We the Cared For

Putting Your Freedoms on a Strict Government Diet

In a  conspicuous example of the never ending storm of special interest groups, lawyers and misguided politicians thundering  ahead to steal your freedom and liberties, Controlifornias (CA) esteemed Governor Schwarzeneger - Shriver signed into law AB 97 a ban on the latest scourge in our nation… “trans fats”.

What this means is that in 2010, no Controlifornia restaurant will be able to serve foods containing trans fats.

It does not mean that business owners can choose that their foods contain these little devils of destruction and that customers would be able to choose to eat them or not. It means that our paternalistic state has made it illegal (making the choice for us for the good of our health).

"California is a leader in promoting health and nutrition, and I am pleased to continue that tradition by being the first state in the nation to phase out trans fats," Governor Schwarzenegger said today. "Consuming trans fat is linked to coronary heart disease, and today we are taking a strong step toward creating a healthier future for California."

These “I know how you should live and you’re going to live your life my way by God” people have taken a matter of private choice and turned it into public policy… again! Like the ratchets on handcuffs, they are squeezing another notch closed around your freedom of choice and we’re going along with it like confessed felons.

Lo and behold also just in... this past Tuesday, July 29, 2008 the Los Angeles City Council passed a law barring fast food restaurants from opening in South Los Angeles.

Another Deadly "War" Instigated to Kill Your Freedoms … The War on Obesity!

This is not a “slippery slope”. This is a cliff we have fallen from and unless the American people wake up in time to pull the rip cord on the parachute, the thump you won’t hear at the bottom will be government laws and mandates about more of your diet, your exercise, what and how you can cook in your home and every other personal choice you make in these very personal matters.

We have talked about bad science, misrepresented statistics and media perversions before. How does this happen?

Here’s the simple fact of it… these people want you to live the way they think you should live regardless of your constitutional rights. You then combine these groups with the segment of law “professionals” that are out to make millions by exploiting our legal systems acquiescence to extract settlements through blackmail in the millions and billions of dollars. Add to this stew, politicians looking for headlines and to pursue their own personal agendas regardless of the oft unheard, more often unknowing people they represent, and the recipe is complete.   

Systematically Breaking Down Your Constitutional Rights

Step 1
Think of it strategically from the hunting lawyer’s perspective…  Broad rights limit revenue, narrowing your rights generates revenue.

If you have a broad right, it is difficult to entrap, ensnare or take legal action against you. If I (the lawyer) can narrow your rights, I not only have the opportunity to win huge settlements by initially cracking the door open, I now also have massive fresh streams of revenue as the trip wires of new rules, regulations, and further narrowing flood through the now cavernous breach in the wall.

Step 2
The “Mommy Groups” (“mommies” is not about the gender but the traditional role that has to protect and coddle everything we touch so that no one and no-thing, can possibly get hurt) position their issues as the high moral ground that the general public finds politically incorrect to argue with because they have forgotten their constitutional right to personal choice. It even tugs at the public’s sense of righteousness i.e., no one likes smokers and it’s dirty and killing everyone, drinking is bad for your health and a moral turpitude, fat people are ugly and unhealthy, risk takers endanger everyone, everyone should have equal access to everything regardless of the cost or the benefit, we need to protect the environment and our children will all die if we don’t do it the way they want, guns kill people, cell phones kill drivers.

Lawyers see the dollar opportunity, the mommies raise their righteous flags and the two come together in a twisted marriage. 

Step 3
The next step for these abusive parents is to gather facts to sensationalize and support their cause. They commission studies through academia, enlist the power of government agencies whose budgets and missions are positively influenced by the “cause” and obfuscate the inverse information that doesn’t support their position.

This information always includes how many people are dead or dying from the problem and the unfair burden it places on the rest of society through increased cost to everyone else!

Step 4
Mommy based government officials and governmental departments seeing an opportunity to maintain or expand their budgets, increase their fame and influence and/or further their own personal agenda join the family to further their interests.

Step 5
Having assembled the family and formulated the battle plan, the job is to then get the perverted message to the masses with the ever obliging, “don’t let the facts confuse the message” hyper liberal media. With very few current exceptions, these mommy enablers (editorial mommies themselves) require nothing more than a few juicy bylines to warrant the complete agreement and continued skewing of the message. Opposing facts and issues would not only require work on their part but be in opposition to their own editorial “beliefs”.

