one of the largest bank failures in American history

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[rob_liberti]

Anyone want to comment on what the heck is going on?

Is there an insider's opinion that is presented for dummies?

[Mashu]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/12/MNJH11O876.DTL&feed=rss.business

http://www.pbs.org/newshour/bb/business/july-dec08/mortgagefall_07-11.html

[DH]

Anyone want to comment on what the heck is going on?

Is there an insider's opinion that is presented for dummies?
Simple review
The reason you saw such a hesitancy to rescue the defaults was that only a portion of the defaults are actually home owners living in the home that was in default. The vast majority of forecloses were from properties in speculation. In other words playing the real estate market as an investment by flipping house, sometimes on paper only- many times over. When the market crashed people were caught with property they could not sell-some many of them. Hence the large numbers of default. Think of what would have happened had you bought 7 homes and were in process of renovating them for sale and or flipping them. Then the crash began in the construction cycle. You had a more or less frozen asset that needed to be readied for a market that may have forced you to lose all your profit margin. Maybe a business owner would be liquid and could ride the trend. Maybe a mom and pop would hold on to their savings, dump the properties unfinished, or just walk away from the paper
Secondarily you had a lax lending qualification system and how banks handled loans, both in obtaining, or buying and selling bundled mortgages. In many cases people were leveraged beyond their means to buy the home, violating every safe debt /asset ratio normally used. So those people defaulted as well.

The problems always arise when we "feel" sorry for Dick and Jane or some anecdotal couple (Gee let me tell you about my brothers friend)... out of work and losing their home and then cast that net out to a national level and assume all cases are Dick and Jane's case when it isn't that case at all. We need to let the market adjust on its own. There is always a positive side to people’s poor investment choices in generational cycles. The housing market will bottom out and younger borrowers will be able to buy homes for less money.
We had a similar trend in the late eighties- early nineties when Insurance companies and small lenders decided to invest liquid assets in the commercial real estate market. They drove the market, developers built, and there was a glut of property. There were not enough businesses to rent space so you had huge failures on the loans. There were spaces previously going for $21 a sq. ft. going for $5. It was also more a regional problem throughout the U.S. Some areas did fine-most didn't. That fall out gave rise to the tax payer funded S and L bailouts.
What came next?
Everyone got skittish and building leveled off and declined to a rate lower than we had seen for decades.
That led to a "market" for new homes and commercial construction in the let 90's. Far to many people got involved, stuck their necks and their wallets out in this new boom, stayed in too long, and got killed.

Now...who here is crying over the hundreds of thousands of investors who got out in time and made fortunes?

The stock market
There was a huge shift in stock market trends when mom and pops decided to start investing in the 80’s. The "trends" over the next decade had faster highs and lows, and were similar to using the stock market as a short term savings bank. Should we bail out losers in the stock market? That is a dangerous precedent to set.
Neither should we bail out real estate investors.

I’m much more concerned with our economy shifting to a service related economy rather than manufacturing base. In the long run we are on course to be a new debtor nation, then a new -post Asian boom- third world nation.

[Aikibu]

I'm much more concerned with our economy shifting to a service related economy rather than manufacturing base. In the long run we are on course to be a new debtor nation, then a new -post Asian boom- third world nation.

Uuhhhh Dan I hate to tell you this but we've been a debtor nation for a very long time

http://en.wikipedia.org/wiki/United_States_public_debt

I highly recommend reading Greg Mankiw's Blog on a Daily Basis Gentle Readers....Professor Mankiw does a great job of deconstructing economics for the average regular joe and jane. :)

http://gregmankiw.blogspot.com/

I am pretty good at this stuff myself and without commenting on the rest of this let me just say we are in very bad shape and there is a better than 50/50 chance of a serious recession of a type not seen since our grandparents were born.;

I agree with you Dan in part about us being a service economy instead of a manufacturing economy but lets refine that a bit We are now in large part a financial services economy which very dangerous indeed as most major economists and historians have noted. It's creepy how much we mirror Imperial Britain before the start of the World War. Most of the regulations governing the behavior of both U.S. Banking and Financial Institutions since the 1930's have been shredded...And Consumer and Credit Protection Laws HA HA HA HA HA!!!

You aint seen nothing yet....It may take a generation for folks to come back from the next few years no matter who gets elected. In actuality it's going take a huge national effort to fix the mess being created

Can you imagine if Dubya and the ReBozos like Phil Graham had been allowed to "privuuuhtizzze" social security to invest in the" Freeeuh Mahkeets."

