Tag Archives: socialsim

What Happened To My Country?–Part One

liberty-bellLast November fifty-two percent of the American voters blindly voted for Barack Obama for President with enough Democratic Senators and Congressmen to give him a veto-proof majority in Congress.  Millions of Americans are now waking up to find their country on the verge of becoming a Democratic-Socialist country similar to those of Western Europe.  As they emerge from their stupor they are asking; “What happened to my country?”  The answer should be no surprise. We did not go from a free republic to a socialist oligarchy overnight.  We have been moving in that direction for the past hundred years and the closer we get the faster we move.

The Rise of Political Parties

Political parties are essential to the institution of government.  Governments are essential to the establishment and preservation of an ordered society.  Both are detrimental to individual liberty and must be accountable to the people governed.  Otherwise, they always combine to subjugate those governed to complete despotism.

The first organized political party in America was founded by Alexander Hamilton and John Adams in 1789.  In response, a second party was founded in 1792 by Thomas Jefferson and James Madison.  The Party founded by Hamilton and Adams was named “The Federalist Party” and the one founded by Jefferson and Madison was called “The Democratic-Republican Party”.  The names were chosen for political reasons and are somewhat misleading.

For example, “Federalist” suggests a loose federation of independent states similar to the one formed after the Declaration of Independence under the Articles of Confederation.  Most Americans at that time feared a strong central government and generally thought of their home state as their “country” rather than the “United States”.  Someone referring to their “country” in personal correspondence was usually referring to their particular state rather than all the states combined.

In the debates during and after the Philadelphia Convention, the term “Federalists” was applied to those who favored the Constitution and a strong central government.  Opponents who wanted strong state governments protected by a “Bill of Rights” were called Anti-Federalists.  What is usually overlooked by most historians is the fact that a majority of the participants in the Convention were in favor of a “national” government rather than a “federal” government.  If not for the Anti-Federalists, our Constitution would have been quite different from the final product.

Political parties are associations of like-minded people organized for the purpose of promoting their shared philosophy of government.  Since the founding of our nation there have been over 150 recognized political parties active in America at various times.  All of them can be placed into one of two categories; (1) Statists who favor an intrusive, all-powerful central government with subordinate state governments; and (2) Anti-Statists who favor strong local and state governments with a central government limited to matters that cannot be effectively attended to by the states.

The Federalist Party at the turn of the nineteenth century would fall into the former category and is the philosophical precursor of today’s Democratic Party.  The Democratic-Republican Party was an anti-statists party and is the philosophical precursor of today’s conservative base within the Republican Party.

The Federalists elected only one President, John Adams, who served one term before being defeated in 1800 by Thomas Jefferson and the Democratic-Republicans.  The Party ceased to exist in the early 1820s and most of its members joined with the nationalistic wing of the Democratic-Republicans.  The Democratic-Republican Party succeeded in electing four successive Presidents, Jefferson, Madison, Monroe and John Quincy Adams.  Without the leadership of Jefferson and Madison, and without the opposition of the Federalist Party it began to dissolve in the mid-1820s.

The nationalist faction of the Party was revived under the leadership of Andrew Jackson as the Democratic Party and continues until today. It succeeded in electing  Jackson as President in 1828.  On taking office in 1829, Jackson institutionalized the “spoils system”, whereby federal jobs were awarded on the basis of party loyalty and work performed on behalf of the party, rather than on experience or merit.  This greatly increased the power of the party by making party loyalty a condition of employment and other favors.  The patronage system of “spoils” soon spread throughout the entire political system as a way of strengthening party influence and longevity.

It also led to widespread corruption as party loyalists competed for prime political appointments and worked to promote the party in order to hold on to their jobs.  Attempts at reform generally proved ineffective until a rejected office-seeker assassinated President Garfield in 1881.  Garfield’s death brought about the Pendleton Act of 1883 and the establishment of the Civil Service Commission.  The spoils system continued in state and local politics however, and is still the primary source of power for big city Democratic political bosses to this day.

In spite of the Pendleton Act and the later Hatch Act, patronage continues in most of our Democratic controlled major cities.  With the Shakman Decrees of 1972 and 1983, the City of Chicago agreed to end the patronage system.  However, as late as 2006 violations of the decrees were alleged in the Congressional campaigns of Rom Emanuel and others.  Chicago now has a “Shakman Monitor” appointed by the courts and operating with debatable results; i.e., the recent “hired-truck” scandal resulting in the conviction of several city executives.