Step 6
Law suits are filed against companies and individuals and they are blackmailed into millions of dollars in settlements or incur unsustainable legal costs to defend their position.

Step 7
Having cracked open the door, they pursue two activities in tandem; spread the lawsuits and regulation as far and wide as possible and pursue further narrowing of the right.

Private Mommy Interests

One also cannot underestimate the benefits and thus influence applied by benefiting private interests. Let's take one magnificent example of a continual mommy supporter… the insurance industry.

Ever in pursuit of collecting as much in insurance premiums as possible while paying out as little in claims as possible, these new narrowed rights bring them the ability to segment out these now deleterious populations for discriminating treatment.

No longer do heavy people, smokers, people who drove after 2 glasses of wine and received a DUI, people talking on their cell phones in their cars, people with traffic tickets, etc. have to be included in the "general population". They can now restrict their coverage to these new "groups", charge much higher premiums or deny these abhorrent people access to insurance completely.

The more “groups” we create, the fewer of the” general population” there are (now) by definition and “insurance” no longer has any connection to its meaning for the masses.  It has now morphed into a “lifestyle” credit application with ever tightening approval guidelines.

You can write in stone that this trans fat absurdity and the war on obesity will continue to erode your very personal choices. The “obesity chart” will continue to change so more people can be categorized as “overweight” or “obese” from its already ridiculous levels.   Business owners and individuals will be further restricted by the government in what food they can serve or eat and the amount, type and frequency of your exercise will come with differing taxation and costs. It is just the latest example in a very long, proven line of constitutionally crushing efforts.

Our country has its national security at risk, energy independence to pursue, a broken social security system, crushing budget short-falls and our leaders involve our government in weighty matters like vegetable oil and margarine because apparently we aren’t equipped to decide what to eat on our own.

Our need for Mommies that care for us and our inability to make these weighty choices is probably a direct result of the great job mommies have done running the educational system in this country… since we’re all apparently just too stupid to know any better.

I was Misled

I was struck this week by a word that is showing up recently in everything I see and hear. It is a term that has now reached an iconoclastic status in the American Lexicon … “Misled”.

The use of this word has recently spread its wings far beyond its usual roost in the political realm in the heat of the mortgage, housing and credit crisis. The proliferation of this word and its use is troubling in many respects.

The first is its ability to abdicate personal responsibility and accountability. The word “misled” is being used today as a verbal shield and sword; a shield to deflect blame from one’s individual decisions and actions to another individual or to another group of people and a sword to slit the bag of money they may steal from the people that “misled” them or from taxpayers whom they expect to cover their bad decisions.

A few current, shining examples are:

• Investors, including very sophisticated money managers, were "misled" about the risks and the value of their MBS investments
• Borrowers were "misled" about the dangers of adjustable rate mortgages
• CEOs "misled" the public and shareholders (pick your topic)
• Homeowners were "misled" when they received a loan for 100% of the value of their house at the time they bought it
• Home buyers were "misled" about the value of their house by appraisers
• Municipalities and the wide range of reasonably well-off investors trying to take advantage of that wealth were "misled" when they were “steered” into Auction Rate Securities
• Depositors were "misled" about the strength and capital underpinnings of IndyMac bank and others

The very dangerous result of this massive cleansing is that it washes off the dirt of the individual’s responsibility for making their own informed decisions. If the individual’s decisions had resulted in the mad money everyone expected, and many reaped, instead of being “misled” by others, they would be socializing the brilliance of their own incredible investment savvy around the backyard barbeque or enjoying their new promotion at work.

Our free markets and our constitution insure the individual’s right to strive to attain their piece of the American dream.  It does not guarantee that people will achieve this dream. It does not say if they reach out their hands and they come back with money, hoorah, but if those same hands come back burned they can put on the salve of public tax dollars or use legal thuggery to achieve the same.

Yet, we are allowing people and companies to sprint like track stars under the umbrella of being “misled” to socialize the losses wrought by their bad decisions.

