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A Mortgage Fable
The Wall Street Journal ^ | SEPTEMBER 22, 2008

Posted on 09/22/2008 7:16:24 PM PDT by Eric Blair 2084

Once upon a time, in the land that FDR built, there was the rule of "regulation" and all was right on Wall and Main Streets. Wise 27-year-old bank examiners looked down upon the banks and saw that they were sound. America's Hobbits lived happily in homes financed by 30-year-mortgages that never left their local banker's balance sheet, and nary a crisis did we have.

Then, lo, came the evil Reagan marching from Mordor with his horde of Orcs, short for "market fundamentalists." Reagan's apprentice, Gramm of Texas and later of McCain, unleashed the scourge of "deregulation," and thus were "greed," short-selling, securitization, McMansions, liar loans and other horrors loosed upon the world of men.

Now, however, comes Obama of Illinois, Schumer of New York and others in the fellowship of the Beltway to slay the Orcs and restore the rule of the regulator. So once more will the Hobbits be able to sleep peacefully in the shire.

With apologies to Tolkien, or at least Peter Jackson, something like this tale is now being sold to the American people to explain the financial panic of the past year. It is truly a fable from start to finish. Yet we are likely to hear some version of it often in the coming months as the barons of Congress try to absolve themselves of any responsibility for the housing and mortgage meltdowns.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Editorial; News/Current Events; US: New York
KEYWORDS: 110th; bailouts; financialcrisis; govwatch; housingbubble; schumer; wallstreet
We all like a good Fairy Tale...especially those for who reality is too much to bear. The rest of the article summarizes the truth.

(Hint: Left wing social engineering big government policies started the mess that Left wing social engineering big government Dem politicians want to take advantage of.)

1 posted on 09/22/2008 7:16:24 PM PDT by Eric Blair 2084
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To: Eric Blair 2084

Well the ones who have some knowledge or responsibility, they will try to act like SPECTATORS, bank on it.


2 posted on 09/22/2008 7:23:09 PM PDT by Freedom4US
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To: Eric Blair 2084

McCain’s weak response to this is starting to drive me crazy. He should be calling for Congress to investigate rather than trying to be bi-partisan. The Dry By Media’s lack of response/lack of laying blame on the Republicans shows me exactly where the blame should lie.


3 posted on 09/22/2008 7:23:52 PM PDT by MarkeyD (I love Palin! McCain is p*ssing me off again.)
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To: MarkeyD
McCain’s weak response to this is starting to drive me crazy. He should be calling for Congress to investigate rather than trying to be bi-partisan.

In fairness to McCentrist, he is trying to win votes and this is an issue that leaves 95% of the population confused and befuddled.

It's much easier to pander to folks who bought a house they couldn't afford and are now facing payments they can't make in order to to get their vote.

A principled leader would take the time to explain it to them ... both pro's and cons. I'm not running for anything, neither are the 100's of financial journalists who are trying to explain what happened here.

4 posted on 09/22/2008 7:30:02 PM PDT by Eric Blair 2084 (Alcohol, Tobacco and Firearms shouldn't be a federal agency...it should be a convenience store.)
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To: Eric Blair 2084
Yeah, but innocent Americans should not be forced to bail out those who took out mortgates that they can't afford. I'm sorry that they're getting foreclosed on, but it's my money (and the money of other responsible people) that will go to these homeowners who bought too much house with their money.

I realize that a lot of Americans just don't understand this situation. That doesn't excuse the blatant pandering with our tax money, however.

5 posted on 09/22/2008 7:36:53 PM PDT by LiberalsSpendYourMoney (Barry, you're more racist than 99% of Americans. And you're ugly.)
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To: LiberalsSpendYourMoney

What happens to me when I can’t afford my house because my taxes were raised to pay for all this?


6 posted on 09/22/2008 7:58:24 PM PDT by Aria ("An America that could elect Sarah Palin might still save itself." Vin Suprynowicz)
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To: Aria
What happens to me when I can’t afford my house because my taxes were raised to pay for all this?

