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Purchase Common Sense --- Part Two

Ever notice most new books on political discussion are nothing but a rehash of the same old charges, personal attacks and never offer any answers or solutions to the Nation’s problems. Common Sense - Part Two does. It raises serious issues and offers real, practical solutions.

Purchase this 90+ page document for only $4.00. Best money you'll ever spend.

Common Sense - Part Two is a downloadable PDF file.

What's in Common Sense -- Part two?   

Somewhere around 90 pages of questions about our government, its association with Wall Street predators, reasons why we desperately need a new National political party; one that isn't corrupted to the bone like the two we now have and enough issues to form the basis for a new party to run on, and run successfully at all levels of government.           

Did subprime defaults really cause the credit crunch or was it caused by a very minor delinquency rate in the AAA rated "Alt-A" mortgages underlying these CDOs? Common Sense -- Part Two asks these questions, and a lot more - you should too!

Preview of:

Common Sense – Part Two

 

We DON’T have to lose the American dream, our way of life, or our economic future!

Is the current push for “socialism” any different from Intolerable Acts of 1774?

“Socialism” is a “clear and present danger” to our American free enterprise system.

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Featuring, “The Liberty Plan”

 

A Blueprint For Change and Economic Recovery

“Most of the harm in the world is done by good people, and not by accident, lapse, or omission, It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals toward virtuous ends” (Isabel Patterson in her 1943 essay: “The Humanitarian With the Guillotine”)

:    “You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before.” (Rahm Emanuel, Obama White House Chief of Staff)

July 31, 2009

Copyright © 2009 By Tpaine2009

All Rights Reserved

mail to: commonsenseparttwo@gmail.com

 

Table of Contents

Common Sense -- Part Two

Preface to Common Sense – Part Two     

Introduction to Common Sense – Part Two  

The Clear & Present Danger From Within     

Think New National Political Party!       

Forming the New American Federalist Party     

“Enron On The Hudson”  Why Americans NEED new Representation – NOW!! 

The Liberty Plan

Introduction to The Liberty Plan     

We Need a New “National Bank” – and Right Away!        

How to Put a Floor Under Housing    

Put an end to Mortgage Servicing      

End Predatory Credit Card Practices     

Consumer Credit Reporting Agency Reforms

Abolish Student Loans    

Abolish Speculation in the Energy Markets   

Just a Piece of an Energy Plan, Focused on Conservation:  

National Health Care – Real Problem or Socialist Set Piece?

Why we “Write” – Here’s How to Achieve “Common Sense” in Government and

Restore Our Democratic Republic to ALL Americans:    

 

Preface

Common Sense – Part Two is intended to be a wake up call for all Americans. This current world wide economic crisis, the worst since the Great Depression, is being used as an excuse to promote a socialist agenda in the United States, which can only lead to eventual totalitarianism. While the Obama administration is the lead in this drive towards socialism, it seems that both the Democrat and Republican parties, reacting to their fringe elements, are behind it. Unfortunately the free press, absolutely essential to democracy and free enterprise, are either completely naïve as to what is going on, or so supportive of the new President as to accept anything and everything he proposes, or maybe just too concerned with their “bottom lines” to live up to their constitutionally guaranteed obligations to this country. They have become nothing more than a “newsertainment” industry, of little value to our democracy, and a potential threat to our freedoms by miserably failing to follow up on important news stories. If Watergate happened today, Nixon would have survived because our current “newsertainment” industry has the attention span of a four year old.

Common Sense – Part Two focuses on three areas; first, the need to smash this socialist trend before it becomes unstoppable; second, to shame the “newsertainment” industry into once again becoming the necessary protector of our Constitutional rights, free enterprise system and basic human rights; third, to make the case for a new National political party that will truly represent the over 40% of Americans who call themselves “independents”. A new party that can bring a stop to the constant political warfare, a new party that encourages compromise and brings back a sense of National interest in Congress and by extension to every legislative body in the United States. A new party, which recognizes a National political principle first introduced by a Republican Senator, Arthur Vandenberg in 1950 and strongly supportive by the Democrat administration of Harry Truman: “Politics stops at the water’s edge”. These two men were strong partisan politicians, but they were also world-class statesmen, not like these egocentric, media made political morons we have today. A new National political party is the only hope we have to save the United States from internal destruction.

A word of warning and one other very, very important note about this essay. It makes absolutely brutal comparisons between the events happening today with the consequences of previous totalitarian regimes like Communist Russia and Nazi Germany, among others. This is done solely to impress Americans with the very real terror that can happen to a people in a society beaten down by economic crisis and depression, and not a personal criticism of any person in public office, either elected or appointed. The assumption in this essay is that they are all men and women of good character and patriotic ideals, but are going down the wrong path because of misguided political concepts or egocentric ideas – which won’t work in a country as diverse and FREE as the United States of America.

