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Where Have All of The Men Gone? The Edge Of The Sword

January 10, 2011 in Uncategorized

This was originally posted here: http://dailypaul.com/node/153984
Visit that site for Dailypaul user comments. There are quite a few of them.

I had an interesting social experience a couple of hours ago. I hope those that read it enjoy it or get something out of it.

Here in Georgia (Atlanta) we just got, oh, about 6 inches of snow in approximately 4 hours (tip of the hat to Al Gore). I was at a colleague’s house working on a project when he came back from outside and said, “If you want any chance of getting home you should leave now.” Myself and another left post haste with already an inch on the ground after about 45 minutes of snowfall. Snow plows down here are about as common as The Yeti so you can imagine the scene. Luckily most motorists were aware of the impending storm and stayed off the road. However there I was in the driving snow thinking to myself that this trip was ill advised/You’re an idiot. My fiancée had told be to stay there if the weather got bad so I knew if anything happened I’d get an earful.

Everything was going quite well until I reached a hill on the East West connector about 10 miles from home. Traffic stopped and I was about 50 or so cars back in the mix. I sat for about 5 minutes contemplating my options and seriously wondering if I was going to have to abandon my vehicle and walk that far. I went for the ‘walk up and see what’s going on’ option. I was quite a ways back and it was cold so I ran to the head of the congestion about a quarter mile ahead. There stood a large hill with several vehicles at various elevations and in various forms of stuck-in-the-snow-ness.

Several others had exited their vehicles and we banded together to start pushing. At first it wasn’t going well but soon we managed to get a system going. We tried to convince rear wheel drive motorists to pull off to the right lane and wait as front wheel drive vehicles could easily tackle the hill. You can imagine how well that went over. We moved about 100 cars through… maybe more. The rear wheel folks would get through of course and I’d have to go all the way up the hill with them because they’d get stuck every 50 feet or so. After pushing one up the hill with another guy I went down to find only one or two people around and jam up as a rear wheel drive car came to the cue. Most of my original crew was gone as their cars had been freed. I realized that my car was running somewhere about a quarter mile back and probably blocking traffic so after freeing that SUV I ran back what seemed like forever looking for my car. I found it and luckily cars were moving by it in the other lane. I moved it up some, so that I could at least reap some benefit for all the work, and then proceeded on foot back to the front.

On my way to my car everyone was rolling down their windows asking. “Hey what’s going on up there?”, “Hey are things moving up there?”, “Has anyone called the police?” (I laughed at that one. No way in hell they could get here). So on my way back to the front I knocked on windows with male drivers to enlist help as there were not many pushers left. Most just looked at me in a really confused fashion. I knocked on one tough looking guy’s window. Looked like the military type and he had a girl with him. He rolled down his window and I asked him to come help. He proceeded to ask me a slew of questions about the situation. I answered, told him why it was backed and he should come help. He then bitched about it yelling out that it’s a “Damn Chinese Traffic Jam”, whatever that is, in tone like all the people in front of him were idiots. All the while not budging from his seat. I just said “fine don’t come” and yelled as I walked away “Enjoy your MAN!” to his blonde passenger. That was probably the most dangerous point of the evening, not because of the snow but because the guy finally got out of the car and now could not seem to stifle his MANhood as he accosted me for saying such a disrespectful thing in front of his lady friend. I apologized and said I’m sorry I’ve been pushing cars for about 45 minutes. He said “Well that’s not my problem you shouldn’t take your frustration out on me.” Perhaps he’s right, but after the blank stares I got through nearly 100% of the windows I appealed to for help I was just like “What is wrong with these men?” So unfortunately he got the brunt of that observation. In all likelihood his elicit reaction was because there was some truth to my statement. He even threatened to snap my neck… All this after I had personally done about 40% of all the work that had kept him inching forward (past my car) for the last 30 minutes. The front was jammed up again when I arrived and we got it cleared and kept going. That distraught man disappeared amongst the commotion. I think I saw him push one car and later only noted his absence. I’m sure I pushed him out later. I hope his girl took note.

