The Man Who Never Was...Barack Husain Obama

"The public will be voting based on the idealized image of the man who never was. If he wins, however, we will be governed by the sunken, cynical man Obama really is."
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If this doesn't send chills down you spine, nothing will!
A sunken, cynical man who will stop at nothing to control your life with socialism and playing the race card. He will lead by example. His example is to accuse then lie about the facts. He will spark a race war and create a wider racial divide. I allready see this happening around me. A black man told me today, quote: "If Obama is not elected it will be because of racism in America." This is and will continue to be the race card that is played by some blacks who parrot Obama's excuse for America not bowing to his cynical lies. This excuse and others like it fosters what is called "white guilt" which is the need felt by many to vote for Obama to not be an example of racism because of not voting for a black man. This is black racism because telling a white man to vote for obama or else is playing the race card. I say don't vote for Obama just because he is black. Vote for him on his qualifications and experience as a community organizer. Vote for him because of his 1,300 or so days in the us senate. Vote for him because as a state senator he voted present.In 1999, Barack Obama was faced with a difficult vote in the Illinois legislature — to support a bill that would let some juveniles be tried as adults, a position that risked drawing fire from African-Americans, or to oppose it, possibly undermining his image as a tough-on-crime moderate.

In the end, Mr. Obama chose neither to vote for nor against the bill. He voted “present,” effectively sidestepping the issue, an option he invoked nearly 130 times as a state senator.

Sometimes the “present’ votes were in line with instructions from Democratic leaders or because he objected to provisions in bills that he might otherwise support. At other times, Mr. Obama voted present on questions that had overwhelming bipartisan support. In at least a few cases, the issue was politically sensitive. This guy is like a vulture that only searches for dead meat. A vote for Oama is a vote for a coward in an empty suit. May GOD help us all if this empty suit is elected. (story reports)

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The Man Who Never Was The Man Who Never Was

The mainstream media have gone over the line and are now straight-out propagandists for the Obama campaign.

While they have been liberal and blinkered in their worldview for decades, in 2007-08, for the first time, the major media consciously are covering for one candidate for president and consciously are knifing the other. This is no longer journalism; it is simply propaganda. (The American left-wing version of the Völkischer Beobachter cannot be far behind.)

And as a result, we are less than seven weeks away from possibly electing a president who has not been thoroughly or even halfway honestly presented to the country by our watchdogs — the press. The image of Obama that the press has presented to the public is not a fair approximation of the real man. They consciously have ignored whole years of his life and have shown a lack of curiosity about such gaps, which bespeaks a lack of journalistic instinct.

Thus, the public image of Obama is of a "man who never was."

I take that phrase from a 1956 movie about a real-life World War II British intelligence operation to trick the Germans into thinking the Allies were going to invade Greece rather than Sicily in 1943. Operation Mincemeat involved the acquisition of a human corpse dressed as "Major William Martin, R.M.," which was put into the sea near Spain. Attached to the corpse was a briefcase containing fake letters suggesting that the Allied attack would be against Sardinia and Greece.

To make the operation credible, British intelligence concocted a fictional life for the corpse, creating a letter from a lover and tickets to a London theater — all the details of a life, but not the actual life of the dead young man whose corpse was being used. So, too, the man the media have presented to the nation as Obama is not the real man.

The mainstream media ruthlessly and endlessly repeat any McCain gaffes while ignoring Obama gaffes. You have to go to weird little Web sites to see all the stammering and stuttering that Obama needs before getting out a sentence fragment or two. But all you see on the networks is an eventually clear sentence from Obama. You don't see Obama's ludicrous gaffe that Iran is a tiny country and no threat to us. Nor his 57 American states gaffe. Nor his forgetting, if he ever knew, that Russia has a veto in the U.N. Nor his whining and puerile "come on" when he is being challenged. This is the kind of editing one would expect from Goebbels' disciples, not Cronkite's.

More appalling, a skit on NBC's "Saturday Night Live" last weekend suggested that Gov.
Palin's husband had sex with his own daughters. That show was written with the assistance of Al Franken, Democratic Party candidate in Minnesota for the U.S. Senate. Talk about incest.