We have turned the old saw that “victory has many fathers and defeat is an orphan” into the uniquely new American version that “victory has one father and defeat rests on the backs of others”.

The very freedom to contract for investment, to buy a house, a car or anything else comes with an individual duty for gathering facts and information being accountable for those decisions. 

So, you might ask, “what if the information is bad or tainted?” “What if they didn’t explain it fully, correctly, or provide the proper warnings?”

In every example listed above, each of these transactions is highly regulated, requires disclaimers, disclosures, contracts and a customer’s signature that they understood the risks and rewards. Where companies took risks and subsequently failed one has to consider that these are their businesses and professions. If these professionals don’t understand the risks they are taking, and take the loss (their own job, business failure or both), they should get into a different business.

As far as receiving the “right” information … what information is ever certain when produced by another individual or group of people? When has information produced by human beings ever not been slanted by their ability to gather facts, process those facts within the context of their education, experience, cultural background and personal biases?

When money is involved, should you assume any person at either end of the transaction is looking out for your best interest? Or should you consider that there could possibly, just possibly, be some taint of their desire for their own economic gain?

Unless we are talking about math where 2 + 2 = 4, this pristine and precise information cannot be found. In fact, the use of math in the complex models used to provide much of the information today is so steeped in assumptions, that include those same individual biases that in this new math 2 + 2 can end up equaling 7, 25 or 100, depending on the individual modeler.

The financial statements of publically traded companies are probably the most historically scrutinized results of addition and subtraction and weighty regulation and audit, yet the allowance for management variance and categorization leaves even these additions of apparently simple 2 + 2 equations to varying sums.

The old “Caveat Emptor” or “buyer beware” is the mantra. The right to participate and the opportunity for gain, brings with it the risk of loss. If people don’t have the desire, ability or will to be informed enough to understand the risk of their undertaking, is it someone else’s responsibility to be sure they do?

If they subsequently leave the thinking and advice to others when their economic viability is at risk, is it someone else’s problem?

But if I hadn’t been “misled “(lied to), I would have made a different decision.

Really?

When dollars seem to be falling from heaven on your friends and neighbors in a market boom and the press is touting the incredible economic miracle, are your ears open to the cautionary tales and explanations of the risks?

Would your investigations be deep and wide to make an informed decision or would you perhaps skip over the pesky warnings for a reach at the pot of gold at the end of the rainbow? That’s your right for sure, one way or the other.

Hindsight’s 20/20, and many lawyers make their living peering through the perfection of hindsight’s 20/20 glasses. So many lawyers, so many pairs of expensive glasses, and so many Americans rushing to empower them to get back their stolen money from those that “Misled”.  Join these with so many of their fellow lawmakers and lawyers in congress who are all trying to keep their jobs as the panicked and distressed line up at the public and private trough to be remunerated or saved for being “misled”.

I have to admit, I must have misread the constitution when it seems to guarantee my fellow Americans and I the right to pursue life, liberty and happiness without the interference of government or of other people! That we would have this right as free individuals to make personal choices that would benefit me if made correctly and be my problem if they were wrong.

But for this right, this right to participate in this grand experiment in the right of the individual to make independent, free decisions, I wouldn’t have the right to shift the burden of my bad decisions to others under any umbrella… but I guess I was MISLED.

Fannie Mae and Freddie Mac; the Federalization of the Mortgage Business

The Federalization of the mortgage and housing industry is front and center in public awareness as of Thursday. I talked about this just last week in the “Credit Crisis and the Rush to Government Bailout”. This has been happening in a series of ways for the past year as the crisis began and is now reaching zenith. The Government Sponsored Enterprises, Fannie Mae and Freddie Mac are “quasi” governmental entities and their failure has always been presumed, and as you will see as time progresses, not allowed to fail as government intervenes to support them.

The GSEs

No serious discussion about the mortgage industry can leave out the most powerful players in the markets development and ongoing operations. These organizations (GSEs) securitize and/or guarantee and hold mortgage loans in the Trillions of dollars.