Bottom line, and I’m sorry this was so long, is not one man I asked came willingly or sprung to action. I guess all the go-getters had already freed their cars and moved on. I felt like a salesman out there trying to sell them the way out of being stuck in the snow in the middle of nowhere. Some came, but only after much prodding. I’m not saying I’m some great hero or anything. I’m just saying … where have all the men gone? It really is true that in society it’s about 5% of the population that leads. “The edge of sword” as they say. The masses sit in their car, not knowing what’s going on just 100 yards in front of them, hoping that someone else will push them out. It makes me really worry about the days ahead as times are sure to go from bad to worse in the relatively near future. Everyone on here should know that you’ll be the 5% everyone will look to. You know what’s around the bend (more or less) and will take action to make things better while everyone else looks around in confusion wondering what the hell is happening.

P.S.

This for anyone who cares if I got out. Everyone else can go check out other posts :) . I looked back to see a Mack truck without a trailer (rear wheel drive) trying to make its way to the front. I went up to him and was said “man… I hate to say this but you might not make it and if you get stuck half way up the hill there’s no way we’ll be able to push you around like these little SUVs and get you out. You could block the whole road!” He said “naw man… If I can get going I’ll make it just fine!” and he was insistent. He was trying to go around a car and was stuck and he then asked… “Is that your car in front of me?” I look and to my amazement… it was. “I said yeah… I can move it for you”… I looked back at that truck knowing what would happen as he climbed the hill and looked ahead and the road was more of less clear. I said to myself, “I’ve done all I can here” and drove off easily maneuvering past a few stuck rear wheel drive cars. I was home in 10 minutes and exhausted. It took me well over an hour to make a trip that’s normally 20 minutes.

My Response to Rolling Stone hit piece on Teaparty

September 29, 2010 in Uncategorized

The Referenced Article can be found here

Update: This letter was hand delivered to Matt Tiabbi on October 26th 2010 by Bobby Wilbert while he was visiting Florida investigating his article on the Foreclosure crisis.

Dear Matt,

I’m not sure if I hate you or love you. But I went to the trouble of reading your entire article and writing this response so I’d implore you to show the same courtesy to me. At first I thought that this was just a “radical left” spin, smear article. Then when you went into your historical account of “The Teaparty” I had to agree with you. I was around essentially when it got started. A man named Trevor had put up a page and a video telling folks to donate to Ron Paul’s presidential campaign on November 5th 2007 to make a one day fund raising event that the media could not ignore. Trevor was completely separate from the campaign. On November 5th (a date made famous at the time by the movie “V for Vendetta”) Ron Paul broke the single day fund raising record, though there was some speculation that Hilary had him beat. With such a success Trevor looked for the next opportunity to do a similar event and decided on December 16th 2007. It was in time to make the 4th quarter reports which would be released before the Iowa caucuses and just happened to be the anniversary of the Boston Tea Party. That one day “Money Bomb”, as they were now called, shattered the records and left no question that Paul was the one day fund raising king. I think it was 6 million that was reached. From that point on the Tea Party phrase began to stick. I am good friends with the Ron Paul meetup organizer for Savannah, GA and in April 2008, if I remember correctly, he and the meetup put together a tax day tea party in Savannah. I didn’t attend but by the next year here where I live in Atlanta the sworn enemy of all Ron Paul campaigners, Sean Hannity, was headlining the Tax Day Teaparty Event. At that point I realized that the movement/group/whatever had been completely compromised and usurped. Folks that fly in my circles these days don’t even mention the Teaparty. It has become a tool of the Republican establishment by and large and your account of that is, I believe, right on the mark. This is how they operate, they cannot abide a principled movement which would challenge the two party monopoly. First they ignored the teaparty but when it refused to go away they choose to take it over, and that seems to have worked pretty well as you pointed out.

