Blue Collar Muse

I’m traveling today so I’m taking the liberty of simply cutting and pasting the text of an email I got from my good friend Fred Thompson.  Actually, I’ve never met the man, it just sounds cool to say it like that since he emailed me personally and all.  FDT writes a regular column at TownHall and this was his from a day or so ago.

The Danger of Government Guarantees

I’ll bet it came as a surprise to most folks that the financial stability of the world as we know it depends upon the survival of a couple of outfits called Fannie Mae and Freddie Mac. Yet that’s what the so-called experts are telling us. Moreover, we taxpayers are now being asked to guarantee Fannie and Freddie’s tab, one that could make the $124 billion S&L bailout of the late 1980s look cheap.

So how did we get stuck with this bill? Well, Congress wanted to “do something” about what it saw as a “housing problem.” To them that meant that they should create an even bigger problem.

So Congress passed laws that made it easier for hopeful home-buyers to buy houses … even when they couldn’t afford them. Then the Fed and other regulators helped, in the form of easy money and loose credit standards for mortgages.

Not surprisingly demand for houses grew, home prices rose, lenders financed additional questionable mortgages, fueling even higher prices and so on. You get the picture. This is called a bubble.

Then an amazing thing happened – apparently impossible to foresee. Home prices did not continue to rise forever! Home prices came down and easy money dried up, causing the above mentioned cycle to reverse. In other words, the bubble burst.

So you’d think the in-over-their-heads homebuyers and the mortgage bankers would take the hit, and the market would right itself. No reason for an international meltdown here, right?

Not so fast my friends. Years earlier Congress established Fannie and Freddie as purchasers of these mortgages, which they could bundle up, repackage and sell to investors, freeing up more mortgage money. As government creations tend to do, the two companies grew until they either owned or guaranteed about half the nation’s $12 trillion dollars in mortgages.

Fannie and Fred were “government sponsored enterprises” which means heads they win, tails you lose. If they make money stockholders, creditors and Fannie and Freddie employees – some making millions annually – get the benefit. But now that mortgages have hit the skids, with mounting losses, the taxpayers potentially face trillions in exposure. This is because there is an “implicit” (read “actual”) government guarantee of Fannie and Freddie’s obligations and both are now too big to be allowed to fail. This is called the “bailout phase,” which will probably lead to a bigger bubble in the future.

Lost in this immense, complex mess is the root problem most people are missing: the government is gradually becoming the guarantor of seemingly every important aspect of American secular life, creating incentives and bureaucracies that cause failure and invite fraud.

In Fan and Fred’s case, it was in no one’s interest to turn off the bubble machine. Just the opposite. The system induced borrowers to take on financial obligations they could not afford and lenders to lower lending standards. Fannie and Freddie went along because their managers’ compensation depended on the firms’ short term financial performance. And investors continued to buy complex security packages they didn’t understand, because the securities were viewed as government-backed.

Heavy campaign contributions by those benefiting from this scheme induced Members of Congress to avert their gaze from the ugly mess that was unfolding.

You’d think we’d have learned by now: when the backstop of the federal treasury makes it easier for politicians, lenders, borrowers, welfare recipients, government contractors, or anyone else, to serve their own self interest at the expense of the taxpayer, many will do just that.

That is why we continue to see self-dealing, moral lapses, outright fraud and lack of management and oversight in a wide array of programs and government-sponsored entities, from housing to Medicare, education and the Small Business Administration, all costing taxpayers billions, even trillions of dollars.

Our Founding Fathers knew more than a little bit about human nature. It is one reason why in the Constitution, the federal government was given certain delineated powers and no others. I hate to burst another bubble, but our government simply doesn’t have the authority or the capability to be the guarantor or insurer of our every need or desire. Isn’t it time we started sending that message loud and clear to the big enablers in Washington?

Blue Collar Muse

Popularity: 22% [?]

It was both encouraging and yet, a bit surreal, to have had this discussion with The Much Younger Trophy Wife on the way home from church yesterday morning and then to see it played out on the InterWebz.