References to “President Obama” or the “Obama administration” are meant to be references to the current political mindset of both parties, Wall Street, and the “newsertainment” industry as a whole. In all instances these references are to “policy” and political concepts or movements, and never intended to be a personal criticism of, or personal attack on, any individual. As a country, we have had more than enough personal attacks on one another made solely for partisan purposes or to “sell newspapers”, or commercials, and it must stop.

My apologies to all, but there is too much at stake for the future of our country to worry about being “politically correct”, or bruising the sensitive egos of politicians who value “face time” in front of a camera over the basic values and interests of our country. Hopefully, a new National political party, founded on strong American values, will send them home where they belong!

    How can the world financial markets trust and respect the United States of America when most of our elected officials, at all levels of government, are looked upon, rightfully so, as a bunch of smalltime, petulant, two bit partisan fools interested in only their own glory and personal egocentric power trips. No need to contemplate any expansion to Mount Rushmore from this group.

    How many millions of Americans are either “Democrats” or “Republicans” simply because they have no other choices? Both parties are led by ideologues responding to the demands of their fringe elements and not the beliefs, values or patriotism of average Americans. Democrats in Congress would rather destroy the CIA and carry out “show trials” of former administration officials than protect the security of the United States, all for nothing more than partisan politics. Republicans have such narrow appeal that the base of their party can be described as an “upside down” pyramid. But it doesn’t matter, even if the GOP had any constructive ideas, the highly partisan “newsertainment” industry would either not report them or trash them. Either way, Americans lose and that is just one reason why we need a new National party representing middle of the road Americans – and that means most of us.

The Liberty Plan - Restoring Consumer Confidence

                                             The “Two Year Liberty Plan”:
                                                  (A basis for discussion)

Introduction:

Did Walt Disney Co. (DIS) buy the United States of America because Congress seems to be acting like an attraction in Fantasyland! A plan that benefits no one; initially could cost $700 billion and doesn’t address either consumer confidence or housing. Is this bailout package a Fantasyland version of the Intolerable Acts of 1774?

I don’t understand bank financing, which is this alleged mechanism of needing liquidity so that some banks can lend to other banks so they in turn can lend to others. If this is the “crunch”, why not cut out the middleman? If the Fed can “give a gift” of $700 billion to the Wall Street super rich, with absolutely no benefit to the economy or Main Street, why can’t they as an alternative make these funds directly accessible to regional and local banks for the sole purpose of making credit available for mortgages and business purposes? “It’s not the credit crunch, stupid; it’s consumer confidence”!

Before this collapse in consumer confidence leads to the next depression, we have to figure out a real solution to the problem of getting the economy moving and prevent a worldwide collapse which, all Congressional b.s. aside, appears to be on the horizon.

Whatever solution, or plan, is proposed it must deal with all Americans fairly, not just the privileged few. In reality, it must provide for the future stability of the country and also try to protect our retail banking system and current investors to the best degree possible.

Mortgage backed securities, (“MBS”): They once were a legitimate form of investment that because of greed and a complete abandonment of any underwriting standards have become “toxic”, whatever that really means. Congress wants to pay $700 billion to buy some of this “toxic” paper and yet some MBS may contain everything from good mortgages, with real value, to mortgages that are the result of deceptive and predatory lending practices, and mortgages whose documentations were falsified by brokers/lenders for the purpose of defrauding investors. The taxpayer should not be asked to pay for, or reward, criminal activity.

One of the proposals in the “Two Year Liberty Plan”, as set forth below, provides for a two-year period of practical, financially sound procedures whereby these “toxic” investments are “detoxified”. The end result of this two-year detoxification process is the dissolution of all MBS and return of the underlying mortgages to their originators where practical. The immediate goal here is to put a floor under the real estate market, provide a mechanism to protect investors, restore credibility to Wall Street investment banks, (if any are left), and show the average American that Wall Street is not their enemy.

The key element here is not $700 billion or $1 trillion, or whatever; it is time. If we put the “toxic mortgage-backed securities” aside and deal with them sensibly over the next two years, we can then move forward with restoring the real estate markets and dealing with the so far unmentioned problems resulting from student loan abuses and predatory credit card practices; both of which are crippling American families unnecessarily and contributing to mortgage delinquencies and defaults.

However, if Congress wants to give the Wall Street investment banks, whose greed created this mess, a $700 billion gift of taxpayer’s money, let them do it. They can answer to the voters. But it isn’t going to create liquidity; nor make affordable credit available to Americans; nor will it revive the overall economy; nor will it stabilize let alone revitalize housing; and the gift to the super rich will absolutely further erode, and perhaps even destroy what’s left of consumer confidence.

We are dealing with perhaps the most complex financial crisis in our history. Wall Street greed, not the sub prime mortgage problems, caused this crisis. Restoration of consumer confidence in housing, and in the Government, is the key to a solution, not a $700 billion dollar gift to Secretary Paulson’s friends. The problem is, the solution may be way beyond the normal fixes and approaches as practiced in the past and restoring consumer confidence rests completely on stabilization and restoration of the housing markets, not a rescue of the so-called “toxic mortgage-backed securities” that were gambles to begin with. If some credit default swaps can be just “torn up” as was reported on CNBC, then it shows their complete lack of any intrinsic value.

