Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University, and the author of “The Second World Wars: How the First Global Conflict Was Fought and Won,” from Basic Books.
The Democratically controlled Senate spends thousands of collective hours conducting an impeachment trial against a president who is no longer president.
The acquittal is predetermined, as in the first impeachment effort a year ago — and known to be so to the Democratic prosecutors.
The Democratically controlled House of Representatives is busy ferreting out purportedly extremist Republican House members. For the first time in memory, one party now removes committee members of the other.
Yet for each Republican outlier, there is a corresponding Democratic firebrand member who has either called for violence or voiced anti-Semitic slurs — and yet will not be removed from House committees.
So the asymmetrical tit-for-tat continues.
The subtext to this madness is that the Democratic Congress, the new administration, the administrative state and the political left are obsessed with dismembering the presidential corpse of now-citizen Donald Trump.
Apparently they fear that one day he will rise from the infernal regions to wreak his revenge.
This article was written the day before the election but contains very sobering and alarming information on the fiscal health of our country and what the next president has to deal with. As if there is not enough bad news in this article, the federal debt is approaching $20 trillion very quickly and increasing the debt ceiling will face Congress and the president by a March deadline. Nancy
The President’s luck is about to run out—on his successor’s watch.
ENLARGE
U.S. President Barack ObamaPHOTO:GETTY IMAGES
EXCERPT FROM THIS ARTICLE:
The tragedy is that Mr. Obama spent his political capital not on growing the economy but on growing entitlements and raising costs for business via regulation. The next President needs to make faster economic growth the policy default, or every other political priority will be hard or impossible to meet. The deficit burden will get worse faster.
The final major lesson is that the next President can’t count on the continuation of low interest rates. The Federal Reserve has been Mr. Obama’s best friend not named Chief JusticeJohn Robertsas its monetary policies have helped finance a record debt blowout at lower cost. Mr. Obama issued more Treasurys than any President in history, and the Fed bought $1.7 trillion worth from 2009-2014. That helped guarantee there wouldn’t be a shortage of demand.
Congratulations to the President-elect, whoever you are, because you’re going to need it. Our deadline arrived Tuesday before we knew the election outcome, but not before we can say with confidence that PresidentObamais leaving his successor a large and growing federal budget problem.
That’s the message in the Congressional Budget Office’s summary, released Monday, of the fiscal year that closed in September. Though the subject barely came up in the campaign—little policy substance did—the federal fisc is once again heading for trouble. There are some lessons in this for the next President, who will quickly realize that Mr. Obama’s fiscal luck has finally run out—on his successor’s watch.
Let’s revisit this piece of financial history, before Hillary rewrites it.
By Larry Kudlow & Stephen Moore– Larry Kudlow is a contributing editor ofNational Review. Stephen Moore is chief economist at the Heritage Foundation.— May 28, 2016
EXCERPT FROM THIS ARTICLE:The seeds of the mortgage meltdown were planted during Bill Clinton’s presidency. Under his HUD secretary Andrew Cuomo, Community Reinvestment Act regulators gave banks higher ratings for home loans made in “credit-deprived” areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting. If banks didn’t comply with these rules, regulators reined in their ability to expand lending and deposits.
We are going to reveal the grand secret to getting rich by investing. It’s a simple formula that has worked for Warren Buffett, Carl Icahn, and all the great investment gurus over the years. Ready?
Buy low, sell high.
It turns out that Donald Trump has been very, very good at buying low and selling high, which helps account for his amazing business success.
But now Hillary Clinton seems to think it’s a crime. Campaigning in California last week she wailed that Trump “actually said he was hoping for the crash that caused hard-working families in California and across America to lose their homes, all because he thought he could take advantage of it to make some money for himself.”
So she’s assailing Trump for being a good businessman — something she would know almost nothing about because she’s never actually run a business (though she did miraculously turn $1,000 into $1 million in the cattle-futures market).
Hillary’s new TV ads say Trump predicted the real-estate crash in 2006 (good call) and then bought real estate at low prices when the housing crash that few others foresaw arrived in 2008. Many builders went out of business during the crash, but Trump read the market perfectly.
