Department of Offense

Steven Horwitz
Department of Economics
St. Lawrence University
sghorwitz@stlawu.edu

September 28, 2008  

My friends,

In the last week or two, I have heard frequently from you that the current financial mess has been caused by the failures of free markets and deregulation. I have heard from you that the lust after profits, any profits, that is central to free markets is at the core of our problems. And I have heard from you that only significant government intervention into financial markets can cure these problems, perhaps once and for all. I ask of you for the next few minutes to, in the words of Oliver Cromwell, consider that you may be mistaken. Consider that both the diagnosis and the cure might be equally mistaken.

Consider instead that the problems of this mess were caused by the very kinds of government regulation that you now propose. Consider instead that effects of the profit motive that you decry depend upon the incentives that institutions, regulations, and policies create, which in this case led profit-seekers to do great damage. Consider instead that the regulations that may have been the cause were supported by, as they have often been throughout US history, the very firms being regulated, mostly because they worked to said firms’ benefit, even as they screwed the rest of us. Consider all of this as you ask for more of the same in the name of fixing the problem. And finally, consider why you would ever imagine that those with wealth and power wouldn’t rig a new regulatory process in their favor.

One of the biggest confusions in the current mess is the claim that it is the result of greed. The problem with that explanation is that greed is always a feature of human interaction. It always has been. Why, all of a sudden, has greed produced so much harm? And why only in one sector of the economy? After all, isn’t there plenty of greed elsewhere? Firms are indeed profit seekers. And they will seek after profit where the institutional incentives are such that profit is available. In a free market, firms profit by providing the goods that consumers want at prices they are willing to pay. (My friends, don’t stop reading there even if you disagree - now you know how I feel when you claim this mess is a failure of free markets - at least finish this paragraph.) However, regulations and policies and even the rhetoric of powerful political actors can change the incentives to profit. Regulations can make it harder for firms to minimize their risk by requiring that they make loans to marginal borrowers. Government institutions can encourage banks to take on extra risk by offering an implicit government guarantee if those risks fail. Policies can direct self-interest into activities that only serve corporate profits, not the public.

Many of you have rightly criticized the ethanol mandate, which made it profitable for corn growers to switch from growing corn for food to corn for fuel, leading to higher food prices worldwide. What’s interesting is that you rightly blamed the policy and did not blame greed and the profit motive! The current financial mess is precisely analogous.

No free market economist thinks “greed is always good.” What we think is good are institutions that play to the self-interest of private actors by rewarding them for serving the public, not just themselves. We believe that’s what genuinely free markets do. Market exchanges are mutually beneficial. When the law messes up by either poorly defining the rules of the game or trying to override them through regulation, self-interested behavior is no longer economically mutually beneficial. The private sector then profits by serving narrow political ends rather than serving the public. In such cases, greed leads to bad consequences. But it’s bad not because it’s greed/self-interest rather because the institutional context within which it operates channels self-interest in socially unproductive ways.

This, my friends, is exactly what has brought us to the mess we are now in.

To call the housing and credit crisis a failure of the free market or the product of unregulated greed is to overlook the myriad government regulations, policies, and political pronouncements that have both reduced the “freedom” of this market and channeled self-interest in ways that have produced disastrous consequences, both intended and unintended. Let me briefly recap government’s starring role in our little drama.

For starters, Fannie Mae and Freddie Mac are “government sponsored enterprises”. Though technically privately owned, they have particular privileges granted by the government, they are overseen by Congress, and, most importantly, they have operated with a clear promise that if they failed, they would be bailed out. Hardly a “free market.” All the players in the mortgage market knew this from early on. In the early 1990s, Congress eased Fannie and Freddie’s lending requirements (to 1/4th the capital required by regular commercial banks) so as to increase their ability to lend to poor areas. Congress also created a regulatory agency to oversee them, but this agency also had to reapply to Congress for its budget each year (no other financial regulator must do so), assuring that it would tell Congress exactly what it wanted to hear: “things are fine.” In 1995, Fannie and Freddie were given permission to enter the subprime market and regulators began to crack down on banks who were not lending enough to distressed areas. Several attempts were made to rein in Fannie and Freddie, but Congress didn’t have the votes to do so, especially with both organizations making significant campaign contributions to members of both parties. Even the New York Times as far back as 1999 saw exactly what might happen thanks to this very unfree market, warning of a need to bailout Fannie and Freddie if the housing market dropped.

