Saturday, November 29, 2008

Prediction 2: The Coming Debt Moratorium

During the recent presidential election both sides of the federal aisle, and their candidates for the presidency, tried to outdo each other in wailing about, and promising relief to, the supposed “victims” of “predatory” lending practices by banks and other lenders.

Then, in a confounding of reason, a nearly a trillion dollars was gifted to the Treasury Secretary to bail out the predators themselves, necessarily creating a horde of other supplicants holding out their beggars’ bowls to catch some of the taxpayer-supplied manna from heaven.

Let’s put aside for the time being the several fascinating issues (e.g., inflation, national debt) that arise from the tulip-craze credit swindles and real estate buying binge of the past several years—caused by democrat-induced fraudulent applications, blind-eye lending decisions, indefensible leverage, and the true definitions of “victim” and “predatory”—and focus instead on what may come next, after the government’s jawboning and arm-twisting of mortgage holders proves unavailing, home foreclosures continue unabated, credit remains frozen, banks continue to fail, debt of all kinds cascades into default, and even commercial mortgages start to tank.

That focus takes us to August 1, 1928.

Mr. and Mrs. John H. Blaisdell sat down with the Home Building & Loan Association and mortgaged a two-story residential building in Minneapolis, Minnesota.

A mortgage is simply another name for a certain kind of contract. The owner (or would-be) owner of real property (the “mortgagor”) pledges it to a lender (the “mortgagee”) as security for a loan. Usually, the proceeds of the loan are used to purchase the property. A common example is the financing arrangement for the purchase of a home. (There can be “chattel” mortgages in personal property, as with financed purchases of automobiles.)

The Blaisdell’s mortgage (i.e., contract) with their lender contained customary, rather simple terms.

In return for putting up their property as collateral, the lender loaned the Blaisdells money. The Blaisdells agreed to repay it in regular monthly installments of principal and interest.

If the Blaisdells didn’t make the payments—if they defaulted on their contractual agreement—the lender could protect its creditor position by foreclosing on the property and selling it at auction.

This is exactly what’s happening today across the country: loan contracts are being breached because of non-payment, and lenders are availing themselves of the legal remedy of foreclosure in order to protect, at least to some extent, the money they loaned.

Back to the Blasidells and the bank.

If the foreclosure sale netted more than the amount Home Building & Loan Association was owed, the excess proceeds would go to the Blaisdells. If it netted less, the borrowing Blaisdells would owe the lender the difference (a “deficiency”).

Another provision of the mortgage contract—automatically inserted there as a requirement of Minnesota law—was a one-year redemption period following a foreclosure sale, during which the Blaisdells could reacquire the property for the price at which it had been sold.

The buyer at the foreclosure sale could get good title only when the one-year redemption period had expired without the Blaisdells having exercised their statutory right of redemption. (Let’s also put aside for now a consideration of by what right the Minnesota legislature could enact a law requiring private contracts to include a right of redemption—a power whose source is far from clear or defensible.)

For a few years the Blaisdells made their regular mortgage payments. Then they stopped.

A foreclosure sale followed, and the lender “bought” the property for exactly the amount then owed on the mortgage. The sale yielded no excess proceeds for the Blaisdells, and no deficiency was owed by them to Home Building & Loan Association which now owned the property subject to the Blaisdell’s one-year statutory right of redemption.

Because the foreclosure sale had occurred on May 2, 1932 the Blaisdells would have had until May 2, 1933 to redeem the property.

But then, a few weeks before that date, providence, in the guise of the State of Minnesota Legislature, intervened. On April 18, 1933, a mere fourteen days before the one-year redemption period was set to expire, the state enacted the “Minnesota Mortgage Moratorium Law”.

The State of Minnesota—not the parties, the Blaisdells and Home Building & Loan Association—had rewritten their mortgage contract.

Why?

