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Role and Purpose of Taxpayer Bank Hard Asset Managers

On the Nature & Philosophy of Financial Instability and Application to the Current Financial Crisis Part IV

Role and Purpose of Taxpayer Bank Hard Asset Managers

By Julian Sanchez, PhD

Read: Circuit Systems and our Financial Crisis - Part I
Read: Functions of Taxpayer Bank and the Market - Part II
Read: The Pros and Cons of a Taxpayer Bank - Part III

The Hard Asset Manager:

Hard assets must be treated differently since they affect supply and demand in a given local market. If you release these assets too quickly, you can accentuate the problem making it worse for the banks. The Hard Asset Manager must work with suppliers for controlled release of assets. In the case of houses, the major suppliers are the homebui lders. The Hard Asset Manager should work with homebuilders to establish a release program so that both the government and the homebuilders can establish the supply each are contributing to the market. The Hard Asset Manager has a dual role, to maximize the return for the taxpayer and to stabilize home prices. The number of homes in many markets can reach a critical mass, resulting in a downward spiral of home prices. If the downward spiral is not stopped, it will jeopardize the stability of banks and their capital structure, which will reinforce the slide in home prices. Therefore, the Hard Asset Manger should not only seek returns for the taxpayer but also balance this with stability of the markets by:

1. Writing down the loan and interest for viable homeowners. They should lower the mortgage and interest sufficiently so that the homeowner can contribute to the local economy, continue paying their taxes, and reduce the inventory of government homes. The key to a successful loan modification program is to ensure negative equity is eliminated2. Without eliminating20negative equity there is a high probability the loan will default again and the deflationary spiral continue. The details of how to implement such a plan with the ability of the government to recover its investment is discussed by Jack Guttentag3. Once these loans have been fixed, they can be added to the loan portfolios of banks that have been nationalized and repaired and the government can then sell stakes in these banks back to the public. These loans can be traded to MBS portfolios to unwind and repair bad loan portfolios. The government can also hold them to maturity to recover their investment and stabilize the housing market, attracting both foreign and out of state investors with government incentives. This is important in the hard hit states of FL, CA, AZ, NV, OH, and MI. Most of these states have high population growth, which can be used to reduce the government’s inventory of homes. These high growth states will eventually absorb the homes with a high probability the government will earn a significant profit.
2. Renting homes by first filling government sponsored rental programs such as Section 8, then going to out-of-state investors and finally the public in the local market. The government’s need to manage these assets can be done though capable asset/property management companies. These asset/property manager companies will hire maintenance, management and service personnel to maintain the inventory of government owned property, which will increase employment in areas hardest hit.
3. Selling mobile assets, such as autos, in a controlled release to the local market or in other states or foreign markets where demand exists. Prudence should be used when releasing these assets into the local market since it would be unwise to disrupt local supply/demand structure.
4. Moving assets to viable sub-divisions or other locations to restore balance.
5. In the extreme, bulldozing down the sub-division, as was done in the Houston market followin g the oil market collapse, and recycling the material.
6. Contemplating new ideas to restore equilibrium to local markets.

The Pros and Cons of a Taxpayer Bank

On the Nature & Philosophy of Financial Instability and Application to the Current Financial Crisis Part III

The Pros and Cons of a Taxpayer Bank

By Julian Sanchez, PhD

Read: Circuit Systems & our Financial Crisis - Part I
Read: Functions of Taxpayer Bank and the Market - Part II

The most attractive time for the taxpayer bank to purchase loans is when there is a significant drop in the price of the bank stock. In the case of National City Corp., (whose purchase by PNC Financial Services in late 2008 for about $5.2 billion in stock was supported by U.S. Treasury funds), the returns were as high as 1650% for the capital injected by the taxpayer bank. In a certain sense the taxpayer bank acts as a counterweight since the investment becomes more attractive the greater the fear in the market as the stock price of the bank becomes more depressed. This will place a floor on the stock price of the troubled bank when it needs it the most. Hence, the taxpayer bank will stabilize the financial system in much the same way as a counterweight causing a building to stabilize in a high wind. That is, the taxpayer bank incentive increases as the market spirals further downward (depressing the stock price). The increased likelihood of the taxpayer bank to invest in a downward spiral will cause investors not to panic and force the shorts (attempts to profit from an expected decline in price) to be more cautious, therefore stabilizing the market.