But worse than all the unfair and distorted reporting and image projecting are the shocking gaps in Obama's life that are not reported at all. The major media simply have not reported on Obama's two years at New York's Columbia University, where, among other things, he lived a mere quarter-mile from former terrorist Bill Ayers. Later, they both ended up as neighbors and associates in Chicago. Obama denies more than a passing relationship with Ayers. Should the media be curious? In only two weeks, the media have focused on all the colleges Gov. Palin has attended, her husband's driving habits 20 years ago, and the close criticism of the political opponents Gov. Palin had when she was mayor of Wasilla, Alaska. But in two years, they haven't bothered to see how close Obama was with the terrorist Ayers.

Nor have the media paid any serious attention to Obama's rise in Chicago politics. How did honest Obama rise in the famously sordid Chicago political machine with the full support of Boss Daley? Despite the great — and unflattering — details on Obama's Chicago years presented in David Freddoso's new book on Obama, the mainstream media continue to ignore both the facts and the book. It took a British publication, The Economist, to give Freddoso's book a review with fair comment.

The public image of Obama as an idealistic, post-race, post-partisan, well-spoken and honest young man with the wisdom and courage befitting a great national leader is a confection spun by a willing conspiracy of Obama, his publicist (David Axelrod) and most of the senior editors, producers and reporters of the national media.

Perhaps that is why the National Journal's respected correspondent Stuart Taylor wrote, "The media can no longer be trusted to provide accurate and fair campaign reporting and analysis."

That conspiracy not only has Photoshopped out all of Obama's imperfections (and dirtied up his opponent McCain's image) but also has put most of his questionable history down the memory hole.

The public will be voting based on the idealized image of the man who never was. If he wins, however, we will be governed by the sunken, cynical man Obama really is. One can only hope that the senior journalists will be judged as harshly for their professional misconduct as Wall Street's leaders currently are for their failings.
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RUSH LIMBAUGH QUOTES: Speaking of Fannie Mae and Freddie Mac, you know what really is at the root of this: high-risk loans. High-risk loans. People had no way of paying them back. They weren't even asked about their ability in many cases, they weren't asked to fill out the income or anything like that. High-risk loans were made on not much more than hope that they would be paid back, and each of these dead-end mortgages were pooled and packaged and sold and resold and resold on the hope that they would be paid back.

The loans were pushed by Democrats who actually were acquiring wealth and power for themselves while telling America these risky loans were going to be good for everybody. There was no history of untold numbers of unproven borrowers being capable of paying back loans of this size, but people just felt good about giving people that they knew nothing about the chance to live in a house that they had not earned. It was so typically socialist Democrat. "Oh, this is how we feel good. We gonna let people live in houses that they can't pay back!" By the way, remember this? And this is still true. Do you realize that 95%, 96% of Americans who have a mortgage are still paying them? Do you realize we're talking here four or five percent. How could four or five percent of these mortgages failing cause all this? Well, like Chuck Schumer said yesterday, "Well, the lowly mortgage brought the economy to its knees."

No, what happened is what was done with these mortgages. They were sold; they were resold. They were packaged. They were borrowed against. They were used as collateral for securities purchases. They were worthless from the get-go. It's not so much that it's just four or five percent of people in foreclosure; it's the multiple of people who got rich trading, selling, packaging, borrowing on all this worthless paper -- and that's why it's deep. People just felt good about giving people they knew nothing about a chance to live in a house that they had not earned. When I thought of it that way, when I thought of how good people felt about giving people they know nothing about the chance to live in a house they've not earned, I thought of Barack Obama and the White House. Barack Obama is nothing different than a high-risk loan.

He has no history of accomplishment. He has nothing besides a nice smile and a firm handshake as evidence he can deliver on what he promises. The White House shouldn't be available to high-risk people, such as a 144-day junior senator who has a myriad of highly questionable, high-risk associates -- and when he fails, we will be asked to bail out the United States for the damage that he caused. I'd like a little more collateral on a presidential candidate than just the having Bill Ayers and Jeremiah Wright and Tony Rezko as cosigners on his application! We know he's the most liberal senator in America, and our country desperately needs to rein in spending and stimulate the economy -- two things that liberals are totally unsuited for, especially a man who has surrounded himself with communists, Marxists, domestic terrorists, and anti-American bigots! Those are his cosigners, as he seeks a loan to be in the White House for a period of time. It might not be the time in our country's history to take such a massive risk. We can all see how these massive risks can turn out.

