The Times, They Are A’ Changing

29Mar/1011

The Times, They Are A’ Changing

On my way into to work this morning I saw an advertisement billboard that struck me.

[Name of Bank] We have money to lend (and the will to lend it)

When a bank can say that it's ability to lend and will to lend separates it from other banks you have to know that things aren't going well.

Even in light of this, though, I have to say that it's probably fool hearty for banks to be lending right now, especially if they are writing mortgages. The housing market has taken quite a hit, to be certain. But one economist that predicted the housing crash in the first place says there is a very good chance that housing will crash again.

By transferring more underwater mortgage balances onto the public books, the plan puts taxpayers on the hook for further losses if housing prices continue to fall. Given the massive support for real estate already afforded by record-low interest rates and massive federal tax and policy incentives, there are very good reasons to believe that home prices will indeed collapse when these crutches are removed. Recent spikes in long-term interest rates warn of this prospect.

If these items aren't enough to make you wonder, perhaps this last item will. Remember all that talk in grade school about this being a free country? Well, it just got a little less free again. Due to a recent law, if you decide you want to put your money in a foreign bank to keep it safe from a falling economy, the IRS wants to know. And if the country you do your banking through has laws that prohibit such disclosures (like Switzerland) they are being ordered to close the accounts.

Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions - Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS.

Come, gather 'round people, wherever you roam, and admit that the waters around you have grown...

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Written by: Carlton Smith on March 29, 2010.

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Filed under: Current Events, Economics, Politics, United States Leave a comment

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Spiff
March 29th, 2010 - 10:28

Part of the problem is that the bulk of the people aren’t realizing that the government is so blatantly infringing on the liberties protected by the constitution, and the ideals that our country was built upon in the first place. Even if they did realize it, they’d still encourage the government because they think that the regulation will somehow save the country and make everyone’s bleak lives better. What’s it going to take for the people to realize that this monster is making everything exponentially worse and dissolving the freedoms this country was made to protect?
Carlton Smith
March 29th, 2010 - 10:34

Well, you’ve touched upon one of the themes of this blog, and why I chose the title I did. You see, it isn’t an accident that Uncle Sol spelled his name, S-O-L – being as it was that he was s*** out of luck.

Unfortunately, I believe that the inherent evil in humanity will always cause it to selfishly choose to give more power to government, believing that government will use that power to better the lives of citizens, as politicians always promise to do. That’s why P.J. O’Rourke said, “Every parliament is a parliament of whores. The trouble is, in a democracy, the whores are us.”

And every student of history knows that while governments promise all kinds of great things when granted more and more power, they tend (greatly) to deliver something else entirely.
Spiff
March 29th, 2010 - 10:40

Indeed, but you didn’t answer my question. What’s it going to take to make people realize what’s happening and then make some things happen that would actually be for the greater good?
Carlton Smith
March 29th, 2010 - 10:44

You’re right I didn’t answer it directly, as I don’t believe there is an answer to it. The question assumes that there is something that will make people realize it before everything falls apart, allowing them the opportunity to right the ship before it’s too late. I don’t believe there is anything. I believe that the only thing that will make people realize that it won’t work is a systemic crash.

And honestly, I’m dubious about the prospects of eyes opening up, even in this eventuality. I think it’s far more likely that the under-implemented ideas of liberty are blamed for the catastrophe, thereby justifying a complete move away from the what remains of our great liberal experiment. The likely outcome of a crash, in my opinion, would be complete totalitarianism.
Spiff
March 29th, 2010 - 11:14

Awesome. So, really, things will get worse, and stay worse, and freedom won’t actually exist, even in outward appearance? I love having something to look forward to…
Carlton Smith
March 29th, 2010 - 11:35

I realize my view isn’t the most optimistic, but I have to call it like I see it.

Of course, I recognize that things don’t always turn out the way one expects and that even if all the conditions are right, the storm doesn’t always occur. So, just because things have gone heavily one way historically, doesn’t mean that they always will.

If there is anything to be done, I would say it is to keep talking about the ideas of liberty, refuse to vote for anyone who has show willingness to not abide by his/her constitutional mandate and understand that voting for the lesser of two evils is still supporting evil.

Ron Paul generated quite a lot of buzz in his last Presidential Campaign and looks to be gearing up to make a lot of noise again in 2012. And while the noise is good, I have no faith whatsoever that the American people will ever give up the great government teat, even if they think that liberty is a good idea. So, while his supporters may be many and vocal, his message is one of discipline, logic and courage. I have a hard time believing that these are enough to overcome the lure of government booty.

As de Tocqueville said, “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”
Wayne
March 29th, 2010 - 11:38

Spiff,

The fact that you are willing to ask the question means that you are willing to recognize that a problem exists.

I’m more pessimistic than Carl. I am afraid that in the event of a systemic crash there won’t be enough of us left to worry about what form of Government we get. There are too many entities that would like to see a total end to the American way of thinking, and would gleefully jump on the bandwagon of destroying us to the man, woman and child…

All we can really do is keep on banging the drum, and hope people start to listen.

Keep up the good work Carl!!!!
Spiff
March 29th, 2010 - 12:16

Ack! LoL, and I thought Carlton’s perspective had a grim result. So Wayne, are you implying that you think a crash here in the U.S. would initiate a large-scale military attack attempting to wipe us out the rest of the way? Do you have anyone in mind specifically who would want to do that, and be capable of it, without worrying about the repercussions of the rest of the world wanting to step into a conflict after something like that? And would they just want to take over the region, or just demolish everything and everyone?

I guess the potential for something like that hadn’t occurred to me before, but then again, I’ve never seen our country at her weakest.
Carlton Smith
March 29th, 2010 - 12:44

I don’t think a military attack is out of the question. Much of our debt is owned by foreign countries (about 35% of it). If we were to default on that debt I think such a result would be entirely within the realm of possibility. Countries have gone to war over less, that much is certain.
Wayne
March 29th, 2010 - 13:56

Don’t limit your thoughts to specific Nation-States, although there are plenty of those that qualify. What would happen if, after a monetary crash, shopping malls started blowing up? Or public transport items (buses, trains, subways, etc.)?

Once people lose trust in the ability of a Government to protect them, the result can become very ugly.

We could end up destroying ourselves before anyone else gets into the act. But once the mayhem started there are plenty of potential ideological adversaries that would be glad to keep the ball rolling.
Carlton Smith
March 29th, 2010 - 14:06

Absolutely. I’ve posted previously about the potential consequences of the dangerous levels of debt we are currently sustaining. A crash of the currency is well within the realm of possibility. If that happens, import prices shoot the moon and things can get very difficult indeed.

I hadn’t considered, though, violence on a larger scale than rioting and looting originating within our own borders. It is a possibility to consider.

The number of possibile outcomes if such a thing occurs is virtually limitless.