What is so hypocritical about this Clinton attack is that it wasn’t Trump, but Hillary, her husband, and many of her biggest supporters who were the real culprits. Before Hillary is able to rewrite this history, let’s look at the many ways the Clintons and their cronies contributed to the housing implosion and Great Recession.
By Thomas V. DiBacco Thomas V. DiBacco, professor emeritus at American University, is author of “Made in the U.S.A.: The History of American Business” (Beard Books, 2003).
December 22, 2013
Both acts were revolutionary, the first agenda item on each president’s to-do list, no matter that after 1912, when President Woodrow Wilson was elected, a major economic slump punctuated the economy. The Federal Reserve bill, like Obamacare, was intensely partisan. Wilson’s liberal Democrats, who held both houses of Congress, wanted a completely government-controlled system for a central bank and currency, whereas Republicans favored mostly private regulation.
Democrats prevailed, jamming the measure through the Senate by a divided vote of 54 to 34 on Dec. 19, 1913. A conference committee approved it on Dec. 22, followed by a House vote of 298 to 60, with 76 not voting. The Senate passed the conference report on Dec. 23 by 43 to 25, with 27 not voting and one vacancy. Not a single Senate Democrat opposed the conference report, only two in the House, and the president signed it the same day. (more…)
PETER J. WALLISON holds the Arthur F. Burns Chair in Financial Policy Studies at the American Enterprise Institute. Previously he practiced banking, corporate, and financial law at Gibson, Dunn & Crutcher in Washington, D.C., and in New York. He also served as White House Counsel in the Reagan Administration. A graduate of Harvard College, Mr. Wallison received his law degree from Harvard Law School and is a regular contributor to the Wall Street Journal, among many other publications. He is the editor, co-editor, author, or co-author of numerous books, including Ronald Reagan: The Power of Conviction and the Success of His Presidency and Bad History, Worse Policy: How a False Narrative about the Financial Crisis Led to the Dodd-Frank Act.
The following is adapted from a speech delivered at Hillsdale College on November 5, 2013, during a conference entitled “Dodd-Frank: A Law Like No Other,” co-sponsored by the Center for Constructive Alternatives and the Ludwig Von Mises Lecture Series.
The 2008 financial crisis was a major event, equivalent in its initial scope—if not its duration—to the Great Depression of the 1930s. At the time, many commentators said that we were witnessing a crisis of capitalism, proof that the free market system was inherently unstable. Government officials who participated in efforts to mitigate its effects claim that their actions prevented a complete meltdown of the world’s financial system, an idea that has found acceptance among academic and other observers, particularly the media. These views culminated in the enactment of the Dodd-Frank Act that is founded on the notion that the financial system is inherently unstable and must be controlled by government regulation.
We will never know, of course, what would have happened if these emergency actions had not been taken, but it is possible to gain an understanding of why they were considered necessary—that is, the causes of the crisis.
Why is it important at this point to examine the causes of the crisis? After all, it was five years ago, and Congress and financial regulators have acted, or are acting, to prevent a recurrence. Even if we can’t pinpoint the exact cause of the crisis, some will argue that the new regulations now being put in place under Dodd-Frank will make a repetition unlikely. Perhaps. But these new regulations have almost certainly slowed economic growth and the recovery from the post-crisis recession, and they will continue to do so in the future. If regulations this pervasive were really necessary to prevent a recurrence of the financial crisis, then we might be facing a legitimate trade-off in which we are obliged to sacrifice economic freedom and growth for the sake of financial stability. But if the crisis did not stem from a lack of regulation, we have needlessly restricted what most Americans want for themselves and their children.
It is not at all clear that what happened in 2008 was the result of insufficient regulation or an economic system that is inherently unstable. On the contrary, there is compelling evidence that the financial crisis was the result of the government’s own housing policies. These in turn, as we will see, were based on an idea—still popular on the political left—that underwriting standards in housing finance are discriminatory and unnecessary. In today’s vernacular, it’s called “opening the credit box.” These policies, as I will describe them, were what caused the insolvency of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, and ultimately the financial crisis. They are driven ideologically by the left, but the political muscle in Washington is supplied by what we should call the Government Mortgage Complex—the realtors, the homebuilders, and the banks—for whom freely available government-backed mortgage money is a source of great profit.