That's my concern too.

7 posted on 09/22/2008 8:02:58 PM PDT by GOPJ ( Bigots are defined by beliefs - not by choice of victim. Dems are the new bigots - ask Sarah.)
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To: Eric Blair 2084
[ A credit-rating oligopoly. Thanks to federal and state regulation, a small handful of credit rating agencies pass judgment on the risk for all debt securities in our markets. Many of these judgments turned out to be wrong, and this goes to the root of the credit crisis: Assets officially deemed rock-solid by the government's favored risk experts have lately been recognized as nothing of the kind.]
 
 
Of course they turned out to be wrong.   Falsified FICO scores have exactly that kind of effect.
 
 
Where's LEO?

8 posted on 09/22/2008 8:12:56 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: LiberalsSpendYourMoney

Actually, as it stands, this is just a bailout of dumbass CEO’s and their boards who thought that packaging the loans they were forced by the government to make to homeless people, crackheads and waitresses who claimed to make 300k into a product and try to sell it to someone else would be a good idea as long as they were making Billions in underwriting fees and everyone was doing it....

Your part of the argument about bailing out the “innocent victims” who who took someone else’s money to buy a house they could never afford is what Barney Frank and Chris Dodd are trying to put into the bill as we speak...that plus limiting CEO pay to $7/hour.


9 posted on 09/22/2008 8:15:11 PM PDT by Eric Blair 2084 (Alcohol, Tobacco and Firearms shouldn't be a federal agency...it should be a convenience store.)
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To: LomanBill

That should be the subject of a Congressional investigation. How and Why did Moody’s, S&P and Fitch would put a AAA rating on a package of loans to homeless people sleeping on a park bench?


10 posted on 09/22/2008 8:18:03 PM PDT by Eric Blair 2084 (Alcohol, Tobacco and Firearms shouldn't be a federal agency...it should be a convenience store.)
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To: MarkeyD
McCain’s weak response to this is starting to drive me crazy.

Was grousing out loud about that at the Media rally and got shushed. He was doing it again. It's absolutely maddening. At least he took a shot about how Obama is absent on attempts to remedy the situation.

11 posted on 09/22/2008 8:25:20 PM PDT by Stentor (Obama supporters: Letting the little void do the thinking for the big void.)
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To: Eric Blair 2084
CONGRESSIONAL HEARINGS, NOW!!!!!
< crickets >

For a Demorat run congress that's probably crammed more Stalinist show trial hearings into a 2 year period than any other Congress in history, the lack of hearings for THE most deserving issue during their tenure is deafening.

12 posted on 09/22/2008 8:25:23 PM PDT by MCH
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To: GOPJ; Aria

That’s a great question.

That’s what homeowners here in the Democratic People’s Republic of NJ are realizing now.

The do-gooder legislators meant well. Now, with the highest in the nation property taxes thanks to Socialist egalitarian policies have caused here, people are fleeing. They can’t afford the taxes.

It’s a comfort to know their intentions were good. That’s all they measure themselves by.


13 posted on 09/22/2008 8:26:53 PM PDT by Eric Blair 2084 (Alcohol, Tobacco and Firearms shouldn't be a federal agency...it should be a convenience store.)
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To: Eric Blair 2084

So it isn’t as though we’re paying the mortgages for these people who couldn’t afford them in the first place, is it? Haven’t they been forced to leave their houses and we’re bailing out the institutions that are stuck with the bad debt?

I kept figuring that now there must be a bunch of empty foreclosed houses for sale cheap. Am I wrong? Are these people still in the houses?


14 posted on 09/22/2008 8:34:13 PM PDT by Aria ("An America that could elect Sarah Palin might still save itself." Vin Suprynowicz)
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To: Eric Blair 2084
Those of us who play by the rules and live within our means have been totally screwed by the people the majority elected.

I think the system has become rigged by the lowest common denominator and the crooks they elect.