There are three primary mortgage related entities with direct or indirect ties to the government. They are the government owned Government National Mortgage Association (Ginnie Mae), and the Government Sponsored Enterprises which include Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Ginnie Mae is directly owned by the government and their mortgage securities are the only securities explicitly backed by the full faith and credit of the U.S. Government. They are the issuer of all types of mortgage loans however are the only issuer of loans insured by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), the Federal Housing Administration (FHA) and the Office of Public and Indian Housing (PIH) and loans made by the U.S. Department of Agriculture (USDA) Rural Development Housing and Community Facilities Programs.

The difference between Ginnie Mae and Fannie and Freddie (created in 1970) is that Ginnie Mae is owned and operated by the U.S. Government within the Department of Housing and Urban Development (HUD), while Fannie and Freddie are private, shareholder owned corporations that are not directly (explicitly) supported or funded by the U.S. government.

Throughout history and as current market conditions show this is a distinction without a difference. It is clearly implied that Fannie and Freddie are backed by the government.

The GSE entities are regulated by the Office of Federal Housing Enterprise Oversight (OFHEO). The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 created this regulatory oversight to address the GSEs safety and soundness which is managed by OFHEO. It also established oversight to be sure the GSEs adhere to their affordable housing requirements which is monitored by the U.S. Department of Housing and Urban Development (HUD).

To give you an idea of the influence these entities have on the mortgage market note the size of the mortgage debt outstanding estimated by the Federal Reserve at $11.9 trillion by the end of 2007. Fannie and Freddie Macs residential mortgage debt held in portfolio or securitized reached $4.9 trillion or 41.4% of the total market by year end 2007.

The GSEs’ shares are increasing as of this writing due to the fact that the secondary market has seized up to the point that more loans are being directed to government backed programs where the liquidity still exists. Total mortgage originations (dollar volume of purchased loans) market share grew from 37.4% in 2006 to 75.6% in the fourth quarter of 2007 (OFHEO Report to Congress 2008, 2008).

These companies have been embroiled in an accounting scandal, investigations of their top officers. Fannie Mae is currently under a consent agreement (ordered to take various actions) and Freddie Mac is under a voluntary agreement to fix risk management, process problems and controls. 

“For the first time in four years, the Enterprises filed their annual financial statements on a timely basis. Significant progress was made in the remediation process, but OFHEO concludes that both companies remain classified as significant supervisory concerns. The primary reason for this classification has changed from previous years. The extraordinary declines in the housing and mortgage markets have greatly increased their credit and interest rate risks, which have put additional pressure on their credit management, interest-rate risk management and financial modeling processes. As you will read in this report, they have made reasonable progress in these areas as well as in governance, internal controls, systems, and operational risk management; still, they both, to a varying extent, have significant further work to finalize their remediation efforts and test those improvements(OFHEO, 2008).”

The GSEs are providing a much needed stabilizing force in the mortgage market through this crisis as was the intent of their charter to begin with. But to continue to say the government guarantee is implicit rather than explicit because it is not written that way is now proven disingenuous. The American tax payer is subsidizing these entities, according to Congressional Budget Office (CBO) study in May of 1996 then to the tune of $6.5 billion in 1995, and is certainly responsible as the lender of last resort to these massive institutions.

With the current credit crisis in full swing we have suddenly lifted the GSEs out of their supervisory arrangements, lowered their capital requirements, and loosened underwriting criteria. Congress can do this again because, again, the taxpayer is behind them shouldering the risks. The interesting thing to watch will be private industries rush to pull it all back when the market normalizes as it surely will to increase their profits. In the meantime the GSEs will have captured most of the market, taken on significant risks, and have a completely different, worsening, risk profile.

So as of today the Fed and the U.S. Treasury Department are looking for ways to prop up these entities. Conversations include opening up the Fed Discount window which is the mechanism that has allowed banks and non-banks to borrow longer term funds using riskier collateral from the Fed. The other option being discussed is the outright purchase of the GSEs debt by the Fed. Each of these options, and frankly any others, will be shifting billions of dollars of risk to U.S. Taxpayer.

With mortgage insurance companies like PMI trying to stay oxygenated with the triad of pressure from skyrocketing insurance claims, continually lowered credit ratings and thus higher capital costs (if they can even access capital with their lower ratings) and reduced revenues because of all of these, the government owned and operated FHA will be the only viable mortgage insurance program left.

Why?