The credit mess and who is to blame

Barney (Queer) Frank and Chris Dodd should be charged with fraud. Both have lied
about Fannie Mae and Freddie Mac. Bad government policy and empty suit types like
Barack Obama in authority. These people above are the stupid sob's that have caused
the current problem because there was a fix and they said no there is no problem
and stopped the fix for Fannie Mae and Freddie Mac. Democrate idiots. Bill Clinton
today said that the democratic congress was to blame for the current crisis. Even
the know liar is telling the truth about his fellow democrats.

For the Credit Mess
By CHARLES W. CALOMIRIS and PETER J. WALLISON Article
wallstreet journal.com

Many monumental errors and misjudgments contributed to the acute
financial turmoil in which we now find ourselves. Nevertheless, the
vast accumulation of toxic mortgage debt that poisoned the global
financial system was driven by the aggressive buying of subprime and
Alt-A mortgages, and mortgage-backed securities, by Fannie Mae and
Freddie Mac. The poor choices of these two government-sponsored
enterprises (GSEs) -- and their sponsors in Washington -- are largely
to blame for our current mess.

How did we get here? Let's review: In order to curry congressional
support after their accounting scandals in 2003 and 2004, Fannie Mae
and Freddie Mac committed to increased financing of "affordable
housing." They became the largest buyers of subprime and Alt-A
mortgages between 2004 and 2007, with total GSE exposure eventually
exceeding $1 trillion. In doing so, they stimulated the growth of the
subpar mortgage market and substantially magnified the costs of its
collapse.

It is important to understand that, as GSEs, Fannie and Freddie were
viewed in the capital markets as government-backed buyers (a belief
that has now been reduced to fact). Thus they were able to borrow as
much as they wanted for the purpose of buying mortgages and mortgage-
backed securities. Their buying patterns and interests were followed
closely in the markets. If Fannie and Freddie wanted subprime or Alt-A
loans, the mortgage markets would produce them. By late 2004, Fannie
and Freddie very much wanted subprime and Alt-A loans. Their
accounting had just been revealed as fraudulent, and they were under
pressure from Congress to demonstrate that they deserved their
considerable privileges. Among other problems, economists at the
Federal Reserve and Congressional Budget Office had begun to study
them in detail, and found that -- despite their subsidized borrowing
rates -- they did not significantly reduce mortgage interest rates. In
the wake of Freddie's 2003 accounting scandal, Fed Chairman Alan
Greenspan became a powerful opponent, and began to call for stricter
regulation of the GSEs and limitations on the growth of their highly
profitable, but risky, retained portfolios.

If they were not making mortgages cheaper and were creating risks for
the taxpayers and the economy, what value were they providing? The
answer was their affordable-housing mission. So it was that, beginning
in 2004, their portfolios of subprime and Alt-A loans and securities
began to grow. Subprime and Alt-A originations in the U.S. rose from
less than 8% of all mortgages in 2003 to over 20% in 2006. During this
period the quality of subprime loans also declined, going from fixed
rate, long-term amortizing loans to loans with low down payments and
low (but adjustable) initial rates, indicating that originators were
scraping the bottom of the barrel to find product for buyers like the
GSEs.

The strategy of presenting themselves to Congress as the champions of
affordable housing appears to have worked. Fannie and Freddie retained
the support of many in Congress, particularly Democrats, and they were
allowed to continue unrestrained. Rep. Barney Frank (D., Mass), for
example, now the chair of the House Financial Services Committee,
openly described the "arrangement" with the GSEs at a committee
hearing on GSE reform in 2003: "Fannie Mae and Freddie Mac have played
a very useful role in helping to make housing more affordable . . . a
mission that this Congress has given them in return for some of the
arrangements which are of some benefit to them to focus on affordable
housing." The hint to Fannie and Freddie was obvious: Concentrate on
affordable housing and, despite your problems, your congressional
support is secure.

In light of the collapse of Fannie and Freddie, both John McCain and
Barack Obama now criticize the risk-tolerant regulatory regime that
produced the current crisis. But Sen. McCain's criticisms are at least
credible, since he has been pointing to systemic risks in the mortgage
market and trying to do something about them for years. In contrast,
Sen. Obama's conversion as a financial reformer marks a reversal from
his actions in previous years, when he did nothing to disturb the
status quo. The first head of Mr. Obama's vice-presidential search
committee, Jim Johnson, a former chairman of Fannie Mae, was the one
who announced Fannie's original affordable-housing program in 1991 --
just as Congress was taking up the first GSE regulatory legislation.