When Secretary Paulson and Chairman Bernanke laid out their case for an immediate financial bailout package to stop an upcoming financial Armageddon, what they were really doing was something analogous to painting over rusted metal or rotten wood in order to sell something – some people might call that fraud.

Problem is, there is nothing in this package help cure the housing/credit crisis. They act as if it doesn’t exist and they know better. And yet, for as long as I can remember, housing was the key to the economy – when housing was good, durable goods and jobs were also. So what’s different now? The difference is Congress’s misguided concern over how to protect only Wall Street’s investment banks, and not even the investors let alone average Americans.

But, in my opinion, and I’m nowhere near an expert, there is a permanent fix but it involves far more than the simple self-serving “plans” the Congress and Secretary Paulson are pushing.

Within a few weeks, perhaps even days after this ill-advised financial bailout package is enacted we are going to wake up and realize something more is needed, something for Main Street and even for the legitimate areas of Wall Street, not the vultures and predators.

Here’s the new idea. It’s a little complicated and I think can really help, that is assuming it is a valid plan to restore consumer confidence and liquidity, stabilize housing, prevent future foreclosures, help people keep their homes and get the economy moving again.

                        The “Two Year Liberty” Plan:

Here are the details – subject to discussion and modification of course.

First: To stabilize and revitalize the real estate markets:

Immediately convert every mortgage and home equity loan to a 5.5%, 50-year, fixed rate mortgage! (Except those who have better terms and those who elect not to participate). No prepayment penalties, no balloon payments nothing but a straight 50-year mortgage. After 24 months allow rates to rise one-half percent, per year, if the market justifies it.

Why “every mortgage and home equity loan”? Because this crisis in the housing market has been allowed to spread so that it adversely affects every American homeowner unjustly, and any plan has to cover all homeowners. This does not involve any taxpayer monies going to one class of borrowers at the expense of others, but does offer relief and protection to all homeowners while the Government decides to investigate this situation. The only ones who pay a short-term price here are the lending institutions and the investors in the “toxic mortgage-backed securities” etc. But the “detoxification” plan should lessen some of the damages here.

Immediately halt all foreclosures for the next 24 months, add the delinquent amounts to the principal of the mortgage, apply this new interest rate and 50 year amortization, and give people a chance to work things out. This should stop the flood of more distressed properties from coming on the market and further destabilizing the housing industry. This should stop cold the future “resets” that are going to be the final blow to housing and consumer confidence.

Forbearance to Sell: At any time within the next 24-month period allow those who can’t afford to stay in their homes a one-time 12-month forbearance to sell rather than foreclose. This should further stabilize prices by keeping these distressed properties off the markets.

This proposition to stop foreclosures by itself should help restore consumer confidence right away.

Disregard Sinking Home Valuations: Since home prices seem to double every 10 years and this is a long-range program, the underlying value of homes should increase once the real estate market is again stabilized. Set appraisals at current market values based on the established system of “comps”. Since the potential for upside vs downside is greater, this should work. This should stop the need for the “mark to market’ write downs.

New mortgages: Allow only 5.5%, 50-year fixed rate mortgages for at least 24 months. After 24 months allow rates to rise one-half percent, per year, if the market justifies it. This should help sales and revitalize the real estate market especially new construction, which is the key to jobs and economic growth.

Proposed Tightened Mortgage Lending Regulations: Here’s a new idea! Let consumer banks set their own lending standards under flexible programs based on factors such as LTV’s, credit scores, income etc, and let the consumer banks evaluate the character issues.

New Mortgage Serving Guidelines: Simply put, you originate the mortgage; you service it.

Current Mortgage “Servicing”: Current mortgage servicers are nothing more than “debt collectors”, as they tell everyone who calls. This plan calls for a two-year detoxification process and the dissolution of all MBS and return of the underlying mortgages to their originators where practical. The end result should be no need for mortgage servicing firms. Mortgage servicers can assist in this program. The plan calls for all new loans to be serviced by the originators, and current mortgages, which survive the detoxification program, will naturally be back in the hands of the originating lenders or assignee.

Insuring Consumer Bank Solvency: Capping interest rates for the next 24-months may create bottom line problems for legitimate consumer banks. Instead of giving billions to investment banks, why not use Federal assistance to support cooperating consumer banks if they experience real losses during this period?

Second: Credit card abuse:

The predatory practices of the credit card companies are exacerbating this crisis and must be dealt with.

Immediately fix the interest rate on all credit cards at 9%. Curtail so-called late fees and penalties to no more than 1% of the payment due. The current system of late fees, over-limit fees, penalties, and criminally high interest rates is out of control, thanks to our government.

This restoration of fair and reasonable credit should help Americans pay down their debts, prevent most charge offs and restore our retail credit market to normal – again, my apologies to the vultures – but tough “bananas”, this is a matter of National emergency and also a clear and present danger to our country.