Because its government owned and will be subsidized by U.S. taxpayers as losses begin to exceed claim paying capability.

The American taxpayer has been pulled into supporting trillions of dollars of high risk mortgages now and in the future.

Do you think that’s ok? Do you think they should be allowed to stand on their own or fail on their own? Do you see any alternatives to these problems?

I look forward to any comments or suggestions you might have.

The Credit Crisis and the Rush to Government Bailout

The current credit crisis and its impacts on our economy and economies across the globe are now evident. The easy money period between 2001 and 2006 poured trillions of dollars of profits into financial services market participants and individuals alike. Trying to place singular blame in this situation is like trying to pin the tail on a herd of donkeys. Banks, mortgage banking companies, Wall Street invest banks, credit rating agencies, regulators, home builders and developers, the Federal Reserve and investors seeking to maximize their returns all share in this problem in one way or another.

Let me start by saying that I am an ardent believer in free market capitalism… period. I am also in full support and a cheerleader for individuals and companies alike to make as much money as possible by providing value and innovation to the customers and markets they serve. The conversations about CEO salary caps and the like smack of socialism at best and communism at worst and have no place in our markets or society.

I also believe that the fundamental right of individuals of age to contract and make decisions for themselves is at the very heart of our freedom and prosperity.  Sometimes people are rewarded by their decisions and sometimes they are penalized for them but at the end of the day, if the transactions are entered into legally, morally and ethically by both parties the gain or the loss is the individuals to bare.

Privatizing Profits and Socializing Losses

What I do have a problem with is that these same individuals and all of these companies, having reaped all of the rewards from their activities and having all of the potential upside, are all now looking to the Government and to the tax payers to bail them out when their decisions have led to bad outcomes and even catastrophe. This event is not an “Act of God” as may be prescribed to Hurricane Katrina requiring public assistance. These are the results of millions of individual choices made by responsible adults of contracting age and private businesses.

These companies and the people managing them reaped billions of dollars in profits and compensation. Individuals made billions of dollars investing in mortgage bonds, buying homes, flipping homes and extracting the equity.

Now that it’s all gone bad what’s the solution?

The solution is a taxpayer bailout of massive proportions through the federalization of the mortgage and credit markets. The expanded use of the Federal Reserve, Fannie Mae, Freddie Mac FHA and just the outright handout of tax breaks and U.S. Treasury cash have put the substantial future risks and current losses right at the feet of the American citizen.

This privatizing of profits and socializing of losses shakes the very foundation of our professed beliefs and the very real workings of our markets in freedom of choice and free markets.

It stretches the imagination that if you go out and make a bad decision on a car purchase and lose money, make a stock investment that goes bad and lose money, or buy a lottery ticket and don’t win or gamble away thousands of dollars in Las Vegas, that these losses are and should be individual choices and outcomes but it’s somehow different because an individual bought a house. In the majority people not only buy a house for safety, security and that “feeling” that comes with homeownership but in the hopes of appreciation on a large investment.

If mortgage delinquencies and foreclosures spiked to 20% of the mortgage borrowing population 80% of this entire population of homeowners are paying their mortgages on time regardless of what is happening to the value of their home. If we’re handing out money why are we handing it out to the people that made the wrong decisions and not giving it away equally to “homeowners” en masse?

There are not many successful incentive programs built around rewarding the bad decision makers vs. the good decision makers that I am aware of. In fact if the incentive takes the risk out of future decisions then I will take more risks if I know someone will subsidize my loss. There is a severe lack of common sense, fair-play, balance and ethics at play here.

Don’t get me wrong. I feel badly for every borrower involved that has been hurt by this just as I do for people when the stock market drops and so many people lose so much money. I also believe that people that were fraudulently induced into their situation should have remedy, which they do in the courts, not through government. 

Think of it this way… it would have been better at this point to have had a nationalized housing program that would take billions of dollars of taxpayer money and buy the houses outright for people that the government thinks are worthy but really can’t afford it.

People have a fundamental problem with significant, programmatic income redistribution like that when it’s “in your face” but don’t see it framed the same way in the disjointed, confusing web of “solutions” that have already been enacted with much more on the way. It is however, exactly the same.