In 2005, the Senate Banking Committee, then under Republican control,
adopted a strong reform bill, introduced by Republican Sens. Elizabeth
Dole, John Sununu and Chuck Hagel, and supported by then chairman
Richard Shelby. The bill prohibited the GSEs from holding portfolios,
and gave their regulator prudential authority (such as setting capital
requirements) roughly equivalent to a bank regulator. In light of the
current financial crisis, this bill was probably the most important
piece of financial regulation before Congress in 2005 and 2006. All
the Republicans on the Committee supported the bill, and all the
Democrats voted against it. Mr. McCain endorsed the legislation in a
speech on the Senate floor. Mr. Obama, like all other Democrats,
remained silent. (In other words he voted present as is his coward way)

Now the Democrats are blaming the financial crisis on "deregulation."
This is a canard. There has indeed been deregulation in our economy --
in long-distance telephone rates, airline fares, securities brokerage
and trucking, to name just a few -- and this has produced much
innovation and lower consumer prices. But the primary "deregulation"
in the financial world in the last 30 years permitted banks to
diversify their risks geographically and across different products,
which is one of the things that has kept banks relatively stable in
this storm.

As a result, U.S. commercial banks have been able to attract more than
$100 billion of new capital in the past year to replace most of their
subprime-related write-downs. Deregulation of branching restrictions
and limitations on bank product offerings also made possible bank
acquisition of Bear Stearns and Merrill Lynch, saving billions in
likely resolution costs for taxpayers.

If the Democrats had let the 2005 legislation come to a vote, the huge
growth in the subprime and Alt-A loan portfolios of Fannie and Freddie
could not have occurred, and the scale of the financial meltdown would
have been substantially less. The same politicians who today decry the
lack of intervention to stop excess risk taking in 2005-2006 were the
ones who blocked the only legislative effort that could have stopped
it.

Mr. Calomiris is a professor of finance and economics at Columbia
Business School and a scholar at the American Enterprise Institute.
Mr. Wallison, a senior fellow at the American Enterprise Institute,
was general counsel of the Treasury Department in the Reagan
administration.

The Bubble Economy Is About To Burst

The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The maldistribution of wealth in the 1920's existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the maldistribution of wealth, caused the American economy to capsize.
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The sub-prime mess, the huge risks taken by hedge funds, and the conflicts of interest that led to Enron are all the consequences of serial bouts of financial deregulation. Will we reverse field in time to prevent another 1929?
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The Glass-Steagall wall was devised to prevent a repeat of the 1920s' scams, in which banks made speculative investments, turned the debts into securities, and sold them off to unsuspecting investors with the blessing of the bank. With Glass-Steagall, commercial banks were tightly supervised and given access to federal deposit insurance, to keep savings secure and prevent runs on banks. Investment banks, meanwhile, were not government-guaranteed and were free to do more speculative transactions for consenting adult customers. But Roosevelt's newly created SEC subjected securities markets to much tighter structures against self-dealing and insider conflicts of interest.
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Hedged In

The hedge-fund story has close parallels to the sub-prime mess. A hedge fund is a nominally private investment fund designed to make very risky financial bets and reap unusually high returns. Hedge funds are free from the disclosures required of ordinary investment companies, thanks to a loophole that exempts narrowly-held funds that serve very wealthy people, no matter how large the fund or how risky its strategies.

As long as hedge funds were small players, some very smart strategists could reap very large returns by exploiting obscure pricing anomalies in financial markets, with little risk to the larger system. But in the booming 1990s, hedge funds exploded. By 2006, hedge funds and their unregulated cousins, private equity companies, were generating a third to a half of the business executed on Wall Street, and hedge funds held an estimated $1.5 trillion in assets.

In the low-yield environment of the post-2000 crash, everyone was hungry for higher returns. Pension funds, university endowments, and other traditionally prudent investors began to pour their money into hedge funds to get higher yields, driving the funds to make ever more dubious deals, or deals that involved improper insider trades or conflicts of interest, to satisfy investors and keep the money coming in.