The Republican Party

The National Republican Party was organized in 1829 in opposition to the autocratic Presidency of Andrew Jackson.  The NRP went out of existence in 1833 to be replaced by the Whig Party, made up mostly of former members of the Democratic-Republicans and National Republican Parties.  The Whigs continued until 1856, electing two Presidents, both of whom died within a year of taking office.

The best-known Whigs were William Henry Harrison, Zachary Taylor, Henry Clay, Daniel Webster and Abraham Lincoln.  Millard Fillmore was the last Whig to hold the office of President.  Ultimately, the Party was wrecked over the question of slavery.  Many former Whigs, including Abraham Lincoln, were instrumental in organizing the Republican Party of today.

Since the election of Abraham Lincoln in 1860, the American Political system has been dominated by the Democratic Party and the Republican Party.  Third party candidates mostly function as “spoilers” to the major candidate of the party most aligned with their point of view.  Today the two major parties act as a shadow government rivaling the powers of the constitutionally appointed government in virtually every segment of political life.

The major source of political power for today’s political parties comes from a residue of the spoils system and campaign contributions extracted from corporations and others as protection from targeted tax codes and bureaucratic regulations that have the ability to determine the profitability of businesses and the personal liberty of individuals.

The next few years will show whether the American people have the will and the ability to take back their country from the statist ideology that dominates it in the twenty first century. To do that we have to regain control of the two major political parties and demand that they too abide by the founding principles on which our government was established.

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Passing the Wealth Around

minute-man-2-lithoOne of the questions that has plagued me most of my adult life is about the concept of a progressive income tax.  It has always bothered me that a person who works hard and prospers is required to turn over to the state a larger portion of the fruits of that labor than the slothful person who drifts through life putting forth as little effort as possible.

The moral justification for a progressive income tax is based on the idea that the more wealth a person has the more he or she should contribute to the benefit of society.  I have no problem with that concept.  It is grounded firmly in both history and religion.  One of the earliest records of taxes is found in the Bible, Genesis 14:20 which records Abraham paying a tithe (10%) to Melchizedek, King of Salem.  Under the Theocracy of ancient Israel, everyone was required to pay a tithe to support the Temple and the government.  That practice is still followed today in many Christian religions.

Under that system if a man’s flock increased by ten sheep one of those sheep was given as a tithe.  If his flock increased by a hundred sheep he was required to contribute only ten. By any standard, this is a fair and equitable sharing of the burden in support of government.  However, exempting the man with only ten sheep from having to pay any tithe at all, while requiring the man with a hundred sheep to contribute twenty to make up the difference may be charitable, but it could never be called fair.

With the exception of a short time during the Civil War, income was not taxed in America.  In 1913, the Sixteenth Amendment was added to the Constitution which authorizes the government to tax incomes “from whatever source derived”.  That amendment seems to be universally accepted as the constitutional justification for a progressive income tax.  I have always considered it just another breach of the Constitution by the socialist element in Congress that has existed since the late eighteen hundreds.

However, yesterday Mark Levin, founder and director of the Landmark Legal Foundation, author of a best selling book on the Supreme Court, “Men In Black” and host of a nationally syndicated radio show, seemed to express the same view with a caller.  I consider Mark to be one of the foremost Constitutional Scholars of today; therefore, I have to take into account his opinions.  For that reason, I got out my copy of the Constitution and reread the Sixteenth Amendment which says,

“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

I am not trained in law; however, I do have formal training in hermeneutics, “the science and methodology of interpreting texts”.  Try as I might, I cannot find justification for a progressive income tax in the Sixteenth Amendment.  I find it in Karl Marx’s Communist Manifesto where he calls for “A heavy progressive or graduated income tax”.   I find it in the platform of the Socialist Party U.S.A, and in the platform of the Communist Party U.S.A, but I do not find it in the Constitution.

Article I, Section 8 grants Congress the “Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; But all Duties, Imposts and Excises shall be uniform throughout the United States;”  ” The remainder of Section 8, specifies the particulars for which Congress may appropriate taxes to “provide for the common defense” and “promote the general welfare”.