As the Minnesota legislature explained,

“Whereas, the severe financial and economic depression existing for several years past has resulted in extremely low prices for the products of the farms and the factories, a great amount of unemployment, an almost complete lack of credit for farmers, business men and property owners and a general and extreme stagnation of business, agriculture and industry, and

“Whereas, many owners of real property, by reason of said conditions, are unable, and it is believed, will for some time be unable to meet all payments as they come due of taxes, interest and principal of mortgages on their properties and are, therefore, threatened with loss of such properties through mortgage foreclosure and judicial sales thereof, and

“Whereas, many such properties have been and are being bid in at mortgage foreclosure . . . sales for prices much below what is believed to be their real values and often for much less than the mortgage or . . . indebtedness, thus entailing deficienc[ies] . . . against the mortgage[es] . . . and

“Whereas, it is believed, and the Legislature of Minnesota hereby declares its belief, that the conditions existing as hereinbefore set forth has created an emergency of such nature that justifies and validates legislation for the extension of the time of redemption from mortgage foreclosure and execution sales and other relief of a like character; and

“Whereas, The State of Minnesota possesses the right under its police power to declare a state of emergency to exist, and

“Whereas, the inherent and fundamental purposes of our government is to safeguard the public and promote the general welfare of the people; and

“Whereas, Under existing conditions the foreclosure of many real estate mortgages by advertisement would prevent fair, open and competitive bidding . . . and

“Whereas, it is believed, and the Legislature of Minnesota hereby declares its belief, that the conditions existing as hereinbefore set forth have created an emergency of such a nature that justifies and validates changes in legislation providing for the temporary manner, method, terms and conditions upon which mortgage foreclosure sales may be had or postponed and jurisdiction to administer equitable relief in connection therewith may be conferred upon the District Court,

* * *
“Section 1. Emergency Declared to Exist. In view of the situation . . . the Legislature of the State of Minnesota hereby declares that a public economic emergency does exist in the State of Minnesota.” (My emphasis throughout.)

Sound familiar?

Just substitute for the “Minnesota Legislature” the “Congress (and President) of the United States,” and these words, and the rationale behind them, could have been written today.

In order to implement the state’s newly declared mortgagor/debtor-relief policy, the Minnesota Mortgage Moratorium Law mandated that foreclosure sales could be postponed, and the redemption period extended until May 1, 1935—two years after the Blaisdells could have redeemed their mortgaged property under the law that existed when they made their contract with the bank .

Taking advantage of the Moratorium Act, the Blaisdells asked a Minnesota court to enter an order extending their redemption period.

The court—apparently recognizing that Article I, Section 10, of the federal Constitution expressly prohibits a state from enacting any law “impairing the obligation of contracts,” and realizing that the Moratorium Act did just that—refused to grant the extension.

So the Blaisdells appealed.

The Minnesota Supreme Court reversed the lower court and granted the two year extension (conditioned on the Blaisdells paying $40.00 “rent” each month).

Consider what had happened.

The Blaisdells had put up their real estate as security for a loan from Home Building & Loan Association. The loan had been defaulted. The lender had to repurchase the property, and then wait almost a year until the statutory redemption period expired before it could have clear title.

Near the end of that period, the Minnesota Legislature rewrote the Blaisdell-Home Building & Loan mortgage contract, the net result being that the lender would have to wait a minimum of another two years before obtaining the property—all the while receiving “rent” instead of the contractually-agreed mortgage payments.

We know why the Minnesota legislature enacted the Moratorium Act.

What was the Supreme Court of Minnesota’s rationale for upholding it?

According to the later Supreme Court of the United States opinion, which we will get to in a moment, the Minnesota court upheld the moratorium law because it was . . . . . .

“ . . . an emergency measure. Although conceding that the obligations of the mortgage contract were impaired [despite the prohibition of Article 1, Section 10], the [Minnesota Supreme Court] decided that what it thus described as an impairment was, notwithstanding the contract clause of the federal Constitution, within the police power of the state as that power was called into execution by the public economic emergency which the Legislature had found to exist.” (My emphasis.)

Actually, the Supreme Court of Minnesota had been even more explicit, and arrogant, about what motivated its decision:

“In addition to the weight to be given the determination of the Legislature that an economic emergency exists which demands relief, the court must take notice of other considerations. The members of the Legislature come from every community of the state and from all the walks of life. They are familiar with conditions generally in every calling, occupation, profession, and business in the state. Not only they, but the courts must be guided by what is common knowledge. It is common knowledge that in the last few years land values have shrunk enormously. Loans made a few years ago upon the basis of the then going values cannot possibly be replaced on the basis of present values.” (My emphasis.)