Man..:eek:

Welcome Folks....Sustainable living in a age of limits is the new/old paradigm just like Grandpa and Grandma had to do. Save Save Save... Pay only cash.... and stretch that Sunday Roast into next Thursday.

William Hazen

[lifeafter2am]

William you are absolutely correct.

Most of the problem was created by the banks lending too much money in the first place, and now we have our current crisis. I was reading how in many cases people were allowed to borrow much more than what their income would normally allow. BUT because the "boom" was happening the banks let it slide, in essence the actual "boom" was nothing more than a lending "boom", and the bubble had to burst sometime. I don't remember the exact figures, but normally people can borrow somewhere around 10% of income, but the banks were letting double and in some cases triple that be borrowed.

And yes, we have just about ALWAYS been a debtor nation, and from the numbers that we are in debt, probably will be far into my generation (I am 25) and my children's children's generation.

we are in very bad shape and there is a better than 50/50 chance of a serious recession of a type not seen since our grandparents were born
The scary part is that a large amount of economists are predicting this as well. We can only hope that it doesn't happen.

[James Davis]

Most of the problem was created by the banks lending too much money in the first place, and now we have our current crisis. I was reading how in many cases people were allowed to borrow much more than what their income would normally allow. BUT because the "boom" was happening the banks let it slide, in essence the actual "boom" was nothing more than a lending "boom", and the bubble had to burst sometime. I don't remember the exact figures, but normally people can borrow somewhere around 10% of income, but the banks were letting double and in some cases triple that be borrowed.



http://en.wikipedia.org/wiki/Community_Reinvestment_Act

Just my opinion, but I think it would have been better if the government had stayed out of the banks' practices and let them lend to people who could pay. There is a name for people who can't afford a home - "renters". I used to be one.

In addition, I don't feel sorry for the peopl in my area who "flipped" houses without improving them in any way. If they had fixed them up or added garage door openers or other add-ons, I would have some sypathy, as they were performing some sort of service. I feel for honest families that are losing their homes. Buying several houses and putting them right back on the market without even seeing them is another thing entirely. It's playing the game, not attaining the American Dream.

[Aikibu]

Thes guys are a dime a dozen but this one's advice has made me a few dollars here and there. He's a smart guy and gets his hands dirty checking investments out

We see eye to eye on this. Note he says it "may" get worse in the next few years as the ARM's adjust for inflation ( The real inflation rate is running about 6% right now and could hit low to mid double digits by this time next year)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aSLF543SCO4A&refer=home

William Hazen

[lifeafter2am]

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

Just my opinion, but I think it would have been better if the government had stayed out of the banks' practices and let them lend to people who could pay. There is a name for people who can't afford a home - "renters". I used to be one.

I agree, I am a renter!

But what I was talking about were people with stable jobs, who were paying mortgages that were over 10% of thier income, which is USUALLY a red flag for lending institutions. This was allowed because of a "boom", that was, in essence, created by this lending practice, at least in part. This lending practice had little to do with the Community Reinvestment Act, which is only stating that banks have to consider and lend to anyone who is eligible. What the actual eligibility requirements are set at are up to the lending institutions. It was their choice to lend to people who were spending too much of their income, and this applied to people in both poor and rich neighborhoods. I know a lot of people "on the island" in Vero where my parents live that are having problems because of this type of lending practice.


In addition, I don't feel sorry for the peopl in my area who "flipped" houses without improving them in any way. If they had fixed them up or added garage door openers or other add-ons, I would have some sypathy, as they were performing some sort of service. I feel for honest families that are losing their homes. Buying several houses and putting them right back on the market without even seeing them is another thing entirely. It's playing the game, not attaining the American Dream.

I agree completely. The problem is I know more people who are honestly losing their homes than people who are loosing in the flipping game. Not to mention the people that have to refinance about this time and their homes are worth LESS than what they paid.

Unfortunately I don't believe the market is going to correct itself soon enough, and we are headed for some serious problems. Then again, I am a "plan for the worst, hope for the best" type of person.

:)

[rachmass]

The "fix n' flip" crowd often simply put a coat of paint on the house, interior and exterior, and replaced the carpet and vinyl. All of a sudden the house they just bought for 40K is now selling a week later for 90K? Is that reality or is there something nefarious going on? Chances are these FNFs are simply a ruse for kicking back large sums of money to the seller (of the flip) via a straw buyer. I have no sympathy for either the buyer or seller in this transaction.

