A Changed Nation

I’m writing this from a position of great sorrow due to the re-election of President Obama.  I’m not saying Romney was perfect (far from it). But Romney being elected would have shown that the country finally figured out that what they voted for back in 2008 was just a charismatic speaker, not a proven leader than could re-direct the country from the fiscal cliff we’re about to plunge off.

George W. Bush was really just a big government progressive republican (I know you Texan’s don’t like to hear that…sorry).  President Bush, even after the 9/11 attacks induced a major defense commitment, pushed the “No Child Left Behind” initiative, which was the largest expansion of federal education spending ever.  Looks like they should have named it “No Child Left a Conservative” as it appears our public educational system is now just a place to indoctrinate children to believe the government is Santa Clause, and business owners can’t be trusted but the government can (now there’s some logic for ya!).  Bush also increased farm subsidies by 80%, and let’s not forget the Medicare Drug entitlement which was the most expensive new program since LBJ.  Bush increased the Federal Budget by 42% adjusted for inflation during his 8 years as President.  Compare that to Bill Clinton who only increased the Federal Budget by 12%.  Is it any wonder the Republican Party is going the way of the Whig party?

I’m going to challenge your thinking in the paragraphs to follow, but it’s time to look at where we stand from a position of truth.  I used to believe our government had the best interest of the people in mind, I believed we had freedom, and that we had over 150 military bases overseas to protect our freedom.  I started to think differently back in 2008 when I heard Bush say, “We need to abandon the free market to save it.”  At that point I started to question whether our leaders in either of the political parties actually believed in freedom, or was this just another term political leaders used to increase their favorability ratings. 

I believe anyone who understands what freedom really is would be appalled at the things that are taking place today.  Contractual law is being thrown out the window as in the case of the GM bailout, Unions and Super Pac’s now have a giant influence on elections, banks and insurance companies are being bailed out based on the amount of political donations they provided, the Federal Government now controls the United States Healthcare system and our educational system, and stimulus packages are being used as free giveaways to political donors.

The results of this presidential election showed that over half the nation does not believe in freedom.  Or at a minimum they don’t understand what freedom is.  The World War II generation is passing away at an alarming rate and being replaced by voters ages 18-29 who have a higher favorability rating of socialism than capitalism.  Our public school system has been infected with a disease called progressivism, and unfortunately the only remedy at this point is to home school.  But we all know most parents don’t have the time to home school, they’re too busy working just trying to put food on the table.  Yet we all have to pay taxes to fund these progressive schools regardless of whether our kids are using them or not.  I have to give the progressives credit, their scheme of infiltrating the schools and having conservatives fund it with their tax dollars was ingenious.  That has paid massive dividends, and in all likelihood was the nail in the coffin of the United States as we know it.

In all of human history, there is no evidence that a nation can actually shrink its government.  What normally happens is a portion of that nation breaks off in what normally is a bloody revolution.  In my opinion, our nation is going to lean further and further left as more of the World War II generation passes away and being replaced by 18-29 year old voters who can’t find jobs and want government assistance.  Add to that the public school system that’s been infected, and a media that may as well be a political action committee for the Democratic Party, and you have a political swing in power like never before in United States history.

Our federal government now has a yearly budget of 3.8 trillion dollars.  In other words, the federal government spends over $10 billion per day.  Our federal government has become so big and complex that corruption and lies have become inevitable.  The time to slow the growth of this cancer has long came and gone.  Once power has become so concentrated at the top, it is pretty much impossible to get them to relinquish that power back to the people.  Even with a divinely inspired document like the Constitution and Declaration of Independence, our nation could not escape the clutches of ever expanding federal power.  It appears nations that are founded on freedom have a life span of around 200 years before the population falls for the lie that you can have a free lunch at the expense of someone else.  Our government has become so big that the large deficits are literally crowding out the private sector from being able to attract new investment to innovate and expand.  We are going to continue to have high unemployment rates and a stagnant economy growing at only around 2% per year.  There will be areas to invest and make money, but those sectors are going to be the exception now rather than the rule.

I wish I could write to you and say that our country in 2016 could be put on the right track.  But unfortunately both parties enjoy the power the federal government now commands.  It will continue to tax the wealthy to the point that production will decline, in a short time the middle class will be shouldering the burden that our politicians promised would reside solely with the “rich.” This is how empires are toppled. 