The Federal Housing Administration, or FHA, established in 1934, was authorized to insure mortgages up to 100 percent, but it required a 20 percent down payment and operated with very few delinquencies for 25 years. However, in the serious recession of 1957, Congress loosened these standards to stimulate the growth of housing, moving down payments to three percent between 1957 and 1961. Predictably, this resulted in a boom in FHA insured mortgages and a bust in the late ’60s. The pattern keeps recurring, and no one seems to remember the earlier mistakes. We loosen mortgage standards, there’s a bubble, and then there’s a crash. Other than the taxpayers, who have to cover the government’s losses, most of the people who are hurt are those who bought in the bubble years, and found—when the bubble deflated—that they couldn’t afford their homes. (more…)
‘It’s easier for government to control a few large institutions’
By Brett M. Decker– Brett M. Decker, former Editorial Page Editor for The Washington Times, was an editorial page writer and editor for the Wall Street Journal in Hong Kong, Senior Vice President of the Export-Import Bank, Senior Vice President of Pentagon Federal Credit Union, speechwriter to then-House Majority Whip (later Majority Leader) Tom DeLay and reporter and television producer for the legendary Robert
Friday, May 11, 2012
Decker: You told me you couldn’t create your company in today’s environment. That’s quite a startling statement about such a successful business. Why not?
Allison: BB&T grew through local decision-making and personalized service focused on small businesses and the middle market. The current regulatory environment not only imposes extraordinary cost on smaller financial institutions, it makes it difficult to treat each customer as a special individual. Personalized service is now considered by the regulators to be “disparate” treatment. Small-business lending is part science and part art. It is extraordinarily difficult to execute a personalized value proposition with bank examiners micromanaging every decision.
Decker: Banks are used as whipping boys to impute blame for the collapse of the housing market, but government played a central role in the mortgage crisis. Can you explain how Washington intervention manipulated the market with such disastrous results?
Allison: Government policy is the primary cause of the financial crisis. The Federal Reserve “printed” too much money in the early 2000s to avoid a mild recession, which led to a massive misinvestment. The misinvestment was focused in the housing market due to the affordable housing (subprime) lending policies imposed by Congress on the giant Government Sponsored Enterprises (Freddie Mac and Fannie Mae), which would never have existed in a free market. When Freddie and Fannie failed, they owed $5.5 trillion and had $2 trillion in subprime loans. Because Freddie/Fannie had such a dominate share of home-mortgage lending in the United States (75 percent), they drove down the lending standards for the whole industry. (more…)
EXCERPT FROM THIS ARTICLE: The Departments of Defense, State and Justice are authorized by the Constitution and are generally accepted legitimate federal government functions. Most of the rest ought to be done at the state and local levels or by the private sector. The current spending and debt crisis eventually will force debate on the role of the federal government — which programs necessitate taxpayer funding and which can be eliminated. The time is closer than most think — just ask any Greek citizen or resident of Stockton, Calif.
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The current debate about the debt vote is minor league compared to what will happen when the government literally cannot spend more than it is taking in. That time may be nearer than you think. It is true that the U.S. government can always “print” money to pay its bills, but at some point, printing more money becomes self-defeating because the resulting increase in the government bond interest rate and required interest payment will spiral out of control. At that point, the government will be forced to operate on a pay-as-you-go basis, as any individual or business is forced to do when they can no longer get credit. Several California cities are now in this situation.
The U.S. government now receives about $200 billion a month in revenue and spends about $320 billion a month. Any responsible business or individual faced with a situation where receipts are only 60 percent of expenditures would make changes before their credit was cut off or, at the very minimum, have a plan for which bills to pay first — but not the U.S. government.
It appears that President Obama is once again going to produce a budget that assumes very high levels of deficit spending can go on forever. It also appears that Senate Democrats will continue to not bother to pass a budget. Note that the purpose of a budget is to allocate scarce resources (your money) and to make sure that spending does not exceed the funds that are available. Senate Majority Leader Harry Reid is the ultimate spoiled child, accusing the taxpayers of engaging in child abuse by not giving him an unlimited allowance. (more…)
Who caused the financial collapse? Just about everyone.