Justice Olsen of the Minnesota Supreme Court, in a concurring opinion, added the following:

“The present nation wide and world wide business and financial crisis has the same results as if it were caused by flood, earthquake, or disturbance in nature. It has deprived millions of persons in this nation of their employment and means of earning a living for themselves and their families; it has destroyed the value of and the income from all property on which thousands of people depended for a living; it actually has resulted in the loss of their homes by a number of our people, and threatens to result in the loss of their homes by many other people in this state; it has resulted in such widespread want and suffering among our people that private, state and municipal agencies are unable to adequately relieve the want and suffering, and Congress has found it necessary to step in and attempt to remedy the situation by federal aid. Millions of the people’s money were and are yet tied up in closed banks and in business enterprises.” (My emphasis.)

In other words, by “common knowledge” things were rough for depression-era borrowers—just as they are today for some, especially those who tried to game the system by purchasing homes without adequate means to pay for them in the expectation that the bubble would everlastingly get bigger and bigger and never burst—let alone for the wheelers and dealers on Wall Street whose voracious appetite for “investment” vehicles could be satisfied only by more and more rotten paper debt.

But times were tough for Home Building & Loan Association (and other lenders) too, so it appealed the case to the Supreme Court of the United States to protect itself and its depositors.

There, Chief Justice Charles Evans Hughes authored the Court’s majority opinion upholding the constitutionality of the Minnesota Mortgage Moratorium Law.

A significant portion of his opinion consists of a survey of some of the Court’s previous cases, on the basis of which Hughes enunciated a startlingly candid conclusion:

“It is manifest from this review of our decisions that there has been a growing appreciation of public needs and of the necessity of finding ground for a rational compromise between individual rights and public welfare. The settlement and consequent contraction of the public domain, the pressure of a constantly increasing density of population, the interrelation of the activities of our people and the complexity of our economic interests, have inevitably led to an increased use of the organization of society in order to protect the very bases of individual opportunity. Where, in earlier days, it was thought that only the concerns of individuals or of classes were involved, and that those of the state itself were touched only remotely, it has later been found that the fundamental interests of the state are directly affected; and that the question is no longer merely that of one party to a contract as against another, but of the use of reasonable means to safeguard the economic structure upon which the good of all depends.” (My emphasis.)

What Chief Justice Hughes was saying couldn’t be clearer.

Postulating an ever-increasingly complicated social environment in which “the good of all” was the standard of value, Hughes held that “public needs,” “public welfare” and “fundamental interests of the state” trumped, and had to be protected from, something perniciously antithetical: “individual rights.” Necessary, according to Hughes and the Court’s majority, was a “rational compromise between individual rights and public welfare.”

Since the nature of a compromise is “a settlement in which each side gives up some demands or makes concessions,” the concept can have no application to individual rights, which are either absolute or nonexistent.

Indeed the majority’s idea of a compromise—between the sanctity of contracts supposedly guaranteed against government impairment by a specific provision of the Constitution (Article I, Section 10), and the “public welfare” that allegedly required a two-year mortgage moratorium—was to allow Minnesota to rewrite the central provision of the Blaisdells’s contract with their lender (repayment of the loan).

So much for compromise—and contracts, and, for that matter, individual rights.

Although since the Blaisdell decision in 1934 there has been some amelioration of states’ power to nullify the Constitution’s Contract Clause, the precedent still stands. Thus, if the real estate situation worsens and the government’s jawboning and arm-twisting of lenders proves inadequate to forestall foreclosures, no one should be surprised if Congress enacts a federal mortgage moratorium act, or Obama decrees one by Executive Order.

But now of course mortgages are only a relatively small part of the financial meltdown problem. Now, the financial undertow caused by oceans of toxic debt paper is sucking under banks, credit cards providers, the auto industry, and God knows who else. Now, it appears that the world financial and economic structure is drowning.

And what life preserver may Congress and Obama, in their infinite stupidity and disdain for the free market, throw into the churning debt waters? Using the Minnesota Mortgage Moratorium Act as a template and the Supreme Court’s decision in Blaisdell v. Home Building & Loan Association as precedent, it will be a Federal Debt Relief Act. In effect, bankruptcy without bankruptcy.

Or, better put, more of the poison that caused the disease.

Thursday, November 20, 2008

Ben Bernanke, Henry Paulson and Alexander Hamilton

Introduction

Until the last few months, the Federal Reserve and Treasury Department have had a near monopoly on America’s monetary system. But now, with the advent of financial crises, corporate bailouts, market meltdowns, credit crunches, housing losses, bank takeovers and actual recession, the federal government’s unprecedented and ruinous monopoly over the financial affairs of the United States has become complete.