One main argument against forming a taxpayer bank is the implications concerning morale hazard. In essence, the concern is that a government bank acting as a backstop would encourage reckless lending by the rescued bank in order to secure short-term profits at the expense of its shareholders and customers. In general, this is a true statement; however, one can engineer the system such that this risk is eliminated as will be discussed later in this paper.

The taxpayer bank should be organized into two main groups. One group, referred to as the Hard Asset Manager, will manage financial instruments that have physical assets tied to them. This includes but is not limited to residential and commercial real estate, autos, etc. The second group, called the Soft Asset Manager, will manage financial instruments such as Credit Card Debt, MBSs (Mortgage Backed Securities), CDOs (Investment securities backed by bonds, loans, and other asset pools), SIVs (Structured Investment Vehicles that borrow money by issuing short-term securities at low interest and lend money by means of long-term securities that pay higher interest), etc., which might not involve the disposition of assets. In the next installment, we will discuss the role and purpose of each of these asset managers.

Part IV

Functions of Taxpayer Bank and the Market

On the Nature & Philosophy of Financial Instability and Application to the Current Financial Crisis Part II

By Julian Sanchez, PhD

Read: Circuit Systems & our Financial Crisis - Part I

Part II. General Approach to Solution

Figure 2.1 illustrates a simplistic view of a given market. The taxpayer bank is a government formed entity that purchases the assets from weak financial institutions and manages them for the benefit of the taxpayer and for stabilizing the local market. Since the taxpayer bank will earn a profit (G-1) for every dollar invested1, it can use these funds to stimulate the economy.

First it can send the taxpayer a check as a return on investment thereby creating its own stimulus package. Second the taxpayer bank can work with the states to fund infrastructure projects, which are desperately needed and can increase jobs in the area.

Next the taxpayer bank can also guarantee a larger amount of Small Business Loans, focusing on those companies that will generate the largest amount of job growth and benefit the economy the most. Once banks are re-capitalized they can start to lend to both the public and businesses. This will stop the slide in job losses and improve the credit markets. The taxpayer bank also has to carefully manage assets so as not to accentuate a further slide in asset prices. We will now discuss the taxpayer bank in more detail.

Taxpayer Bank

The taxpayer bank can be viewed as the buyer of last resort. In essence this bank will purchase loans at the originated face value for the discounted assets and the difference received in equity. The equations governing the returns for both the government and the shareholders are defined in “Analysis and Solution to the Current Financial Crisis” 1. The taxpayer bank acts in a certain sense as a counterweight to the financial system.

In a systemic failure, banks start experiencing large losses causing their stock prices to collapse. As their stock price collapses other banks stop lending to them and each other. Capital becomes constrained. Asset values decline since there are fewer buyers. Banks stop lending to each other and to their customers reducing the opportunity for new earnings, which depresses the stock price even more.

As asset values decline further, bank stock prices fall even more restricting their ability to raise capital in an effort to slow down or reverse this trend. As the stock price of more banks collapse, more assets are dumped onto the market causing a further spiraling downward of asset prices, leading to other bank failures.

———————————————————

Reference:

“Analysis and Solution to the Current Financial Crisis” Public Domain Oct 3, 2008.

Part III

Circuit Systems & our Financial Crisis I

On the Nature & Philosophy of Financial Instability and Application to the Current Financial Crisis Part I

By Julian Sanchez, PhD

Abstract:

Very large systems operating in their normal range exhibit quasi-linear relationships between input and output that can be used to predict output behavior. However, when the system becomes destabilized, the dynamics change so that the relationship between output and input is non-linear. Making matters worse is the fact that these non-linear relationships between output and input become a function of time. The time varying non-linear nature of the system implies that injections into the system cannot be predicted and can produce large perturbations resulting in unintended consequences which are even more difficult to control. These perturbations are even more troubling since the entire system becomes unstable and not well understood. Altering the system in an effort to fix the problem usually results in new perturbations of the system. The probability increases that these quasi-random perturbations will synchronize triggering a cataclysmic failure resulting in system collapse or that outside disturbances such as environmental disaster, weather related tragedies, war, etc. will cause a weakened system to fail. Therefore, when dealing with a very large out of control multi-dimensional system, the best approach is to preserve the entire system (irrespective of moral hazard). In this paper we will discuss a comprehensive solution to stabilizing and preserving the system along with the philosophies that motivate them.