If I could buy a house for 40K, put 5K into it and have a 90K house, something is wrong. It isn't reality. Or am I missing something?

[rob_liberti]

I bought multi-family units and flipped them over about 3 year span of time each. When things are going up, the renters pay the mortgage, and you can get a lot of work done without getting totally stressed out. I made money doing that for sure. Now I'm not so sure what to think about investing in such things. Thanks all who responded. We have some INTERESTING times ahead.

Rob

[rachmass]

Rob, there is a big difference flipping over a 3-year period versus the 1-week to 3-month periods that were common for the not so legitimate of flips.

I agree, we are in for some very interesting times.

[Aikibu]

Rob, there is a big difference flipping over a 3-year period versus the 1-week to 3-month periods that were common for the not so legitimate of flips.

I agree, we are in for some very interesting times.

Very True Rachel however these transaction represent less that 1/2 of 1% of all housing transactions over the last three years and as someone like Robert Kiyosaki (Rich Dad Poor Dad) points out not a very smart thing to do.

The real issue is the mucking up and non-transparency of most Mortgage Instruments into shady CDO's sold to everyone and thier brothers and sisters.
Another key issue is the reentry of Banks into the Financial Markets as speculators through the process of massive deregulation with the complete collusion of the Bond Rating Firms like Moody's and Standard & Poors (you know the folks who are supposed to provide you... dear reader... With an "objective rating" of how good/secure the bond is that you want to invest in.:eek:) and mostly accomplished by the Republican Party over the last 30 years.

Paulson bailed out the MAC's today and saved his Wall Street Buddies while sticking we 200+ Million taxpayers with the bill, and doing nothing to fix the institutional problems. As soon as the dust settles... Watch all the golden parachutes pop up as most of these executives grab what they can and run.:crazy:

The Gilded Age has nothing on us....

William Hazen

[lifeafter2am]

The Gilded Age has nothing on us....

William Hazen

LMAO!!!!

[Aikibu]

Not Good if even partially true.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/16/ccusdebt116.xml

William Hazen

[lifeafter2am]

Not Good if even partially true.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/16/ccusdebt116.xml

William Hazen

I agree, that is definitely not a fun article to read.

Vladimir Putin, now Russia's premier, has stated repeatedly that his country is engaged in a new Cold War with the United States. It is clear that Moscow would relish any chance to humiliate the United States, provided the costs of doing so were not too high for Russia itself.
Nice, just nice......

As we have said, we here in the states are in for some interesting times. But, the bubble had to burst sometime.

[Dan O'Day]

The problem lies with our basic market system of capitalism. When it is regulated too little - or seemingly at times, not at all - the rich get richer and the poor get poorer.

But many of us are to blame. We are to blame for somewhere along the line coming to believe that capitalism defines what the USA was originally conceived of to be.

Capitalism is just a machine. An amoral machine with a voracious appetite. It defines no nation or no people except for those consumed with greed.

And...it doesn't work. Just like 20th century applications of socialism and communism. It doesn't work.

I've long advocated for a system with a basic premise of equal wages for all jobs. The first thing I always hear from detractors when I say this is, "Well what if that guy doesn't work as hard as me and makes the same amount of money"? or "Oh, so a manual laborer should make as much as a highly schooled medical doctor?"

My answer to the first question is, "Why are you worried about the other guy?" and the next question, "Yes, the manual laborer who was on a ladder during a storm risking his life to restore power to the warm and dry library where the pre-med student was studying late into the evening should definitely make as much as a doctor."

How often do doctors and lawyers and stockbrokers and other pencil pushers risk their lives on the job?

The issue with work should not be about compensation it should be about doing what one enjoys and what they are good at.

Equity for all. That is the only system of economics which has ever worked on this planet. It has happened over the eons though usually by accident. Low populations in geographic areas which were abundant in the basic necessities for comfortable life played a huge role.

And we're lucky...we still have that geographic area. It's called Planet Earth. Now if we can just get greed and competitiveness out of the way...

Competition...funny how folks often claim that's what brings the best out in people.

I guess maybe us folks who train in aikido know different. I know I do.

The only victory is self victory.

[lifeafter2am]

Well stated Dan, well stated!