The United States government’s money monopoly has been created by numerous federal laws passed by Congress, approved by various Presidents, and upheld as constitutional by the Supreme Court of the United States.

If this monopoly and its devastating consequences for capitalism and the free market are ever to be broken, Americans must first understand its roots and how it grew into the political monster it is today.

The Historical Roots[1]

The belief that government should have a monopoly on money was not an invention of the United States. Five hundred years before Christ, Solon, King of Greece, used his “sovereign” prerogative to control and debase that country’s coinage in order to support his military adventures, and to redistribute wealth from creditors to debtors. Similarly, over many centuries a long succession of Roman emperors steadily debased that empire’s money in order to fund their expenditures when they couldn’t raise taxes any higher.

Eventually, the justification for government control of money was simply that it had always been so.

In the Dark Ages, an integral part of feudalism was that monetary affairs were the exclusive province of monarchs.

A landmark English legal case in 1604, the Case of Mixed Money, provided a clear, unequivocal statement of the relationship between government and money:

"And so it is manifest, that the kings of England have always had and exercised this prerogative of coining and changing the form, and when they found it expedient of enhancing and abasing the value of the money within their dominion: and this prerogative is allowed and approved not only by the common law, but also by the rules of the imperial law."[2]

Money and the Constitution of the United States

The birth of the United States ushered in a new era in the relationship between the individual and government. In a bold statement, the Founding Fathers recognized that man had “unalien­able” rights. Individual liberty was not to be subordinate to the whims and caprice of political rulers.

Unfortunately, however, the question of the individual's right to freedom in monetary affairs was not so clear. The Constitutional Convention of 1787 grappled with the questions of government authority over money. As one commentator noted:

"Once the Convention was under way, proposals that the Federal Government be given the power to coin money and to fix its value and that both the Federal and State governments be vested with authority to emit bills of credit triggered heated debate over the appropriate limits of governmental monetary power."[3]

When the work of the delegates was finished, the constitutional monetary power that emerged in Article I, Section 8, was brief and unambiguous. Congress was given the power only:

“To borrow money on the credit of the United States.”

“To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.”

“To provide for the punishment of counterfeiting the securities and current coin of the United States.” (My Emphasis.)

At the same time, lest there be any doubt where the monetary power reposed, Article I, Section 10 of the Constitution, provided that: “No state shall . . . coin money . . . [or] make anything but gold and silver coin a tender in payments of debts. . . .” (My emphasis.)

These few monetary powers expressly delegated to the federal government by the Constitutional Convention, together with the powers expressly denied to the states, constitute the aggregate “money powers” of the Constitution. As such, they are the root of government power over monetary affairs in the United States.

What that root grew into, few if any of the Founders would have recognized.

First Test of Constitutionality

The first question regarding the nature of the federal government’s monetary power, as defined by the new Constitution, came in early 1791. Legislation to create the first Bank of the United States was proposed in Congress. Both the attorney general and Secretary of State Thomas Jefferson concluded that the proposed bank was unconstitutional. Alexander Hamilton, then secretary of the treasury, disagreed.

What Jefferson and Hamilton disagreed about was not whether government possessed the power to enter the banking business, but rather what level of government—state or federal—possessed that power. Their dispute was not over the principle but over its application. More important, Hamilton's conclusion that Congress had the power to charter the bank was based on his contention that the federal legislature possessed powers beyond those specifically delegated to it in the Constitution.

Even though Congress lacked the constitutional power to charter a bank, and even though the argument in support of the power’s existence relied in part on an assumption of extra-constitutional powers, Hamilton’s opinion prevailed. President George Washington signed the bank bill into law, and the first Bank of the United States came into being.

The test of the constitutionality of the bank (and thus of the power of government in monetary affairs generally) did not come before the Supreme Court until the charter of the First Bank of the United States expired, and Congress had authorized the incorporation of the Second Bank of the United States.

The bank opened a branch in Baltimore, Maryland, and the state legislature attempted to levy a tax on the institution, which it later sued to collect.

Superficially, the question to be decided was whether the Maryland law taxing the federally established bank was constitutional. Implied in that question, however, was the more basic one of the extent of federal power.

The bank case is known as M'Culloch v. Maryland, and it is without doubt among the most important ever decided by the Supreme Court, in two respects.

First, the Court agreed with Hamilton's contention that the government possessed powers beyond those specifically delegated to it in the Constitution.