15 posted on 09/22/2008 8:37:25 PM PDT by Aria ("An America that could elect Sarah Palin might still save itself." Vin Suprynowicz)
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To: LiberalsSpendYourMoney

Taxpayers shouldn’t have to pay, but they must. The problem is not defaulting mortgages, per se—the rate of foreclosures is not significantly worse than other difficult times we’ve had. The problem is the derivatives market and the federal reserve (i.e., Greenspan’s easy money policy). If all the bad mortgages were to go belly up, it would indeed be a problem for those banks that lent that money and their’s alone. That’s not the case anymore. What has happened in the past couple decades is the explosion of the derivatives market, specifically credit swaps, collateralized debt obligations.

In simple terms, Fannie and Freddie was required by law to buy up mortgages in order to lessen the risk to banks who were required by the Community Reinvestment Act to give mortgages to “historically disadvantaged persons”. Neither Fannie nor Freddie nor any other lending bank really wanted to absorb such risk (nor would their shareholders allow it), therefore they mixed jumbo, prime, and subprime mortgage debt obligations and sold shares of these bundled debts (”collateralized debt obligations”, or CDOs). These are investment vehicles that by and large are only available to commercial and institutional investors.

With the easy money policy of the Greenspan years, the real estate market boomed—so much so that in the sellers’ market, common rowhouses in Philadelphia, for instance, were selling for $600-700k when ten years prior they had a FMV of no more than $50k. Again, that by itself is ok, assuming that the bad loans would, in times past, be risks that the lending banks could absorb with higher interest rates, etc... But now, you have the real estate bubble burst and a higher than normal amount of defaults. Again, not exactly a typhoon by itself. Problem is, the CDOs are, along with related derivatives, spread throughout the financial system to the tune of about 34 trillion dollars.

What it means is that a few defaults out of the ordinary becomes a terrific storm because the valuations of all real estate have collapsed, which in turn means that no one really knows what the CDOs are actually worth now because the good loans are fused with the bad—everything is now devalued. That’s 34 trillion dollars invested in financial instruments where no one has any idea of the actual worth of the investments. The cascade effect began last year when the RE market collapsed. Then Bear Stearns, then the big one, Fannie and Freddie.

But Fannie and Freddie were really the tip of the iceberg—AIG not only invested in such CDOs, but they insured many of them—CDOs are like bonds, in that the payment is technically guaranteed. 34 trillion dollars in guarantees for something that may be worth half of that. Suddenly no one trusts anyone in the industry. Suddenly institutional investors flee the derivatives market and start pulling stakes out of the money market sector. Money markets provide the main source of capital for commercial lending banks, so with a big hit to the money markets after the Fannie/Freddie and AIG collapses, you suddenly have a situation where by the middle of last week, there was zero money available for commercial lending. None anywhere in the US financial industry.

There is no choice; something must be done. Doing nothing will not just cause a few banks to fail. It will lead to a total collapse of the entire US economy. I am a follower of the Austrian School of economics, but even I know that because the government created this mess, they must do something now because to let the entire US economy fail in order to prove a point is irresponsible.

I am not endorsing the Paulson plan per se; I happen to like McCain’s idea myself, but something must be done short-term or there will be no tomorrow upon which to reboot the system and do it right. Unfortunately, the taxpayers must step up to bring order to the chaos. Hopefully, a new system will be brought in under McCain-Palin, but the economy will be toast in as little as a week if something isn’t done or at least agreed to so that investors will have some confidence.


16 posted on 09/22/2008 8:38:33 PM PDT by Ilya Mourometz
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To: Eric Blair 2084
A lady I used to work with remortgaged her home twice to finance her Dads cancer treatments but he died anyways. She then bought another home then foreclosed on her triple mortgage.

I'm sorry about her Dad but she intentionally defrauded the lender.

17 posted on 09/22/2008 8:43:47 PM PDT by Manic_Episode (Some mornings, it's just not worth chewing through the leather straps...)
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To: Eric Blair 2084
[How and Why did Moody’s, S&P and Fitch would put a AAA rating on a package of loans to homeless people sleeping on a park bench?]
 