I’m encouraged because I felt sure that it was only me that understood that there really is no such thing as “price gouging” or at least it is far more rare than anyone truly understands.

Then, I dropped by Michael Silence’s place and got referred to a couple of others, including Tennessee blogger Rich Hailey at Shots Across the Bow (congrats on your Instalanche, Rich).

Michael also referred me to a couple of great articles by Rand Simberg. His article from just after Katrina, ‘Three Cheers for Price Gougers’ is excellent and cannot be recommended highly enough.

Between Rand and some good ol’ boy, Tennessee common sense from Rich, we should be able to put this lunacy to bed. But there will always be Left wing whiners who incorrectly believe they have a right to what others have simply based on their need. That error has been shown to be a fallacy at least as far back as the 50s and Atlas Shrugged by Ayn Rand. But the point needs making over and over again in every generation.

Kudos to Rich and Rand for doing so and doing so well!

Blue Collar Muse

Popularity: 19% [?]

When unexpected good things happen, we call it Serendipity. Not so with unexpected bad things. The Law of Unintended Consequences, abbreviated LUC and pronounced “luck” as in “If it weren’t for bad LUCk I’d have no LUCk at all!”, is perhaps the most famous non-scientific Law. No need to be a rocket scientist to recognize no matter how hard you try to avoid it, bad things will happen which you did not foresee and did not intend.

BCM’s corollary to LUCk postulates the larger the pool of original actions from which to derive consequences of any sort, the greater the odds of realizing a Spontaneous Unintended Consequence, abbreviated SUC and pronounced “suck” as in, well, you’re likely way ahead of me here! All of which puts Democrats, with their emphasis on more regulation, bigger Government and expanding bureaucracy at huge risk for SUCking on a regular basis.

News reports this week show Dems SUCking in 2 ways which don’t bode well for Americans. As always, in November, remember who got you into this mess.

Both instances of Democratic SUCking stem from their Energy policy which refuses to acknowledge both the value of drilling for American oil and of increasing our ability to refine oil we are able to acquire from any source. While Democrats publicly pretend to hate high prices for items impacted by oil costs, privately they are jubilant.  High fuel prices are  particularly joyous as they force Americans to drive less thereby ushering in the long awaited dream of planetary salvation. But just here, things start to SUCk for the country.

World Net Daily reports BusinessWeek is running a story on a new Ford, the Fiesta ECOnetic. It gets a stunning 65 mpg, but the carmaker can’t sell it in the US. Only Europeans will be able to buy the ECOnetic.

“We know it’s an awesome vehicle,” says Ford America President Mark Fields. “But there are business reasons why we can’t sell it in the U.S.” The main one: The Fiesta ECOnetic runs on diesel.

Automakers such as Volkswagen (VLKAY) and Mercedes-Benz (DAI) have predicted for years that a technology called “clean diesel” would overcome many Americans’ antipathy to a fuel still often thought of as the smelly stuff that powers tractor trailers. Diesel vehicles now hitting the market with pollution-fighting technology are as clean or cleaner than gasoline and at least 30% more fuel-efficient.

Yet while half of all cars sold in Europe last year ran on diesel, the U.S. market remains relatively unfriendly to the fuel. Taxes aimed at commercial trucks mean diesel costs anywhere from 40 cents to $1 more per gallon than gasoline. Add to this the success of the Toyota Prius, and you can see why only 3% of cars in the U.S. use diesel. “Americans see hybrids as the darling,” says Global Insight auto analyst Philip Gott, “and diesel as old-tech.”

Higher taxes, higher production costs and decades of irresponsible environmentalism - all thanks to Democrats - leave Americans out of fuel, walking on the roadside. Meanwhile, world citizens in Europe reap benefits from American technology, manufacturing jobs and the economic benefit of both.

The second instance of Democrats as LUCky charms also comes via World Net Daily, this time pointing to an ABC News story that the Highway Trust Fund, in which monies are held to be disbursed to the several states for infrastructure upkeep and repair, will run out of money at the end of this month.