Article I, Section 9 provides that, “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.”  The Sixteenth Amendment amends Section 9 to allow for taxation “without regard to any census or enumeration.”  It does not authorize a graduated or progressive tax, however.  In practice, the only purpose of a progressive, graduated income tax is for social engineering and redistributing wealth. Using the tax code to control or manipulate the business, social and personal lives of citizens violates both the letter and spirit of the Constitution.

In considering the socialist takeover of our government, it is apparent that it never could have succeeded without the help of our tax code.  Few actions of Congress have been more detrimental to the welfare of America than the progressive tax code.  When we take back the government from the socialists and return it to a Constitutional Republic, one of the first orders of business should be to reform or repeal the tax code so that it applies equally to all citizens at whatever station in life.

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Is Real Reform Possible?

The McCain-Palin campaign is presenting itself as a reform ticket and the country is responding with increasing support.  Some polls have them moving into a double digit lead over Obama.  We have heard promises of reform before, but for the first time in living memory there is a real possibility it will be attempted.  The question is whether or not reform is possible.

Any meaningful, lasting reform would involve major changes in Americans expectations from government.  It would mean at least a partial return to constitutional government, which we have not had for several generations.  Socialist programs that have been implemented since the Great Depression would have to be rolled back and the federal government’s involvement in extra-constitutional areas would have to be severely curtailed.

Both McCain and Palin have expressed the desire to end “earmarks” and pork barrel spending. That’s a good start, but they are kind of a “gimmie” for most Americans and do not address our fundamental problems.  Real reform needs to take place in those areas the public has come to enjoy and expect, but which, sooner or later, will result in our collapse as a free nation.

For example, there is no constitutional authority for the federal government’s involvement in education or health care.  Yet, these two issues are near the top of the list for most Americans who are demanding the government “do something”.  The responsibility for these programs, if approved by the voters, belongs to the individual states not the federal government.  The principle of limited government with enumerated powers is the fundamental principle of our form of government.  We have been moving away from this principle for the past hundred years, since the rise of the “progressive” movement.

Many if not most of the economic and energy problems we are facing today can be traced to a basic principle of socialism.  Sooner or later, socialism always fails.  What we are seeing today is the end result of socialist programs begun in the early part of the twentieth century.  Fannie Mae and Freddie Mac are perfect examples.  They were begun in 1938 as quasi-governmental organizations for the purpose of helping homeowners recover from the Great Depression and provide financing for a depressed mortgage industry.

Since then they have grown to the point where they account for more than half of the twelve trillion dollar mortgage market.  For decades, “social engineering” has been one of Fannie and Freddie’s major functions.  Poor oversight by those responsible for its management, coupled with years of mismanagement and corruption, and sloppy regulation by Congress left it unable to cope with the soft housing market that normally follows an economic “bubble”.

The result is that taxpayers are now on the hook for billions if not trillions of dollars worth of bad loans.  An indication of just how far we have drifted from constitutional government is the extent to which so many otherwise conservatives see the nationalization of over half of the domestic mortgage market as a good thing.

It only took forty years for socialism to wreck our healthcare system.  The current healthcare “crisis” is the direct result of the federal government’s involvement in Medicare and Medicaid.  As with the mortgage market, when a socialist program fails, the proposed solution is usually to nationalize those parts of the economy affected.  Healthcare and energy will be the next ones scheduled for nationalization if we continue on the current path.

Unfortunately, John McCain also takes a “soft” socialistic approach to the problems of energy, healthcare, education, and the economy, only differing from the socialist/democrat agenda in degree and detail.  There is no way of knowing just how Sarah Palin views the Constitution.  In the past seventy-four years I have never heard a journalist or anyone else ask a politician to explain just how a proposal or bill fits within the Constitution.  While most politicians on both sides of the aisle give lip service to a reverence for the Constitution, their actions indicate that compliance with its limitations is seldom considered.

There is no doubt in my mind that John McCain and Sarah Palin represent the best chance in my lifetime for real government reform.  I would feel much more comfortable, however, if once in a while they would explain why certain proposals of Barack Obama are unconstitutional and why those proposed by them are not.

In addition, I cannot help but wondering how the American people would react if McCain and Palin suddenly started attempting to eliminate unconstitutional programs.   How would they react if the redistribution of wealth through progressive taxation was ended, or subsidies for social and economic engineering, or bureaucracies and their accompanying subsidies dealing with education, energy, housing, urban development, agriculture, etc. were cut back or terminated?