Not surprisingly, hedge funds ran into a Lake Wobegon problem: Everybody can't be above average. By 2003, some hedge funds were still producing outsized returns, but the typical fund was no longer even beating the market averages. As the markets discovered in the collapse of August 2007, a lot of hedge funds using sophisticated computer models were making very similar bets. Rather than offsetting each other's risks, they were reinforcing them.

Today, hedge funds are being squeezed from both sides. Many of their investors want out, and a lot of their banks have stopped advancing them credit. The only thing stopping a hemorrhage of investor withdrawals are rules limiting how quickly investors can take their money and run. As their balance sheets worsen, hedge funds are forced to sell off assets, often for big losses. Several have taken big hits. A few smaller ones have gone bust. But a big hedge-fund collapse is the other shoe that hasn't yet dropped.

What would that be like? When Long Term Capital Management, a leading hedge fund of the roaring 1990s, collapsed in 1998, the Federal Reserve went to extraordinary lengths to prevent an economy-wide credit panic. Hedge funds use so-called derivatives to leverage their own capital at ratios unthinkable to ordinary investors -- 20 or even 50 to one. When LTCM suddenly found that its computer models had guessed wrong, so many banks were owed so much money by LTCM that if the fund simply ceased operations, the losses would have wiped out the capital of New York's major banks. So the Fed, technically exceeding its statutory authority, leaned on the big banks to simply buy the fund outright, liquidate its positions in orderly fashion, and eat about $4 billion in losses. Because hedge funds are unregulated, and LTCM was doing business with so many different banks, neither the Fed nor the other regulatory agencies had any idea of the degree of risk LTCM posed until the fund blew up and the Fed had to contain the damage.

In the nine years since LTCM collapsed, the industry has become hydra-headed. More than 9,000 hedge funds have opened up shop, and the kind of rescue that the Fed mounted in 1998 would not be possible today, according to one former senior official of the Fed, because the risks are now so diffuse. In principle, the authorities can monitor hedge funds by keeping tabs on the books of the so-called "counterparties" -- the banks that underwrite their activities. But bank examiners have not been able to keep up with hedge-fund innovations. The industry is a financial black box.

Repealing Roosevelt

Hedge funds, private equity companies, and the sub-prime mortgage industry have two big things in common. First, each represents financial middlemen unproductively extracting wealth from the real economy. Second, each exploits loopholes in what remains of financial regulation.

The Roosevelt schema of financial regulation was built around two principles -- disclosure and outright prohibition of inherent conflicts of interest. All publicly listed and traded companies were required to disclose to the Securities and Exchange Commission and to the public all financial information deemed "material" to investor decisions. The New Deal also prohibited stock trading based on insider information, and it created structural barriers against the kinds of temptations that ruined the economy in the 1920s. The most notable of these was the 1933 Glass-Steagall Act, which prohibited the same financial company from being both a commercial bank and an investment bank.

The Glass-Steagall wall was devised to prevent a repeat of the 1920s' scams, in which banks made speculative investments, turned the debts into securities, and sold them off to unsuspecting investors with the blessing of the bank. With Glass-Steagall, commercial banks were tightly supervised and given access to federal deposit insurance, to keep savings secure and prevent runs on banks. Investment banks, meanwhile, were not government-guaranteed and were free to do more speculative transactions for consenting adult customers. But Roosevelt's newly created SEC subjected securities markets to much tighter structures against self-dealing and insider conflicts of interest.

The New Deal also acted on the home mortgage front. Millions of people were losing their homes and farms to foreclosures, both creating human tragedies and deepening the Depression. In response, the Roosevelt administration literally invented the modern system of home finance. Pre–New Deal mortgages had typically been short-term notes, where most of the principal was due and payable at the end of a brief term, often just three to five years. The New Deal devised the modern long-term, fixed-rate, self-amortizing mortgage. Congress created the Federal Housing Administration to insure these mortgages and win their acceptance among lenders. It also created the Federal National Mortgage Association to sell bonds and buy mortgages, and thus replenish the funds of local lenders. And the New Deal devised a system of federal home loan banks to supervise and advance capital to savings and loan institutions. Deposit insurance was extended to government-supervised mortgage lenders.

The system worked like a watch, combining sound lending standards with expanded opportunity. The rate of home ownership rose from 44 percent in the late 1930s to 64 percent by the mid-1960s. Savings and loan associations almost always ran in the black, there were no serious scandals, and the government deposit-insurance funds regularly returned a profit.