Credit Limits: Fix individual credit limits at a percentage of the adjusted gross income reported on the prior year’s tax return, with provisions for incomes derived from sources other than wages. Let’s say the limit is set at 10%, then penalties should be established for individuals who try to exceed that by use of multiple cards.

One other connected item. An extensive review of the credit reporting system is urgently needed. For too long is has contained an exorbitant amount of erroneous information mostly derogatory and has been used by unscrupulous creditors and collection agencies as a tool for extortion and retaliation. This system has no validity in determining he creditworthiness of borrowers.

Third: Student Loans:

The following is really an outside the box idea!

Immediately forgive all student loans!! (For the record I never had any except a small parent loan decades ago).

Net immediate effect? If you have to ask, I don’t know what to say. Can you imagine how many families will all of a sudden have enough money to pay their mortgages, credit cards and regular household bills? As to those who have been able to repay their loans I’m sure a grateful government will allow a reimbursement through income tax credits etc.

The current student loan program is not what it was intended to be many decades ago. It has morphed into nothing more than a commercial loan program of no long-term benefit to either the borrower or the United States. Its administration is predatory, and riddled with greed and corruption.

Instead of “donating” the $700 billion of taxpayer money to a few super rich, earmark it for Main Street. Put that much money as a down payment towards forgiving student loans and you’ll have an immediate real “stimulus package” for the economy.

Fourth: Energy Trading:

The greed in human nature being what it is, you can bet that once any knowledge that this plan may be considered becomes public, there will an immediate run-up in energy futures. The solution:

To finish off the unjustified buying of oil and energy futures by speculators, who have no intention of ever taking delivery on a contract, you just can’t shut down the exchanges like Nymex. There are legitimate users of necessary energy products that need to establish future costs for either manufacturing or transportation purposes, among others. Other than that, there is no need for anyone else to buy futures.

The solution to eliminating this greed in the energy markets really lies in a simple change to the Federal Tax Code.

Legitimate Users of energy products: Define a user as one who actually takes delivery on contracts and uses them for legitimate internal business use, such as diesel for truckers and farmers, refined oil products for manufacturing. No change in the Federal Tax Code needed here.

Hoarders a/k/a “buy and hold” speculators. Treat them like we are under wartime conditions. Simply seize their holdings and sell them at auction. Disallow any losses for tax purposes and impose fines as would be appropriate if we were in a war.

Speculators: Loosely defined as anyone who buys and sells futures and who doesn’t take delivery for legitimate self-use. Tax their profits at 80% and tack on an additional 25% surcharge to help support the search for alternative energy sources. Any losses realized in trading energy would not be recognized for Federal Income Tax purposes.

Those three proposals should eliminate all dangerous energy speculation.

Conclusion:

As a nation, we have become very good at defining problems; not so good on solutions. Our Government and the network and cable “newsertainment” media are more interested in the flavor of the day stories than following up on the issues that are destroying the future of all Americans. I am a 67 year old retiree with no set of credentials to speak of, but this plan, I think, is logical, well thought out, is fair to all parties, does not involve taxpayer money and to say the least is “innovative”.

Action Plan: What is needed to get consideration for this plan is a nationwide telephone, fax and email campaign directed at every member of Congress calling for them to act IMMEDIATELY! The campaign must be overwhelming, consistent, and continuous, and not stop until Congress acts. If they don’t, there’s still time before November to “change out’ the bad parts of Congress.

Bill Maxstadt,
October 3, 2008

JUNE 19. 2008 - UPDATED DIRE WARNING TO ALL AMERICAN HOMEOWNERS!

THIS HOUSING/CONSUMER CONFIDENCE CRISIS IS WAY PAST THE BOGUS SUBPRIME FORECLOSURE TRIGGER!!

THERE ARE 1,000,000 MORE FORECLOSURES AND OVER 9,000,000 HOMEOWNERS UPSIDE DOWN ON THEIR MORTGAGES WITH NO RELIEF IN SIGHT!

THERE IS A WAY IF THE BEST CONGRESS MONEY CAN BUY WILL ACT!!

PLEASE VISIT MY OTHER POST ON THIS BLOG FOR A POSSIBLE ANSWER BEFORE IT REALLY IS TOO LATE!! - "Housing/Consumer Confidence Crisis – A Clear and Present Danger to our Country:" -

Back in May I wrote on my blog that it looked like there were forces at work in some areas of the investment banking community who are trying desperately to destroy the market value of your home in order to cover-up and justify questionable losses in hedge funds and other speculative strategies.