Can circuit systems teach us how to solve our financial crisis?

Introduction:

The purpose of financial systems is such that a gain is produced for each dollar invested into a given instrument. This gain in nature is similar to gain produced by a circuit that amplifies. However, any circuit that produces gain suffers from instability. The solution to eliminate such instability is to couple the output to input with negative feedback. Without automated negative feedback, the circuit will require excessive manual controls and high quality low tolerance components which are expensive and require constant maintenance to implement the negative feedback. The constant maintenance and excessive manual controls cannot be maintained without human error entering the process and occasionally inducing the collapse of the design. Therefore to produce a more robust design able to operate under a variety of conditions while still maintaining the desired operating conditions with lower quality components, control systems and circuit designers use negative feedback loops to create self correcting circuits able to produce the desired result under a variety of conditions. In this paper we review the overall philosophy of stability in financial systems. This paper provides an overview into guidelines and principles for a comprehensive solution to the current financial crisis. We will discuss the impact of shorting stock, morale hazard and other financial topics that can result in instability of the financial system. Our purpose is to provide a philosophical view with guiding principles for the current financial crisis.

Part II

Why al-Qaeda and Bush’s neocons were useful to each other!

On January 19 2009, the Huffington post carried an article on Bush pardoning Osama bin Laden…. Seriously now, the funny thing is that Osama bin Laden has done more for the Bush administration than any potential pardon candidate and would have “deserved” such a pardon from Bush!

Here are some reasons why al-Qaeda and the Bush’s neocons were indeed useful to each other:

Charles Edmund Coyote, January 26, 2009:

Before the September 11 attacks, Washington’s neocons waited for a ‘Pearl Harbor’ type event that would give them the opportunity to rouse public support for a war against Iraq and Six other [Syria, Lebanon, Libya, Somalia, Sudan, and Iran] “rogue states” they were sure American military power could easily dispatch. The neocon’s Project for the New American Century proposed to remake the oil-rich-Middle-East in America’s image. Vice President Dick Cheney dreamed of restoring the imperial presidency that had been lost in the debacle of Richard Nixon’s Watergate. And George W. Bush had an agenda that was anything but the ‘humble’ foreign policy on which he had run in the 2000 Presidential race.

In 1999, when Texas Governor George Bush was preparing to campaign for the nation’s highest office, he contracted with Houston Sportswriter and Author Mickey Herskowitz to ghost-write his autobiography. It would be called ‘A Charge to Keep’. After 2 months of interviews and work, however, Bush’s team of advisors decided they better get rid of Herskowitz. The gregarious Governor Bush was telling Mickey too much. What’s most interesting about the Mickey Herskowitz saga is that Bush explained to him that if a President attacks a small country and wins an easy war, it is an effective way to increase his popularity with the American people and gain the ‘political capital’ needed to advance his political agenda. Bush and his team had seen Bush’s father, H.W., rise to 90 percent approval ratings over the First Iraq War in 1991, but felt he failed to take advantage of the popularity gained.

As a well-known RAND Corporation study advocated, the most effective way to fight terrorist organizations is through a combination of intelligence operations and police work, using flexible military power when necessary. That, in essence is what the U.S. had done with such success during the opening weeks of its Afghan War. The Bush Administration, however, switched the focus to Iraq, before the job was done in Afghanistan, and, for reasons that remain unclear, badly fumbled the opportunity to eliminate bin Laden and Ayman al-Zawahiri at the Battle of Tora Bora. Disingenuously, the Bush neocons and Cheney imperialists then militarized the ‘War on Terror, formatting it as a perpetual state of “war”, which made it easier to delimit government, expand presidential power, and use American power to attempt to remake the world.

In South Asia, al-Qaeda was also making its plans. During the 1990’s, the people and the governments of Muslim nations from Algeria and Egypt, to Saudi Arabia and the Sudan, had grown tired of the Islamists and were running them out of their countries. In Algeria, Islamic radicals had even taken to eliminating each other over perceptions that many of their own members were “”not Muslim enough”. Bin Laden had been expelled from Saudi Arabia to the Sudan and then back to the caves of Afghanistan. Even in Afghanistan, his friend Mullah Omar, concerned for the well-being of his Taliban government, had ordered bin Laden to stop giving interviews to the western press talking about jihad against Israel and the U.S.A.