Look Ma, No Hands

If you fast forward to 2000, much of this protective apparatus has been repealed. Regulators who didn't believe in regulation and a compliant Congress have allowed financial engineers to evade what remains. In the 1980s, regulators began allowing exceptions to Glass-Steagall. In 1999, Congress finally repealed it outright, permitting financial supermarkets like Citigroup to operate any kind of financial business they desired, and profit from multiple conflicts of interest. The scandals that pumped up the dot-com bubble of the late 1990s, as well as the most flagrant cases like Enron, and the crash that followed, were the result of the SEC and the bank regulators ceasing to police conflicts of interest. In the scandals of the 1990s, corporate CEOs, their accountants, and stock analysts working for their bankers, all conspired to puff up corporate balance sheets and pump up stock prices on which executive bonuses depended. This is a little harder today, thanks to the honest accounting requirements of the 2002 Sarbanes-Oxley Act (which the Bush administration hopes to water down). But the same kinds of conflicts and potentials for abuse exist when a mega-bank underwrites a leveraged buyout by an affiliated hedge fund, and then hypes the sale of securities when the fund is ready to sell the company back to the public.

Meanwhile, the once staid and socially directed system of providing home mortgages was seized by financial wise guys and turned into another casino. In the early 1980s, exploiting the Reaganite theme of government-bashing, the savings and loan industry persuaded Congress to substantially deregulate S&Ls -- which then speculated with government-insured money and lost many hundreds of billions, costing taxpayers upward of $350 billion in less than a decade.

In 1989 when Congress reregulated S&Ls, the financial engineers just did another end run. Mortgage companies that were exempt from federal regulation came to dominate the mortgage lending business. This loop of the story begins in 1968 with the privatization of Roosevelt's Federal National Mortgage Association. In the wake of that move, investment bankers invented a daisy chain known as "securitization" of mortgage credit. Through securitization, a mortgage broker could originate a loan, sell it to a mortgage banker, who would then sell it to an investment bank like Salomon Brothers, who in turn would package the mortgages into securities. These were then evaluated and coded (for a fee) by private bond-rating agencies according to their supposed risk, and sold off to hedge funds or pension funds. Each of these worthies took their little cut, raising the cost of credit to the borrower. Rather than diffusing risks (a course that economic theory urges on a prudent capitalist nation), however, securitization concentrated them, because everyone was making the same bet on real-estate inflation.

In the sub-prime sector, you could get a loan without a full credit check, or even without income verification. The initial "teaser" rate would be low, but after a few years the monthly payment would rise to unaffordable levels. Both borrower and lender were betting on rising real-estate prices to bail them out, by allowing an early refinancing. But when a soft housing market dashed those hopes, the whole sub-prime sector crashed, and the damage spilled over into other financial sectors.

The Great Enabler

Ever since late July when the credit crunch in sub-prime mortgages became an economy-wide problem, all eyes have been on the Federal Reserve. None other than Milton Friedman, no friend of government meddling in the economy, blamed the Great Depression on the failure of the Fed in the 1930s to intervene aggressively enough. Financial writers have taken to quoting Walter Bagehot, the great financial journalist and commentator of the Victorian era, who correctly counseled that in a financial panic, the job of the lender of last resort is to flood the system with liquidity. This is what the Fed, somewhat belatedly, has been contriving to do.

At first, Chairman Ben Bernanke was reluctant to move too quickly, lest he signal that irresponsible speculators would be bailed out. Then, after pleas from Wall Street became urgent, and credit markets began freezing up in an old-fashioned panic, Bernanke moved.

In mid-August, the Fed flooded the financial markets with cheap money, in order to induce panicky creditors to keep lending and prevent an asset meltdown. Though the Fed's target rate on overnight inter-bank loans (the "federal funds" rate) was kept at 5.25 percent to avoid a sense of desperation, the actual rate fluctuated between 4.5 and 5 percent for several days, thanks to the tens of billions that the central bank poured into the markets.

Then, when that move failed to calm the markets, the Fed took the additional step of reducing the discount rate, the interest rate charged on money that banks borrow directly from the Fed itself. At this writing, the Fed is universally expected to cut the federal funds rate at its next scheduled meeting Sept. 18. The only question is how much.