I don't know anything about loans to homeless people sleeping on park benches - but I do know a thing or two about falsified FICO scores.
[That should be the subject of a Congressional investigation.]
 
Yes, it should but...
 
 
==================================================================
During the House Financial Services Full Committee Hearing on "Recent Events in the Credit and Mortgage Markets and Possible Implications for U.S. Consumers and the Global Economy"Chairman Barney Frank left the hearing in order to attend a meeting in support of legislation that would force American employers to hire homosexuals.   That says a lot about Barney's priorities.
 
Barney "Fife" Frank.
Financial Services Watchdog
 
This watchdog only has one tooth.
Barney's boyfriend makes him keep it in his pocket
==================================================================
 
Me thinks we need a new watchdog?

18 posted on 09/22/2008 8:46:40 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: Aria

Not to worry if you live in Jersey. Your property taxes have already been raised so much you had to sell your house to afford the down payment on the house next door.


19 posted on 09/22/2008 8:49:21 PM PDT by ProtectOurFreedom
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To: Eric Blair 2084

The taxpayers are being asked to pick up a $700 billion tab, “no questions asked”, with no reforms to prevent this from happening again, no recourse, and no responsibility. No freaking way! Both parties are giving the taxpayer the shaft! CALL YOUR CONGRESSMAN!


20 posted on 09/22/2008 8:50:52 PM PDT by Judges Gone Wild
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To: Ilya Mourometz

Thank you for the explanation. I actually sort of understand it.


21 posted on 09/22/2008 8:55:01 PM PDT by Aria ("An America that could elect Sarah Palin might still save itself." Vin Suprynowicz)
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To: Ilya Mourometz
>>The problem is the derivatives market
Let the NyLon geniuses, who created that market, eat cake.
 
Americans can rebuild from the ashes without their help.   We begin as soon as all their 1s are turned into 0s.
 
The New York T-Bill party - In remembrance of the Boston Tea Party
 
>>and the federal reserve
 

22 posted on 09/22/2008 8:56:01 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: Aria

I think you understand it perfectly. There are no good guys here per se....except for honest, law abiding tax paying citizens who played by the rules and bought a house they could afford like you and me.

There were plenty of greedy activities by investment banks who figured if Gubmint was going to give you a lemon (loans to people who have no ability to pay it back), you make lemonade... set up a street side lemonade stand to try to peddle the swill and get money. If nobody buys it, than the neighborhood pays.

My thesis is that Carter started the whole thing with the CRA (Community Redevelopment Act) back in the 70’s and than Clinton put it on steroids in 1995 by strengthening the law.

If banks didn’t make the loans, community organizers in ACORN would have been on them like Mike Tyson on a beauty pageant contestant. Forget about getting your merger approved if you were a bank who didn’t give in to the coercion.


23 posted on 09/22/2008 8:57:03 PM PDT by Eric Blair 2084 (Alcohol, Tobacco and Firearms shouldn't be a federal agency...it should be a convenience store.)
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To: LomanBill

Yeah; I’m in favor of returning to a gold standard, but that won’t do squat now. Allowing the entire derivatives market won’t just hurt the tassled-loafer crowd, it will bring the entire US economy to its knees and lead to a civil war. This isn’t a hard landing, it’s a fall into a bottomless pit that will take every man, woman and child in the US down with it.

If a wall is collapsing, you don’t sit there and let it fall on people walking by. You prop it up temporarily, fence it off, and either rebuild it the right way (if possible) or build permanent supports. Saying it’s ok to let the economy crash to prove a point (which I happen to agree with, btw) is not morally or ethically correct. Something must be done, and while it might not be Paulson’s plan, letting it all fall to pieces is the absolute worse thing—it will make 9/11 look like child’s play in terms of the damage it will do to the lives of average Americans.


24 posted on 09/22/2008 9:06:05 PM PDT by Ilya Mourometz
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To: Judges Gone Wild

I agree. Call your Congressman....9 times per day if necessary! He/she works for you, you don’t work for him/her.

Make sure to tell him/her that Gubmint compelling private lenders to loan money to people they would otherwise have no interest in doing business with is overstepping the proper role of Gubmint.