Congress is at the very heart of this interference and manipulation. In their rush to appease and support major corporations and investors (contributors all), shrill customer advocate groups and some small segment of voters, they pile over one another to pour billions of hard earned tax dollars at the problem like so much oil on the squeaky wheel. They defer to experts at the Fed and others letting them make decisions that clearly stretch the boundaries of, or are just outright beyond the boundaries of their charters. The Fed jumps in with even more zeal and fewer restraints to “save the financial system from collapse” putting its protective, tax payer blanket over their constituents.

These are the same "experts" that helped create the problem in the first place. These are, for the most part, good people with good intentions, all with competing constituent interests, making cumulative bad decisions that put a cancer causing salve on a wound to stop the immediate bleeding today. The tumors are going to be popping up in places and at times that will be totally unexpected and will have to be dealt with more severity and more public money, in the future.

The Fed and the U.S. Treasury are playing the same game of chicken the originators were back in 2006 only with much more power, more sophisticated tools and controls and doing it with tax payer, not private money.

It goes something like this… If the government shifts the burden of risk to itself the credit markets will regain confidence, liquidity will return (the money will flow), the markets will “normalize”, the risky assets we’re now backing with tax payer dollars will come back to a higher value and voila; we’ve avoided the pain. Sound familiar?

There seems to be this consensus that the failure of many of these major banks would collapse the entire financial system here and around the world.

I find this difficult to imagine with the Trillions of dollars of capital flowing through global markets everyday and many financial institutions (i.e., Wells Fargo, J.P. Morgan and Bank of America) on solid footing because they made better decisions during the boom period in balancing their risks.

The other glaringly obvious argument against this is the ability for bank and non-bank financial institutions to re-capitalize (get more money) even in light of the severity of their problems. Investors foreign and domestic are looking for opportunities to own in the upside of these now troubled companies and have invested billions to shore them up for that chance. Sure it’s at a fire sale price, certainly it’s painful, and yes there will be companies that can’t find enough money or find it in time and go out of business. And yes, it will put a strain on the financial system. That’s the definition of free market capitalism.

Bailing everyone out from start to finish in this thing has not only shifted the private losses to tax-payers but sent a huge signal to future actors that the ultimate downside risk isn’t so ultimately bad after all.

We might as well create a new national corporate and banking “Federal Lost Investment Insurance Program” we’ll call “FLIP” that is the bigger brother to the FDIC deposit insurance plan. The FDIC plan insures depositors their money back for up to $100,000, if one of their insured banks fail. The new FLIP program is the Federal Reserve and Congressional guarantee that if the investment losses are big enough and bad enough then these “too-big-to-fail” players will be guaranteed and saved by the Federal government.

Being FLIP – The New “FLIP” Program

The model for the FLIP program is a little different however; the FDIC actually collects insurance premiums from the banks whose deposits it insures. FLIP wouldn’t have to involve itself in pesky matters like that because ultimately the premiums to “flip” losses onto tax payers backs are already collected by the IRS.

The mortgage and housing markets have been transformed over time from a fairly simple business of bank balance sheet borrowing and lending to a highly sophisticated and complex web of instruments, market participants and global interactions.

As in so many areas of society, the speed of technological innovation has exceeded our ability to control these dynamic forces. While allowing wonderful and beneficial innovation it also brings a false sense of security to its users and rather than migrating in our experience and waiting for historical results, we fly full speed ahead with our models like so many unproven test aircraft as if they were already proven ready for fleet deployment.

These innovations have been extremely beneficial to borrowers and market participants alike providing more access to more capital. The massive amounts of money that flow through this system and the profits for individuals and companies alike are astounding  and everyone would like to participate and wants as much, as fast as they can get it. This is as it should be.

The issue is not that we won’t have problems. This won’t be the last asset bubble that collapses leaving a path of destruction in its wake. It is the price for pioneering and moving forward. The issue is how we learn from what happened and improve our ability to balance controls and free markets in as close to the right formula as possible.

One thing is for sure, if we allow individuals and companies the freedom to make their own financial decisions they should be left with consequences of those decisions, good or bad, or they, and we, would have learned nothing or certainly far less than we should.