At the end of your article you point out the super-national companies are in charge anyways so “what’s the difference?” I think you are also correct in this assumption. There were some other areas where I could agree with you as well but that’s just boring isn’t it. Onward then to the disagreements! I enjoyed your section about the creation museum as it gives me opportunity to make a fun metaphor. Your claim is that people who believe in creation are about as dumb as they come and that their sort of backward ideology is hampering our nation. But they probably are not dumb. That is just their belief system and the world they are familiar with. When they are given evidence that they are in error, they backlash and begin to make absurd arguments to rationalize their own beliefs because they don’t want to not believe. It is what they know and hold dear and if you change that, well, their whole world would fall apart. Everything around them, all the evidence, says they are wrong… but they just cannot bring themselves to do it. What if I told you that you believed in a world that is just as backward as these people’s museum and that your article, and many like it, are chapters in the holy book of this religion? You’d say, I’m sure, “yeah right I could never believe in something as odious as those people, I’m an educated man, a journalist, you, Mr. Clarke, are an extreme weirdo kook.” What if I could stack evidence upon evidence of citations and quotation to prove I was right? Would you emotionally reject the ideas? The false religion I speak of is twofold. First is a belief in Keynesian economics, second is the belief that Republicans and Democrats are bitter enemies locked in a mortal struggle.

Now I am not a card carrying libertarian, in fact I mistrust that party as well, but my favorites are Thomas Jefferson, Murray Rothbard, James Madison, Frederic Bastiat and those typed folks. I ascribe to the Austrian School of Economics, mostly because they seem to be right a lot. When every economist in the USA a couple years ago was scratching their head and wondering, “what the hell just happened?” The Austrian School Economist were saying, “I told you guys this was going to happen!” Many had written books about it, most notable and mainstream is Peter Schiff’s play by play, “Crash Proof”, written in 2006. Keynesianism is what most Americans believe in and in my opinion it has been shown to be a complete failure time and again. Even though Keynes is a relatively modern figure his ideas have been around for an age. I’d recommend reading “The Law” by Bastiat, for proof, as he was fighting those ideas in the 1850’s. I just recently picked up a collection of papers by a little known American named Charles Holt Carroll, I actually found it at the Goodwill down the street. I’d never heard of it, or him, but the title seemed interesting. This particular collection of works ranges from about 1845 to 1870. Today he would be considered an Austrian Economist. In the introduction the editor, summarizing Carroll’s statements from the mid 19th century, in one paragraph laid out an exact copy of our current economic collapse. In his view, 160 years ago, it was a natural outcome to what is now called “fractional reserve banking” which is not only in common use today, it is codified, and represents the very heart, the foundation, of our current financial system. But there is no debate, no discussion, of errors of Keynesianism in the media. There are only discussions and disagreements on how to implement it and which Keynesian strategies to use this time. Left and Right, they are all Keynesians. Even Nixon has been quoted as saying “We are all Keynesians now”. I don’t like to throw labels around as they always evoke only emotional responses but Keynesianism is necessarily a socialistic economic system. What I mean by that is it stresses planned economies and heavy legislative intervention in the economy, giving rise to what we have now termed as the “mixed economy”.
That being said, since both parties ascribe to this economic model and openly hire its proponents as advisors and law makers, both parties are inherently socialistic or as I like to say collectivist. i.e. Bush bailouts, Bush pushing Greenspan to drop interest rates after 9/11 and dotcom crash. Bush expanded military spending and medicare. Obama also had bailouts, Universal Healthcare, Housing Stimulus, expansion of Military etc. A tax cut here and the removal of a regulation there does not change the overarching philosophy of the modern Right, which is Keynesianism and increased centralized control of the economy and thus, the people. It’s all the same stuff, just wrapped in different Christmas paper. I liken it to the fact that only about 3 companies make laundry detergent, but there are a 100 different brands on the self in the detergent isle. It is all the same stuff, but in the 50’s they discovered that house wives liked to switch brands just to change things up, so they put it in different boxes with different names.