I actually had a discussion about capitalism with a fellow graduate student once. It is funny the myths that surround it. Like the myth that if you work hard then you will be fine.... yeah right. Tell that to the millions of working poor, those that work full time, sometimes at two jobs, to still live at or below the poverty line.

One of the saving graces of capitalism though is social mobility, the ability to move between the social classes .... hopefully up. But, again, the problem lies that this is few and far between these days. Most of those that move up make small advances, and are usually from either middle class or upper-middle class to begin with and, like I said, advance small amounts.

I was talking to an economics / poli sci student that I was teaching once, and he brought up a good point as well. Unless the entire world is based off of a capitalistic system, you will always have larger nations taking advantage of smaller ones. Such is the capitalistic way.

Indeed I believe we need a change, but what the future holds will be interesting to see.

:)

[Gernot Hassenpflug]

The problem with the "should" part of the arguments above, IMHO, is that you can't realize them: there simply aren't enough resources. The best implementation of "should" is what Western civilization currently has. Other attempts have empirically failed to deliver similar results. Political rhetoric like the above may garner support votes, but economics determines the empirical consequences, given the incentives and constraints.

I say, Dan and co, by all means, try it out yourself, and reality will set in as soon as you have no more resources.

[Aikibu]

Another informative blog that is part of my daily read...

http://bigpicture.typepad.com/comments/economy/index.html

Enjoy gentle readers...:)

William Hazen

[lifeafter2am]

Another informative blog that is part of my daily read...

http://bigpicture.typepad.com/comments/economy/index.html

Enjoy gentle readers...:)

William Hazen

Ah, a good read indeed. Thank you William!

[dps]

It is all about greed and lack of self control. The lending institutions wanted to make more money and did not control themselves and the people borrowing the money wanted to have what they could not afford and did not control themselves.

If you work hard, be smart with your money, be patient and live below your means you can avoid problems like what is currently going on.

David

[Lorien Lowe]

I've long advocated for a system with a basic premise of equal wages for all jobs...."Yes, the manual laborer who was on a ladder during a storm risking his life to restore power to the warm and dry library where the pre-med student was studying late into the evening should definitely make as much as a doctor."

the problem is that there are some jobs for which there is a greater need than there is a supply of people willing to do them. Now that wages have gone up, there is an abundance of nursing students waiting to get into nursing school (though the capacity of schools to turn out nurses still lags behind the demand). Who wants to disimpact the bowels of elderly strangers on a regular basis, or mop up the vomit of drunken teens, for $15 an hour? Likewise, there's a good reason that trash collectors make more than cashiers at clothing boutiques in the mall: collecting garbage is a nastier and socially far more necessary job.

The problem comes when non-market forces artificially bid-up or lower the wages - for example, a corporation has far more power in wage negotiation than does an individual employee, especially if that employee is in unskilled work and can easily be subbed by someone else. Likewise, unions can sometimes be more interested in pay raises than they are about the long-term survival of the institution.

How often do doctors and lawyers and stockbrokers and other pencil pushers risk their lives on the job?

I don't know about lawyers and other office workers, but doctors do it on a regular basis. A drug-seeking ER patient picked up a mayo stand and threw it at one of the docs at my hospital about 2 weeks ago, and there's continual risk of picking up a whole slew of pathogens for everybody that works in a hospital. Better than half of the staff (including me) ended up on antibiotics this spring because of an unusually bad flu season followed by bacterial pneumonia.

The issue with work should not be about compensation it should be about doing what one enjoys and what they are good at.

That's a nice idea, but again there are some jobs that nobody enjoys, but need to be done anyway.

Equity for all. That is the only system of economics which has ever worked on this planet. It has happened over the eons though usually by accident. Low populations in geographic areas which were abundant in the basic necessities for comfortable life played a huge role.

And we're lucky...we still have that geographic area. It's called Planet Earth. Now if we can just get greed and competitiveness out of the way...

Equity for all on planet Earth will mean that everybody lives somewhere along the lines of a lower-middle-class person in China. No personal cars. No meat to eat on a regular basis. No dishwasher. Etc.

Not that that's necessarily a bad idea, but just be sure that you know what you're advocating.

Wrt the OP, I do agree that this is a perfect example of capitalism run amok. Banks and lenders have been allowed to 'socialize the risk while privatizing the profit,' which is so not-ok that I feel like strangling a broker every time I think about it.

And I second the person who wrote, 'thank god we didn't set up 'private investment accounts' with social security!'

