Was AIG Used As A Strawman?

This morning, anyone who read The Drudge Report would have seen this picture and the bold printed "REGULATE" title at the top of the page. Right now, it is just a teaser without a detailed story behind it. But from the top line heading that appears above that picture, it implies that the Obama Administration is preparing to REGULATE banking and Wall Street salaries and bonuses. And, maybe, even, all corporate pay.

This brings me to a question: "Was the AIG flap a completely "fabricated" strawman which will allow Obama to do what he always wanted to do...control executive pay in America" Was this entire flap allowed to happen in order to move towards the complete regulation of salaries in this country? Don't forget those infamous words of Rahm Emanuel: "Never let a good crisis go to waste!"

You've got to wonder. Is this just the first step towards a broader and even more expansive form of socialism than that which exists in the socialist governments of Europe? This move by Obama is absolutely disturbing me; and, it should be seriously disturbing to all Americans who believe in the benefits of a free enterprise system.

Born-Again Conservatives

The last 5 weeks has seen the rebirth of conservatism in the Republican party. If they had only found that rebirth, just a few years ago, they might still be in control of Congress and the White House.

Today, Republicans are only a political shell that few in this country are really interested in listening to. But, the real question remains unanswered. Can being born-again as a conservative be the salvation of the Republican Party, and, the salvation of this country? Just maybe, their stand against this Stimulus Bill will be their pathway to the political heaven of regaining the confidence of the American people.

If the Obama/Pelosi/Reid Stimulus Package works, the Republicans will continue to be the goats of political history. They will truly look like the "Party of No" that the Democrats are trying to label them as. But, if jobs continue to be lost and the economy gets deeper into recession with inflation rearing its ugly head, Americans will seek Republican guidance. I don't think there's any in-betweens on this one.

I firmly believe that the economic days of Jimmy Carter and his then-majority controlled Democratic Congress, very much like it is today, are ahead of us. Like then, we could be slipping into an economic condition of both a retreating economy and an economy that has rampant inflation. We are, once again, on the precipice of inflation-driving high government spending, economically injurious Federal regulation and control (especially in energy), and of the expansion-sapping effect of high taxation. This is the soup that almost always results in the economic condition called "Stagflation." A condition that Keynesian Economists (like Team Obama) always say can't happen but, almost always does (See a Full Explanation/Commentary on Stagflation at the Wikipedia Website).

The stimulus for Stagflation starts with a recession. Then, through too much government intervention, the economy is not allowed to "selfheal" by shedding the excesses that forced the recession in the first place. Instead the goverment intervenes to delay or try to lessen the utimate shedding of excesses. You can see this kind of government intervention in the banking, credit, and auto industries' and through the potential tinkering with individual, upside-down mortgages. Inflation is fueled by overriding the normal market forces by injecting high taxes and cash into the system. High government spending and the resulting borrowing/printing of money, just cheapens the dollar and forces inflationary price movement. This is even more true today, than in the Carter Administration because we have become so dependent on imported goods. Back then, imported oil was Jimmy Carter's nemesis. Today, it is almost everything we buy.

We may not see Stagflation for another 15 to 30 months. But, when it does start happening, the poor and the retired will be hurt the most. The middle class will also lose in the battle of lagging wages versus rapid inflation. That's when, I believe, conservatism will be seen as the only path out of the economic wilderness that Obama and the Democrats have created for this country.

It should be pointed out that it was "Reaganomics" that pulled this country out of the severely Stagflated economy of the 1970's and 1980-1982 . The primary driver in reversing that situation was reduced government intervention, spending, and reduced taxes.

Let The Good Times Roll

It's human nature not to raise questions when things are going good. You know...let the good times roll! And, those who scheme to take your money always use this fact to their advantage. This fact is at the core of every Ponzi scheme.

The recent Bernard Madoff scandal (pronounced "made-off" and resulting in many an easy joke), just reinforces this fault of human nature (See Full Story). As long as he was able to show his investors (or should I say: his "marks") that he was able to provide phenomenal returns, no one would question his accounting. But one man did and he was ignored. That man, Harry Markopoulos, a financial analyst, complained to the Securities and Exchange Commission (SEC) in "1999" on the basis that it was impossible for Madoff to legally have the returns that he and his phony investment firm were showing (See Full Story). Harry Markopoulus' nose and that old saying of "If it sounds too good to be true...it is" got his suspicions up about Madoff. Sadly, if he had been listened to, Madoff and his Ponzi scheme would have been stopped 8 or 9 years ago.

People seem shocked that smart people like Steven Spielberg lost money and, all those combined, lost over $50 billion in Madoff's scheme. But, how easily they forget. Even a well scrutinized, public company can screw the public. It wasn't that long ago that Enron put the bite on the entire investment community through its phony accounting. Fortune magazine was so enthralled with Enron, at an earlier time, that it called it: "America's Most Innovative Company." Unfortunately, the innovations were in bad, falsified accounting.

When Mr. Obama announced his pick for the SEC Chief, Mary Schapiro, he blamed lax oversight for the Madoff scandal. I guess that was another one of his cheap shots at Bush. However, Mr. Madoff's firm was the kind of operation that was never federally regulated. Federal law, going back to the 1970's and during both Democratic and Republican-controlled Congresses alike, never mandated regulation of the Madoff-type of operation. That was Madoff's advantage. Like a lot of typical political B.S., Mr. Obama is just expressing the hindsight and the lack of foresight that all politicians always seem to have. Let's not forget that Enron was a regulated security with constant public and financial scrutiny and it got away with what it did during the Clinton Presidency and a primarily Democratic-controlled Congress. Mr. Obama may talk big; but, regulation or not, there will always be another Madoff or Enron scandal in the future of America; and, just maybe during Mr. Obama's term or terms in office. Just mark my words.

One last comment about Madoff. He's out of jail on $10 million bail (See Full Story). Only in America can a person use the money that he stole to post the bond he needed to get out of jail. How stupid is that!