Complicating matters further was the 1994 renewal/revision of the Community Reinvestment Act of 1977. The CRA requires banks to make a certain percentage of their loans within their local communities, especially when those communities are economically disadvantaged. In addition, Congress explicitly directed Fannie and Freddie to expand their lending to borrowers with marginal credit as a way of expanding homeownership. What all of these did together was to create an enormous profit and political incentives for banks and Fannie and Freddie to lend more to riskier low-income borrowers. However well-intentioned the attempts were to extend homeownership to more Americans, forcing banks to do so and artificially lowering the costs of doing so are a huge part of the problem we now find ourselves in.

At the same time, home prices were rising making those who had taken on large mortgages with small down payments feel as though they could handle them and inspiring a whole variety of new mortgage instruments. What’s interesting is that the rise in prices affected most strongly cities with stricter land-use regulations, which also explains the fact that not every city was affected to the same degree by the rising home values. These regulations prevented certain kinds of land from being used for homes, pushing the rising demand for housing (fueled by the considerations above) into a slowly responding supply of land. The result was rapidly rising prices. In those areas with less stringent land-use regulations, the housing price boom’s effect was much smaller. Again, it was regulation, not free markets, that drove the search for profits and was a key contributor to the rising home prices that fueled the lending spree.

While all of this was happening, the Federal Reserve, nominally private but granted enormous monopoly privileges by government, was pumping in the credit and driving interest rates lower and lower. This influx of credit further fueled the borrowing binge. With plenty of funds available, thanks to your friendly monopoly central bank (hardly the free market at work), banks could afford to continue to lend riskier and riskier.

The final chapter of the story is that in 2004 and 2005, following the accounting scandals at Freddie, both Freddie and Fannie paid penance to Congress by agreeing to expand their lending to low-income customers. Both agreed to acquire greater amounts of subprime and Alt-A loans, sending the green light to banks to originate them. From 2004 to 2006, the percentage of loans in those riskier categories grew from 8% to 20% of all US mortgage originations. And the quality of these loans were dropping too: down-payments were getting progressively smaller and more and more loans carried low starter interest rates that would adjust upward later on. The banks were taking on riskier borrowers, but knew they had a guaranteed buyer for those loans in Fannie and Freddie, backed, of course, by us taxpayers. Yes, banks were “greedy” for new customers and riskier loans, but they were responding to incentives created by well-intentioned but misguided government interventions. It is these interventions that are ultimately responsible for the risky loans gone bad that are at the center of the current crisis, not the “free market.”

The current mess is thus clearly shot through and through with government meddling with free markets, from the Fed-provided fuel to the CRA and land-use regulations to Fannie and Freddie creating an artificial market for risky mortgages in order to meet Congress’s demands for more home-ownership opportunities for low-income families. Thanks to that intervention, many of those families have not only lost their homes, but also the savings they could have held onto for a few more years and perhaps used to acquire a less risky mortgage on a cheaper house. All of these interventions into the market created the incentive and the means for banks to profit by originating loans that never would have taken place in a genuinely free market.

It is worth noting that these regulations, policies, and interventions were often gladly supported by the private interests involved. Fannie and Freddie made billions while home prices rose, and their CEOs got paid lavishly. The same was true of the various banks and other mortgage market intermediaries who helped spread and price the risk that was in play, including those who developed all kinds of fancy new financial instruments all designed to deal with the heightened risk of default the intervention brought with it. This was a wonderful game they were playing and the financial markets were happy to have Fannie and Freddie as voracious buyers of their risky loans, knowing that US taxpayer dollars were always there if needed. The history of business regulation in the US is the history of firms using regulation for their own purposes, regardless of the public interest patina over the top of them. This is precisely what happened in the housing market. And it’s also why calls for more regulation and more intervention are so misguided: they have failed before and will fail again because those with the profits on the line are the ones who have the resources and access to power to ensure that the game is rigged in their favor.

