Community Reinvestment “The Healthcare Edition”

I’m sure you’ve heard a common definition of insanity as doing the same thing over and over while expecting different results.  Enter the latest version of the Community Reinvestment Act.  If you remember, the Community Reinvestment Act is what forced lenders to make loans to high-risk individuals at regulated prices.  It was a clear solution for the liberal minded.  As you know, the rest is history.  Fannie Mae and Freddie Mac made loans to people who couldn’t afford them at rates that were unsustainable.  Then they repackaged those loans with other assets and sold them to investors.  When the house of cards collapsed, the government took our tax dollars and bailed them out.

Obama is now working to make Blue Cross Blue Shield the next Freddie Mac and Fannie Mae and Aetna the new AIG.  Consider his healthcare bill.  It forces insurance companies to sell to anyone no matter how high risk while limiting what they can charge.  It makes businesses who can barely afford payroll buy their employees health insurance with one size fits all plans.  In the meantime, Obamacare makes insurance companies too big to fail by limiting competition and forcing everyone to buy.  Insurance companies, who survive on shared risk, will be forced to take on more risk than they can handle while not being allowed to raise the capital they need to cover it.

Imagine what will happen when the next animal flu pandemic hits and every American goes to the doctor, sending the bill to their insurance company.  The doctor bill will be higher because all their billing will be subject to insurance discounts plus Obamacare adds VAT (value added tax) to medical institutions, clinics, and medical supplies.  Insurance companies won’t have the funds to cover these costs because in addition to price controls they will also be paying higher VAT under Obamacare.

How long will doctors work for free when the insurance reimbursement backlog reaches six months?  A year?  And what does Obama do when insurance company shareholders read their company’s financials?  I think we’ve seen what happens with AIG, Citigroup, GM and Chrysler.  In addition to being forced to buy insurance, we will be forced to own the too big to fail insurance companies.

When the government owns all the insurance companies, already regulates what they can charge, and has assumed by “necessity” all of their risk, Obama will finally have what he set out for in the beginning: a socialist, single-payer tax funded solution.  It will cover abortion, and it will be a system just as efficient, viable, and fair as Social Security.

Having Sachs in the Oval Office

The buzz in Washington these days is still all about the arrival of Scott Brown and how the Republicans finally have enough votes to join the Healthcare debate.  Meanwhile, a scandal is continuing to brew unnoticed.  It turns out this President is engaged in the same unethical relationships as both his predecessors.  And as I predicted, Tim Geithner may be taking the fall for it.

The White House relationship with Goldman Sachs first became news when Rahm Emanuel, now Obama’s chief of staff, was working for Bill Clinton’s campaign.  Actually, technically Rahm worked for Goldman Sachs and volunteered for Clinton’s campaign.  Goldman Sachs gave as much as they were allowed, had their employees give as much as allowed, and then paid the salaries of Clinton’s campaign staffers so that Clinton wouldn’t have to.  At the time, they said they were hiring Clinton staffers for networking purposes.  This loophole got the Clinton campaign around the campaign finance laws that Obama indignantly called out the Supreme Court for repealing.

The payoff came when Clinton bailed out Mexico and other countries through the IMF after Goldman Sachs had invested heavily in government bonds from those countries and stood to lose it all.  This was just the first time the Government bailed out Goldman Sachs by bailing out what they had invested in.

The Bush administration destroyed it’s reputation as a free market, capitalist administration when Goldman Sachs alumnus Henry Paulson was handed sole control and responsibility of the TARP bailout process.  Half of the left portrayed Bush as an imbecile, the rest saw him as some sort of evil genius.  In this instance it actually was one or the other.  But before those on the left cheer, it was the Pelosi/Reid congress who wrote Paulson’s financial regency into the TARP bill.

Several banks took large amounts of TARP funds.  Goldman Sachs themselves took $10 billion, but many banks were told to take it to avoid creating a stigma on certain banks as worse off than others.  Although the plan didn’t work and AIG, Citigroup, and a handful of failed banks have been destroyed in public opinion, Goldman Sachs managed to stay out of sight through the process.  Although Goldman Sachs has set aside $11 billion for bonuses this year, AIG is the name that comes to mind when Americans think of evil banks who stole our money and spent it on outrageous bonuses.  In fact, it is ironic that one of the greatest mouthpieces for the liberal movement, Michael Moore, shows up in front of Goldman Sachs asking for the American people’s money back.  Moore’s own movie was funded by Goldman Sachs.

Speaking of AIG, they are now under investigation for what they did with some of the billions of dollars in taxpayer TARP funds they received.  What they did was use the money to pay off some of their best investing partners who were going to lose it all.  Guess who one of those major investing partners would be.  In fact, Goldman Sachs was invited to the table when the government decided what to do with AIG.

Up next on Obama’s agenda is far reaching regulations to discourage banks from every doing anything that might make them a profit in the future.  Obama is going to ride in on a white horse and make it so that banks will lend freely and with no risk.  I have no idea how, but then again he has the best in the business like Tim Geithner.  And Geithner is getting the best advice from his chief of staff, former Goldman Sachs lobbyist Mark Patterson.