[lifeafter2am]

That's a nice idea, but again there are some jobs that nobody enjoys, but need to be done anyway.


Just be careful with this statement. I actually know a guy, there was also an article written about him, who went through medical school, graduated at the top of his class and is now a school janitor because he enjoys doing that more than anything else. Just because we can sit here and say that some jobs suck, doesn't mean that everyone thinks those jobs suck.

:)

[Dan O'Day]

Well heck...I've been on a forum that uses web crossing software for years and I'll be darned if I can yet figure out how to quote stuff here without picking up the whole post.

Oh well...in the meantime, as Lorien suggested I do, I will at least endeavor to "be sure I know what I am advocating".

I'm aware of how market forces behave in a capitalist economy. I've been a business owner and operator for over fifteen years. I've been doing it long enough my way to pretty much figure I'm unemployable in a market in which O'Day Construction doesn't exist.

With regard to danger on the job any occupation poses risks just like walking down the street poses a risk of getting hit with a meteorite. Some occupations, however, pose a significantly higher rate of hazard than others. And they tend to be manual laboring type deals.

Equitable living standards across the globe don't necessarily need to be equated with the living standards of a newly industrialized state vying to catch up with the rest of the world. Rather those living standards which prove equitable for all might be something quite different.

I'm not naive. I realize what I advocate requires a quantum shift in thought and perception to materialize. And that, in fact, is what I have always advocated....an entirely different viewpoint.

To think differently. To think away from the positions which were thrust upon us by our forbearers. They did what they were taught to do and so on down the line but you know what...they had it all screwed up.

They were wrong. Dead wrong. And I've always known it.

Now it is up to us, or my kids' generation, to call a spade a spade and say, Hey man! This doesn't work! Your whole idea of success and life on earth is all screwed up and us kids are not going to follow in your eons old rutted tracks.

In my opinion we can kickstart this process by doing all we can to focus economic stimulus on programs of the arts. Yep. $300 billion a year to the NEA. Alot of money but not even close to what has been spent murdering thousands of innocent children and their parents in Iraq and Afghanistan over the last few years.

Art! Not Bombs! Art! Not Bombs!

[James Davis]

How often do doctors and lawyers and stockbrokers and other pencil pushers risk their lives on the job?



They already gave up their lives, a few years of them anyway, in study while I was out goofing off. That's why they drive Lexuses and I don't. ;)

[James Davis]

In my opinion we can kickstart this process by doing all we can to focus economic stimulus on programs of the arts. Yep. $300 billion a year to the NEA. Alot of money but not even close to what has been spent murdering thousands of innocent children and their parents in Iraq and Afghanistan over the last few years.

Art! Not Bombs! Art! Not Bombs!

Too much of my tax money has already gone to support "artists" who create works like "Piss Christ". Supplementing people so that they can attack what other people hold dear will not create harmony.:straightf

[lifeafter2am]

Too much of my tax money has already gone to support "artists" who create works like "Piss Christ". Supplementing people so that they can attack what other people hold dear will not create harmony.:straightf

No it does not, but one has to think that art like this is needed to keep people grounded as well. My belief is that most people take them selves and their religions/philosophies etc way too seriously. Plus, who says it is necessarily attacking, that is subjective. Sometimes art is just art .... but this is off topic now.

I don't know about stimulating an economic change by tunneling funds into the arts, and this is coming from both a part-time artist, and vocal advocate of the arts.

In order for any kind of change to work, people need to abandon their ideas about the "American dream", which has turned into not being independent, but being rich and having stuff. Consumerism is our biggest problem, and it only gets worse as it spreads to the rest of the world. Not saying that the US is solely responsible for it, but one cannot argue that much of it comes from us.

[Aikibu]

Interesting report...

http://bigpicture.typepad.com/comments/markets/index.html

Makes you wonder if the recently signed housing bill will do more harm than good.

How many banks can we taxpayers bail out?

William Hazen

[lifeafter2am]

Interesting report...

http://bigpicture.typepad.com/comments/markets/index.html

Makes you wonder if the recently signed housing bill will do more harm than good.

How many banks can we taxpayers bail out?

William Hazen

As much as I disagree with the taxpayers having to bail out the banks, I really don't see any other option. If they went under what would that mean for our economy? On the other hand though, is bailing them out only a band-aid on the larger problem?

Nice site, has some great articles!