I know, my friends, that you are concerned about corporate power. So am I. So are many of my free-market economist colleagues. We simply believe, and we think history is on our side, that the best check against corporate power is the competitive marketplace and the power of the consumer dollar (framed, of course, by legal prohibitions on force and fraud). Competition plays mean, nasty corporations off against each other in a contest to serve us. Yes, they still have power, but its negative effects are lessened. It is when corporations can use the state to rig the rules in their favor that the negative effects of their power become magnified, precisely because it has the force of the state behind it. The current mess shows this as well as anything ever has, once you realize just what a large role the state played. If you really want to reduce the power of corporations, don’t give them access to the state by expanding the state’s regulatory powers. That’s precisely what they want, as the current battle over the $700 billion booty amply demonstrates.

This is why so many of us committed to free markets oppose the bailout. It is yet another example of the long history of the private sector attempting to enrich itself via the state. When it does so, there are no benefits to the rest of us, unlike what happens when firms try to get rich in a competitive market. Moreover, these same firms benefited enormously from the regulatory interventions they supported and that harmed so many of us. The eventual bursting of the bubble and their subsequent losses are, to many of us, their just desserts for rigging the game and eventually getting caught. To reward them again for their rigging of the game is not just morally unconscionable, it is very bad economic policy, given that it sends a message to other would-be riggers that they too will get rewarded for wreaking havoc on the US economy. There will be short-term pain if we don’t bailout these firms, but that is the hangover price we pay for 15 years or more of binge lending. The proposed bailout cannot prevent the pain of the hangover; it can only conceal it by shifting and dispersing it among the taxpayers and an economy weakened by the borrowing, taxing, and/or inflation needed to pay for that $700 billion. Better we should take our short-term pain straight up and clean out the mistakes of our binge and then get back to the business of free markets without creating an unchecked Executive branch monstrosity trying to “save” those who profited most from the binge and harming innocent taxpayers in the process.

What I ask of you my friends on the left is to not only continue to work with us to oppose this or any similar bailout, but to consider carefully whether you really want to entrust the same entity who is the predominant cause of this crisis with the power to attempt to cure it. New regulatory powers may look like the solution, but that’s what people said when the CRA was passed, or when Fannie and Freddie were given new mandates. And the very firms who are going to be regulated will be first in line to determine how those regulations get written and enforced. You can bet which way that game is going to get rigged.

I know you are tempted to think that the problems with these regulations are the fault of the individuals doing the regulating. If only, you think, Obama can win and we can clean out the corrupt Republicans and put ethical, well-meaning folks in place. Think again. For one thing, almost every government intervention at the root of this crisis took place with a Democratic president or a Democratic-controlled Congress in place. Even when the Republicans controlled Congress, President Clinton worked around it to change the rules to allow Fannie and Freddie into the higher-risk loan market. My point here is not to pin the blame for the current crisis on the Democrats. That blame goes around equally. My point is that hoping that having the “right people” in power will avoid these problems is both naive and historically blind. As much as corporate interests were relevant, they were aided and abetted, if unintentionally, by well-meaning attempts by basically good people to do good things. The problem is that there were a large number of undesirable unintended consequences, most of which were predictable and predicted. It doesn’t matter which party is captaining the ship: regulations come with unintended consequences and will always tend to be captured by the private interests with the most at stake. And history is full of cases where those with a moral or ideological agenda find themselves in political fellowship with those whose material interests are on the line, even if the two groups are usually on opposite sides. This is the famous “Baptists and Bootleggers” phenomenon.

If you’ve made it this far, I am most grateful. Whether or not you accept the whole argument I’ve laid out here, I do ask one thing of you: the story I told at the start of the role of government intervention in this mess is true, whatever your grander conclusions about the causes and cures are. Even if you don’t buy my argument that more regulation isn’t the cure, to blame this mess on “the free market” should now strike you as an obvious falsehood and I would hope, in the spirit of fair play, that you would stop making that claim as you speak and write about the ongoing events of the last two weeks. We can disagree in good faith about what to do next, and we can disagree in good faith about the degree to which government intervention caused the problems, but blaming a non-existent free market for a crisis that clearly was to some extent the result of government’s extensive interventions in that market is unfair. So if I have persuaded you of nothing else, I hope deeply that I have persuaded you of that.