Second, the Court upheld the constitutionality of the bank, and thus of Congress’s power to charter it. The monetary power the federal government possessed, according to the Court, could be ascertained not only by reference to the Constitutional document itself, but also by recourse to the concept of “sovereignty.” Although the nation had supposedly rejected the concept of “sovereign rights” in our Declaration of Independence, the Court resurrected it in M’Culloch.

The Legal Tender Cases

The next test of the constitutionality of government monetary power was the Legal Tender Cases.

In order to finance the Civil War, the government issued “greenbacks” (currency run off government printing presses, with green ink on the back) and enacted the first “legal-tender” laws. The laws made the newly printed paper currency legal tender for paying not only import duties, but private debts, as well.

As the circulation of paper money coming off the government’s printing presses increased, all the fiat currency necessarily fell in value. Creditors who had loaned full-value dollars backed by metal were forced to accept depreciated paper currency in payment of their notes and mortgages.

A series of lawsuits ensued, and the Supreme Court was once again called on to settle the dispute. As expected, the Court stood firmly behind the existence and exercise of government power. In each of the cases, the legality of the legal-tender laws was upheld.

After the Legal Tender Cases had firmly established the monetary philosophy started by the sovereign rulers of Greece and Rome, and resurrected by Hamilton, all that remained were logical extensions of that philosophy.

In subsequent cases, the right of individuals to mint and circulate coins was struck down ( Ling Su Fan v. United States), and the Court asserted the government possessed “sovereign rights” over the entire banking system (Noble State Bank v. Haskell).

The final blow to individual liberty, capitalism and the free market as they related to the monetary system came with the Gold Clause Cases. In Franklin Delano Roosevelt’s bid to prevent Americans from withdrawing the gold they had deposited in good faith in the nation’s banks, in 1933 he simply outlawed the private ownership of the metal.[4]

Many individuals had foreseen a depreciation of currency coming, and when entering into contracts they had inserted clauses giving them the option of being paid either in dollars or in a specified amount of gold. With gold outlawed, the debtors were relieved of this burden. They could pay off debts in depreciated, legal-tender currency.

Holders of gold-clause bonds and contracts sued, and the cases eventually reached the Supreme Court of the United States. No one should have doubted the result. Chief Justice Hughes summed up the Court's position:

"The contention that these gold clauses are valid contracts and cannot be struck down proceeds upon the assumption that private parties . . . may make and enforce contracts which may limit [Congress’s] authority. Dismissing that untenable assumption, the facts must be faced. We think that it is clearly shown that these clauses interfere with the exertion of the power granted to Congress . . . ."

Imagine that!

Existing private contracts had gotten in the way of later Congressional power over gold ownership in particular and the monetary system generally. What an inconvenience![5]

Conclusion

An ocean had been crossed, a revolution fought and won, a Constitution debated, promulgated, and approved, and still the age-old sovereign power over monetary affairs persisted.

The story of how the United States government has come to possess its enormous power over our entire monetary system is not an uplifting one. It is sad to realize how the basic intention of our Founding Fathers at the Constitutional Convention was subverted by ideas foreign to the principles of capitalism and the free market--ideas that had animated this nation’s formation. Even sadder is the realization that the subversion was occurred through the collusion of all three branches of our federal government.

In light of recent events it should now be obvious that capitalism and the free market, monetary freedom and economic stability, cannot be attained simply by controlling or even abolishing the powers of Mr. Bernanke and his money-manipulating Federal Reserve or Trillion-Dollar-Tsar Paulson’s Treasury Department.

Indispensable to restoration of the Founders’ vision of limited government in general, and enumerated monetary power in particular, is an understanding by the American people that allowing the President, Congress and the Court to manipulate money, with the ghost of Alexander Hamilton looking over their shoulders, is merely to emulate the sovereigns of history—with the disastrous results that swamp us today.

____________
[1] For a book-length treatment of the subject discussed in this essay, see "Government’s Money Monopoly," published by iUniverse and available at http://www.amazon.com/.

[2] Pursuit of the Case of Mixed Money through the corridors of history finds it used as a precedent 250 years later in America's Legal Tender Cases and roughly half a century after that in the Gold Clause Cases.

[3] Getman, “The Right to Use Gold Claues in Contracts,” XLII Brooklyn Law Review, 479, 489 (1976).

[4] The most thorough historical discussion of Roosevelt’s illegalization of private gold ownership is the article entitled “How Americans Lost The Right To Own Gold And Became Criminals In The Process.” Long out of print, it may be located by a Google search.