The world has been told that it was lack of regulation of the financial sector which lead to the mal-investment of the US economy in the past decade. The causes, however, are much deeper and not nearly so trivial as implementing new bureaucracies. This was kindly pointed out by a humble merchant named Charles Carroll 160 years ago. Yet today nobody cares to explore the root causes, no senate committee digs beyond the emotional issue of corporate, big bank, capitalistic greed being the underlying cause of it all. It should be noted that even Ben Bernanke has said that “interest rates were too low, for too long” during the real estate boom. The fact that the Federal Reserve regulates interest rates, and even the current Fed chair states that that was a key factor, would point to the fact that too much regulation in marketplace was a major contributor. The housing bubble could never have formed in a society with interest rates that followed the markets AKA supply and demand. With a negative savings rate in the US that would mean that, domestically, savings would be rare and thus interest paid on saving should have been high. If you need to borrow money, along with scores of other who also need to borrow, but few have money then a lot of people will be after the savings of a very few people. You’ll have to offer a better return than the next guy if you want to borrow that money. Now Americans are more broke than ever and the interest rate is 0%. This makes about as much sense, when you think about it, as Adam’s pet Brontosaurus in the creation museum. We think that our financial system is well advanced and that we can, through interest rate manipulation and government intervention in the market, keep afloat and economy that produces nothing. When the world reserve status of the dollar is removed the US will have not too much to offer the world for trade when that time comes, and it will come. (Our trade deficit is well enough evidence of that). Time will show that this system is more backward than a creationist world view and people will wonder what we were thinking just as we now balk at the backward catholic church that persecuted Galileo. A social system so strong that it forced Galileo himself to sincerely recant his own, now well proven, findings while on his death bed for fear of the fate of his immortal soul.
To think that we have ‘arrived’ and are no longer capable of such great errors is typical of the human condition which is why we should recognize that it must still exist today. Though you paint in your article that to revert back to a constructionist constitution is akin to reverting back to belief in a 6000 year old Earth, I’d like to point out that the inevitable conclusion of highly concentrated power in any central authority is necessarily, whether it slowly creeps in or arrives overnight, an oligarchical authoritarian power. Which is, unquestionably, the most ancient and backwards of all human societal constructs and a far cry from one of the most revolutionary set of ideas ever codified and adopted in the history of the Earth. You might say that I am a radical, but open your eyes. It’s all around you. It really is all just noise. Left or Right in power yields only greater centralized power. Keynesianism is the state religion and if you want to stop all the noise that is keeping people from believing that the earth is indeed orbiting the sun the best thing you can do is shut up and listen.

April 19, 2010 in Uncategorized

Ron Paul helps his son top 100k for the day April 19th 2010 for the Patriot’s Day Money Bomb.

Does Everyone Win in a Short Sale?

May 20, 2009 in Uncategorized


I often say to clients and sellers that I strive to make win-win-win situations using short sales as the main tool. The seller avoids a foreclosure, the listing agent is guaranteed their commission and possibly double commissions (on the resale), I make money, the community wins with one less foreclosure and the bank does not end up with a bad asset on its books. I have however been asked many times “Does the bank really win?” Especially when they are taking $100,000 plus discounts on some of the short sales we negotiate? The short answer is… more than you could possibly know! I am going to take this opportunity to make sure that you never feel bad about negotiating down a bank again and are driven to get every penny negotiated out of them possible. I will do my best to make this brief but this is a condensation of years of learning into workings of our modern banking system. I have used this knowledge against negotiators time and again. Not really by spitting out facts and figures but just knowing this information gives you the mental leverage and right mindset you need to get what you want from the situation

