My Answer to the President-Ron Paul

Dear Friends:

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy – all the capital misallocation, all the malinvestment – and prevent the market’s attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I’d only be repeating what I’ve been saying over and over – not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration “is working with Congress to address the root cause behind much of the instability in our markets.” Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that “low interest rates” led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments – investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or “wildcat capitalism” (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: “Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.”

Doesn’t that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn’t that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn’t the federal government shown that the “many” who “believed they were guaranteed by the federal government” were in fact correct?

Then come the scare tactics. If we don’t give dictatorial powers to the Treasury Secretary “the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet.” Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks’ manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day – and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection – a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end… It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a “rescue plan”? I guess “bailout” wasn’t sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you’re supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects – the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

In liberty,

Ron Paul

Catastrophic fall in numbers reveals bird populations in crisis throughout the world

The birds of the world are in serious trouble, and common species are in now decline all over the globe, a comprehensive new review suggests today.

From the turtle doves of Europe to the vultures of India, from the bobwhite quails of the US to the yellow cardinals of Argentina, from the eagles of Africa to the albatrosses of the Southern Ocean, the numbers of once-familiar birds are tumbling everywhere, according to the study from the conservation partnership BirdLife International.

Their falling populations are compelling evidence of a rapid deterioration in the global environment that is affecting all life on earth – including human life, BirdLife says in its report, State of The World’s Birds.

The report, released today with an accompanying website at the BirdLife World Conservation Conference in Buenos Aires, Argentina, identifies many key global threats, including the intensification of industrial-scale agriculture and fishing, the spread of invasive species, logging, and the replacement of natural forest with monocultural plantations.

It goes on to suggest that in the long term, human-induced climate change may be the most serious stress.

Based in Cambridge, BirdLife International is a global alliance of conservation organisations working in more than 100 countries and territories which is now the leading authority on the status of birds, their habitats and the issues and problems affecting them.

When brought together, as in its new report, the regional pictures of bird declines combine to present a startling picture of a whole class of living things on a steep downward slope.

A remarkable 45 per cent of common European birds are declining, with the familiar European turtle dove, for example, having lost 62 per cent of its population in the last 25 years, while on the other side of the globe, resident Australian wading birds have seen population losses of 81 per cent in the same period.

Twenty common North American birds have more than halved in number in the last four decades, while in Asia, the millions of white-rumped vultures which once filled the skies have crashed by 99.9 per cent and the species is now critically endangered.

“Many of these birds have been a familiar part of our everyday lives, and people who would not necessarily have noticed other environmental indicators have seen their numbers slipping away, and are wondering why,” said Dr Mike Rands, BirdLife’s chief executive.

All the world’s governments have committed themselves to slowing or halting the loss of biodiversity by 2010, but reluctance to commit what are often trivial sums in terms of national budgets means that this target is almost certain to be missed, according to the report.

“Birds provide an accurate and easy-to-read environmental barometer, allowing us to see clearly the pressures our current way of life are putting on the world’s biodiversity,” Dr Rands said.

“Because these creatures are found almost everywhere on earth, they can act as our eyes and ears, and what they are telling us is that the deterioration in biodiversity and the environment is accelerating, not slowing.

“Effective biodiversity conservation is easily affordable, requiring relatively trivial sums at the scale of the global economy. For example, to maintain the protected area network which would safeguard 90 percent of Africa’s biodiversity would cost less than $1bn a year. Yet in a typical year, the global community provides about $300m.

“The world is failing in its 2010 pledge. The challenge is to harness international biodiversity commitments and ensure that concrete actions are taken now.”

http://www.independent.co.uk/environment/nature/catastrophic-fall-in-numbers-reveals-bird-populations-in-crisis-throughout-the-world-937573.html

Jewish families offered $50,000 to move to Alabama

*NOTHING surprises me anymore…sigh. I guess this money couldn’t go for other uses??*

DOTHAN, Alabama (CNN) — Given the stereotype of the Deep South as the Bible Belt, Rabbi Lynne Goldsmith’s glowing, Chamber of Commerce-like endorsement of Dothan, Alabama, is not what you might expect to hear.

“If you need a robust Orthodox community, we don’t have it,” Goldsmith said. “But if you want a community where your neighbors are friendly; where people smile at you in the grocery store even if they don’t know you, then Dothan’s for you.”

There’s a reason Goldsmith, who has been in the city a year, is encouraging people to relocate: She’d like to see more Jews in Dothan.

The city of 60,000 sits in the southeastern corner of Alabama, near the state’s borders with Georgia and Florida.

The Jewish community in Dothan was never one that would wow anyone with its size. At its height, about 100 families worshipped at Temple Emanu-El. Today, temple membership is about half that number.