[5] For a book-length treatment of the subject discussed in this essay, see "The Gold Clause: What It Is and How To Use It Profitably," published by iUniverse and available at www.amazon.com.

Sunday, November 16, 2008

McCain's Loss: Beyond The Conventional Wisdom

By now it’s clear that despite the McCain campaign’s misguided belief that many Republicans and Conservatives would hold their noses on November 4th and vote for him as “The Only Game In Town,” that didn’t happen.

Most of the obvious reasons have been adduced: McCain had cobbled together the Republican/Democrat “Gang of Fourteen” gaining them leverage over President Bush’s judicial nominees; McCain had embarrassed the administration over the torture of high-value terrorists; McCain had been in bed with Ted Kennedy on amnesty for illegal aliens and with Russ Feingold on throttling political speech. And more. Plenty more!

But there may have been something else that bothered many of the American people, who are not stupid, even if they did not experience their anxiety consciously.

Ironically, what McCain trumpeted as his cardinal virtue, may have been seen by countless American voters, even subconsciously, as his worst vice: his heralded ability to compromise.

Few people really understand the true meaning of compromise, and its frequent consequences. As the late political philosopher Ayn Rand wrote:

"There can be no compromise on moral principles. 'In any compromise between food and poison, it is only death that can win. In any compromise between good and evil, it is only evil that can profit.' (Atlas Shrugged.) The next time you are tempted to ask: 'Doesn’t life require compromise?' translate that question into its actual meaning: 'Doesn’t life require the surrender of that which is true and good to that which is false and evil?' The answer is that that precisely is what life forbids—if one wishes to achieve anything but a stretch of tortured years spent in progressive self-destruction." (Emphasis in original.)

Sadly, the path of compromise is the one John McCain has been traveling all his years in Congress. Millions of American voters were apparently unwilling to walk that road with him.

Wednesday, November 12, 2008

What Happened . . . And What Does It Mean?

In the Blog of November 4th, below, I wrote that "Soon, I will explore two related questions: (1) what made possible this insane choice of Barack Obama to be President of the United States, and (2) what the implications are of what made his election possible.

The answer to question (1) is by now obvious. Indeed, by now almost every electronic, print and broadcast pundit has weighed in with opinion, fact and analysis identifying why Obama won and McCain lost.

The pundits have written about Bush-fatigue, Iraq-weariness, economic meltdown, disaffected conservatives, Sarah Palin--all of which, and much more, contributed to the Democrat winning and the Republican losing.

But for the moment, I want to focus on what I call the "Four-Ms" of Obama's victory: Money, Media, Message, Magnetism.

Obama had much more money than McCain, which allowed the President-elect to hire an Internet-savvy, creative-thinking, hard-working organization and to purchase an enormous amount of exposure on television and elsewhere.

Obama had the Old Media in his pocket, which provided him with considerably more, and far more favorable, press than that afforded McCain.

Obama had a message as neatly tailored as a Saville Row suit--sometimes carefully specific, othertimes deliberately opaque. McCain's was usually muddled, often contradictory, soaked in bromides, and never wholly conservative.

Obama had a primary and general election campaign whose magnetism more resembled a Grateful Dead rock tour than a presidential contest, while McCain's effort reprised typical Republican rallys.

These four "Ms," more than anything else, are what elected essentially a nobody to the presidency of the United States.

But the more important, indeed the more fundamental, question is what are the four Ms' implications.

What does it imply that Obama had so much more money than McCain, that Obama had the Old Media in his pocket, that Obama successfully manipulated his message, that Obama was able to conduct a rock band tour posing as a presidential election?

The answer to these questions tells us a lot about where America is headed, certainly for the next four or eight years and perhaps far beyond that.

Money. Given how much money Obama was raising, it should have been clear that he would repudiate his promise to McCain and accept only public funding for his campaign. And repudiate it he did.

The implications of how Obama raised hundreds of millions of dollars are of great concern to those of us who believe in a two-party political system.

Here's why.

According to CBS News, Obama now has an e-mail database of more than 10 million supporters, at least 3.1 million of whom contributed money to his campaign. "Millions more made up the volunteer corps that organized his enormous rallies, registered millions of voters and held countless gatherings to plug the senator to friends and neighbors. On election day, they served as the backbone of Obama's get-out-the-vote operation . . . ."

But that's history.