When a modern home loan is originated we are seeing the culmination of centuries of development in the way banks operate. Unfortunately this development is not what I would call progress. Let me explain. In the early days of banking, goldsmiths would agree to warehouse gold for a fee. The gold smiths would issue receipts for the gold placed in storage. The owner of the receipt then owned a title to the gold in storage which could be redeemed at the goldsmith at a later date. The goldsmiths then realized they could loan out some of this gold they had on hand and be paid interest. “How is any of this history mumbo-jumbo related to short sales?” you might ask. Soon you will see! The goldsmiths who took on these practices soon ceased their smith work and took this much more lucrative path of warehousing gold for clients, lending it out and being paid interest. As warehousing of gold became more common so did warehousing receipts, more commonly called bank notes, redeemable to their bearer in gold at the issuing bank. People began for convenience accepting bank notes from reputable banks as payment for goods or services. Bankers took special note of this and a moral hazard emerged. If a banker’s notes, which are just worthless pieces of paper, can be traded for goods and services, then the issuer of that paper has the ability to create wealth through a process which is now referred to as fractional reserve banking. Let’s make a basic example. If the banker took friends out to an elaborate meal at the finest dining establishment in town, he would have two options when the check arrived. 1) Pay for the meal with gold he earned making his living. 2) If the restaurant is known to accept his bank notes as payment he could simply pull a note from his ledger and make it redeemable at his bank for the correct amount of gold and give it to the restaurant. So now we have a receipt to redeem gold created with no deposit of actual gold made in the warehouse. Now imagine if the banker realized he could lend out bank receipts to borrowers instead of gold and receive interest without having drained any gold from the vaults. This interest was true money for nothing! This also allowed banks to lend out more money than they had on hand and receive more money in interest. However, the marketplace had a remedy for such unscrupulous business practice. If word got around that the bank had issued far more bank notes than could be redeemed for actual gold, it could cause a run as people feared their savings would not be left. This safely kept fractional reserve banking in check for much of 18th and 19th centuries as a run on one’s bank meant complete ruin, both financially and in reputation, for the bankers associated with that institution. Now there have been books as thick as my arm written on the subject I am about to delve into. I will attempt be very, very brief. If you want the comprehensive source read “The Creature from Jekyll Island” by G.E. Griffin. That’s right Jekyll Island, Georgia. I am sure many of you may have visited there for a family vacation and perhaps even stayed at the Jekyll Island Club Hotel. Before WWII this island was privately owned and the Jekyll Island Club was owned by many wealthy share holders who vacationed there. It was there that the framework was laid, behind closed doors, to what we now know as the Federal Reserve Bank. Pushed through congress during a holiday break and ratified by a later regretful President Woodrow Wilson, the Federal Reserve Act of 1913 was brought in as a means to stabilize the economy of the USA which had suffered some upheaval in the early 1900’s. Little did the people know that “The Fed” would soon oversee the largest economic depression in modern history. The Fed’s real role essentially was to create a private entity chartered by congress to oversee banking in the United States. Prior to The Fed thousands of various bank notes circulated alongside US dollars. The Federal Reserve basically formed the banks of the United States into a banking cartel under one note, The Federal Reserve Note. The Fed would dictate interest rates, took over the issuance of money from congress, and acted as lender of last resort to banks in trouble (we’ve seen this in action recently). Of course the problem with any cartel is that if one party involved decides to leave the cartel, the price fixing scheme, in the case of the fed fixing interest rates, would fall apart. Every cartel ever to exist always seeks collusion with government in order to enforce the cartel for this reason. Exactly as the banking industry sought to do and succeeded with the Federal Reserve Act. Oh my God Rich…! Seriously get to the point here! Ok, so under the Federal Reserve System banks (particularly banks which owned stock in The Fed) took riskier positions as far as lending out on fractional reserve. After all, the Fed had mandated certain reserve requirements and if the banker fell short on reserve he could always appeal for an emergency line of credit from “the lender of last resort,” The Fed. Everyone learned