The relatively small number of sub-prime delinquencies and foreclosures should not have collapsed the entire nationwide real estate market. There must have been some other reason, or reasons, and the two most probable areas were either the unregulated investment banking community dealing in mortgage backed securities, or the sub-prime lenders themselves with the smell of predatory and unethical lending practices surrounding them.
In looking at the investment banking community it became obvious that the origins of this current crisis were the collapse of two Bear Stearns hedge funds beginning in July 2007. But there have been massive hedge fund failures before and they didn’t lead to anything like this. Were these funds shorted before the July 2007 collapse? Did someone or some “investment bank” start a public campaign to create the appearance of a collapse in the alleged housing “bubble” with subprime defaults as the cause in order to justify the write down of these so-called investments? How come there has not been any indication of an upcoming investigation by the Federal Government? Not one word by any Federal official – now I think I know why.
Subsequently I realized that Treasury Secretary Henry Paulson’s public pronouncements were designed to help his pals on Wall Street and not the average American homeowner. Keep this in mind, before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs, a major Wall Street investment bank. In trying to determine if Wall Street investment banks and related hedge funds were responsible for the sudden collapse in real estate, the real question here then is do we have a conflicted Treasury Secretary? That may be the biggest question of all!

Or so I thought!

If the administration wasn’t going to look into Wall Street, than surely just as a matter of basic “politics” Congress should have looked at the lenders. And they did, and Senator Christopher Dodd’s Committee came up with a plan to bail out – NOT AMERICAN HOMEOWNERS – but Countrywide Financial, an alleged major predatory lender.

However, in now appears that “Senators Chris Dodd and Kent Conrad, among other high-profile individuals, received favorable rates on their home loans as friends of Countrywide Financial CEO Angelo Mozilo”, reports Conde Nast Portfolio.

However, the major liberal media has been almost completely silent on this corruption, breach of Senate Ethics rules and limits on accepting gifts. What else is new?

In retrospect, I think the colonists had it easy in dealing with the Intolerable Acts passed by Britain in 1774 compared to the media supported and endorsed political corruption in both the Administration and Congress now destroying the average American’s standard of living.

Supply and Demand Sets Oil Prices – If You Believe That, I have a Bridge in Brooklyn I Want to Sell You!

Next time you have to buy diesel fuel, home heating oil or $4 plus gasoline. Ask yourself this question:  Are crude oil, heating oil and gasoline necessities, or just ordinary speculative commodities? If they're the former, how can they be the latter?

How can anyone buy into supply and demand setting oil prices when the markets are overwhelmed by everyone from small speculators, to institutional investors, to commodity index funds and large hedge funds and to Wall Street banks buying massive amounts of oil contracts?

We also have the b.s. of “geo-political” concerns and government disseminated bogus “inventory” numbers. More on them later.

There is so much conflicting b.s. being sold to Americans by the 24-hour “newsertainment” industry masquerading as legitimate “news” that it is impossible to tell the real truth behind the unconscionable run-up in oil prices. There are some very basic questions that need to be answered in order to get to the truth

The first and most basic question of all as mentioned above: Are crude oil, heating oil and gasoline necessities, or just ordinary speculative commodities? If they're the former, how can they be the latter?

Secondly, I heard on CNBC that speculators, commodity index funds, large hedge funds, institutions and Wall Street banks who are not users of crude, were buying oil to “buy and hold” in anticipation of a huge run-up in oil. WOW, what a shock! My question is, how does this practice differ from hoarding? Considering the tenuous nature of the energy markets, isn’t this practice not in the best interest of the United States? This situation has to be addressed only as what is good for the country as a whole. After all Congress and the President have apparently decided that Wall Street should be protected even if the outrageous energy prices, especially heating oil and diesel, mean that in this upcoming winter the elderly poor freeze to death and food becomes too expensive for the poor and lower middle class in general. Hey, let’s face it, millions in backward, underdeveloped countries survive on a lot less than we do, so let the poor shoulder their share of the burden in keeping Wall Street “financiers” happy.

Third, crude oil is the world's most actively traded commodity. Why? It seems that the standard contract trades in units of 1,000 barrels. What the hell is anyone going to do with 1,000 barrels of crude oil – except speculate about making a killing in the market? Margins for a single contract are under $10,000. Speculator’s paradise!

Conflicted Regulator? That may be the biggest question of all! Our arrogant and condescending Treasury Secretary Henry M. Paulson has repeatedly and publically stated that investors are not to blame for the staggering increases in the energy markets. “Investors”, does he really mean “speculators” and hoarders?

But keep this in mind. Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs, a major Wall Street institution. This is the same guy who graciously slapped the average American homeowner across the face when he stated that housing prices were bound to collapse because we've had unsustainable growth for some period of time! He conveniently ignored the fact that major Wall Street traders had critically shorted the mortgage backed securities markets in 2007 bringing on the collapse of two huge Bear Stearns hedge funds beginning in July 2007. For more on this, visit www.useconomycrisis.com.

Maybe Paulson is right and the situation is just being clouded by all this extraneous talk about speculation and hoarding. There’s an easy way to find out.

To finish off the unjustified buying of oil and energy futures by speculators, who have no intention of ever taking delivery on a contract, you just can’t shut down the exchanges like Nymex. There are legitimate users of necessary oil products that need to establish future costs for either manufacturing or transportation purposes, among others. Other than that, there is no need for anyone else to buy futures.