Tell the Congresscritter that you would be in favor of limiting CEO pay to minimum wage or a bag of magic beans if they would stop meddling in free enterprise and coercing lenders to make loans they don’t want to make.


25 posted on 09/22/2008 9:16:37 PM PDT by Eric Blair 2084 (Alcohol, Tobacco and Firearms shouldn't be a federal agency...it should be a convenience store.)
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To: Ilya Mourometz
[If a wall is collapsing, you don’t sit there and let it fall on people walking by.]
 
And if the wall was part of a prison, built for keeping slaves?    The difference between a castle and a prison is, after all, merely the direction the guns are pointing.
 
We can have a kinder, gentler, Civil War - or we can prop up the wall and indenture our children to the servitude of a system - a system that has taken on a form which has no other purpose than to make itself the object of collective worship and servitude.
 
Let the wall fall, and in its place, raise up a system of financial governance that is true to the intent of the writers of the American Declaration of Independence.   Let us construct a system of governance that has, as it's sole purpose - the securing of the inalienable rights of the governed.
 
 
 
"TO SECURE THESE RIGHTS, governments are instituted among men,  deriving their just powers from the consent of the governed" -  Still as self-evident today as it was in 1776?

26 posted on 09/22/2008 9:43:55 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: GOPJ

Regarding McCain’s “weak response,” I’m not so sure that a confident-sounding statement such as “We must investigate!” would be that useful.

Even amongst economic experts, there is no consensus on what to do. Some say (correctly) that the Feds have no obligation to perform a bailout, and should therefore let the market correct itself. Others say (correctly) that the interconnectedness of all this toxic paper might have led to monetary deflation...with a corresponding contraction of payrolls, leading to unemployment and a full-scale depression.

I truly believe that there has been so much market distortion in the past few decades — indeed caused by government intervention, manipulation, and regulation — that there is no easy, no painless, way out.

Fundamental changes, such as (i) return to 100% gold standard, (ii) repeal of legal tender laws, (iii) forbidding fractional reserve banking, and (iv) dismantling the Federal Reserve, would go a long way toward preventing this from happening again (it would also go a long way toward radically curtailing government spending, radically reducing inflation, and stopping the “boom-bust” cycle). In addition, we could use a Constitutional amendment prohibiting government from interfering with the way in which a business conducts its affairs (such as offering loans, mortgages, etc.). The above is my “wish list.”

Something else that would be fantastic if mentioned loudly and clearly by Governor Palin: a renewed commitment by government to protect the citizen’s right to PROPERTY (including a renunciation of the government’s “right” of eminent domain). If Palin said something like that, it would be revolutionary.

I think most of us recognize this much: right now, she is the only viable hope for real, positive change in Washington; much more so than her honorable running mate.


27 posted on 09/22/2008 9:53:55 PM PDT by GoodDay (McCain-Palin '08)
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To: Ilya Mourometz
 
 
 
 "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . .   Corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor  to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."
 
 -- President Abraham Lincoln, letter to Col. William F. Elkins,  Nov. 21, 1864 
 
 
The train now pulling into the station has been a long time coming...

28 posted on 09/22/2008 10:05:28 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: Ilya Mourometz

“Saying it’s ok to let the economy crash to prove a point (which I happen to agree with, btw) is not morally or ethically correct.”

I’m for having it crash and be waiting at the bottom to take advantage of the losers!

Since I scrapped church at the age of 8 for drag racing I don’t stop for a second before taking advntage of stupid people.

I don’t gamble in the stock market, don’t have retirement acounts or mutual funds, just cash waiting to take advantage of situations like this.


29 posted on 09/22/2008 10:26:30 PM PDT by dalereed
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To: GoodDay
[Something else that would be fantastic if mentioned loudly and clearly by Governor Palin: a renewed commitment by government to protect the citizen’s right to PROPERTY]
 
Yes, but in conjunction with that must be a reevaluation of the idea of artificial "personhood" that is currently being endowed upon collective entities via corporate charter.
 