Rudyard Kipling once described Afghanistan as the “place where empires go to die”. Bin Laden understood the advantages of taking on superpowers in that region and had done it with the Soviet Union in the 1980s. Believing that Israel and its supporter, the United States, were instruments of oppression for the muslin people, he planned for an opportunity to drag the United States into a long and costly war similar to what had helped drag the Soviet Union down twenty years before. One effective, low-cost, guerilla fighter can keep a hundred expensive military personnel busy for a long time. Al Qaeda’s goal, in the September 11 attacks, was to provoke a heavy military response from the Americans, the inevitable cost and clumsiness of which would offend the Muslin world and destabilize the Middle East, thereby increasing oil prices (which had been cheap for decades), damage the American economy, and bring prosperity to the Muslim people.

Bin Laden took the chance that America would strike back at al-Qaeda in a way that would alienate the U.S. from the larger Muslim world. But that did not happen in Afghanistan where the U.S. used only 400 CIA agents and Special Forces (along with a very effective Air Force and suitcases of cash for the Northern Alliance) to tear the Taliban government apart. The Bush administration, however, was not focused on bin-Laden, and used the 9/11 attacks as an excuse to attack Iraq and Saddam Hussein. Instead of using available U.S. troops to trap bin Laden, Washington hired Afghan mercenaries who were also taking money from al-Qaeda! During the battle of Tora Bora these local “allies” let many of al Qaeda’s fighters escape, while the nearby U.S. Marines and Special Forces, foreseeing al-Qaeda’s strategic withdrawal to safety, were under orders to do nothing to stop it. Most experts and witnesses claim Osama bin Laden escaped from Tora Bora around December 14, 2001.

“I don’t know where bin Laden is. I have no idea and really don’t care. It’s not that important. It’s not our priority.” said George W. Bush on March 13, 2002, six months after September 11.

Bin Laden repaid the favor to George Bush during the 2004 presidential election. Although Bush adviser Karl Rove successfully painted George W’s image as “resolute” and Democrat John Kerry’s as “a weak flip-flopper”, the race for the presidency was still neck-to-neck even a few days before the election. Then, with four days to go, Osama bin Laden released a tape telling the American people “Your security is in your hands. Any nation that does not attack us will not be attacked”. According to a CIA analysis, reported in the book, W Got His War, Bin Laden knew that by demanding US withdrawal from the Middle East, Americans would instead fight all the harder and consequently vote for the “resolute” appearing Bush instead of the more nuanced Kerry. Bin Laden wanted Bush to win and continue his clumsy war in Iraq in order to deplete the American economy and continue to harm American relations with the Muslim nations.

The distracting war in Iraq turned out not to be easy ‘cake walk Bush had expected. Sad to say, it became instead a walk into bin Laden’s trap, helping al Qaeda achieve many of its goals. Years ago, bin Laden demanded that the price of oil should be $144 a barrel. By 2008 this had come true, in large part because of the Hubris of President Bush’s clumsy Middle East policies.

Charles Edmund Coyote

Keith Olbermann explains why George W.Bush…

must be brought to justice.

We compromised with slavery in the Declaration of Independence – and four score and nine years later we had buried 600,000 of our sons and brothers in a Civil War.

After that War’s ending, we compromised with the social restructuring and protection of the rights of minorities in the South. And a century later, we had not only not resolved anything, but black leaders were still being assassinated in the cities of the South.

Bush guilty of torture

More on Bush guilty of torture

Barack Obama’s Transitions to the Presidency

OBAMA TRANSITIONS TO THE PRESIDENCY

How long will the Obama honeymoon last?

Media make false comparison of inauguration costs

The media myth about the cost of Obama’s inauguration

Fox’s Smith falsely suggested Obama stimulus plan will “cut taxes on people who don’t pay taxes” - Media Matters

Obama arrives in DC area 2 weeks before inaugural

Perhaps we should encourage the Republican Party to seat Chip Saltsman as RNC Chairman. If that once great organization insists on continuing to run itself into the gutter, then let them build a home there – Peter Yarrow’s comment

How many people would want to go through years of a modern President’s daily life - Obama bristles as the bubble closes in

vs

Read more

Fairwell George W Bush! Reasons we will miss you…

Bushisms:

“I was proud the other day when both Republicans and Democrats stood with me in the Rose Garden to announce their support for a clear statement of purpose: you disarm, or we will.”—Speaking about Saddam Hussein, Manchester, N.H., Oct. 5, 2002 (Thanks to George Dupper.)

