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Tuesday, March 24, 2009
David Limbaugh :: Townhall.com Columnist
Beltway Arrogance and Blind Faith
by David Limbaugh
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Was the Copenhagen Global Warming Summit Walk-Out a Win for the U.S.?


Of course not, but their agenda is not about economic growth, which is bound to occur as a matter of course despite their irresponsibility. These liberal tinkerers believe they finally have a chance -- because of the crisis mentality, which they see as an "opportunity" they can't waste -- to implement their comprehensive agenda -- and not just on education, the environment and health care. Now is their time to strengthen labor unions, punish producers and redistribute wealth. Now is the time to convert the war on terror into a law enforcement matter and coddle foreign dictators even as they laugh in our face. Now is the time to use the power of the presidency to promote the abominable practice of abortion.

The way they see it, they now have a chance to actualize their vision for an America that is remade in their image and that is radically at odds with the vision of this nation's Founders. It doesn't matter that there couldn't be a worse time in our history for implementing their reckless policies. They know they may not get another chance in their lifetimes to work such mischief. Even though it will break the federal bank, us, our children and our grandchildren, it's all going to be OK because they will finally have achieved their statist vision for America.

Their ideology tells them that any means justify the ends of achieving their liberal Utopia -- even means (such as literally bankrupting federal budgets) that logically guarantee it can never be achieved. That's what I mean by their blind faith in an ideology.

For greater insight into the liberal mind, to help you understand why liberals are blissfully driving like Mr. Magoo toward the precipice of our national financial destruction, I refer you again to Mark Levin's "Liberty and Tyranny," in which he dissects the statist's unshakable drive to expand government and control our lives.

The statist never learns from his policy failures. He is never deterred by the destruction he causes. Negative data are simply rejected, as with his steadfast allegiance to failed Keynesian economics.

"The fact is that the New Deal was, overall, a dismal failure," writes Levin. "Yet today it serves as the Statist's prototype for governance. … (The statist) is unmoved by reason, evidence and history."

Blind faith, indeed.

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About The Author
David Limbaugh, brother of radio talk-show host Rush Limbaugh, is an expert in law and politics and author of Bankrupt: The Intellectual and Moral Bankruptcy of Today's Democratic Party.
 
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I think Forbes has the key
I watched more hearings, and the former CEO of AIG - the brit guy - kept making his point concerning the arcane "mark to market" rule that caused AIG to run into it's liquidity crisis concerning the CDO swaps.
The rule came out of congress in the late 90's and was fine until home foreclosures weakened the CDO swap "insurance" and issued a call for CASH to be available to "back up" the CDO swap "insurance" that "guaranteed" the large institutions holding the bad mortgage packages.
AIG couldn't whip up the cash reserve for their "inurance markers in the form of CDO swaps". When they tried to rally a pile of cash, it drained the credit in the system, and panicked it, since investment firms knew the CDO's swaps were NOT BACKED by liquidity(cash) all over the entire world.
The mark to market rule ( write down losses NOW(and raise the CASH to cover immediately) that might have to be paid over the course of the contract years) ) forced the CDO swappers to mark their "CDO swap insurance" as VULNERABLE since the market for home sales contracted due to rising defaults, so years worth of possible payouts in home defaults HIT all at once since the CDO swaps were NOT BACKED BY ANY CASH/CAPITAL RESERVES.
So, mark to market caused SEVERE liquidity/cash pressures when foreclosures started hitting - the insurance against the failing loans called CDO swaps in AIG-FP has NO liquid cash backup - and the RATING on them went lower and caused CASH/credit problems system wide.
Suspending the mark to market, and CHANGING the Credit Default Swaps area so that "insurance"(hedge) against loan failures will be a problem that definitely needs to be addressed.

Great Column
Great job on the column.
" ... and their audacity in forcing (and rewarding) banks to make uncreditworthy loans, pressuring Freddie and Fannie to "securitize" them, encouraging AIG and others to traffic in "derivatives," and then punishing all of them instead of taking the blame themselves? They are the ones who created this havoc and then refused to take corrective regulatory action when warned of the impending financial disaster. "
Yes, and the left will feed off the greed that is becoming obvious and blame it, because when you force what should be criminally prosecutable and push it and the resulting massive leverage and bloated worldwide credit that created even more loans and bloating and false paper profits and derivative (playing in TRILLIONS of NOTIONAL leveraged value) and swap "insurance" that was backed by nothing with AAA+ ratings.... you get HEADY players who dabble in hundreds of millions, billions, and even notional trillions -- gigantic salaries, bonuses, perks, high priced hookers, unbelievable lifestyles, market hype and volatility, worldwide inflation ...
Yes, it amounted to completely violating the old standard 1 in 10 dollars held back fractional banking, and instead extended it to whom knows what "fractional banking" reserve...1 in 20, 1 in 100, 1 in 200 ?
One giant pumping bubble with huge paper profits, and plenty of actual takers sucking up the M3 expansion - spread right down the citizenry reaping in 401k and higher priced homes - etc.
So with the gigantic leverage in every large institution worldwide - it's not going to unwind very nicely.
Since excessively easy credit was the game for so long, the market is going to have to readjust how things are done, with REALISTIC values - or alternately the bubble must be repumped up to a level that allows it to move and yet retain false credibility.
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