While the United States may have finally been converted into a European-style socialist government, God still sits on the throne.  He is sovereign and has a plan.  I will take comfort knowing that I am in the great state of Texas surrounded by people who still believe in the principles America once stood for.  We will bind together to try and fend off the continuing assault on freedoms coming from Washington D.C., and if we get pushed hard enough we may just decide to return back to our roots… the Republic of Texas.            

What are these CA Officials Thinking?

Today (7/13/12) it was reported that officials in San Bernardino County (CA) have been in secret talks as to whether or not to use the power of eminent domain to seize troubled mortgages from banks.   

 http://www.reuters.com/article/2012/07/13/us-sanbernardino-eminentdomain-idUSBRE86C14K20120713

California has been one of the hardest states hit by the financial crisis, and as a result has one of the highest rates of underwater mortgages in the country.  For those of you who don’t know, being “underwater” on your mortgage means you currently owe more on your mortgage than what your home is worth.

I have one question for the officials in San Bernardino County.  Is it your intention to put the final nail in the coffin of the state of California?  Maybe the officials in California truly believe they are doing the right thing, but the road to hell is paved with good intentions.  Or are they just doing this to show they are doing something, anything, in hopes of getting re-elected.  It is obvious that fiscally they have ran their county into the abyss, so this may be the “Hail Mary” of their re-election efforts.

Details are still to follow on how this would play out.  But here is what is most likely to happen here.  Banks are currently holding onto these mortgages that are underwater, hoping for two things.  Either the government comes in with QE 3 (quantitative easing… or money printing) and purchasing mortgage backed securities which will help get these under-performing mortgages off the bank’s balance sheet and onto the federal reserve’s (or in other words… the taxpayers), or the U.S. Congress comes in with some sort of bailout for the banks.  This is why the banks have been for the most part unwilling to help out these underwater homeowners.  If there was an actual free market, where the government didn’t pick and choose who they were going to bailout, the banks would have started working with underwater homeowners a long time ago. It would be in the banks best interests to do so in order to minimize the losses on that under-performing mortgage.

So while the banks are waiting on either the Fed or action from Congress, the officials in the County of San Bernardino have decided to take matters into their own hands.  They are going to force the banks to give these mortgages to the County.  The county then will lower the outstanding mortgage to the homes current market value.  This could literally knock off 100k or more in debt on that home in some circumstances.  The question remains… who is going to be on the hook for that loss?  It’s either going to be the bank or the county.  Since the county of San Bernardino is broke along with most counties in California, it is certain the county will force the banks to take this loss. 

On the surface this doesn’t seem like a bad idea right?  The homeowner is no longer underwater; this gives them the ability to refinance to today’s record low mortgage rates.  Now the homeowner also has more discretionary income that could be used to help support the California economy.  Seems all well and good right?  Wrong!

The unintended consequences would be disastrous for California.  These banks that had these mortgages “stolen” from them now have to write down these gigantic losses on their balance sheets.  Banks still have not recovered from the financial crisis.  This giant blow to their financial standing would send bank stocks plummeting as analysts scramble to figure out how big of a blow this will have on bank earnings.  I’m sure at this point you’re thinking… who cares?  The banks deserve to have their stock prices collapse.  Fair enough.

But the biggest unintended consequence would be banks no longer willing to write mortgages in the state of California.  Or at least they will raise interest rates dramatically.  Who can blame them?  Just like with the bankruptcy of the auto companies, contractual law has been thrown out the window by an iron-fisted government.  We look more like Soviet Russia at this point than the “land of the free and home of the brave.” 

With banks refusing to lend, or at a minimum higher mortgage rates in the state of California, housing prices would go into free fall.  The rest of the country also wouldn’t be immune from falling housing prices.  Banks would start to demand higher interest rates on mortgages everywhere in the U.S. as they start to determine the likelihood that counties in other states contemplate using eminent domain as well.  Higher mortgage rates mean’s higher mortgage payments.  This means potential buyers will have to lower the amount they can borrower in order to be able to afford the payments.  The result is sellers having to come down on the asking price.  This is bad news all around.

We all know the saying, that what happens in California tends to make its way into other states.  This is one of those times where I hope, “what happens in California, stays in California.”