There are some “GOOD RIDDANCE BUSH” Bumper Stickers left!!

“The law I sign today directs new funds and new focus to the task of collecting vital intelligence on terrorist threats and on weapons of mass production.”—Washington, D.C., Nov. 27, 2002

“The war on terror involves Saddam Hussein because of the nature of Saddam Hussein, the history of Saddam Hussein, and his willingness to terrorize himself.”—Grand Rapids, Mich., Jan. 29, 2003

“You’re free. And freedom is beautiful. And, you know, it’ll take time to restore chaos and order—order out of chaos. But we will.”—Washington, D.C., April 13, 2003

“We ended the rule of one of history’s worst tyrants, and in so doing, we not only freed the American people, we made our own people more secure.”—Crawford, Texas, May 3, 2003 (Thanks to Tony Marciniec.)

“I think war is a dangerous place.”—Washington, D.C., May 7, 2003

“I’ve got very good relations with President Mubarak and Crown Prince Abdallah and the King of Jordan, Gulf Coast countries.”—Washington, D.C., May 29, 2003

“I’m also not very analytical. You know I don’t spend a lot of time thinking about myself, about why I do things.”—Aboard Air Force One, June 4, 2003

“It’s very interesting when you think about it, the slaves who left here to go to America, because of their steadfast and their religion and their belief in freedom, helped change America.”—Dakar, Senegal, July 8, 2003 (Thanks to Michael Shively.)

“Security is the essential roadblock to achieving the road map to peace.”—Washington, D.C., July 25, 2003

“I glance at the headlines just to kind of get a flavor for what’s moving. I rarely read the stories, and get briefed by people who are probably read the news themselves.”—Washington, D.C., Sept. 21, 2003

“See, free nations are peaceful nations. Free nations don’t attack each other. Free nations don’t develop weapons of mass destruction.”—Milwaukee, Wis., Oct. 3, 2003

“The ambassador and the general were briefing me on the—the vast majority of Iraqis want to live in a peaceful, free world. And we will find these people and we will bring them to justice.”—Washington, D.C., Oct. 27, 2003 (Thanks to Robert Hack.)

“The illiteracy level of our children are appalling.”—Washington, D.C., Jan. 23, 2004 (Thanks to Lewell Gunter.)

“I want to thank my friend, Sen. Bill Frist, for joining us today. … He married a Texas girl, I want you to know. (Laughter.) Karyn is with us. A West Texas girl, just like me.”—Nashville, Tenn., May 27, 2004

“I’m the master of low expectations.”—Aboard Air Force One, June 4, 2003

“Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.”—Washington, D.C., Aug. 5, 2004 (Thanks to Alicia Butler.)

“Free societies are hopeful societies. And free societies will be allies against these hateful few who have no conscience, who kill at the whim of a hat.”—Washington, D.C., Sept. 17, 2004 (Thanks to David Stanford.)

“After standing on the stage, after the debates, I made it very plain, we will not have an all-volunteer army. And yet, this week—we will have an all-volunteer army. Let me restate that.”—Daytona Beach, Fla., Oct. 16, 2004

“I believe that, as quickly as possible, young cows ought to be allowed to go across our border.”—Ottawa, Nov. 30, 2004

“Because the—all which is on the table begins to address the big cost drivers. For example, how benefits are calculate, for example, is on the table; whether or not benefits rise based upon wage increases or price increases. There’s a series of parts of the formula that are being considered. And when you couple that, those different cost drivers, affecting those—changing those with personal accounts, the idea is to get what has been promised more likely to be—or closer delivered to what has been promised. Does that make any sense to you? It’s kind of muddled. Look, there’s a series of things that cause the—like, for example, benefits are calculated based upon the increase of wages, as opposed to the increase of prices. Some have suggested that we calculate—the benefits will rise based upon inflation, as opposed to wage increases. There is a reform that would help solve the red if that were put into effect. In other words, how fast benefits grow, how fast the promised benefits grow, if those—if that growth is affected, it will help on the red.”—Explaining his plan to save Social Security, Tampa, Fla., Feb. 4, 2005