Has an educational system dominated by socialism for four generations so indoctrinated our citizenry in the socialist lifestyle that weaning them off it would be too difficult to succeed?  There is no effort to counter socialism as socialism because too few Americans recognize it, or feel its effects on their lives and future happiness.  The consequences of socialism are masked behind an unsustainable level of debt.

Socialist programs seem to endure for about four or five generations before they collapse from their own weight.  This has been the experience of the Soviet Union, Western Europe and our own ventures into socialism.  This is easily seen by examining the history of European healthcare systems, the labor market in France and our own Social Security, Medicare and mortgage financing systems, to name a few.

In spite of the inevitable failure of these systems, most Americans would resist ending or even shrinking them to any meaningful degree.  The outcome of the November election is meaningless if we continue to ignore the damage socialism has inflicted on our form of government and our way of life during the past century.

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Obama’s Dual Citizenship

On Thursday, Barack Obama gave perhaps the most revealing speech of his campaign, even though the content of the speech was unexceptional and the delivery could only be described as professional and competent. A comparison of the speech with recordings of his impromptu remarks during the earlier part of his trip highlights the gap between his reading ability and his thinking ability. It is obvious that Obama was not picked for the role of President because of his intellect, his judgment, or his knowledge of history. He was picked because of his ideology.

He wasted no time setting the theme of the speech early on when he introduced himself to the crowd with, “Tonight, I speak to you not as a candidate for President, but as a citizen — a proud citizen of the United States, and a fellow citizen of the world.” The balance of the speech was mostly an elaboration on that theme. The phrase “citizen of the world” got a lot of play on conservative radio, but very little in the mainstream press. For most journalists and probably for most of his American audience the phrase was nothing more than “politically correct” pandering to his audience.

Taken in the context of Obama’s ideology and personal background, however, the phrase has a much deeper meaning and portends the type of presidency we can expect from Obama if he is elected.

Political observers continue to be impressed and sometimes puzzled by three aspects of the Obama campaign; the crowds he attracts, the large amounts of money he is able to raise, and his popular support in spite of his lack of government experience and the vacuousness of his message. It should not be that much of a mystery.

Obama is a dedicated international socialist and polling data indicates that at least 40% of the American public is in agreement with socialist’s principles. On specific elements of the socialist agenda, the percentage of agreement by Americans goes into the seventies.

For the past hundred years, the socialist movement in America has been working toward dominance of the government. Obama represents their first real opportunity to realize their long sought after goal. The number of hard-core socialists and their enthusiastic “dupes” probably amount to somewhere around 30% of the population. Add to that the number of Americans sympathetic to various elements of their agenda such as environmentalism, feminism, abortion, health care, and the gay agenda and you have the answer to the Obama phenomena.

If this sounds like the ravings of a “conspiracy theorist” consider this: The Hyde Park area of Chicago, home of the University of Chicago and the area represented by Obama in the Illinois Senate, is the Midwest hub of socialist activity. His introduction into state politics was backed by Hyde Park socialists and endorsed by the Democratic Socialist of America, the largest socialist organization in America and a close affiliate of Socialist International.

In addition to the DSA, Chicago also has active chapters of the Communist Party of America and the Socialist Party USA. The DSA website is a wealth of information on the socialist agenda. The Platform of the SPUSA for 2008 reflects almost all of the various agendas of Obama and the Democratic Party. Here are some quotes from the two websites.

Democratic Socialist of America

“The Democratic Socialists of America (DSA) is the largest socialist organization in the United States, and the principal U.S. affiliate of the Socialist International. DSA’s members are building progressive movements for social change while establishing an openly socialist presence in American communities and politics.”

“In the United States, we must fight for a humane public policies that will provide quality health care, education, and job training and that redirect public investment from the military to much-neglected urban housing and infrastructure. Such policies require the support of a majoritarian coalition of trade unionists, people of color, feminists, gays and lesbians and all other peoples committed to democratic change. Our greatest contribution as American socialists to global social justice is to build that coalition, which is key to transforming the power relations of global capitalism.”

“…Many socialists have seen the Democratic Party, since at least the New Deal, as the key political arena in which to consolidate this coalition, because the Democratic Party held the allegiance of our natural allies. Through control of the government by the Democratic Party coalition, led by anti-corporate forces, a progressive program regulating the corporations, redistributing income, fostering economic growth and expanding social programs could be realized.”