Lewis E. Lehrman
January 14, 2013, Vol. 18, No. 17
The Financial Crisis and the Free Market Cure – Why Pure Capitalism Is the World Economy’s Only Hope by John A. Allison, McGraw-Hill 320 pages, $28
EXCERPT FROM THIS ARTICLE: As the head of a major American bank, Allison was witness to the decisions of government, Federal Reserve leaders, and banking CEOs that led to a huge speculative bubble and the collapse of the financial system, including Fannie Mae, Freddie Mac, virtually the entire cartel of big banks and brokers, and major companies. Allison guides us, with a gimlet eye, through taxpayer-subsidized bailouts of these wards of the state, focusing on a reckless, insolvent, privileged financial oligarchy—subsidized by a feckless Fed, a dilatory Treasury, and a politicized FDIC. The coercive power of the federal government, and the moral hazard of excessive regulation, is dissected and debunked.
To appreciate this landmark work it is necessary to know a bit about the author’s background.
John Allison is not only a banker-entrepreneur; he is also a recognized intellectual leader of American business. Moreover, Allison’s financial expertise is a product of his personal biography: In a mere two decades, he built BB&T (Branch Banking & Trust Co.), a comparatively small Southern bank of $4.5 billion in assets, into a $152-billion financial enterprise, making it one of America’s largest and most profitable banks. But unlike many overpaid, underperforming CEOs, Allison focused his leader-manager skills—at modest compensation—on behalf of his employees, customers, and shareholders. (more…)
EXCERPT FROM THIS ARTICLE: Savers are getting ripped off. Interest rates are near zero, yet the inflation rate as of October 2012 was 2.2 percent, which means real interest rates are negative 2 percent, so savings are being diluted by 2 percent a year. It’s a stealth, non-voted-on tax, maybe as much as $200-300 billion a year. This is not news. The Roman emperors debased their coins from 4.5 grams of pure silver to less than a tenth of a gram over a few centuries. Hardly anyone noticed until the Visigoths (or was it the Vandals?) showed up to sack Rome. The U.S. dollar has been diluted by 96 percent since the Federal Reserve was created 99 years ago. Modern vandals!
Father-son talks are always difficult, but it was time to teach my teenager about how things work. I dragged him to our local branch of Wells Fargo and opened a checking account with ATM card privileges and a savings account where he deposited his hard-earned umpiring cash. Having worked on Wall Street for 25 years, I stroked my chin and provided some sage advice: Checking accounts don’t pay interest, so keep your money in the savings account and just move it to checking when you need it. None other than Albert Einstein, I noted, said, “compound interest is the most powerful force in the universe.”
His first bank statement showed interest income of $0.01—and a series of $35 fees for insufficient funds, wiping out all his money. I got a “You’re a financial genius, Dad,” dripping with sarcasm.
My son got ZIRPed. Senior citizens living on fixed incomes are getting ZIRPed. We all are. Since December 2008, when Ben Bernanke’s Federal Reserve started buying mortgage backed securities in order to “solve” the financial crisis, we have all been subject to a zero interest rate policy.
Banks were (and still are) sitting on piles of underwater mortgages. They can’t sell them at depressed prices, else they trigger losses and writedowns to their leveraged balance sheets and maybe—yikes—go bankrupt. The stock market knows this, which is why Bank of America shows $20 in book value (assets minus liabilities) on their balance sheet, but the stock is selling for under $11. Citigroup’s book value is $64, and the stock is $37. Better that banks had been stripped of these mortgages back in 2009 via temporary nationalization or good bank/bad bank splits. But no one had the courage, so instead we are subject to ZIRP, at least through mid-2015.
The Fed’s concept was simple: With interest rates at zero, capital will flow to other financial assets with better returns. Like the stock market, which would allow banks to raise capital and deleverage their balance sheets so they could slowly but surely write down all those crappy mortgages. Or into real estate, which might raise prices and make those bank mortgages less underwater.
Conceptually, ZIRP has worked. The stock market is up 12 percent in 2012. Bank stocks like Bank of America’s have doubled off their lows. Real estate investment trusts, or REITs, are up 15 percent. Yet in the real world, ZIRP is a huge FAIL. GDP growth in 2012 will come in at an anemic 2 percent after a 1.7 percent tick up in 2011. ZIRP is not growing the economy. And no growth means no jobs. (more…)