“It’s in our country’s interests to find those who would do harm to us and get them out of harm’s way.”—Washington, D.C., April 28, 2005

“Well, we’ve made the decision to defeat the terrorists abroad so we don’t have to face them here at home. And when you engage the terrorists abroad, it causes activity and action.”—Washington, D.C., April 28, 2005

“See, in my line of work you got to keep repeating things over and over and over again for the truth to sink in, to kind of catapult the propaganda.”—Greece, N.Y., May 24, 2005

“I think we are welcomed. But it was not a peaceful welcome.”—Philadelphia, Dec. 12, 2005, on the reception of American forces in Iraq

“As you can possibly see, I have an injury myself—not here at the hospital, but in combat with a cedar. I eventually won. The cedar gave me a little scratch.”—After visiting with wounded veterans from the Amputee Care Center of Brooke Army Medical Center, San Antonio, Texas, Jan. 1, 2006

“The point now is how do we work together to achieve important goals. And one such goal is a democracy in Germany.”—Washington, D.C., May 5, 2006

“That’s George Washington, the first president, of course. The interesting thing about him is that I read three—three or four books about him last year. Isn’t that interesting?”—Showing German newspaper reporter Kai Diekmann the Oval Office, Washington, D.C., May 5, 2006

“I think—tide turning—see, as I remember—I was raised in the desert, but tides kind of—it’s easy to see a tide turn—did I say those words?”—Washington, D.C., June 14, 2006

“I’ve reminded the prime minister—the American people, Mr. Prime Minister, over the past months that it was not always a given that the United States and America would have a close relationship.”—Washington, D.C., June 29, 2006

“And there is distrust in Washington. I am surprised, frankly, at the amount of distrust that exists in this town. And I’m sorry it’s the case, and I’ll work hard to try to elevate it.”— Speaking on National Public Radio, Jan. 29, 2007

“More than two decades later, it is hard to imagine the Revolutionary War coming out any other way.”—Martinsburg, W. Va., July 4, 2007

“I’m going to try to see if I can remember as much to make it sound like I’m smart on the subject.”—answering a question concerning a possible flu pandemic, Cleveland, July 10, 2007

“You know, when you give a man more money in his pocket—in this case, a woman more money in her pocket to expand a business, it—they build new buildings. And when somebody builds a new building somebody has got to come and build the building. And when the building expanded it prevented additional opportunities for people to work.”—Lancaster, Pa., Oct. 3, 2007

After 75 years, FDR’s First Inaugural Address becomes inspiring for our own time

“Only Thing We Have to Fear Is Fear Itself”

March 4, 1933

I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impel. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone.

More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.

Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.

Restoration calls, however, not for changes in ethics alone. This Nation asks for action, and action now.

Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.

Hand in hand with this we must frankly recognize the overbalance of population in our industrial centers and, by engaging on a national scale in a redistribution, endeavor to provide a better use of the land for those best fitted for the land. The task can be helped by definite efforts to raise the values of agricultural products and with this the power to purchase the output of our cities. It can be helped by preventing realistically the tragedy of the growing loss through foreclosure of our small homes and our farms. It can be helped by insistence that the Federal, State, and local governments act forthwith on the demand that their cost be drastically reduced. It can be helped by the unifying of relief activities which today are often scattered, uneconomical, and unequal. It can be helped by national planning for and supervision of all forms of transportation and of communications and other utilities which have a definitely public character. There are many ways in which it can be helped, but it can never be helped merely by talking about it. We must act and act quickly.

Finally, in our progress toward a resumption of work we require two safeguards against a return of the evils of the old order; there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people’s money, and there must be provision for an adequate but sound currency.

There are the lines of attack. I shall presently urge upon a new Congress in special session detailed measures for their fulfillment, and I shall seek the immediate assistance of the several States.

Through this program of action we address ourselves to putting our own national house in order and making income balance outgo. Our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound national economy. I favor as a practical policy the putting of first things first. I shall spare no effort to restore world trade by international economic readjustment, but the emergency at home cannot wait on that accomplishment.