from school that massive bank runs paved the way to the great depression. This means that far too many banks had issued far more receipts for deposits than they had deposits on hand. The Fed did bail out many banks, mostly banks who were shareholders in the Fed. Those banks then purchased competing banks for pennies on the dollar (Sound Familiar? Think Bear Stearns. If you recall, Bear Stearns was mandated by The Fed to be taken over by JP Morgan for pennies on the dollar in late 2008). I am almost done PROMISE!!! In 1933 we saw the Glass-Steagall Act passed in the midst of the Great Depression. You’ve probably never heard of it but I say that it was one of THE BIGGEST PR successes of all time!!! This act formed a little company called the Federal Deposit Insurance Company. Everyone in this business knows about that. Heck everyone who has a bank account or has ever set foot in a bank is probably familiar with the FDIC. They plaster it everywhere, a proud moniker that “Your money is safe here!!!” People love it! Their deposit is insured by Uncle Sam. What no one realized is that the Glass-Steagall Act actually was the culminating event of literally hundreds of years of banking effort and planning. The banks had managed to find a way to operate on a fractional reserve basis with no risk of bank runs. No longer was writing the proverbial bank note for dinner a moral hazard of banking it was now public policy. Today as we speak, The Fed mandated reserve rate for all banks in the USA is approximately 10%. That means that, in fundamental terms, if a bank receives $100 as a deposit of cash from you or I then the bank can legally lend out $1000 on that deposit with no risk of bank runs or legal recourse. Why would anyone or another bank accept $1000 check from a bank they knew to have only $100 on hand? Well because that person would take that check to their bank which, as are all banks in the USA, is a part of the Federal Reserve System and takes advantage of the same lending practices. Don’t believe me about the 10% reserve requirements? Just read it here on The Federal Reserve’s site http://www.federalreserve.gov/monetarypolicy/reservereq.htm. The FDIC in reality is a bailout plan which allows banks not only to loan on a fraction, but also loan out 90% of its liabilities, or outstanding receipts, without assets to back them. In the days of old if a banker kept an 80% or 90% reserve he stood great risk of a run if word got out. We now have 10% reserve requirements. So from now on when you see the FDIC logo proudly displayed on/in your bank, just know that that symbol means INSOLVENT not INSURED! Every FDIC insured bank is self admitting insolvency. So when Bob Smith wants to buy a property for $350,000 with 15% down ($50,000 down) the bank grants a loan for a property for $300,000. Let’s pretend for simplicity sake that the bank writes a check to the seller’s bank for $300,000 which will be deposited in the seller’s account. In the issuing bank’s account they only are required by The Fed to have $30,000 in the bank to write that check. So for $30,000 the bank is going to collect interest on a $300,000 loan. In the first year alone at 6% rate, that is $17,900 in interest to the lender plus the lender has the power to foreclose on and control a $350,000 real asset for $30,000! Oh and I forgot, the buyer made a down payment. That puts the total outlay of the bank at -$20,000. So after they are given the down pay and they must commit the $30,000 as reserves they still net a positive $20,000 from the FRONT end of the transaction. So now the bank may go out and loan $200,000 out based on that $20,000 in new reserves. After the first year’s interest comes in from Bob’s loan of $17,900, they can make a loan of $179,000. Now do you see why banks have the tallest buildings in most cities in the world, including our own Bank of America building? So I know it has been a long journey with me this week but I hope you have stuck it through and perhaps even learned something new. Now you see that in a short sale situation the bank wins. Even in a 0% down situation, if the bank has collected even a couple of year’s interest on the property that alone can recoup the bank’s real investment in the property. Even if they gave the property away they would not be terribly worse for wear. These banking processes are far more convoluted than shown here and I have not even discussed the banks selling these notes to investors and Wall Street, etc. I just wanted to engender the basic concepts of Fractional Reserve Banking and the implications of it on our industry. Last little note. Fractional reserve banking is also the main engine of inflation of the money supply. Inflation is not rising prices as most teach and discuss. Rising prices are a symptom of inflation which is quite simply, expansion of the money supply. And as history has shown, most recently in our little housing bubble, more money chasing after the same amounts of good and services (houses), leads to rising prices. It’s simple supply and demand. But that’s another story.