Collectivization of "private" property is leading to corporate, collectivist, communism.  It is enabling corporate collectives to implement socialist agendas that are antagonistic to the American idea of the individual - the individual who is endowed by their Creator with certain inalienable rights.
 
Certainly the right to pursue the truth, through discourse as well as by other means, is an integral part of the pursuit of happiness.
 
Capitalism must be subordinate to the individual pursuit of truth.  
 
Governance, in the form of Corporate Collectivism or otherwise,  should not be allowed to make itself into the object of  worship and servitude.  Governments - systems of governance - are merely tools; and as tools they should be used to secure the rights of the governed.  But objects of worship and servitude are exactly what governments become when the individual, out of whom the collective constructs itself, is deprived of the right of free speech - especially when that speech is critical of the collective itself.
 
That is precisely the reason for our 1st amendment separation between state and religion - WE were protected from being forced to WORSHIP the state.  But now the state has become the corporation.  Clever.
 
The 1st amendment right to free speech must be restored to ALL; whether in the physical collective workplace, or elsewhere.   To recognize the truth in this, we need only observe the silent obedience by which this socialist financial catastrophe was facilitated.
 
Truth and Honor must be restored to the workplace - and it begins, with the Individual. 
 
Let us speak freely again!
 
 

30 posted on 09/22/2008 11:04:25 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: Ilya Mourometz

Great explanation— finally, I understand the situation.

You should be a teacher.


31 posted on 09/22/2008 11:12:22 PM PDT by Cedar
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To: dalereed
[Since I scrapped church at the age of 8 for drag racing]
But didn't you just trade one system of worship for another?
 
I've had lots of religions.   Triathlon was one my favorites.  But...
 
1. Thou shall have no other gods before me.
 
I've found, through personal experience, that my Creator is sort of picky about that one.
 
[I don’t stop for a second before taking advntage of stupid people.]
 
Exactly the attitude that made predatory lender Ameriquest so, temporarily, wealthy.
 
 
Is going to church the only thing that makes one ethical?

32 posted on 09/22/2008 11:14:35 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: LomanBill; Carry_Okie

ping


33 posted on 09/22/2008 11:30:51 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: Ilya Mourometz

>>I’m in favor of returning to a gold standard

I’m not.

But I am in favor of returning control over monetary policy to the elected representatives of the Republic’s citizens - as per the intent of Article I, section 8, of the United States Constitution.


34 posted on 09/23/2008 10:38:16 AM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: Eric Blair 2084
The do-gooder legislators meant well. Now, with the highest in the nation property taxes thanks to Socialist egalitarian policies have caused here, people are fleeing. They can’t afford the taxes.

Unintended consequences...

35 posted on 09/23/2008 7:38:46 PM PDT by GOPJ (Let free markets work - stupid companies SHOULD go belly-up - including Frannie and Freddie.)
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To: GoodDay
I think most of us recognize this much: right now, she is the only viable hope for real, positive change in Washington...

You're right. She's not an insider - and she's not afraid to go after the corrupt.

36 posted on 09/23/2008 7:47:07 PM PDT by GOPJ (Let free markets work - stupid companies SHOULD go belly-up - including Frannie and Freddie.)
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To: LomanBill; wideawake

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Home --> Questionable Quotes --> Lincoln's Prophecy

Lincoln's Prophecy

Claim:   Abraham Lincoln issued a prophetic warning about the tyranny of capitalism.

Status:   False.

Example:  

As a result of the war, corporations have been enthroned, and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working on the prejudices of the people until all wealth is aggregated in a few hands, and the republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before even in the midst of war. God grant that my suspicions may prove groundless.

Origins:   The above quote, attributed to President Abraham Lincoln, has been periodically dusted off and presented to the public as a prophetic warning about the destruction of America through the usurpation of power and concentration of wealth by capitalist tyrants for over a century now, undergoing a renewed burst of popularity whenever wartime exigencies stir public debate over governmental policies.