The basic thought that guides these specific means of national recovery is not narrowly nationalistic. It is the insistence, as a first consideration, upon the interdependence of the various elements in all parts of the United States—a recognition of the old and permanently important manifestation of the American spirit of the pioneer. It is the way to recovery. It is the immediate way. It is the strongest assurance that the recovery will endure.

In the field of world policy I would dedicate this Nation to the policy of the good neighbor—the neighbor who resolutely respects himself and, because he does so, respects the rights of others—the neighbor who respects his obligations and respects the sanctity of his agreements in and with a world of neighbors.

If I read the temper of our people correctly, we now realize as we have never realized before our interdependence on each other; that we can not merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective. We are, I know, ready and willing to submit our lives and property to such discipline, because it makes possible a leadership which aims at a larger good. This I propose to offer, pledging that the larger purposes will bind upon us all as a sacred obligation with a unity of duty hitherto evoked only in time of armed strife.

With this pledge taken, I assume unhesitatingly the leadership of this great army of our people dedicated to a disciplined attack upon our common problems.

Action in this image and to this end is feasible under the form of government which we have inherited from our ancestors. Our Constitution is so simple and practical that it is possible always to meet extraordinary needs by changes in emphasis and arrangement without loss of essential form. That is why our constitutional system has proved itself the most superbly enduring political mechanism the modern world has produced. It has met every stress of vast expansion of territory, of foreign wars, of bitter internal strife, of world relations.

It is to be hoped that the normal balance of executive and legislative authority may be wholly adequate to meet the unprecedented task before us. But it may be that an unprecedented demand and need for undelayed action may call for temporary departure from that normal balance of public procedure.

I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption.

But in the event that the Congress shall fail to take one of these two courses, and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis—broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.

For the trust reposed in me I will return the courage and the devotion that befit the time. I can do no less.

We face the arduous days that lie before us in the warm courage of the national unity; with the clear consciousness of seeking old and precious moral values; with the clean satisfaction that comes from the stern performance of duty by old and young alike. We aim at the assurance of a rounded and permanent national life.

We do not distrust the future of essential democracy. The people of the United States have not failed. In their need they have registered a mandate that they want direct, vigorous action. They have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it.

In this dedication of a Nation we humbly ask the blessing of God. May He protect each and every one of us. May He guide me in the days to come.

Source: Franklin D. Roosevelt, Inaugural Address, March 4, 1933, as published in Samuel Rosenman, ed., The Public Papers of Franklin D. Roosevelt, Volume Two: The Year of Crisis, 1933 (New York: Random House, 1938), 11–16.

Quotes by F.D. Roosevelt:

“A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward”

“Be sincere; be brief; be seated”

“Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off”

“Happiness lies in the joy of achievement and the thrill of creative effort”

“If civilization is to survive, we must cultivate the science of human relationships - the ability of all peoples, of all kinds, to live together, in the same world at peace”

“Men are not prisoners of fate, but only prisoners of their own minds”

“Rules are not necessarily sacred, principles are”

“When you get to the end of your rope, tie a knot and hang on”

“Whoever seeks to set one religion against another seeks to destroy all religion”

“There are many ways of going forward, but only one way of standing still”

Good Riddance George W. Bush, the End of an Error!

The end of the Republican Party

I have been a registered Republican since 1976.  I have been oriented toward fiscal responsibility, the rule of law, and genuine national defense, since I was nine years old.

Once upon a time the Republican Party was composed of big people with ideas big enough to do the big job of leading this big country; people like Ronald Reagan and H.W. Bush and Gerald Ford.

For reasons cited above, I have been profoundly disappointed by W. Bush and his administration of this country. He ran as a conservative but governed as a big government internationalist, the worst since Lyndon Johnson in the 1960s, doing so without Johnson’s redeeming support for Dr. Martin Luther King on civil rights and on fiscal responsibility.

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I do appreciate that W clearly is not racist, having appointed more blacks to high position than any other US President. He also is belatedly evidencing a quality of grace in turning over the reins of this nation to Barack Obama. But aside from these qualities, I ask you to name one worthwhile achievement by this Republican President.

If you want to talk about Iraq, I will point out that no American President has ever been so stupid as to attack the wrong country; wasting vast amounts of money, military resources, and this nation’s good name to accomplish absolutely nothing of value. No President in the history of this country has ever allowed himself to be so misguided.