[Gernot Hassenpflug]

As much as I disagree with the taxpayers having to bail out the banks, I really don't see any other option. If they went under what would that mean for our economy? On the other hand though, is bailing them out only a band-aid on the larger problem?

Obviously people like to have others take care of their problems. A little bit of robbery spread over several million people seems like a good deal I guess. Well, if banks were *not* bailed out, perhaps then that would encourage people to take their money business to responsible people, and take responsibility for finding such. Then there would actually be a market for responsible bankers, and an appreciation of history so as not to repeat things in some guise in the future. Now, it is a simple matter for bankers to dupe the population with new schemes using the same principles as before.

Besides which, the government in combination with lobbyists would still find another way to take your money...

[lifeafter2am]

Obviously people like to have others take care of their problems. A little bit of robbery spread over several million people seems like a good deal I guess. Well, if banks were *not* bailed out, perhaps then that would encourage people to take their money business to responsible people, and take responsibility for finding such. Then there would actually be a market for responsible bankers, and an appreciation of history so as not to repeat things in some guise in the future. Now, it is a simple matter for bankers to dupe the population with new schemes using the same principles as before.

Besides which, the government in combination with lobbyists would still find another way to take your money...

I think you missed my point. I don't agree with what they did, but if they didn't do it there was a very real possibility of sending the country into a serious depression. As much as I think they should learn their lessons, I don't think it should be taught at the expense of the entire nation.

I think they should have taken all the bonus money and the exorbitant salaries that the CEO's and such were paid and used that to bail out the companies.

[Lorien Lowe]

I think they should have taken all the bonus money and the exorbitant salaries that the CEO's and such were paid and used that to bail out the companies.

hear, hear.
Criminal prosecution of those most responsible.

[Dan O'Day]

Too much of my tax money has already gone to support "artists" who create works like "Piss Christ". Supplementing people so that they can attack what other people hold dear will not create harmony.:straightf

The politicians and the real movers and shakers of our tax dollars love it when we, the American Public, get all worked up over a pittance of govt. funded controversy like the art piece you refer to.

We are suckers when we go down that road. While we're all arguing it out over the 50 or 100 or 200K that some guy/gal got to make art that someone found offensive the govt. crooks who egg it on are stealing hundreds of billions of dollars and funneling it through companies like Halliburton.

Yep. While we're arguing over something as insane and inane as whether or not to drill for oil off the CA coast, the movers and shakers are committing treason, ignoring congressional subpoenas, torturing fellow human beings in military prison camps, killing god knows who and how many, destroying our economy, and the honor this nation may have once deserved along with the biosphere on the planet we all share.

Yep. We can stay divided and conquered as easily as a kid separating colored marbles. The War Machine folks count on it, you know. They love us distracted and arguing over nothing while they play their games of madness and terror.

We can also just say no, no, no more to the liars and thieves and traitors who we call "elected" representatives of The People. Elections are a sham. Democracy can never exist where elections serve the body politic.

Lottery Representation is the only fair and decent way to administer democracy. SS#'s go in a big hat and we draw for positions.

No need to change anything else. Same positions for municipal, state and feds. You get drawn, you do your service unless you have a serious compelling reason not to.

Regardless of who you are and what prior experience you may have you serve a single term after having completed a two year special schooling focusing on relevant studies, i.e. civics, constitutional law, foreign policy, etc, etc.

You get the same salary that is currently appropriated for whatever position. You serve once and your name is forever removed from the "hat".

For this to work lobbying will no longer be a privately funded industry. All constituents will have an opportunity to regularly communicate with their reps via publicly funded caucuses, etc.

No private lobbying will exist. It will be outlawed.

So what does this have to do with the banking crisis this thread is supposed to focus on? Everything.

One planet, one family. We must do things together and no longer abdicate our personal responsibility to each other by giving away our power to commercial concerns ( by this I mean the corporations that we all know own our politicians ).

In the USA we have long mistaken our voluntary abdication of our power as a personal freedom that is due us. Well, I do not believe that freedom is something you give away. It is something you work for constantly. And work with.

Those who do not exercise their freedoms ought not be surprised when those freedoms no longer exist. If there is no market, then why should there be a supply? Just like capitalism.

I am tired, tired, tired of seeing my fellow human beings manipulated by the machinery of greed and corruption ( govt. and commercial media ). But hey...who do Americans think they really are, anyway? Some kind of born noble and honorable folk which have a moral hand up on everyone else?