… the Transportation Department said that this month it is expecting to bring in $2.7 billion in gas tax revenues but anticipates needing $4.4 billion to reimburse states for their highway and road projects. The department said it will start the upcoming fiscal year that begins Oct. 1 with no money in the trust funds if patterns continue as is.

Why? The story reports that Americans are driving less due to the high cost of fuel. A lot less. Try 10 billion miles less in May of ‘08 than in May of ‘07. Music to Democratic ears. But wait. The Highway Trust Fund is kept chuck-full-o-bucks by fuel taxes. Less driving means less fuel purchases. Less fuel purchases means less revenue to the Fund. And less Fund revenue means that “…starting next week [The Transportation Department] will begin delaying payments to states …” for the projects they are working on. Oooops, the favorite Democratic tactic of raising taxes to generate income doesn’t work yet again!

The solution? Democrats want yet another $8 billion in tax money for the Fund. Is there no end to the SUCkiness? The Bush administration recently opposed that plan. Democrats merely criticize the President, pointing to projects that will suffer if the Fund stops paying. Leaving alone, for this post anyway, the waste inherent in sending money from the states to the Feds to be sent back to the states, another factor is at work here. Railing at the GOP, Democrats conveniently forget another truth.

In this highly charged political season, Transportation Secretary [Mary] Peters blamed the financial crisis on earmarks included in the last transportation bill, which she said amounted to $24 billion in pet projects.

The last transportation bill, the one passed by a Democratic Congress, the Congress with a 9% approval rating, contained enough Pork to fund the Highway Trust Fund for almost 6 months! But it’s the GOP who is wrong for not simply ponying up another $8 billion. Democrats in control of purse strings don’t have to exercise fiscal constraint or oversight. If Bush and Co. won’t go along, open fire on the GOP. If the Right continues to balk and Dems need another few billion dollars for something, they’ll just raise another tax.

But which candidate is campaigning on reforming the earmark tradition so taxpayers get the most for the money taken from them in taxes? And which Party wants to reduce the size of Government so it doesn’t continue to cost Americans 54% of every dollar they make just to fund some level of Government? Which leads inexorably to the crucial question, “Who offers realistic hope to Americans that their SUCky LUCk can change?” How you answer that question on November 4th will have a profound impact you both of our lives. Choose well.

Wondering if that’s enough talk about the Economy for Senators Obama and Biden …

Blue Collar Muse

Popularity: 35% [?]

A. C. McCloud at Memphis Mud reminds us there’s a meeting tomorrow night in Memphis for those interested in hearing TDOT’s plans for a proposed Toll Bridge over the mighty Mississipp’ in Memphis. While I mentioned it in a recent post on toll roads and bridges proposed in other parts of the state, AC is a Memphis area resident and knows more about that part of the state and the value of another bridge than I do. He’s wondering where they’re actually going to put the thing! Head over to his place and check out his thoughts.

And don’t forget to attend the meeting tomorrow night and let your voice be heard on the matter. State Transportation bigwigs will be there and they say they want to hear from you. Give ‘em an earful!

The meeting will be held from 6PM to 8PM at Central Station Depot 545 South Main Memphis, TN 38103. More details can be found here. Hopefully a couple of you Memphis bloggers can get there and live blog the event or at least cover it for the rest of us. If you do, let me know and we’ll link to and promote your efforts. Any other Tennessee bloggers reading this, please consider linking to AC’s post and getting the word out about the meeting.

Blue

Popularity: 18% [?]

Well folks, time to let your voice be heard if you’re concerned at all about Tennessee Toll Roads. Why? Well, our beloved government, once again, wants to represent us. They want to know what we think about Toll Roads in Tennessee. So they’ve scheduled public meetings for Memphis, Nashville and Knoxville. Ooops … did I mention those meetings were scheduled for July 10th, 15th and 17th respectively? I know, there was just so much publicity. How could it have slipped past me? Actually, there is one more public meeting on July 29th in Memphis which will at least partially address the matter so you Westies take notice!

