Jim Babka will be speaking in Connecticut this weekend. Details below the signature.
Quote of the Day:
"The government broke it. I don't trust them to fix it."
-- Senator Jim DeMint, Republican, South Carolina
We've heard the Treasury Secretary and the Federal Reserve Chairman make their case for a $700 billion bailout of the financial markets. We're not persuaded. Quite the contrary. We reject their predictions of dire consequences if their plan doesn't pass. We're so convinced of this that we're willing to stake our continued existence on it.
If the economy goes into a deep slump because they didn't pass their bailout plan then charitable contributions will be among the first things cut from family budgets. If we're wrong then we'll be among the many institutions to fail. But we don't believe we're wrong. And we don't believe we'll fail.
In 2003 dire warnings about "weapons of mass destruction" were used to justify an unnecessary war in Iraq. We bucked the tide of public hysteria and dared to claim that there were NO "weapons of mass destruction" in Iraq.
We were right, and popular opinion, driven by political fear mongering, was wrong. Now we're being told that our economy is threatened by "financial weapons of mass destruction," and we'll once again buck the hysterical trend by predicting that . . .
There are no "financial weapons of mass destruction" threatening our economy -- except for the $700 billion bailout plan.
We don't believe that mortgage defaults on a mere 3 million homes have the power to halt the mighty American economic engine. It's really that simple.
Many wild claims are being made. Yesterday, on CNBC, Jim Cramer predicted a Great Depression II if the bailout plan isn't passed. Cramer is even willing to let the Democrats cap CEO pay and take ownership positions in troubled firms (socialism), if that's what it takes to pass the bailout plan. Cramer, despite his great intelligence and personal charm, is madly, hysterically, wrong.
In the Great Depression 40% of homes went into foreclosure.
Today the foreclosure rate is only 6%, and the trend is toward fewer foreclosures rather than more.
We're far closer to the end of this problem than we are to the beginning.
Of course, the fear mongers will claim that we had a 40% foreclosure rate in the Great Depression precisely because the government didn't intervene soon enough, and that current foreclosure rates will spiral out of control if the bailout bill isn't passed. This reading of history gets the true story of the Great Depression exactly backwards . . .
The myth is that President Hoover did nothing after the stock market burst in 1929. Nothing could be further from the truth. In fact, Hoover actually began the kinds of interventions that are commonly associated with FDR. Roosevelt was merely copying, and dramatically expanding on what Hoover had already done, not setting a new course. And look at what the results were . . . a Great Depression that lasted for 12 long years!
Hoover and Roosevelt both tried to stop market prices from falling, which is exactly what the current proposal aims to do. But the result in the late 20s and early 30s was that the market never cleared, and so the Depression went on and on and on.
We could have the same thing again today if we allow the government to once again intervene in natural market processes.
The fact is that the politicians, the bureaucrats, and various hysteria mongers, are misleading us. They tell us that the market is frozen, but the fact is that commercial loans are at an all-time high, and even real estate loans ARE HIGHER THAN THEY WERE LAST YEAR! The fact is that . . .
The current "crisis" is mainly centered among the highly leveraged investment banks on Wall Street, but even there the market is far from frozen. Merrill Lynch was able to sell its bad assets and was then bought by Bank of America (which had earlier bought CountryWide).
Does this look like a frozen market to you? It doesn't to us.
And would it really matter if the markets were "frozen?" Inactive markets simply mean that buyers and sellers of assets have a disagreement about what those assets are worth. We must not allow the politicians and the bureaucrats to substitute their judgement for the judgements of buyers and sellers who are, after all, SPENDING THEIR OWN MONEY, whereas the politicians and bureaucrats are asking to spend YOUR MONEY!
We've taken the time, and shown the courtesy, of hearing our "leaders" speak, and having done so, WE REJECT THEIR CLAIMS! THEIR MUST BE NO BAILOUT, OF ANY KIND!
Please be clear about what we're NOT saying. We're NOT saying that things are rosy, or even all that good. As we explained Monday, we're feeling the effects of a FED-generated bubble pop. We are very simply saying that a bailout is wrong-headed and unnecessary, and could even make things worse.
If you agree with us, please tell your elected representatives to OPPOSE ALL BAILOUTS! You can use our generic campaign for cutting federal spending to send your message. Use your personal comments to reject the bailout and to make any of the points we've made in this message, or additional arguments of your own. You can send your message using our Educate the Powerful System.
But don't stop there. Please take the following additional steps . . .
* Call your Representative and your two Senators after you've sent your message
* Pass this Dispatch to others -- SOUND THE ALARM AND SPREAD THE WORD
* Register for a Digg account, and then Digg this message on our blog.
Finally, we've staked our existence on our principals and our best judgement. We expect to thrive, not die. But we are struggling in this economy too. Many DC Downsizers have had to cut their pledges because of the current downturn. Some have lost their jobs. We really need those of you who are still doing well to come to our aid. We especially need new monthly pledges to replace $400 a month we've lost so far this Summer. You can make a contribution here.
Thank you for being a part of the growing Downsize DC army!
Jim Babka & Perry Willis
President & Communications Director
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