'Course quite a large number of murdered Indians might not see it that way. And then there were a few million folks forcibly brought from Africa and violently enslaved who would probably feel differently. And of course the tens of thousands of folks in Central America who were murdered in the name of the United Fruit Company would surely take umbrage with the claim.

The list goes on and on. War after war after secret war after secret war and all in the "national interests" of whom? The United States? Or rather the United Corporations of Greed and Power?

We are all better than this. And we have proven it in the past. Convincingly. When women in this nation said they deserved to vote they went out into the streets and won the freedom to vote. When workers decided they deserved the right to unionize and not be shot down by corporations wielding govt. guns when they went on strike they then went out onto the streets en masse and won the right to unionize and exert bargaining powers.

When people of recent African ancestry decided they deserved equal protection under the law they went out into the streets and won the freedoms their paler skinned counterparts already had. The list goes on and on. The freedoms we enjoy today were all won by our fellows past and present who went out into the streets and demanded their rights and forced them from that entity which had denied them. That entity being the government of The United States of America. It wasn't Communist Russia or China or North Korea or North Vietnam or Central American nations or foreign religious fanatics who denied the citizens of this nation so many of the rights they enjoy today. It was the government of the USA.

Yep. If you love your freedom thank a Civil Rights Activist. Or better yet, become one. We can do it again. We can say we deserve to be free of the control and manipulation of commercial entities and their minions holding office all over this land.

So what I do is push the LRS ( Lottery Representation System ) of democracy to lots of folks. Of course most don't want to hear of it, they think I'm crazy. My senators and congressional rep. never return my emails or phone calls. So what? I'm doing something and that's what matters. I'm exercising my freedoms that were won for me by my fellows and using them to help create what I believe to be better freedoms.

And you know what...once in awhile someone gets to thinking about it and maybe that will help foster a change which might occur decades down the road. And many, many people are pushing their own ideas of positive and progressive changes which promote equitable living among all human beings.

We'll get there someday. We will. In the meantime I celebrate the right we all have to like or dislike a particular piece of taxpayer funded art and to speak of it. However I do not celebrate anything which acts as a distraction to offenses much more grievous than even the most universally offensive artwork could ever become.

What was it? Eight years ago? All that hubbub over the NEA's paltry $200 million dollar budget. And our representatives worked so hard and so long to do what? They cut it to $50 million, I think it was. This was back in the day of a Federal Govt. budget surplus. Today we have a deficit of near a half a trillion dollars.

Yep. American politicians…they're really working for us.

[James Davis]

The politicians and the real movers and shakers of our tax dollars love it when we, the American Public, get all worked up over a pittance of govt. funded controversy like the art piece you refer to.
Government funded. My being Catholic isn't the only thing that causes me to take offense at "Piss Christ". The fact that someone is using the police power of government to take my hard earned money, and that of my neighbors, to fund it also makes me angry.
We are suckers when we go down that road. While we're all arguing it out over the 50 or 100 or 200K that some guy/gal got to make art that someone found offensive the govt. crooks who egg it on are stealing hundreds of billions of dollars and funneling it through companies like Halliburton.
You brought up the NEA, so that's what I wrote about. I don't like war either. In either case, it's taxation without representation

Lottery Representation is the only fair and decent way to administer democracy. SS#'s go in a big hat and we draw for positions.

No need to change anything else. Same positions for municipal, state and feds. You get drawn, you do your service unless you have a serious compelling reason not to.

Regardless of who you are and what prior experience you may have you serve a single term after having completed a two year special schooling focusing on relevant studies, i.e. civics, constitutional law, foreign policy, etc, etc.

You get the same salary that is currently appropriated for whatever position. You serve once and your name is forever removed from the "hat".
I support term limits, but I do not support this system. What are we to do if some neo-nazi is sent up to represent us? Some people are unelectable, for good reason.

For this to work lobbying will no longer be a privately funded industry. All constituents will have an opportunity to regularly communicate with their reps via publicly funded caucuses, etc.

No private lobbying will exist. It will be outlawed.

So average Joes will no longer be allowed to pool their money and buy advertising so that they have a voice that can be heard? Private lobbying will still exist, it'll just be people who aren't that interested in obeying laws; it'll be called bribery. Gun free zones sometimes have shootings, and drug free schools and workplaces sometimes have junkies. When we outlaw something, we seldom get rid of it, and often give more police power to the government.