No President in the history of this country has ever been so Un American. In his abandonment of our constitution and disregard for the rule of law, Bush gave real Americans genuine concern over the real and serious undermining of fundamental American principals that took place in his administration of our Executive Branch of government. He took an oath of office to uphold the US Constitution. I am certain he has never read that document, even once in his life, much less tried to understand it.

He badly fumbled the War on Terror and this Nation’s economy. This country has not seen a worse military leader since General Custer asked, “What Indians?” Have you noticed bin Laden still has his own tape and video production company. Given the best military and intelligence organizations in the world, Kemo Sabe W never got his man, electing instead to pour valuable time and resources down the wrong rat hole. As former White House terrorism czar, Richard Clark once said, if al Qaeda ever explodes a nuclear weapon in an American city, we’ll know who to blame.

Thanks to excessive market deregulation, excessive free trade policies, inattention to serious health care issues, and excessive levels of military spending, America’s middle class, the backbone of its democracy, is now facing the worst economy since Reagan took office, perhaps the worst since the Great Depression. The Bush administration managed to create this mess out of the economic prosperity and federal budget surpluses that Bill Clinton handed over to them.

Don’t bother with silly accusations about what Bill Clinton was doing with his spare time in the oval office when Newt Gingrich, the Republican Speaker of the House who impeached Clinton, was doing the same thing in his own spare time.

The Republican Party campaigned against Obama, not on the strength of its ideas, for those had been lost under W, but on the weakness of its irrelevant character attacks. They tried to convince the American people that Obama, an outstanding graduate of Harvard Law School, a multimillion dollar best selling author, a friend of people such as Warren Buffet, was a ‘terrorist’ That is seriously lame and those Republicans who bought into that are also seriously lame.

Many Republicans tried to convince the American people, that Obama, an active member of a Christian community for some 20 years, was Muslim. That is more than lame, it is Un-American. Even Bush, in his September 20, 2001 speech, declaring War on Terror, proudly pointed to freedom of religion as one of the fundamental rights those who attacked this country on 9/11 were are trying to take away. America is a country that separates church and state, and empowers its citizens to worship or not worship God as they see fit. The answer real Americans give to the accusation that someone might be a Muslim is, ‘So What!’

If you agree with President Bush’s September 2001 War on Terror speech, then you need to understand that those who really are Palin’ around with Terrorists are those who try to assault the Freedom of Religion every American has.

The strength of character required to be President is almost always derived from a depth of faith. Whether trying to attack a presidential candidate’s character by falsely associating them with a less traditional religion, as with Barack Obama; or properly associating them with a less traditional religion, as with Mitt Romney; if that person’s faith has demonstrated it is deep enough to be a source of strength enabling that person to become a serious candidate for this country’s highest office, than real Americans will respect that faith.

Republicans have strayed badly from the great party they once were and have done so to the extant they have forgotten what it means to be a real American. America has never been about being as small and narrow as possible. It has always been, and will always be, about being able to fly as high as we belong, born upward by the winds of freedom.

If most Republicans are trying to do away with that, than most Republicans are trying to do away with America.

As I’ve learned about how small minded Republican operatives lied about Bill Clinton’s Presidency to discredit it with the American people, as I’ve learned about how narrow minded right-wing radio and media has been in misleading the American people to gain electoral advantage, I have become more and more disgusted with the Republican Party itself. In its determination to highlight the small and narrow minded, in its pursuit of the lowest common denominator in American politics, it has chosen to become small and narrow minded and is choosing to become the lowest common denominator in American politics.

I will support President Obama from the false Republican attacks and disinformation certain to come. If he proves able to make the most of the opportunity the fumbling and low reaching Republican party has given him, then I see little reason to continue identifying myself with such a party.

By their warmongering and incompetence, by their determination to continue reveling in the mud trough, the Republicans are amply demonstrating this country would be better off without them.

I ask you to uphold the values of America, and remember why so many have come here. We are in a fight for our principles, and our first responsibility is to live by them. No one should be singled out for unfair treatment or unkind words because of their ethnic background or religious faith.
- George W. Bush, September 20, 2001

Charles Edmond Coyote

Read also my article: The downfall of the Republican Party

GOOD RIDDANCE BUSH, THE END OF AN ERROR

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