It should be clear how there is a direct link from the tax payer wallets to their pockets now that things have gone bad. It is as if billions of dollars in salaries, bonuses, profits and borrower gains were made privately and now that these same players are having trouble and we can’t ask them for the money back to pay for this mess, we will give them more and save them with tax payer dollars.

This troubling mix of government and public policy integrated with private practice and wealth creation makes for bad bed fellows. The Federal Reserve is a real influence over these events, creating them and trying to fix them, and does a poor job of both.

Our policy makers use the “potential failure of the banking system” as a reason to prop up private interests and to throw billions of dollars at the problem. Some with very real and calculable ramifications, but the majority of them will bring incalculable impacts and distortions that will only be evident over time.

The bottom line is that if we are going to allow private profits, then private interests should be allowed to fail. If this notion of private interests being so intertwined with the failure of our financial system is as real as they would have us believe i.e. Bear Stearns and all of the counterparty risk, then we have no more significant public policy issue than unwinding theses financial entanglements with maximum speed and getting on with business. This is what Congress should spend its emergency time on and not figuring out how fast they can hand out money.

If this truth is supposed to self evident, that we believe the public must prop up private interest, then let’s quit acting as if we have a free market economy and start socializing profits and put government controls over these sectors since we are already responsible for the losses.

It just feels more honest to me that way.

Guns and Control! Control! Control!

On June 26, 2008, the Supreme Court, at long last, confirmed the right of individuals to possess firearms as guaranteed by the second Amendment to the U.S. Constitution. Twisted interpretations of this clause have led to the slow suffocation of the very basic natural right of the individual to self-defense. This clause is not limited to self-defense, it also includes the basic right to own firearms for sport, hunting or any other legal purpose.

Amendment II to the United States Constitution

“A well regulated militia being necessary to the security of a free State, the right of the People to keep and bear arms shall not be infringed.”

This is a welcomed decision and the timing is prescient as we come to the Fourth of July weekend recalling just how these rights were woven into the fabric of life recalling John Adams words in July 1776 when he wrote to his wife Abigail envisioning a day that…

"will be celebrated by succeeding generations as the great anniversary festival. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires and illuminations from one end of this Continent to the other from this time forward forever more."

To read an excellent review of the issues and outcomes of the recent decision read Robert A. Levy’s July 2, 2008 article “Second Amendment – No Longer Embarrassing”.   

With so many great reviews of the decision, this seems a better opportunity to discuss the issue of how special interest groups that specialize in gaining “control” eat away at our liberties like a slow termite infestation eating away at the foundation of our countries constitutional house.

Patient, persistent, and righteously endowed, they specialize in getting you to live your life to their edict, even if it may cost you yours.

Control! Control! Control!

It is truthfully said that gun control is not about “guns” but about “control”.  A gun is a tool that has no more living animation than that of a knife or a hammer. I’ve yet to see a firearm jump off the ground and make its way to rob a liquor store of its own volition. It is the individual wielding the tool that determines the use or misuse of the object.

To that end, we pass laws. We pass laws that cover penalties for individual actions that harm others; everything ranging from murder, to assault, assault with a firearm, robbery, robbery with the use of a firearm, brandishing a weapon in threatening manner and so on. You pay the penalty if you hurt someone illegally whether the harm is caused by your individual use of a car, a fist, a knife, a pencil, a hammer… or a gun.

But this is not enough for those who don’t like guns. Whether through complete unfamiliarity, a complete disconnect about interest in them for hobby and recreation, and certainly out of fear, they have and continue to try and remove this basic right from the individual.

One shouldn’t try to confuse this conversation with facts where the mounting body of evidence proves these controls don’t work and actually work against the law abiding citizen. It is enough to say (even common sense would tell you) that criminals are the primary cause of gun related crimes and lo and behold, criminals don’t follow the law anyway. Gun control is not “crime control”… it is purely control.

Before the Supreme Court’s ruling, prohibitionists tried to drag you to the alter preaching “if there were no guns in America then the criminals wouldn’t be able to steal them, and use them to kill people”.  Just head on over and have a look at our friends in England where guns have been outlawed and violent crime has increased to see how the criminals respond when the citizenry can’t defend itself.