The solution to eliminating this obfuscating factor in the energy markets really lies in a simple change to the Federal Tax Code.

Legitimate Users of energy products: Define a user as one who actually takes delivery on contracts and uses them for legitimate internal business use, such as diesel for truckers and farmers, refined oil products for manufacturing. No change in the Federal Tax Code needed here.

Hoarders a/k/a “buy and hold” speculators. Treat them like we are under wartime conditions. Simply seize their holdings and sell them at auction. Disallow any losses for tax purposes and impose fines as would be appropriate in we were in a war.

Speculators: Loosely defined as anyone who buys and sells futures and who doesn’t take delivery for legitimate self-use. Tax their profits at 80% and tack on an additional 25% surcharge to help support the search for alternative energy sources. Any losses realized in trading energy would not be recognized for Federal Income Tax purposes.

Those three proposals should eliminate all speculation as a consideration in determining whether or not supply and demand are controlling oil prices etc.

“Geo-political” b.s. effects on oil prices: Does anyone remember the intense threatening public rhetoric of the Cold War? According to the media, it seemed that the Soviet Union and the United States were close to war several times, on several fronts and only diplomacy could prevent the impending Armageddon. We heard this story over and over again and what made it plausible was the fact that we were real enemies. But in fact, most of this public animosity was for the benefit of our respective populations. Keep focusing on the enemy! Buy war bonds (or the equivalent)! Join up – defend your country! And on, and on, and on!

But the real purpose of the Cold War was to prevent a “hot war” and it was to this aim that the backdoor channels, so to speak, were where the real diplomacy took place. I can imagine the Soviet representative saying to the American; we’ll publically threaten Israel and you can publically threaten East Germany. Now, let’s work out our public responses so nothing goes wrong! Fiction, yes, but you get the point.

If we allowed this current immoral and unethical speculation in energy back then, we’d be paying $500.00 a barrel!

The point here is this current geo-political crap being used as an excuse for an oil run-up is nothing more than a fabrication by speculators. Does anyone really believe, for example, that Iran would nuke Israel knowing that such a move would mean its complete destruction? Iran’s public rhetoric is for internal consumption, not a blueprint for war.

The other geo-political “news” like a camel taking a dump in the middle of a Saudi highway is not a threat to oil supplies as the speculators and hoarders would like the markets to believe.
Oil inventories:  Crude oil is a raw material. It must be refined to be used, for example, as either fuel or in the petrochemical industries. 
Correct me if I’m wrong, but the location of the real crude oil inventories is in the ground, not in some downstream oil tanker, or tank farm, or a refinery’s storage capacity.
Does anyone know of a single incident in the entire world where an actual shortage of crude oil, or any refined product has lead to a disruption in supply? Anyone in the United States seen an “out of gas” sign? Anyone unable to get heating oil? Any manufacturing shut down for lack of petrochemical materials?
But, in an AP story on Wednesday, June 11th it was reported “the Energy Department's Energy Information Administration created new supply worries when it said oil inventories fell by 4.6 million barrels last week. Analysts surveyed by energy research firm Platts expected a much smaller decline of about 1.4 million barrels; any sign that oil supplies are falling has tended to send oil climbing.”
Where were these so-called “fallen oil inventories” located?

Concluding thoughts: The world may truly be facing an eventual shortage of crude oil and all its products. But until we rid this market of unscrupulous greed and speculation, we will not be able to stabilize the true price and value of a barrel of oil. Our “enlightened” government, the Administration and Congress want Americans to conserve as part of a program to achieve energy independence. To benefit who? Their friends in the Wall Street investment banks?

What should we Americans do? What is needed is a nationwide telephone, fax and email campaign directed at every member of Congress calling from them to PLEASE act IMMEDIATELY and end speculation in the energy markets. This effort must be overwhelming, consistent, and continuous, and not stop until Congress acts. American’s need their help before our elderly freeze to death and the poor face real malnutrition if not starvation. For now, ask politely and firmly.

Housing/Consumer Confidence Crisis – A Clear and Present Danger to our Country:

                            WARNING TO ALL AMERICAN HOMEOWNERS

Are you someone who has worked hard all your life now and own your home free and clear? Or are you a new homeowner who saved for a down payment and now own a home with a prime mortgage and some hard earned equity? Or are you are a credible subprime borrower forced to pay a higher interest rate because of a credit history that may even be incorrect and are now in trouble?  It doesn’t matter who you are because it looks like there are forces at work in some areas of the investment banking community who are trying desperately to destroy the market value of your home in order to cover-up and justify questionable losses in hedge funds and other speculative strategies.

Wall Street investment banks and their supporting media are trying to convince Americans that current home values, across the country are the result of an unjustified run-up in housing prices. Therefore, according to their way of thinking, there was an unsustainable housing “bubble” which has just burst. While this theory of a housing bubble may be true in a few speculator driven markets, it is not true in most of the United States. By comparison, Internet stocks were a real bubble because of irrational expectations based on idiotic pro forma paper values and absurd pie-in-the-sky revenue projections. But almost all current housing values are the results of regional supply and demand, with price appreciation backed by appraisals, underwriting standards, and lender approvals at every step of the price appreciation. This alleged nationwide “bubble”, is it a fact or a Wall Street “red herring”?