Thanks to an email tip from Bobbie Patray of The Tennessee Eagle Forum, however, we can still make our voices heard. And we need to do so. Bobbie notes the meetings were not about specifics but “… about the concept of tolling in general and what it could bring to the State of Tennessee.” She linked to a story in the Knoxville News Sentinel which reports TDOT says there will be no Toll Road if public opposition is high enough. While that’s encouraging, one wonders what will have to happen for TDOT to accept that we don’t want Tennessee Tolls.

KNS reporter J.J. Stambaugh notes,

Tennessee Department of Transportation Commissioner Gerald Nicely drew a round of applause Thursday when he promised that the proposed Knoxville Parkway won’t be a toll road if the public is opposed to the idea.

It was the only applause he drew during the 90-minute meeting at Bearden High School, which was attended by about 50 people.

I don’t have any numbers for those attending in Nashville or Memphis but it seems the publicity for this little shindig in the East was as skimpy as elsewhere. The money quote is about a third of the way through the article.

Nicely and other officials, including TDOT Chief of Environment and Planning Ed Cole, explained that the Legislature has authorized TDOT to look at possibly building toll roads, but included the caveat that “strong public support” is a prerequisite for moving forward.

During a following question-and-answer session, Knoxville resident David Cochran asked Nicely to define “strong public support” for the audience, most of whom clearly were opposed to tolls.

“That’s one of the things we’re doing here tonight,” Nicely said. “I don’t think I can define ’strong public support’ tonight.”

Nicely’s response initially drew snickers and groans from the crowd, but he found himself showered with applause after adding: “There probably is more opposition than there is support for the project. … If that trend continues, we would not proceed.”

And there you have it. The will of the people is painstakingly sought in the decision making process. All the people have to do is rally enough opposition. But we don’t know how much opposition is enough opposition. And the person who will determine how much is enough can’t tell us how much that actually is. If that isn’t government in action, I don’t know what is.Fortunately for us, while public comments at the meeting are closed, your opinion on the matter can still be heard! For those interested, your comments must be in writing (either email or snail mail), send snail mail to:

Project Comments
Tennessee Department of Transportation
Suite 700, James K. Polk Building
505 Deaderick Street
Nashville, TN 37243-0332

Note in the beginning of your letter your comments concern the proposed Tennessee Toll Roads and the recent public meetings held in regards to them. TDOT will be able to attach your comments to the appropriate file from there. Get them in the mail quick, too. Bobbie Patray notes there’s only a 21 day window after a meeting for your comments to be attached. No one at TDOT could clarify whether that meant 21 days from the last meeting or 21 days from the 10th for Memphians, 21 days from the 14th for Nashvillians and so on. Nor could they clarify whether or not it was a postmark of 21 days or actually received in 21 days.

If you prefer email, send your comments to Elizabeth Beeching at elizabeth.beeching@state.tn.us with “Toll Roads” in the subject line. They’ll print your email off and add it to the comment file.

If you have further questions or concerns on this, here are two additional sources of information. The folks at TDOT’s Community Relations Department were very helpful and encouraged me to call them at 615-741-2331. In addition, TDOT maintains a page listing the Public Comment Meetings available to all Tennesseans on all their projects here. Might be a good page to bookmark.

That’s it. Get busy! Go write and tell them “No Tennessee Toll Roads!” If we don’t we only have ourselves to blame!

Blue Collar Muse

SEE ALSO :

Toll Roads in Tennessee? at Rustmeister’s Alehouse.

Thanks to Stacey Campfield’s ‘Blue About Toll Roads’, Michael Silence’s ‘A Blogger’s Campaign Against Toll Roads’and Blue Collar Republican’s Tennessee Toll Roads for the link love!

Kat Coble schools my toll road despising backside in Queen of the Toll Road at Just Another Pretty Farce.

Popularity: 24% [?]