In the end, all I can ask of you is that you continue to think this through. Explaining this crisis by greed won’t get you far as greed, like gravity, is a constant in our world. Explaining it as a failure of free markets faces the obvious truth that these markets were far from free of government. Consider that you may be mistaken. Consider that perhaps government intervention, not free markets, caused profit-seekers to undertake activities that harmed the economy. Consider that government intervention might have led banks and other organizations to take on risks that they never should have. Consider that government central banks are the only organizations capable of fueling this fire with excess credit. And consider that various regulations might have forced banks into bad loans and artificially pushed up home prices. Lastly, consider that private sector actors are quite happy to support such intervention and regulation because it is profitable.

Those of us who support free markets are not your enemies right now. The real problem here is the marriage of corporate and state power. That is the corporatism we both oppose. I ask of you only that you consider whether such corporatism isn’t the real cause of this mess and that therefore you reconsider whether free markets are the cause and whether increased regulation is the solution.

Thanks for reading.

Steve

Bill Clinton and Barney Frank thought it a good idea to give home loans to people who could not pay the mortgage.Nancy Pelosi is pointing the finger in the wrong direction.

****************************************************************************

**********

Subject: NY Times Article - Fannie Mae Eases Credit To Aid Mortgage Lending

9-30-1999

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9

58260&scp=1&sq=fannie&st=nytFannie Mae Eases Credit To Aid Mortgage Lending By STEVEN A. HOLMES

Have you noticed how the Citgo signs have disappeared in the past 7 -8 months? 

Very clever move by Chavez.  But guess what CITGO IS CHANGING ITS NAME TO? This is serious Americans…make sure you read.

 NEWS FLASH:

 Chavez is NOW getting a Russian Weapons Factory built by Putin. The RUSSIANS are building an AK-47 Kalashnikov Assault Rifle factory in Venezuela to give armament support to Communist Rebel groups throughout the Americas;

Chavez NOW has IRANIANS operating his oil refineries in Venezuela for him. It is likely only a matter of time, if not already, before Chavez has Iranian built LONG RANGE missiles, with a variety of warhead types aimed at…. Guess Who?

CITGO  is NOW in the process of Changing its name to  PETRO EXPRESS   due to the loss of gasoline sales in the USA due to the recent publicity of ownership by Chavez of Venezuela …

Every dollar you spend with CITGO or PETRO E XPRESS gasoline will be used  against you, your basic human rights, and your freedoms.  He will start wars here in the Americas that will probably be the death of millions. 

THIS IS VERY IMPORTANT because Chavez is starting to feel the loss of revenue from his holdings.  HE OWNS CITGO. This is a very important move which everyone should be aware of.

‘PETRO EXPRESS’ IS ALSO 100%  OWNED BY ‘CHAVEZ.’

TELL your friends 

BOYCOTT   ‘CITGO’ AND  ‘PETRO EXPRESS’.

MAKE SURE THIS IS PASSED ON TO EVERYONE IN YOUR E-MAIL LIST IN THE UNITED STATES AND OUTSIDE OF  AMERICA

E pluribus hokum or
When the gamblers bail out the casino
By Spengler

Why should American taxpayers give US Treasury Secretary “Hank” Paulson a blank check to bail out the shareholders of busted banks? Why should the Treasury turn itself into a toxic waste dump for their bad loans? Why not let other banks join the unlamented Brothers Lehman in bankruptcy court, and start a new bank with taxpayers’ money? Or have the Treasury pay interest on delinquent mortgages, and make them whole? Even better, why not let the Chinese, or the Saudis or other foreign investors take control of failed American banks? They’ve got the money, and they gladly would pay a premium for an inside seat at the American table.

