GOP Capitulates, Finance "Reform" Bill Moves Forward

The timely leak of the SEC lawsuit against Goldman Sachs and a circus of the Senate hearing the other day over a CDS whose main buyers (two) were both large institutional investors who knew the risk have resulted in GOP capitulating to the "public opinion" (according to the article from Huffington Post, which has a photo of jubilant Chris "friend of Angelo" Dodd..ugghh) and agreed to proceed with the debate of the bill on the floor.

If the public do support this bill that no one has read, I'm so close to giving up and rolling over.

What's hilarious about this so-called "reform" to me is this:

"The bill would establish a nine-member Financial Services Oversight Council, including the treasury secretary, Federal Reserve chairman and the heads of regulatory agencies to monitor markets for threats, such as the bubble in housing prices and mortgage-backed securities that preceded the financial near-collapse two years ago."

In other words, people who didn't have a clue that anything was amiss until the collapse in 2008 would be put in charge of monitoring the market threats. Either they would deem any activity as "threat" or they wouldn't see a "threat" at all, just like before. And we would be paying for these people and their soon-to-be-created new bureaucracy of supporting staff members and outside so-called experts who didn't see anything coming either.

Besides, I think I know what the next bubble is, and the government council would do its best to ignore: US sovereign debt bubble, which is already happening. Or worse, as more and more people move their paper assets to physical assets like gold, they would designate that flight to safety as "bubble" and restrict people from buying and/or holding gold.

Also under this "reform" bill, the Federal Reserve would have more power to do ... what? Do we know what they do? Not really, because they refuse to tell us anything, other than it (whatever it is) is a "national security":

"The Federal Reserve would begin policing large bank holding companies and interconnected nonbank institutions whose collapse might pose a threat to the economy. With approval of the council, the Fed could even break up complex companies that posed a grave threat."

The gravest threat is the Fed itself, particularly under this reckless chairman who doubled the balance sheet in one short month and refuses to tell us what he used it for.

Democrats may or may not drop $50 billion bailout fund to be managed by the insolvent FDIC, but the consumer protection would be another Federal Reserve's job. As far I have read, the definition of "financial" activity is extremely broad; any business extending credit to customers could be classified as "financial" firms and under the regulation and policing by the Federal Reserve.

So the small council to decide what is risky, the privately-held central bank with hardly any transparency to police the country's financial activities - the federal government would be in charge of the most vital part of any country. It would be so unlike America that the world has known. East Europeans and Russians must be shaking their heads in disbelief.

If the money and capital don't flow freely in and out, the country dies. Death may be slow, but it comes surely. Just like the body dies if the blood stops circulating. But this government doesn't seem to care for free-market capitalism that requires free flow of money and capital; it opts so readily for crony capitalism in which the people and big corporations who are well-connected with the government officials benefit and dominate.

This financial "reform" is no exception. Under this bill, anyone who wants to invest in a promising startup will be required to have either annual income of $450,000 minimum or net worth of $2.3 million minimum. In other words, only rich people need to apply. If a grandma wants to give $10,000 to her grandson's garage startup, unless she's that wealthy, the government wouldn't allow her. And the grandson would have to wait for 4 months to see if his application to the SEC to raise funds has been approved by the bureaucrats. For more, see my post from April 9.

And remember, Goldman's CEO said in the Senate hearing that he supports the bill.

Not that the previous government cared about free-market capitalism, but they at least pretended, and cooked the proverbial pot slowly. But this one, everything it does is "in your face", one after another.

I think I quoted this British Prime Minister before, but I'll do so again:

"Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves."

Looks like tyrants are winning, and we are being rendered slaves.

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Al Gore, Criminal Billionaire

In his testimony in Congress on April 24, 2009, former Vice President Al Gore sneered at a Congresswoman who simply asked him about his interests in green business (that include carbon trading venture with ex-Treasury Secretary Hank Paulson), and went into a taunting tirade: "Do you think there is something wrong with being active in business in this country?" (Here's the link to the video. You can watch Al Gore's staff sitting behind him laugh and sneer as their boss does.)

Well, first, the Congresswoman was not asking whether or not there's something wrong with being a businessman in this country. Second, in your particular case Mr. Vice President, yes it is a crime, even if you won't be the first one to profit immensely from government connection. John D. Rockefeller did, J. P. Morgan did. It's a fine American tradition of crony capitalism, but don't tell us it's a rugged entrepreneurism. (Investing in Apple Inc.'s stocks doesn't make one an entrepreneur.)

Lew Rockwell seems to share my disgust.

Al Gore, Criminal Billionaire (Lew Rockwell, 11/4/09 LRC Blog)
[emphasis is mine]

"Al may become the first man to rip-off a cool billion through government carbon tyranny. When a man becomes rich in the market, it is because he has been highly successful in serving consumers. When a hereditary member of the power elite like Gore becomes even richer through the state, it means he has been very successful in pushing the faces of consumers into the mud. He promotes climate lies and then poverty-producing state intervention because of the lies, and then makes big bucks from special deals with companies he helped enrich through the state. What a monster."

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WSJ: Gore-Backed Car Firm Gets Large U.S. Loan

(Crony) Capitalism is alive and well.

Gore-Backed Car Firm Gets Large U.S. Loan
(9/25/09 Wall Street Journal)

"WASHINGTON -- A tiny car company backed by former Vice President Al Gore has just gotten a $529 million U.S. government loan to help build a hybrid sports car in Finland that will sell for about $89,000.

"The award this week to California startup Fisker Automotive Inc. follows a $465 million government loan to Tesla Motors Inc., purveyors of a $109,000 British-built electric Roadster. Tesla, like Fisker, is a California startup focusing on high-end hybrids, with a number of celebrity endorsements that is backed by investors that have contributed to Democratic campaigns.

"The awards to Fisker and Tesla have prompted concern from companies that have had their bids for loans rejected, and criticism from groups that question why vehicles aimed at the wealthiest customers are getting loans subsidized by taxpayers."

And the reason (or excuse) for giving $529 million taxpayers' money to a company who is going to make a high-end sports car in Finland?

"Matt Rogers, who oversees the department's loan programs as a senior adviser to Energy Secretary Steven Chu, said Fisker was awarded the loan after a "detailed technical review" that concluded the company could eventually deliver a highly fuel-efficient hybrid car to a mass audience. Fisker said most of its DOE loan will be used to finance U.S. production of a $40,000 family sedan that has yet to be designed." [emphasis is mine]

Yet to be designed family sedan. Also note the word "could". Money is fungible, Mr. Rogers. Or will the money given to the company refuse to be money unless it is spent for this yet-to-be-designed car?

For the rest of the article, please click on the link.

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