“…we are not a separate party. Like our friends and allies in the feminist, labor, civil rights, religious, and community organizing movements, many of us have been active in the Democratic Party. We work with those movements to strengthen the party’s left wing, represented by the Congressional Progressive Caucus.”

Socialist Party USA, from Party Platform

“We call for the United States to immediately and unconditionally withdraw its forces from Iraq and Afghanistan.”

“We call for an end to the U.S. occupation of the province of Guantanamo, Cuba.”

“We call for an end to the Israeli occupation of the West Bank-East Jerusalem and Gaza, and an end to all U.S. aid to Israel, as a precondition for peace.”

“We demand the immediate withdrawal of the United States from the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA), and oppose the creation of a widened Free Trade Area of the Americas (FTAA).”

“We call for a steeply graduated income tax and a steeply graduated estate tax, and a maximum income of no more than ten times the minimum. We oppose regressive taxes such as payroll tax, sales tax, and property taxes.”

“We call for the restoration of the capital gains tax and luxury tax on a progressive, graduated scale.”

“We call for the end of all anti-gay, lesbian, bisexual, and transgender (GLBTQ) restrictions in law and the work place, the repeal of all sodomy laws, and the legalization of same-sex marriage.”

“We oppose all efforts to declare English an official language, and call for an end to all language discrimination. We demand that all public and private institutions provide services and materials in the languages of their communities.”

“We demand full support for every woman’s right to choose when, if, and how to have children, including the right to free abortion on demand at any stage of pregnancy, without interference or coercion.”

“We support public child care starting from infancy, and public education starting at age three, with caregivers and teachers of young children receiving training, wages, and benefits comparable to that of teachers at every other level of the educational system.”

Barack Obama has been closely associated with the socialist movement all his life. He was born in Hawaii to two University of Hawaii students and spent his formative years in the radical university climate of the sixties. After his mother’s divorce from his father when Barack was two, he moved to Indonesia with his mother and her new husband in 1967. He returned to Hawaii in 1971 where he lived with his maternal grandparents until he graduated from high school.

His first real contact with mainland America was when he moved to Los Angeles and later to New York to attend college. During his childhood in Hawaii, he became close with a family friend, the communist poet, Frank Davis. Davis is referred to in Obama’s book “Dreams from My Father” only as “Frank” who he describes as a close friend and mentor.

After graduating from Columbia University in New York in 1983, he sought employment as a Community Organizer, the backbone of the socialist movement in America. He was eventually employed by a church group in Chicago where he worked as a community organizer for three years until he enrolled in Harvard Law School in 1988. While working as a community organizer he also served as a consultant and instructor for the Gamaliel Foundation, a community organizing institute.

In his run for the Illinois Senate in 1994, he sought and received the endorsement of William Ayers, a former domestic terrorist and leader of the Weather Underground, an offshoot of SDS, a communist student front group of the sixties. He also received the endorsement and financial support from the Democratic Socialist of America. In his bid for the U.S. Senate in 2004, he ran practically unopposed, supported by the Chicago Democratic machine and the Chicago socialists.

In 2003 when he was considering running for President, he made the obligatory pilgrimage to the office of George Soros just as he had to William Ayers before running for the Illinois Senate. Soros, an international financier and founder of the Open Society Institute, withdrew his support for Hillary Clinton and focused his multiple political organizations on supporting Obama for President.

With this background in mind when reading Obama’s Berlin speech it is easy to see that he takes his “citizen of the world” statement much more seriously than a mere platitude to his European audience.

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Fannie Mae, Freddie Mac and Your Constitution

The American people are getting a crash course this month in government economics and the wisdom of the Founding Fathers. As they watch their energy and food costs skyrocket and their home value plummet, many are in a daze wondering, Wha‘ Hap’n? Unfortunately, this is likely only the beginning. When the economy of scale meets the law of diminishing returns with the genetic incompetence of government thrown in, you have a formula for disaster.

The Founding Fathers knew from the experiences of governments that had gone before that government is limited in the things it can do well. They also knew that government, while necessary for matters of security, is paid for with the liberties of its people. Therefore they gave us a carefully crafted government, enshrined in the Constitution, that promised maximum security for the people with a minimum sacrifice of liberty.