As the faithful arrived on a recent Friday for 7 p.m. services, it was evident that there are not very many members, and most are older. The congregation recently decided that it needed to bring in some younger families, and they felt they had to do it with flair.

“We felt like it needed to be something that had enough sizzle that would get attention, and it really has,” temple member Larry Blumberg said.

Blumberg put up $1 million to help relocate 20 young Jewish families to Dothan. The congregation took out ads in Jewish newspapers offering up to $50,000 per family.

Rob Goldsmith, the rabbi’s husband, is director of the relocation project. He says the response has been beyond expectation.

“We’ve had 275,000 hits on our Web site, several hundred phone calls and e-mails. We’ve really gotten the attention,” Rob Goldsmith said.

Interest in the program has come from as far away as China, Cuba, South America, Israel and all over Europe. The group’s Web address is http://www.bfjcs.org/.

Out of all the Web site hits and e-mail inquires, Rob Goldsmith says, only about 25 are “promising.” For many of applicants, their incomes were too high. Others were from outside the U.S. or — for one reason or another — their inquiries were not taken seriously.

To qualify, there are some strict criteria. Besides being a Jewish family with children, candidates will have to sign a five-year agreement and pass criminal background and credit checks.

Net assets can’t exceed $100,000, and according to Rob Goldsmith, people won’t just be handed a check for $50,000. The money must be used to cover housing and relocation costs, as seed money to start a business or on education expenses for children. Depending upon need, it may add up to something less than $50,000.

The Jews in Dothan have no problem using dollars as an incentive, says Lynne Goldsmith. “We don’t want to die.”

Rob Goldsmith says small southern towns are rapidly losing their young Jewish populations as young people go off to college and don’t come back.

“We need to, like so many small towns, reinvigorate and not close and lock the doors like so many Jewish communities in the South,” he said. “It’s not gonna happen here.”

Dothan prides itself on being progressive and different from the stereotype of the Deep South city.

“There’s ignorance everywhere. There’s ignorance in Dothan,” Mayor Pat Thomas said. “But … you have a great community here, and you have a community that’s open to all faiths. And I think that’s a great strength.”

The Jewish families say the city practices not just religious tolerance but religious acceptance.

“Being a Jew living in Dothan for 20 years, I have never experienced any anti-Semitism,” said Daryl Shapiro, who moved here after graduating from Auburn University.

Dr. Marty Margolies and his wife, Abbie, moved to Dothan more than 30 years ago from New York. Preconceived notions of the South are just wrong, he says.

“We had apprehension when we came,” Shapiro added. “This turned out to be a wonderful community, as are most of the communities in the South we’ve been in. And all those preconceptions just evaporated.”

The Jewish community is hoping to move four families a year to Dothan over the next five years. Members hope the first two families will be living there by Hanukkah, in December.

Margolies believes that it’s a wonderful opportunity.
“You have to open your eyes. You have to look. You have to be a little adventuresome, and I don’t think you’ll be disappointed. I haven’t been,” he said.

http://www.cnn.com/2008/US/09/24/jews.dothan/index.html

Commentary: Financial meltdown is an absolute disaster

NEW YORK (CNN) — When I see something on the horizon that I consider serious, all I can do is dive in and do as much homework as my brain can possibly handle.

Then, after I digest the information, I look around for the smartest people I can find and talk to them. And then I e-mail them.

Then I call them at home during their child’s fourth birthday party. This is why there’s not a long line of people gathering to be my friend (among other things).

Doing my homework and then listening to the best brains from both sides of an issue allows me to crystallize my opinions better than any other method I’ve tried.

When I first started to truly understand the economy, one of the smartest people I began speaking to was Nouriel Roubini, chairman of RGE Monitor and professor of economics at New York University’s Stern School of Business.

Right here on CNN.com, after sifting through all of Roubini’s “smart guy” language, I attempted to boil down the five levels of economic disaster that we could be facing. Like our military’s DEFCON (a one-to-five scale, with one being the most serious), the “DEFCONOMY scale” has been eerily prescient so far. And believe me, this isn’t a set of predictions that either Mr. Roubini or I wanted to turn out to be correct.

Back in February when the column was published, I was being called crazy for being too pessimistic. I had become a bit of a dark cloud to be around. No one wants to grab lunch with the guy constantly whining about the sky falling, especially when things seemed to be going generally well.

At the time, most people weren’t even sure we were on the DEFCONOMY scale at all. Now, we’ve clearly raced passed DEFCONOMY 5, 4, and likely 3 as well.

Look at the description of DEFCONOMY 3:

“Some banks begin to crack under the pressure of continuing write-downs and mounting defaults by consumers. A national or large regional bank finally collapses, triggering hedge fund failures and general chaos on Wall Street, potentially leading to a 1987-style market crash.