In the USA we have long mistaken our voluntary abdication of our power as a personal freedom that is due us. Well, I do not believe that freedom is something you give away. It is something you work for constantly. And work with.
Agreed. See above.

We are all better than this. And we have proven it in the past. Convincingly. When women in this nation said they deserved to vote they went out into the streets and won the freedom to vote.



We gave women the right to vote long before many nations who were much older than we.

http://www.ipu.org/wmn-e/suffrage.htm
We granted women the right to vote before some pretty ancient places that should have thought of it already:

Pourtugal, Spain, Japan, China, India, Canada, Greece, and Switzerland all followed our lead.

You're right in saying that your post has everything to do with the current economic situation. Those of us who live within our means and conduct ourselves with above-board honesty are bailing out businesses that chose to make unwise decisions. The government is using its power to tax us to give our money to undeserving people, organizations, and wars. The NEA is just a small example.

[Aikibu]

You're right in saying that your post has everything to do with the current economic situation. Those of us who live within our means and conduct ourselves with above-board honesty are bailing out businesses that chose to make unwise decisions. The government is using its power to tax us to give our money to undeserving people, organizations, and wars. The NEA is just a small example.

Thanks God I think there may actually be some push back this year if Obama holds true. As far as I am concerned I would give the government allot more money if they needed it because after it's ours right? LOL But until they spend it responsibly and stop trying to destroy the pubic commons with "private enterprise" I am fighting to keep every dollar.
That is my way of legally protesting "taxation without representation"

William Hazen

[Dan O'Day]

James, I am attempting to address your points in this post. Please forgive my lack of savvy with the quote function. I will place your quotes in italics.

Government funded. My being Catholic isn't the only thing that causes me to take offense at "Piss Christ". The fact that someone is using the police power of government to take my hard earned money, and that of my neighbors, to fund it also makes me angry.


Understood. Of course in a system where we, theoretically anyway, pool our resources for the greater good of all not all people will be pleased all the time with any given application of funding. But one may be pleased all the time if that application of funding is supportive of democracy.

You brought up the NEA, so that's what I wrote about. I don't like war either. In either case, it's taxation without representation

I did bring up the NEA. Interesting take on war with regard to taxation. I think of it more as an utter failure of diplomacy followed by acts of terror.

I support term limits, but I do not support this system. What are we to do if some neo-nazi is sent up to represent us? Some people are unelectable, for good reason.


Yes, some people may not best represent the consensus of their constituents under the LRS. However I believe those scenarios will be the exception to the rule.

I have far more faith in the neighbor down the street or the fellow worker rising to the occasion of being chosen as representative of the people than I do in a politician who calculates every step of the way on his/her rise to power. And then uses that power primarily to stay in power.

Nope. Elections are inherently flawed. Because candidates want to win. And when someone wants to win things often go awry, to put it nicely.

Incidentally, this is one of the things I so love about aikido. Nobody wants to "win". Except in a victory over self concept of course.

So average Joes will no longer be allowed to pool their money and buy advertising so that they have a voice that can be heard? Private lobbying will still exist, it'll just be people who aren't that interested in obeying laws; it'll be called bribery. Gun free zones sometimes have shootings, and drug free schools and workplaces sometimes have junkies. When we outlaw something, we seldom get rid of it, and often give more police power to the government.


It would be very easy to outlaw lobbying. The fact that no represenative could serve a second term would play a huge role in making lobbying a non-starter anyway. Single terms mean no time to court represenatives and get them to do your bidding.

By the way, the "average Joes pooling money for ad time to have their voices heard" is a bit disengenous don't you think. In all my years and travels acoss this land I've yet to meet one of these "average Joes".

Political action groups are primarily funded by hidden enterprises which often stay hidden to use a tax free status, like that which churches enjoy, to illegally fund their causes.

Caucuses would be publicly funded and voices would be heard so there would be no need for lobbying as we today know it anyway.

We gave women the right to vote long before many nations who were much older than we.


The govt. of the USA never gave anybody anything. We citizens have forced our civil rights from the govt. Women demanded their right to vote and then went out and onto the streets to show they were serious about it. Women wrested their right to vote from a govt. that for too long - maybe always - has been an entity seperate from the People it supposedly serves.

Your point of women being able to vote in the USA before having that right in other countries is a bit lost on me. I try not to rate things on a comparative basis. But that's an entirely different topic.

In closing, thank you for your input and willingness to share this discussion.