These words did not originate with Abraham Lincoln, however — they appear in none of his Lincoln collected writings or speeches, and they did not surface until more than twenty years after his death (and were immediately denounced as a "bold, unflushing forgery" by John Nicolay, Lincoln's private secretary). This spurious Lincoln warning gained currency during the 1896 presidential election season (when economic policy, particularly the USA's adherence to the gold standard, was the major campaign issue), and ever since then it has been cited and quoted by innumerable journalists, clergymen, congressmen, and compilers of encyclopedias.

Pedigree for this quote is often asserted by pointing to the 1950 Lincoln Encyclopedia, compiled by Archer H. Shaw, which "authenticates" the quote by citing a purported 1864 letter from Lincoln to one Col. William F. Elkins found in Emanuel Hertz's 1931 book, Abraham Lincoln: A New Portrait. However, this source is fraudulent: Hertz was taken in by a forgery, and Shaw, a sloppy compiler, added the bogus letter to his encyclopedia (along with several other pieces of Lincoln apocrypha) without verifying its authenticity. As historian Merrill Peterson noted in Lincoln in American Memory:
A Lincoln Encyclopedia, the brainchild of an Ohio newspaperman, Archer H. Shaw, made its appearance in 1950. Here, conveniently arranged from A to Y — from "A.B.C. Schools, attended by Lincoln" to "Young Men, attitude toward" — were the great man's spoken and written words for ready reference. "Mr. Lincoln is the most quotable notable in history," David Mearns opined in the Introduction. He might have added "one of the most fraudulently quoted" as well. Regrettably, some of these errors crept into the Encyclopedia. Here, for instance, was the oft-heard warning against "corporations enthroned" by the war, the letter to Colonel Taylor on the origin of Greenbacks, and an alleged plea to an Illinois jury in 1839 in defense of fifteen women on trial for saloon smashing. Protecting the Lincoln canon from spurious intruders was an ongoing problem.
Why have these "money powers" words been put in the mouth of Abraham Lincoln? In a general sense, the reason is because dead people — especially revered leaders — make great commentators on modern-day politics: They can't be questioned about the legitimacy of their comments, interrogated about what they meant, or asked to elaborate about the subject at hand; they can only be refuted through imprudent suggestions that Our Revered Leader was wrong!

In a specific sense, this quote sounds plausible because Lincoln's tenure as president occurred during a great war that was indeed the focal point of industrial and economic change in America, and because Lincoln left behind some decidedly pro-labor statements. As Merrill Peterson detailed:
It was easy to understand Lincoln's appeal to social radicals, said [socialist William J.] Ghent, for he held very advanced views of the rights of labor. As early as 1847 he had written, "To secure to each labourer the whole product of his labour, or as nearly as possible, is a most worthy object of any good government," which was remarkable for a prarie lawyer of that time. Speaking in New England in 1860, he praised the right to strike, as then being exercised by the shoemakers of Lynn. His clear assertion of the labor theory of value in the 1861 message — "Labor is prior to, and . . . superior to capital" — and his answers to the addresses of workingmen abroad and at home gave a color of Marxism to his thinking. He was, surely, the best friend labor ever had in the White House.
Nonetheless, Peterson concluded, even Lincoln's wartime experience and pro-labor credentials don't justify the attribution of the "money power" warning to him:
Nevertheless, he was no prophet. Imprisoned in the democratic-capitalist ideology of nineteenth-century America, he believed the free laborer toiled up from poverty to become a capitalist in his own right. Individual opportunity, not class struggle, was his message.
Last updated:   26 September 2007

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  Sources Sources:
    Ghent, W.J.   "Lincoln and the Social Problem."
    Collier's   v. 35; #23-24   (1905).

    Peterson, Merrill D.   Lincoln in American Memory.
    New York: Oxford University Press, 1994.   ISBN 0-19-509645-2   (pp. 160-161, 340).


37 posted on 09/23/2008 8:02:39 PM PDT by Eric Blair 2084 (Alcohol, Tobacco and Firearms shouldn't be a federal agency...it should be a convenience store.)
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