What's not is that Obama is now in a position to use that database as a means of communicating with voters directly, thus avoiding the media entirely. The millions of names could be used not only for four more years of "Reelect Obama" fundraising, but also to communcate with Obama's legion of supporters and enlist them in a multitude of activities--from leaning on Congressmen opposing a favored bill, to taking to the streets in protest against the President's enemies, to inundating a newspaper with op-ed articles and letters-to-the-editor.

Media. That the Old Media was on board the Obama express is not news. The question is why, and what are the implications.

The why is no secret: Virtually all the white collar members of the media are liberals, many of them products of the Sixties and many of them aching to prove they weren't racists.

If--perhaps a more apt word is when--the Democrat President and Democrat Congress resurrect the "Fairness Doctrine," what will be left is the Internet (which could be heavily regulated by "user fees") and the Old Media. For the same reasons they so openly and shamelessly promoted Obama's candidacy, and because they'll never admit they were wrong (see the Dan Rather/George Bush scandal), the Old Media will continue to swoon over his programs and cover up his mistakes and wrongdoing.

Message. No one should have to be reminded about the substance of the part of Obama's message he deigned to reveal. Then, of course, there was what he did not reveal.

The implications of why Obama kept much of his program obscure are frightening. Two examples will suffice.

Barack Obama is at the least a socialist, at worst a Marxist, as his background, associates, writing and speeches leave no doubt. His unscripted, spontaneous "spread the wealth around" comment to Joe-the-Plumber was merely a brief glimpse into Obama's utterly collectivist-statist mindset. Behind that comment lies years of Obama's indoctrination into, and practice of, Socialist/Marxist principles, conduct as dangerous to American democracy as was the incipient National Socialism of Germany in the 1920s.

Now that Obama is free of the campaign's restraints, the implications of his real message will be translated into federal legislation and judicial appointments. Once that happens, while post-Obama in 2013 or 2017 some of the legislation could, in theory at least, be unwound, the federal judges he and the Democrat Senate will appoint during the intervening years have their jobs for life. (Pray for Justice Anthony Kennedy, of all people, to live at least another four years!).

Magnetism. Even Obama's most critical opponents recognize that he was perceived by tens of millions of voters, including virtually every Negro in the United States, as the Farrakhan-anointed political Messiah.

Apparently being comfortable with that status, Obama himself and his campaign played it for all it was worth: his acceptance speech in a sports stadium-as-Greek-temple, his phony seal of the President-of-the-United-States-to-be, his standing alone before an uncountably large audience for his victory speech. It is understatement to say that Barack Obama has successfully manufactured a cult of personality which reminds one of the early years of men who later became some of the worst tyrants in history: Hitler, Mussolini, Castro, Mao, Pol Pot.

Let's be clear about what I'm saying. It's not that Obama is like those despots. Nor is it that Obama will become like them.

I am saying that a cult of personality, at any level of political power, is a dangerous thing and that some of the worst cults of personality in history have resulted in the death of literally countless millions of innocent human beings.

If Obama persists in fostering and growing his Massiah-like persona, he will become more and more immune to reason and accountability.

President Obama's ability to raise perhaps $1 billion for his 20012 election, his power to reach electronically into every nook and cranny of the United States, his adulation by the Old Media and neutering of the New Media, his devious and oft-shrouded programs, and his Messiah-like personification among millions and millions of adoring acolytes are legitimate and undeniable implications from who he seems to be and what he has already done.

They do not portend well for our Republic--or its volk.

Friday, November 7, 2008

Focusing on Obama

In the Blog of November 2, 2008, below, I wrote that Barack Obama is an altruist-collectivist-statist.

I want to elaborate on that statement.

“Altruism” is popularly understood as benignly performing good deeds, as for example contributing to medical research, helping the poor, supporting the arts.

The real meaning of altruism, however, is much more malignant. It is “the doctrine that the general welfare of society is the proper goal of an individual’s action" [1] not his or her own happiness.