I’m not a conspiracy theorist, but as unemployment remains above 10% and the economy prepares to begin stage two of it’s double-dip, Goldman Sachs is about to have it’s most profitable year in the company’s history.  If you are keeping score, you might think something was up.

Euthanizing Jobs

Democrats have received plenty of negative press when it comes to certain provisions in their healthcare system that will create rationing.  In fact, we are already seeing rationing of the new H1N1 flu vaccine.  We have plenty of Tamiflu (stockpiled by the Bush administration), but to get an H1N1 shot you must fall into specific categories of government priority.  This is not a different concept from what Sara Palin called “death panels” because Washington bureaucrats will decide who gets treatment and who doesn’t.

Most Democrats have fled from or mocked the idea of death panels.  But one Democrat Congressman is embracing the phrase whole-heartedly.  Rep. Barney Frank, who is one of the major players responsible for the failure of our housing industry in 2007 and our banking industry in 2008, is endorsing the idea of Government euthanasia.  But he isn’t talking about death panels for individuals who the government thinks are too old for free healthcare; Frank is talking about putting down large, bloated and un-popular Wall Street giants who the government deems to be no longer financially sustainable.

It’s the big government alternative to un-popular bailouts.  With bailouts, the government took hundreds of billions of our dollars and used them to prop up companies who would probably have failed without them.  It was an unconstitutional usurpation of public funds to keep private industry afloat.  Frank’s alternative is a panel that would identify struggling companies and then take the guess work out of whether they might fail or not by simply mandating a government shut down.   Rep. Frank has said himself, “There will be death panels enacted by this Congress, but they will be for nonbank financial institutions.”

Barney Frank realizes that announcing death panels to euthanize citizens for being too old or too sick is not a popular idea.  However, government killing off bloated Wall Street corporations who are a drag on the system gives liberals chills up and down their leg and makes most ignorant consumers feel all warm and fuzzy inside.

What Frank and Democrats don’t realize is that the CEO of AIG is not the only employee of AIG.  AIG had 116,000 employees in 2008.  Now, I understand that is only a third of the jobs Obama’s economy has lost every month on average since he took office, but that is 116,000 lives affected.  In addition, AIG has thousands of stockholders.  Warren Buffet is not representative of the majority of stockholders in the US.  The majority of stockholders in the US are middleclass working families who have savings accounts such as 401k plans, IRAs, college savings plans and so on.

When a company fails, it is bought by a stronger company or it declares bankruptcy and re-organizes or shuts down.  But that is the natural course of the free market.  It is not a decision made by a bureaucrat in Washington DC, probably based on political contributions received, to liquidate 116,000 jobs and turn people’s retirement into toilet paper.  When exactly would the government decide that a company is no longer viable?  When it starts to look bad?  When it is in bankruptcy?  Tell that to Delta Airlines, Winn Dixie, United Airlines, Texaco, and other US companies who have survived bankruptcy.

I am not a proponent of bailouts.  I don’t believe in too big to fail.  But I also don’t believe in capital punishment for private industry.  When it comes down to it, euthanizing America’s employers to ease the shock of major corporate failures is just as unconstitutional as taking up a collection from the tax paying public to keep those corporations on life support.    When you have a party in control that deals in earmarks, lobbyists, corporate contributions, and big government involvement in private industry, corporate death panels are fundamentally dangerous to our free society.

Now, I know the argument that will be pushed here.  Non-bank financial institutions affect the very foundation of our monetary system.  An unexpected collapse could destroy our economy, send society back to the stone age, and leave a billion Americans unemployed and roaming the streets like zombies.  America’s economy is not resilient because the federal government rescues it.  America’s economy is resilient when those unemployed Americans wandering the streets have the freedom and opportunity to market, make and sell goods and services that people want and need.  America’s economy is resilient when Americans can take risks and expect to be rewarded exponentially for those risks.  Corporate death panels belong in a Fascist country, not America.

If AIG’s failure would destroy America’s monetary system, then that sound more like a failure of the semi-constitutional Federal Reserve system than of free market capitalism.

Michael Moore: A Hypocritical Story

You may have seen the commercials for Michael Moore’s new documentary.  We have learned a lot from Michael Moore over the years.  We learned that Cuba has better healthcare than the United States.  In fact, Ted Kennedy might have gone there for treatment if it wasn’t for his brother JFK and the unfortunate incident of the Bay of Pigs.  That gives Cuba a distinguishment of being one of the Communist nations the Kennedys didn’t collaborate with.

Moore also taught us that Iraq was a wonderful peaceful place to live, where kids flew kites, before Bush Jr. decided to avenge Bush Sr. and invent intelligence that fooled Republicans, Democrats, and even other nations into going to war to remove the benevolent dictator, Saddam Hussein.  Fahrenheit 911 has been debunked by several counter-documentaries and Moore was actually sued by some of the soldiers he interviewed, including one who had lost both arms but supported Bush and the war despite what Moore portrayed in the movie.