How aggressively the Fed should move has been the subject of extensive commentary. If the Fed moves too slowly or doesn't cut enough, it ends up playing catch-up behind an advancing panic. If it moves too quickly or too generously, it just invites the next round of speculation with cheap money, and in passing might erode confidence in the none-too-robust dollar. But all of this commentary misses the larger point: If monetary policy is the only tool the government has at its disposal, the Fed can't possibly solve the larger crisis (or prevent the next one) by using interest rates alone.

Indeed, until Congress dismantled financial regulation, the Fed was not called upon to mount these heroic rescues, which have become so common in recent years. Until the 1960s, the central bank could keep interest rates low, confident that they would underwrite the growth of the real economy rather than risky financial speculation, for the simple reason that entire categories of speculation did not exist.

But during the past quarter-century, as deregulation has turned the economy into a casino, the Federal Reserve has had to mount major rescues at least six times. In the early 1980s, it bailed out the big New York banks, some of which lost more than the total amount of their capital in failed speculative third world loans; the money-center banks would have been adjudged insolvent if the Fed hadn't bent its usual capital-adequacy rules. Next, the Fed poured huge quantities of liquidity into financial markets after the stock market crash of 1987, in which the market lost more than 20 percent of its value in a single day. The Fed intervened again on several occasions after speculators destabilized several third world currencies and economies from Mexico to Malaysia. The Fed cleaned up after the aforementioned Long Term Capital Management collapse. It flooded markets with money after the dot-com crash and the attacks of September 11, and most recently in the credit crunch of summer 2007.

Indeed, markets have become so reliant on the Fed's bailouts that they even have a term for it -- "the Greenspan put." A put is a financial term meaning a right to sell a financial security at a predetermined price. The knowledge that the Fed would cheapen money in a crisis reassured speculators that they could always unload their paper. That awareness also influenced financial insiders to behave more recklessly.

The point is not that the Fed should turn its back when financial markets are on the verge of replicating the Great Crash. The point is that the Fed has become the chief enabler of a dangerously speculative economy. It is simply not possible to get the right balance of financial prudence and financial liquidity using monetary policy alone. That's why we once had a more carefully regulated economy.

The Fed, as the designated lender of last resort, does have more arrows in its quiver than monetary policy. It has certain regulatory powers -- but has been loath to use them. For example, the Fed has residual powers to crack down on the credit terms of sub-prime lenders who sell mortgages in financial markets (virtually all of them). For the better part of a decade, the late Federal Reserve Governor Ned Gramlich, who was the Board of Governors' most expert member on housing and mortgage markets, warned Chairman Alan Greenspan about lowered credit standards and the risks of a housing bubble.

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So in summary what has caused this crisis. The STUPID FEDERAL GOVERNMENT!

Too much deregulation.

The big push by democrates for low income family unsecured loans.

Our congress and presidents have set us up again for a DEPRESSION.

Its is comming. All in congress are not to blame. Congressional hearings were held.

Democrates were warned about freddie mac and fannie mae.

Nothing was done except get a bill out of committee by the republicans. No floor vote.

It seems now that with a little research we could have seen it comming. I think most people didn't want to see it comming or care.

Everyone thinks of the fed like insurance. When the insurance company goes belly up
the pot will run dry. It looks like its about to run dry. People are and will panic.

In the end people are like lemmings to some extent.

If we do go into a depression some people will have to learn to grow their own again.

Lets face it, we all can make do on a lot less. We can survive in spite of some
IDIOTS in congress paving the way for dr greed to pocket all he can while he can.

Dr greed is about to find out his stocks aint worth what they use to be.

Check out the price of gold. Panic has begun. A run on the bank has begun..the fed.

The bank will sonner or later close its doors. The next question is will obama or mccain declare marshall law?
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Oh by the way this is all to convenient for the purpose of propelling the empty suit
into the white house. The empty suit is like a blank check to many Americans. The timing of this crisis is very odd. Too odd to ignore for me. I do think people are
working behind the scenes to assure the community organizer will organize America
into a socialist society. Obama won't get elected because of his town meetings thats
for sure. He will be elected for 2 reasons. The democratic controlled congress
generated financial crisis and.....you guessed it White Guilt some of the same people who do and would buy
carbon credits to save us from something that does not exist global warming. Remember
if there is not a crisis the liberal democrates will create one. Its kind of like
telling us that 15 hurricanes will hit next year and not one did, which by the way did happen. Speculation leads to panic and panic leads to an empty suit and socialism. Its that simple forrest. (StoryReports)
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After reading the above it is enough to make one panic.
Keep in mind also the information which I have reproduced below:

We have gone beyond a subprime mortgage crisis. We are, let’s face it, in the midst of a global financial crisis. But it is important for investors to differentiate between the risks they face as shareholders in financial institutions and the risks they face as depositors or insurance holders in the larger banks and financial groups. In extremis, shareholders can and will be wiped out, as they have been in the case of Lehman Brothers and the likes of Northern Rock. But banks and insurers obviously hold a special place in the broader economy, and depositors and holders of insurance have every reason to believe that they will, by and large, be made whole in the event of a commercial banking or insurance group’s insolvency. The challenge for the international banking system is that there are very few private entities with either the capital or the willingness to support ailing rivals. The alternative – sovereign wealth funds – will be increasingly unpalatable as suppliers of emergency capital of last resort, particularly during a US election year. Which leaves the taxpayer to bail out the larger and more significant financial firms that are unable to work through their problems in an orderly fashion.

The financial markets are currently in a process of adjusting, rather painfully, to this new and more uncertain environment. The prices of multiple types of assets are reflecting not necessarily radically worse prospects, but forced, distressed selling on the part of many financial institutions and funds as those organisations scramble to raise liquidity. Some superb longer term opportunities will inevitably arise out of the panic.

As before, we would reiterate the significance of a sound, diversified and balanced investment approach. The world is not ending, though certain members of the investment banking community evidently are, as independent entities at any rate.

Imagine asking the empty suit for advice on investing. Uh, oh uh uh, oh, uh oh oh, eh.

Help Obama's Brother George Out

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George Hussein Onyango Obama, Barach Obama's brother lives in a hut in a ramshackle town of Huruma on the outskirts of Nairobi in Kenya. Telegraph.co.UK has the original story from August 21 2008.

He is 26 and lives on $12 a year. That is 3 cents a day.

His own flesh and blood has turned his back on him so it is up to us, the good people of America, to help this man out.

We would also like to point out what a difference a country makes. One of the Obamas was born in America and lives in a million dollar house has made over $20 million in the last three years.

George Obama was born in Africa, lives in hut and makes only 1 dollar a month. He needs a hand up and with your help we are going to give it to him.

Barack has not helped his brother out of poverty so we will. Our goal is to get him a clean place with running water, electricity, food, a car and job.
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He has only met his famous older brother twice - once when he was just five and the last time in 2006 when Senator Obama was on a tour of East Africa and visited Nairobi.

The Illinois senator mentions his brother in his autobiography, describing him in just one passing paragraph as a "beautiful boy with a rounded head".

Of their second meeting, George Obama said: "It was very brief, we spoke for just a few minutes. It was like meeting a complete stranger."

George added he was no longer in contact with his mother and said:"I have had to learn to live and take what I need.

"Huruma is a tough place, last January during the elections there was rioting and six people were hacked to death. The police don't even arrest you they just shoot you.

"I have seen two of my friends killed. I have scars from defending myself with my fists. I am good with my fists.
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Mr Obama, 26, the youngest of the presidential candidate's half-brothers, spoke for the first time about his life, which could not be more different than that of the Democratic contender.

"No-one knows who I am," he told the magazine, before claiming: "I live here on less than a dollar a month."

According to Italy's Vanity Fair his two metre by three metre shack is decorated with football posters of the Italian football giants AC Milan and Inter, as well as a calendar showing exotic beaches of the world.

Vanity Fair also noted that he had a front page newspaper picture of his famous brother - born of the same father as him, Barack Hussein Obama, but to a different mother, named only as Jael.

He told the magazine: "I live like a recluse, no-one knows I exist."

Embarrassed by his penury, he said that he does not does not mention his famous half-brother in conversation.

"If anyone says something about my surname, I say we are not related. I am ashamed," he said.
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I agree, you should be ashamed of your 'brother' barack obama. You are an example of his fake mass media show. Barack obama shuns you because he does not want to identify with you his own brother. It is similar to they way he shuns the black Americans also. He says he wants to be identified as a black man yet he will make sure not too many black people are seen in his rallys on tv. Why? I know why and so do you. I agree help this brother, his own brother will not.
Help a brother here
As a white man I am offended by a black man who will not help his own brother who lives on $12 a year.