None of the above will occur. America will give between US$700-$800 billion to the Treasury to buy any bank assets it wants, on any terms, with no possible legal recourse. It is an invitation to abuse of power unparalleled in American history, in which ill-paid civil servants will set prices on the portfolios of the banking system with no oversight and no threat of legal penalty.
Why are the voices raised in protest so shrill and few? Why will Americans fall on their fountain-pens for their bankers? If America is to adopt socialism, why not have socialism for the poor, rather than for the rich?
Why should American households that earn $50,000 a year subsidize Goldman Sachs partners who earn $5 million a year?

Believe it or not, there is a rational explanation, and quite in keeping with America’s national motto, E pluribus hokum. Part of the problem is that Wall Street, like the ethnic godfather in the old joke, has made America an offer it can’t understand. The collapsing the mortgage-backed securities market embodies a degree of complexity that mystifies the average policy wonk. But that is a lesser, superficial side of the story.

Paulson’s dreadful scheme will become law, because Americans love their bankers. The bankers enable their collective gambling habit. Think of America as a town with one casino, in which the only economic activity is gambling. Most people lose, but the casino keeps lending them more money to play. Eventually, of course, the casino must go bankrupt. At this point, the townspeople people vote to tax themselves in order to bail out the casino.
Collectively, the gamblers cannot help but lose; individually they nonetheless hope to win their way out of the hole.

Americans are so deep in the hole that they might as well keep putting borrowed quarters into the one-armed bandit. They have hardly saved anything for the past 10 years. Instead, they counted on capital gains to replace the retirement savings they never put aside, first in tech stocks, then in houses. That hasn’t worked out. The S&P 500 Index of American equities today is worth what it was in 1997, after adjusting for inflation (and a pensioner who sells stock purchased in 1997 will pay a 20% capital gains tax on an illusory inflationary gain of 40%). Home prices doubled between 1997 and 2007 before falling by more than 20%, with no floor in sight.

As it is, many of the baby boomers now on the verge of retirement will spend their declining years working at Wal-Mart or McDonalds rather than cruising the Caribbean. Some of them still have time to tighten their belts and save 10% of their income (by consuming 10% less), plus a good deal more to compensate for the missing savings of the 1990s.

Altogether, they’d rather gamble, and if that requires a bailout of the house, they gladly will chip in to pay for it. After all, today’s baby boomers won’t pay for the bailout. The next generation of taxpayers will pay for Paulson’s $700-$800 billion. If that enables the present generation to keep borrowing rather than saving, it is no skin off their back. If home prices continue to collapse, the baby boomers will die in debt anyway, working at low-paying jobs until the day before their funerals.

The homeowners of America hope against hope that somehow, sometime, the price of their one only asset will bounce back. The character of Mortimer Duke in the 1983 film Trading Places comes to mind. After losing his fortune in the frozen orange juice futures market, Duke screams, “I want trading reopened right now. Get those brokers back in here! Turn those machines back on! Turn those machines back on!” If a reverse takeover of the US government by Goldman Sachs is what it takes to turn the machines back on, the American public will support it. Sadly, there is no reason to expect the bailout of bank shareholders to have any effect at all on American home prices, which will continue to sink into the sand.

Contrary to what the Bush administration says, it is not the case that banks’ troubled mortgage assets cannot be sold in the private market. Those are the so-called “Level III” assets that banks say they cannot value. But that is only a dodge that the banks use to postpone taking losses. There is a ready bid for these assets from hedge funds, in multi-hundred-billion-dollar size. The trouble is that the market bid is 25% to 30% below the prices that banks carry these assets on their books.
Traders at Wall Street boutiques who specialize in distressed securities say that US regional banks regularly make discreet offers to sell private mortgage-backed securities (not guaranteed by a federal agency) at prices, for example, of 75 to 80 cents on the dollar. Hedge funds bid, for example,
55 to 60 cents in return.