The national government was given the responsibility for those things which the state governments could not do for themselves, such as national defense, foreign relations and the promotion of international and interstate trade. Everything else was left pretty much up to the state governments. The intention of the founders was for the state governments to be the primary governments affecting the lives of individual citizens.

Their greatest fear was that they would create a government that would expand over time and eventually abolish state sovereignty, in the process, taking away the liberties of the people. This concern is the predominant theme of the writers of both the Federalist Papers and the Anti-Federalist Papers. To prevent this from happening they clearly spelled out the powers delegated to the Federal Government in Article 1, Section 8 of the Constitution.

The economic woes we are experiencing today are the direct result of the Federal Government attempting to do that which it was not designed to do. Both the energy crisis and the mortgage crisis are government created and exacerbated. Both are the results of attempting to blend socialism with free market capitalism, and overreaching in both. Furthermore, they both are the consequence of Congress’ ignoring the restrictions of the Constitution on their powers.

During the housing boom of the late forties and early fifties, brought about by the returning veterans of World War II and their growing families, the number one focus of the American Dream shifted from liberty and freedom to home ownership. By the seventies, the utopian aspirations of the “Great Society” had transformed home ownership from an earned reward for individual thrift and labor, to a “right“ fostered by government.

Congress, in order to “make it happen” decided to go into the mortgage business. They chartered two shareholder owned businesses known as “Fannie Mae” and “Freddie Mac”. Their purpose was to provide money to the mortgage industry by purchasing mortgages and repackaging them into securities which they would than resell to investors. The cost to the government was intended to be minimal since the actual funds would be provided by investors.

These two government sponsored enterprises (GSEs) enjoyed several advantages over their privately managed competitors in the mortgage banking industry. One was their unique relationship to wielders of power in the government. As privately financed enterprises the government is not technically responsible for their success or failure. However, the perception was permitted to develop that mortgages financed by these GSEs were underwritten and therefore guaranteed by the Federal Government.

Furthermore, due to their close relationship with Congress they were not subjected to the same regulatory oversight private banking firms were. Private financial institutions are required to keep a certain level of cash reserves on hand in case of a business downturn. Fannie and Freddie were exempted from this requirement, at least to the same extent private investment firms are, and they were not held to the same stringent accounting practices private firms are held to.

So then, what we have, are two government sponsored financial enterprises, undercapitalized and under regulated competing in the market place for mortgage backed securities. Their investors are led to believe that investments are guaranteed by the “full faith and credit” of the U.S. Government. Furthermore they have access to cheaper money at more lenient rates than their competitors. As a result, Fannie Mae and Freddie Mac soon became the nation’s largest holders of mortgages in the secondary mortgage market.

Together they hold over five trillion of the twelve trillion dollars in mortgage debt currently outstanding in the U.S. Their position as the “lender of last resort” for many mortgage brokers results in a larger than normal inventory of mortgages to homeowners who are bad credit risks. Since their investments are almost exclusively in the home mortgage market, the rising rate of mortgage defaults and falling home prices places them in serious jeopardy.

On Friday, the Federal Deposit Insurance Corporation took over IndyMac, a California based mortgage bank, in the second largest banking failure in U.S. history. IndyMac is the largest casualty thus far in the subprime mortgage crisis, more or less created by the federal government in its rules concerning “equal opportunity lending practices“.

To further complicate the situation Senator Chuck Schumer (D-NY) made public—presumably for political publicity—a letter he had written to the Office of Thrift Management June 26, questioning the soundness of IndyMac. The result was a run on the bank. Over the next two weeks investors withdrew over $1.3 billion from their accounts necessitating the take over by the FDIC.

At the same time shareholders in Fannie Mae and Freddie Mac began dumping their shares in those two GSEs. Many in the Treasury Department are privately worried that Fannie Mae and Freddie Mac may follow IndyMac into insolvency necessitating a bail-out by the government. If that happens the taxpayer is on the hook for $5 trillion dollars in outstanding mortgages.

Look for the socialist/democrats in Congress to begin floating the idea of nationalizing the home mortgage industry should Fannie Mae and Freddie Mac continue their downward slide.

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Reference Sources:
The IndyMac Takeover Wall Street Journal
Fed Can Lend to Just About Anyone WSJ
Critics of the Firm Sadly Say “Told You” WSJ
The Doc Is In
The American Energy Crisis