneficial to the real estate, mortgage and title industries? Furthermore, how will this impact Wall Street, if at all?
Is this, as Paulson claims, good for “working Americans?” See our previous REALonomics post.
Watch the Paulson video here.
President George Bush wants to overhaul the regulation and control of America’s financial markets. Under the Bush plan, the Federal Reserve (Chairman Bernanke) will become the designated controller of our economic markets and be fully responsible to regulate their stability.
In addition, Bush wants the central bank to poke its regulatory nose inside the tent of every part of the financial services industry in the United States. All financial services, not just commercial services, will be under the scrutiny and powers of the central bank.
The Crowning of Mr. Bernanke
Under the Bush scenario, Bernanke will be coronated as the royal controller of all currency, money management, commerial banks and every type of financial institution in the United States. The Fed, under Bernanke, will become the market stability regulator, something like a throttle control on an engine, empowering it to tinker with every aspect of lending in the country.
Included in the plan is a knee-jerk reaction to the sub-prime lending debacle that designates another bureucratic office to oversee consumer lending issues to insure standardized compliance.
This plan evokes a number of questions the real estate industry must ask itself. Are we federalizing the economy, such as many second and third world countries have done? Is this the socialization of lending in the United States? MORE IMPORTANTLY, what does this action, if implemented mean to the real estate, mortgage and title industrys? Will such action actually benefit the economy and the consumer or, will it serve to further stagnate growth, delay recovery, stiffle free market innovation and release us all from entreprenuerial solutions?
Let’s Remember not to Forget
Let’s not forget that the former Federal Reserve Chairman, endorsed and encouraged sub-prime lending before his convenient departure from office.
Let’s not forget that one of Bernanke’s financial aces has alwasy been to print more money, thus further weakening the value of the dollar in the international markets.
Let’s not forget that in the past the markets corrected and self-regulated themselves, weeding out corruption and bad practices.
Let’s not forget that history clearly demonstrates that intrusive federal tampering with the free market system inevitably leads to a weaker stock market.
Let’s not forget this is an election year and the heat has been turned up in the political kitchen forcing politicians to create solutions to the mortgage mess for the American consumer.
All of us should take a close look at what is occuring and ask ourselves if the solution Bush proposes is the right one and whether long term financial and market stability should be put into the hands of Washington.
REALonomics believes that too much federal control and regulation of the monetary supply and the financial markets is like giving it the power to regulate and ration water.