On rare occasions, the bank seller and the hedge fund buyer will meet in the middle, although very few transactions occur. Although many banks are desperate to sell, they cannot accept the offered price without taking losses over the threshold of mortality, for write-downs of this magnitude would destroy their shareholders’ capital. Investment banks typically hold about $30 of securities for every $1 of capital, so a 3% write-down would leave them insolvent. Lehman Brothers classified 14% of its assets as Level III at the end of the first quarter; Goldman Sachs was at 13%. Why is Lehman bankrupt, and Goldman Sachs still in business? If Secretary Paulson, the former head of Goldman Sachs, had not proposed a general bailout last week, we might already have had the answer to that question.

For the Paulson bailout to be helpful to the banks, it must buy their securities at much higher prices than the private market is willing to pay. Otherwise it makes no sense at all, for the banks could sell at any moment to the hedge funds. But that is a subsidy to private banks, administered at the whim of the Treasury Secretary, without oversight and without the possibility of legal recourse.

Some Democrats in Congress are asking for some form of oversight, but it is hard to imagine how they might use it, for a Treasury with $800 billion to spend would constitute the whole market bid for low-quality mortgage assets, and would set whatever prices it wished. Professionals with years of experience set prices on these securities with great uncertainty. How would an overseer determine if it had set the correct price? And if the Treasury decided to bail out one bank (say, Goldman Sachs) rather than another, how would the overseer judge whether that decision was judicious, politically motivated, venal, or arbitrary?

Opposition to the Treasury plan is disturbingly thing. Bloomberg News on June 21 quoted the Democratic chairman of the Senate Banking Committee, Christopher Dodd, saying, “I know of nobody who is arguing over the amount of money or even about that the secretary ought to have the authority to purchase these toxic instruments, these bad debts.”

Why the taxpayers of America would allow their pockets to be picked in this fashion requires a different sort of explanation than one finds in economics textbooks. My analogy of gamblers taxing themselves to bail out the casino is inspired, in part, by a remarkable new book by the Canadian economists Reuven and Gabrielle Brenner (with Aaron Brown), A World of Chance. In effect, the Brenners re-interpret economic theory in terms of gambling, showing how profoundly gambling figures into human behavior, especially in such matters as so-called life-cycle investing. The 50-ish householder who has not made enough to retire may take outsized chances, considering that as matters stand, he will work until he drops dead in any case.

The Brenners write:
If people reach the age of fifty or fifty-five and have not “made it,” what are their financial options to still live the good life? Except for allocating a few bucks to buy lottery tickets, it is hard to think of any other option. If people find themselves down on their luck and see no immediate opportunities to get rich, what can they do to sustain their hopes and dreams? Allocating a fraction of their portfolios with a chance to win a large prize is among the options. And when people are leapfrogged - that is, when some “Joneses” who were “below” them jump ahead - how can they catch up? They will tend to challenge their luck for a while, taking risks that they might have contemplated before in business, financial markets, and other areas but did not follow up with action.
A World of Chance undermines our usual view of “economic man” and substitutes the angst-ridden, uncertain denizen of a world that offers no certainties and requires risk-taking as a matter of survival. I hope to offer a proper review of the work in the near future. As my marker, though, permit me to leave the thought that for providing a theoretical foundation for the counter-intuitive behavior of American taxpayers, the Brenners deserve the Nobel Prize in economics.

Alas for the gamblers of America: they will tax themselves to keep the casino in operation, but it will not profit them. Where, oh where, is America’s Vladimir Putin, who will drive out the oligarchs who have stolen the country’s treasure and debased its currency?

” Those who do not learn from history are doomed to repeat it.”
George Santayana

“All that’s necessary for the forces of evil to win in the world is for enough good men to do nothing.”
Edmund Burke 

A German’s View on Islam

A man, whose family was German aristocracy prior to World War II, owned a number of large industries and estates. When asked how many German people were true Nazis, the answer he gave can guide our attitude toward fanaticism. ‘Very few people were true Nazis,’ he said, ‘but many enjoyed the return of German pride, and many more were too busy to care.. I was one of those who just thought the Nazis were a bunch of fools. So, the majority just sat back and let it all happen. Then, before we knew it, they owned us, and we had lost control, and the end of the world had come. My family lost everything. I ended up in a concentration camp and the Allies destroyed my factories.’