What appears to be most disturbing is this unjustified attack on most American’s primary asset seems to be happening with the support of the Federal Government and the financial media. Something is dreadfully wrong here.

The American dream of home ownership, and the real estate market in general, must be stabilized and saved before we can address the clear and present dangers to our country associated with oil speculation, runaway food prices, (again the result of unconscionable speculation), credit card abuse, predatory student loans, credit reporting abuse and fraud, and most importantly, consumer confidence.

Yet, the focus of the Federal Government, the media and the current presidential candidates has shifted the emphasis away from the troubles of the American homeowner just when things are about to get a lot worse. More and more hard working, responsible Americans are falling further and further behind with no relief in sight, and nobody is working for them.

But, this shift away from “talking” about helping average Americans may be understandable because not a soul has come up with any viable plan for restoration of the housing market, protection of American homeowners and for assigning the real blame for this housing and consumer credit crisis to the proper parties. Why constantly remind Americans their financial well being is in jeopardy if you don’t have any idea of how to help them? No politician is that dumb.

How did a very small-alleged problem in the subprime mortgage market blow up to become this potentially catastrophic decline in housing values and consumer confidence? Can this deepening decline be stopped before we go into a depression? Money or credit doesn’t seem to be an issue since the Fed appears to be ready to inject liquidity wherever it is needed. The only question is, where is it really needed?

The origins of this current crisis are allegedly the collapse of two Bear Stearns hedge funds beginning in July 2007. But there have been massive hedge fund failures before and they didn’t lead to anything like this. In fact, prior hedge fund failures that involved playing games with the shares of General Motors, Morgan Stanley, Cablevision Systems, Gateway and others did not lead to the collapse in value of these companies whose stock was in play. So how did the failure of these two unregulated greed driven hedge funds start the collapse of the legitimate housing market? After all, homes have real intrinsic value; hedge fund investments are merely high-risk pieces of paper without any real intrinsic value except the expectation of huge profits. How were the losses on these “paper” investments allowed to extend to the underlying mortgages and even more astoundingly to housing values?

Were these funds shorted before the July 2007 collapse? Did someone or some “investment bank” start a public campaign to create the appearance of a collapse in the alleged housing “bubble” with subprime defaults as the cause in order to justify the write down of these so-called investments?

How come there has not been any indication of an upcoming investigation by the Federal Government? Not one word by any Federal official.

Our government, not the housing markets, has told Americans that their homes are grossly overvalued and that they must pay the price for unbridled speculation. On Friday, January 18, 2008, Treasury Secretary Henry Paulson stated in part that the housing market; “… needs to correct. It's we've had unsustainable growth for some period of time.”  Really? Says who?

Is it possible short sellers have driven down home values by shorting the mortgage backed securities markets? According to data released by the magazine Trader Monthly on Monday, April 7, 2008 and reported on the MoneyNews.com website the 2007 payout, for one trader was $3 billion or $26 per every American household. Another trader shorting the same market netted himself a $1.5 billion payout. Again quoting the MoneyNews.com website, “Hedge funds often promise to make money in all markets by using tools, such as shorting, that are off limits to other money managers”. If energetic use of this set of tools had the unintended consequence of potentially destroying the accumulated wealth of American homeowners, then something is drastically wrong with this practice.

What I don’t understand is how do you devalue investment-grade mortgage bonds without devaluing their collateral, (right word?)? Who initially decided, “housing prices should decline on a national level”? Did Secretary Paulson know about this shorting of the market on January 18, 2008 when he graciously slapped the average American homeowner across the face?

Assuming that shorting the mortgage backed securities markets is legal, and then making it work by claiming housing is overpriced, and by assuming the Feds were aware of it, doesn’t it follow that there were at least some unintended consequences here? Look at it this way; the Feds crucified Martha Stewart over $50K. Surely a payout of over four and a half BILLION DOLLARS to just two of the traders in this field should have gotten someone’s attention!

In any event, how do we get out of this catastrophe in the making? Obviously neither Wall Street, the banking industry, nor the Feds are going to do it. They all may have good intentions, but they also have too many conflicts of interests to act on behalf of the average American homeowner.

The country needs a plan to resolve this crisis that works in the interest of all parties, investors included, and the plan should do as little damage as possible. A “plan” is basically defined in one-way as “a method for achieving an end”, according to Merriam-Webster’s Online Dictionary”. So, for what it’s worth; here’s one.

                                                The “ Liberty” Plan:

So, here’s a new idea. It’s a little complicated and I think can really help, that is assuming it is a valid plan to restore consumer confidence, revitalize the housing markets, stop foreclosures and help people keep their homes. I’m not trying to make an argument here, so I’ll lay out the ideas behind the plan first, and then try to explain where they came from and why they just might work.