Odds we get here: Very good. Roubini says that we’ll likely socialize the losses, “effectively nationalizing the mortgages or the banks.”

Any of that sound familiar? The Wall Street Journal reported that last week, “the market for mortgage-backed securities disappeared” and that the “financial system was behaving like a patient losing blood pressure.”

As we threaten to cross into DEFCONOMY 2, the government rushed to bring us into the current bailout debate and stop the bleeding. But it may be too late — my gut tells me we’re already in Defconomy 2, and if true — the transition to Defconomy 1 may be far quicker than many expect. To show how serious of a situation we are in, Defconomy 1 on Roubini’s list is the great depression.

So now that we’re here, what do we do? I am massively conflicted about this bailout program. The idea of government stepping in to bail out international banks that were reckless with their own business literally makes my stomach churn. We are privatizing gains and socializing losses.

As George Will wrote this week: “Treasury Secretary Paulson, asked about conservative complaints that his rescue program amounts to socialism, said, essentially: This is not socialism, this is necessary. That non sequitur might be politically necessary, but remember that government control of capital is government control of capitalism.”

Unfortunately, he’s right. In fact, it would have to take an absolute disaster to make me even consider supporting something like this. Welcome to that absolute disaster.

In the weeks following that DEFCONOMY column, I moved from thinking this meltdown scenario was a frightening possibility to realizing it was a near inevitability.

While it took the people in power far too long to recognize it, they are now understanding the same sad truth. This bailout plan is not a good idea — it’s an absolutely terrible idea. It’s just the only idea we have left.

Our financial system is like a 747 flying around with all four of our engines on fire. The bailout effort will not stop us from landing hard, but without it, we may simply drop out of the sky.

What Congress is attempting is a last-second search for an open field to land this plane with as little damage as possible. With that in mind, I think some kind of action may be a necessary evil, but we must be very, very careful.

Action for the sake of action, much like change for the sake of change, doesn’t solve problems. It usually inflames them. And what’s worse is that it creates brand-new catastrophes we haven’t even considered yet. Wall Street and Congress have been playing with fire, and now it’s Main Street that’s beginning to sweat.

http://www.cnn.com/2008/POLITICS/09/24/beck.bailout/index.html

Alberta company recalls 16 types of sandwiches in Listeria scare

TORONTO — The Canadian Food Inspection Agency on Thursday announced a recall on a wide variety of Hygaard brand sandwiches that it says could be contaminated with Listeria.

The Alberta-based manufacturer, Hygaard Fine Foods, is voluntarily recalling 16 types of sandwiches with best-before dates ranging from Oct. 24 up to and including Nov. 16, though there have been no illnesses linked to the sandwiches.

The products have been distributed across Canada except for Prince Edward Island and New Brunswick.

Listeria can cause the disease listeriosis, which can cause fever, headache, nausea and neck stiffness.

Elderly people and pregnant women, as well as people who have weakened immune systems, are particularly vulnerable.

A countrywide outbreak of listeriosis that has been linked to a massive Maple Leaf Foods recall has claimed the lives of 18 people.

But it’s not immediately clear whether the sandwich recall is linked to Maple Leaf.

http://canadianpress.google.com/article/ALeqM5iqao4_4kTP1EST-az_gtLMoZnhwQ

Calamitous Web Bot Predictions

George Ure and his colleague ‘Cliff’, two self-described “time monks,” shared dire predictions based on their web bot technology. Their method captures changes in language patterns within Internet discussions. This aggregated data is then processed with software to determine various keywords, which they interpret in a predictive fashion.

Beginning on October 7, 2008 and running through March 2009, they foresee a calamitous period on an epic scale. America will be beset by a variety of problems, which they broke down as 45-48% related to the economy, 40% concerning the military, and the rest associated with natural disasters. Between 2 and 22 million lives could be lost or seriously impacted, they estimated, possibly related to a “global coastal event” in 2009. On Dec. 10-12th, 2008, a large quake could hit the Pacific Northwest, they added.

The two recommended developing self-sufficiency and the ability to live off the grid. They also spoke about strange disappearances next year, in which people, including those in power, will vanish without a trace into interdimensional doorways. Additionally, an object they call a “coherer” — a reverse-engineered or left-behind dimensional artifact is currently in the possession of people who are concerned for their lives.

China banks told to halt lending to US banks

BEIJING, Sept 25 (Reuters) – Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

“The decree appears to be Beijing’s first attempt to erect defences against the deepening U.S. financial meltdown after the mainland’s major lenders reported billions of U.S. dollars in exposure to the credit crisis,” the SCMP said.

http://www.reuters.com/article/marketsNews/idUSPEK16693720080925