Philosopher Ayn Rand has identified the concept’s nakedly pernicious essence, defining altruism as “the ethical theory which regards man as a sacrificial animal, which holds that man has no right to exist for his own sake, that service to others is the only justification of his existence, and that self-sacrifice is his highest duty." [2]

Closely related to the concept of altruism is that of “collectivism.” Contrary to popular misconception, the concept has nothing to do with people having common interests joining together in some voluntary collaborative effort. To the contrary, and completely antithetical to the principle of individual rights, collectivism is “the ownership and control of the means of production and distribution by the people collectively; socialism." [3]

Again, Rand cut deeper, to the core of collectivism. It “holds that the individual has no rights, that his life and work belong to the group (to "society,” to the tribe, the state, the nation) and that the group may sacrifice him at its own whim to its own interest." [4]

Because altruism and collectivism are ethical concepts, and because the only way for government to implement them is by the threat or actual application of force, they necessarily have a familiar political-legal corollary: statism—“the principle or policy of concentrating extensive economic, political, and related controls in the state at the cost of individual liberty" [5]; “the doctrine or practice of vesting economic control, economic planning, etc. in a centralized . . . government." [6]

Which brings us back to Barack Obama.

Putting aside the beliefs and tactics of his mentor, radical agitator Saul Alinsky, and even ignoring Obama’s publicly stated views prior to the presidential primary and general election, during that process the candidate was a virtually self-confessed altruist-collectivist-statist.

Obama’s speeches were riddled with requests for (indeed, insistence upon) sacrifice, emphasis on group “rights” rather than individual rights, and the always-present, sometimes even explicit, threat of government force to compel the sacrifices and to define the rights: national service, patently confiscatory taxation, suppression of disliked speech, equality of result not opportunity, and promises to “spread the wealth around.”

If one reads through the lens of what altruism-collectivism-statism really means, Obama’s presidential election campaign speeches, interviews and other statements, make it immediately and unarguably apparent that a majority of Americans have just elected to the presidency of the United States a man whose core ethical and political beliefs are diametrically opposed to the principles that animated the founding of the United States of America.

It is through that lens Barack Obama’s presidency must be viewed. When it comes into sharp focus, we will see that the forty-fourth President of the United States is indeed an altruist-collectivist-statist.

And that is very bad news, indeed, for those of us who believe in individual rights, limited government and capitalism.
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[1] Webster’s New World Dictionary of the American Language.
[2] Ayn Rand, “The Objectivist Ethics,” The Virtue of Selfishness.
[3] Webster’s New World Dictionary of the American Language.
[4] Ayn Rand, “Racism,” The Virtue of Selfishness.
[5] The American College Dictionary.
[6] Webster’s New World Dictionary of the American Language.

Thursday, November 6, 2008

Prediction 1: Obama as Megalomaniac

Within the first month of Barack Obama's presidency it will become more apparent than it was during the election that he is a certified megalomaniac.

"Megalomania" is defined by Webster's New World Dictionary of the American Language as "a mental disorder characterized by delusions of grandeur, wealth, power, etc . . . a passion for, or for doing, big things . . . a tendency to exaggerate."

Obama's megalomania once in office will dwarf the examples of it that were apparent during the election campaign, e.g.: "I will not weaponize space"; "I will pull the troops out of Iraq"; the site and theatrical staging of his acceptance speech; ditching his family during his victory speech.

Watch closely, and listen to the pronouns.

Tuesday, November 4, 2008

D-Day

It is near midnight on what is certain to be one of the most fateful days in American history.

An unqualified, uncredentialed, unprincipled, unpatriotic and untruthful corrupt Chicago politician has managed to bootstrap himself from relative obscurity to the Presidency of the United States.

Except for the financial aspects of national security which remain in the hands of a Congress hostile to America's safety, Barack Obama, late of community organizing, Bill Ayers's living room, and Jeremiah Wright's church, will have the fate of the free world in his novice's hands. He will have the nuclear codes and access to the most sensitive intelligence imaginable. He will be the most powerful man in the world.

That Obama is not nearly up to the job is no longer relevant. He has the job!

Soon, I will explore two related questions: (1) What made possible this insane choice of Barack Obama to be President of the United States, and (2) what the implications are of what made it possible.

I will do this, fittingly from the underground, during the dark night upon which we now embark.

Sunday, November 2, 2008

D-Day Minus One

It is Sunday night, November 4, 2008.

The clocks were turned back early this morning, ending Daylight Saving Time for this year.

While the temporal darkness will last until the spring, the political night is just beginning.

It will, of course, be the heart of darkness should Obama be elected. Yet McCain's election will not be without serious problems because, at bottom, he, like Obama, is merely another altruist-collectivist-statist who believes that compelled sacrifice is noble, that rights come either from God or society, and that the heavy hand of government is a legitimate hammer to compel sacrifice and create/deny rights.

We shall soon know just how dark the future will be.