My first experience with Michael Moore was through my English Composition 101 class in college.  Apparently watching a Michael Moore documentary was supposed to make us better writers.  In the movie Roger & Me, Moore travels to a Democrat state where local, state and federal taxes and regulations and union restrictions have made it actually cheaper to build cars outside of the US and import them then to make them here.  As a result, GM closes a plant in Flint, Michigan.  Of course, that isn’t the angle Moore takes.  Instead he goes into the corporate offices to try to make the CEO look like a buffoon with his cameramen in tow, and then acts righteously indignant when they kick him out.  Moore spends the rest of the film chronicling people being evicted on Christmas Eve and eating pet rabbits.  He also mocks the former plant workers who make a new life for themselves.  He highlights one former plant worker who opened a successful lint roller producing company.  Selling lint rollers over assembling cars?  How demeaning.

Michigan has stayed true blue and as a result found themselves in the recession years before the rest of the country.  And there aren’t even that many greedy CEOs left in the state.

I wonder what would happen if the taxes, regulation, and union demands got to the point where GM just could not compete globally and would actually risk going out of business?  What would happen if GM needed to be bailed out by the Government to survive?  Now we have our answer, “Capitalism: A Love Story” by Michael Moore.

If Moore were truly honest, the movie would go something like this.  Scene 1 would be Moore getting kicked out of the Union boss’ office (quite literally) for asking why they have made labor so expensive that companies can no longer employ the workers and survive.  In fact, he might ask a controversial and in your face question like “With all the layoffs due to your rigid collective bargaining and refusal to cave even when taxpayers are keeping your company afloat, doesn’t it seem like the only workers you are interested in are the ones who survive the layoffs and keep paying dues?”

Scene 2 would have Michael Moore standing outside the White House with his money bag and his megaphone shouting “We want our money back!”  It would then fade to Moore sitting with the President going over the details of how Obama used tax dollars to buy a majority stake in Chrysler, gifted the stake to the unions, and then sold the company overseas to Fiat in Italy.  If Moore was smart he could rename his movie “Barack & Me”.  I mean how is Roger Smith moving jobs to Mexico because he can’t afford to pay American workers any different than Obama moving jobs to Italy because taxpayers can’t afford to keep Chrysler afloat?

Scene 3, if Michael Moore was truly honest, would be an interview with himself.  He could ask himself about how much money he has made in our capitalist system by making and selling propaganda movies.  He might ask himself what is so special about him that he could take advantage of such an opportunity to provide goods and services that Americans want at a price they can afford.  Perhaps he might venture into why it is that other Americans don’t take advantage of the opportunities provided by capitalism, like he did.

Instead, I think by now we can all predict Moore’s M.O.  He will find unsuspecting employees whose duties include ordering paper for the office and making coffee and ask them specifics about where the bailout money has gone.  He will get kicked out of corporate offices and then act like he actually had a right to be there in the first place.  He will highlight bonuses paid to CEOs by bailed out companies.  He will go to bailed out companies with his money bag and megaphone and demand our money back.

I guess the movie is already in production, so it might be too late to tell Michael Moore that the bailouts had absolutely nothing to do with capitalism.  In fact, TARP had absolutely nothing to do with capitalism.  Auto bailouts and government takeovers had absolutely nothing to do with capitalism.  Fannie Mae and Freddie Mac and the community reinvestment act had absolutely nothing to do with capitalism.  Government manipulation through tax credits has absolutely nothing to do with capitalism.  Trillion dollar stimulus programs have nothing to do with capitalism.  Sarbanes-Oxley regulation had absolutely nothing to do with capitalism.  The things that are still holding our markets down, such as cap and trade, higher taxes, universal healthcare, TARP repayment, cash for clunkers aftermath, and our enormously growing debt all on the horizon have nothing to do with capitalism.  “Too big to fail” is the antithesis of capitalism.

So what about CEO bonuses?  Shouldn’t they work for free now that taxpayers are bailing out their company?  Allow me to use a football analogy.  Last year the Detroit Lions went 0-16.  They have not had a good consistent quarterback in years.  Their best quarterbacks got injured.  Now think long and hard.  If America gave the Detroit Lions a $50 billion loan to save their team, rebuild their stadium, and get back on their feet, would you demand that they hire the best quarterback who will work for less than $100,000?  They might be able to get the waterboy to play quarterback for that much.  Instead they are paying more than $10 million a year for the number one rookie quarterback Matt Stafford.  If he performs well, they will have to eventually pay him more or he will go to another team.  I wrote a post about what happens when you don’t pay your executive employees on March 17th.  8 days later, it actually happened.

Michael Moore doesn’t live in the real world.  He lives in the land of Hollywood where if we are tolerant and understanding all war can be avoided.  If evil, greedy CEOs would learn to imagine no possessions, nobody would be poor anymore.  If we can afford to fight a war against poor Arab community organizations like Al Qaida, then we can certainly afford to buy everyone in our nation health insurance.  And if the markets are destroyed through government intervention and the government takes your money and gives it to companies so that they can pay their CEO a bonus, it must mean that capitalism does not work.

Ironically, Michael Moore is confusing government intervention with capitalism and is about to make millions doing it.