Two things: First, any solution has to involve time – this is going to take time to restore confidence and fix housing. Second, it has to be focused on ALL homeowners fairly. It is immoral and unethical for the Feds or anyone else to help the subprime borrower at the expense of the prime borrower. The crisis has now put millions of homeowners with prime mortgages “under water” on their home equity – that must be addressed and remedied.

Here are the details – subject to modification of course.

Generally speaking, the basis for this plan is literally to put everything on hold for 24-months as I’ll explain below. Do it so that assets are protected and no one loses any mortgage principle or invested interest and no more foreclosures – just stay static for 24-months.

No more “write downs” in the billions, if no security interest is going to be lost (hopefully) - no need to take these absurd losses. Here’s how.

Immediately convert every mortgage and home equity loan to a 4%, 50-year, fixed mortgage! No prepayment penalties, no balloon payments nothing but a straight 50-year mortgage. After 24 months allow rates to rise one-half percent, per year, if the market justifies it.

Why “every mortgage and home equity loan”? Because this crisis in the housing market has been allowed to spread so that it adversely affects virtually every American homeowner unjustly, and any plan has to cover all homeowners. The Liberty Plan does not involve any taxpayer monies going to one class of borrowers at the expense of others, but does offer relief and protection to all homeowners while the Government decides to investigate this situation. The only ones who pay a short-term price here is the lending institutions and the investors in these speculative investments.

But while the rate of return is cut, the principle is protected while an orderly resolution is found. If the housing market can be stabilized for the next 24-months there should be no reason why investors should lose their money. Investors are consumers also, and restoring their confidence is critical to our financial markets. The Liberty Plan calls for an equitable protection of their assets just like the American homeowners. All you have to do is look at the debacle involving the over 22,000 investors that owned $490 million in unsecured investment notes issued by American Business Financial Services, (Pink Sheets: ABFIQ.PK), now bankrupt to see why this is critical.

Immediately halt all foreclosures for the next 24 months, add the delinquent amounts to the principal of the mortgage, apply this new interest rate and 50 year amortization, and give people a chance to work things out. This should stop the flood of more distressed properties from coming on the market and further destabilizing the housing industry. This should stop cold the future “resets” that are going to be the final blow to housing and consumer confidence.

Disregard Sinking Home Valuations: Since home prices seem to double every 10 years and this is a long-range program, the underlying value of homes should increase once the real estate market is again stabilized. Set appraisals at current market values based on the established system of “comps”. Since the potential for upside vs downside is greater, this should work. This should stop the need for the “mark to market’ write downs.

These proposals alone should help restore considerable consumer confidence right away.

As to other important details, once the bleeding is stopped then the experts in the field can work these out. Some examples:

New mortgages: Allow only 4%, 50-year fixed mortgages to be written for at least the next 24 months. After 24 months allow rates to rise one-half percent, per year, if the market justifies it. This should help sales and revitalize the real estate market especially new construction, which is the key to jobs and economic growth.

New Mortgage money: I honestly don’t know how to attract investors to this new mortgage lending, but until they come back it seems like the federal government could make money to lend available to banks under the same format they are using to help investment banks.

Proposed Tightened Mortgage Lending Regulations: Here’s a new idea! Let consumer banks set their own lending standards under flexible programs based on factors such as LTV’s, credit scores, income etc, and let the consumer banks evaluate the character issues.

New Mortgage Serving Guidelines: Simply put, you originate the mortgage; you service it.

Insuring Consumer Bank Solvency: Capping interest rates for the next 24-months may create bottom line problems for legitimate consumer banks. Instead of giving billions to investment banks, why not use this credit facility to support cooperating consumer banks if they experience real losses during this period?

Forbearance to Sell: At any time within the next 24-month period allow those who can’t afford to stay in their homes a one-time 12-month forbearance to sell rather than foreclose. This should further stabilize prices by keeping these distressed properties off the markets.

Real Estate Commissions: For the next 24-months from enactment, fix single-family owner occupied real estate sales commissions at 4%. Brokers can also contribute their share to help combat this housing crisis, which is a clear and present danger to our country. Believe it or not, some brokers are greedy and might take advantage of this potentially robust market.

A Mortgage is a Contract: I know that mortgages are contracts. Mortgagor has the responsibility to maintain his/her property and to make the payments in a timely fashion according to the terms of the contract/mortgage. Question is, do mortgagees have to make a good faith effort to maintain the overall value of the real estate market by not jeopardizing the stability of the financing markets? – if I have the terms correct. By participating in these hedge fund schemes have mortgage lenders breached their obligations under the implied doctrine of good faith? It will take time and a sincere investigation by the banking authorities to determine this.

Action Plan: What is needed to get consideration and enactment of this plan is a nationwide telephone, fax and email campaign directed at every member of Congress calling from them to PLEASE act IMMEDIATELY! The campaign must be overwhelming, consistent, and continuous, and not stop until Congress acts.  American homeowners need their help. For now, ask politely and firmly.

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