Fortunately, our natural right is finally affirmed (troublesome that it needed to be) and the outright attempts to leave us prey to criminals as they tried to do in Washington D.C., San Francisco, Chicago and New York won’t fly. No longer will a phone, 911 and law enforcement that shows up after the fact to clean-up the mess, be a person’s only defense against violence.

So why would the gun controllers, while certainly chastened by the affirmation of the individual right second amendment, make the appearance to be unphased as a quote from the President of the Brady Center Paul Helmke would indicate after the ruling?

“Our fight to enact sensible gun laws will be undiminished by the Supreme Court’s decision in the Heller case.  While we disagree with the Supreme Court’s ruling, which strips the citizens of the District of Columbia of a law they strongly support, the decision clearly suggests that other gun laws are entirely consistent with the Constitution.”

It is because these groups are left to rally on in their efforts to leave the individual unarmed for self-defense. They accomplish this through the very real tactic of near prohibition through rules, regulations and the penalty of law for law to achieve the same end. The Heller case ruled on by the Court is a perfect example where you could have a firearm, but it had to inoperable or disassembled.

Since the criminals are proven to have no such fear of these laws, I will term gun control advocates the “Crime Endorsement Group” or CEG.

Here is just a small sampling of the methods the CEG uses to accomplish the same control through other means:

• Hold gun manufacturers liable for the misuse by individuals using their products (akin to suing a car manufacture for people found at fault in a car accident)
• Increase waiting periods to take possession of a firearm after purchase even though the criminal background check has been cleared
• Limit the number of firearms that can be purchased within timeframes that make it inconvenient
• “Smart Gun” laws attempting to mandate that manufactures produce semi-automatic handguns that “recognize the users “hands” (this technology does not even exist)
• Ammunition registration laws requiring purchasers and sellers of ammunition to be “registered”, fingerprinted and put in a database
• Serialization of ammunition that requires each cartridge to have a unique serial number stamped into them and requires these numbers be recorded at the time of purchase for future tracking
• Limit the amount of ammunition purchases i.e. 50 rounds (bullets) per month
• Handgun serialization that requires the gun itself to stamp its serial number onto cartridges fired from that gun
• Mandate that a firearm owner report within 5 days if a firearm is lost or stolen. If they didn’t know, it the legal burden of proof is on the owner.
• To outlaw the sale of firearms and ammunition at gun shows in public forums, even though they are cordoned and lawfully conducted.
• Limiting the number of rounds an individual “clip” or magazine can hold
• Make it illegal or restrict and individuals right to carry a firearm for personal defense.
• Defining as banned weapons “assault weapons”, then packing the regulation.  These include a myriad of technicalities that apply to things like pistol grips on shot-guns, whether ammunition can be attached to the firearm itself, whether a clip is detachable in such nonsensical ways that you can tell they were drafted by a. people without a clue as to the workings of the firearm, b. people who don’t care one way or the other just so that they make it as difficult as possible and easy to restrict and entrap the individual.

My home state of Controlafornia is a homeland for CEG testing and hopeful implementation of all of the above. To help law abiding citizens understand what constitutes an “assault weapon” vs. a Controlofornia legal firearm, the folks at calguns.net put together this handy chart to help. You will notice that the chart, as “simplified” as it is, still references out to schedules and regulatory sections.

Again, none of these laws is proven to reduce the level of crime. In fact in many cases they have proven otherwise and in the case of many of the “shall-issue” right-to-carry states (the state has to have a reason not to issue an individual a permit to carry a firearm) has proven to be a crime deterrent.

Imagine criminals that have to think twice about whether the person they are going to victimize might be able to defend themselves.

All of these tangential means are used to meet the prohibitionist goals.

This doesn’t mean that background checks, not extending these rights to felons or the mentally ill, shouldn’t prevail. Nor does it mean that military type weaponry like tanks, shoulder fired rockets, mortars or grenades to name a few have a place in the right to self-defense or use in sports, hunting and recreation. These are reasonable restrictions, when balanced against the individual right.

So voters beware. The controllers aren’t reducing crime nor increasing your safety. They are purposefully, willfully and very craftily pulling away your freedoms.

If we want to reduce crime and violence, we need to address our fixation on the Drug War and its results. More on this topic in the next conversation … There are few bullets left in the clip to shoot at this one.