We are told again and again by ‘experts’ and ‘talking heads’ that Islam is the religion of peace, and that the vast majority of Muslims just want to live in peace. Although this unqualified assertion may be true, it is entirely irrelevant. It is meaningless fluff, meant to make us feel better, and meant to somehow diminish the spectra of fanatics rampaging across the globe in the name of Islam.

The fact is that the fanatics rule Islam at this moment in history. It is the fanatics who march. It is the fanatics who wage any one of 50 shooting wars worldwide. It is the fanatics who systematically slaughter Christian or tribal groups throughout Africa and are gradually taking over the entire continent in an Islamic wave. It is the fanatics who bomb, behead, murder, or honor-kill. It is the fanatics who take over mosque after mosque. It is the fanatics who zealously spread the stoning and hanging of rape victims and homosexuals. It is the fanatics who teach their young to kill and to become suicide bombers.

The hard quantifiable fact is that the peaceful majority, the ‘silent majority,’ is cowed and extraneous.

Communist Russia was comprised of Russians who just wanted to live in peace, yet the Russian Communists were responsible for the murder of about 20 million people. The peaceful majority were irrelevant.

China’s huge population was peaceful as well, but Chinese Communists managed to kill a staggering 70 million people.

The average Japanese individual prior to World War II was not a warmongering sadist. Yet, Japan murdered and slaughtered its way across South East Asia in an orgy of killing that included the systematic murder of 12 million Chinese civilians; most killed by sword, shovel, and bayonet.

And, who can forget Rwanda, which collapsed into butchery. Could it not be said that the majority of Rwandans were ‘peace loving’?

History lessons are often incredibly simple and blunt, yet for all our powers of reason we often miss the most basic and uncomplicated of points: Peace-loving Muslims have been made irrelevant by their silence.Peace-loving Muslims will become our enemy if they don’t speak up, because like my friend from Germany, they will awaken one day and find that the fanatics own them, and the end of their world will have begun.

Peace-loving Germans, Japanese, Chinese, Russians, Rwandans, Serbs, Afghans, Iraqis, Palestinians, Somalis, Nigerians, Algerians, and many others have died because the peaceful majority did not speak up until it was too late.

As for us who watch it all unfold, we must pay attention to the only group that counts; the fanatics who threaten our way of life.

Lastly, anyone who doubts that the issue is serious, is contributing to the passiveness that allows the problems to expand. Let us hope that thousands, world wide, read this and think about it, and send it on before it’s too late.
 

This will bring a tear or two…
 
My lead flight attendant came to me and said, ‘We have an H.R. on this flight’.  H.R. stands for human remains.
 
‘Are they military?’ I asked. ‘Yes’, she said. ‘Is there an escort?’ I asked.  ‘Yes, I already assigned him a seat’.
 
‘Would you please tell him to come to the flight deck. You can board him early’, I said.
 
A short while later, a young army sergeant entered the flight deck.  He was the image of the perfectly dressed soldier.  He introduced himself and I asked him about his soldier.  The escorts of these fallen soldiers talk about them as if they are still alive and still with us.
 
‘My soldier is on his way back to Virginia’, he said.  He proceeded to answer my questions, but offered no words on his own.  I asked him if there was anything I could do for him and he said no.  I told him that he had the toughest job in the military and that I appreciated the work that he does for the families of our fallen soldiers.  The first officer and I got up out of our seats to shake his hand.  He left the flight deck to find his seat.
 
We completed our preflight checks, pushed back and performed an uneventful departure.  About 30 minutes into our flight I received a call from the lead flight attendant in the cabin.  ‘I just found out the family of the soldier we are carrying, is on board’, he said.  He then proceeded to tell me that the father, mother, wife and 2-year old daughter were escorting their son, husband, and father home.  The family was upset because they were unable to see the container that the soldier was in before we left.  We were on our way to a major hub at wh ich the family was going to wait four hours for the connecting flight home to Virginia. The father of the soldier told the flight attendant that knowing his son was below him in the cargo compartment and being unable to see him was too much for him and the family to bear.  
 
He had asked the flight attendant if there was anything that could be done to allow them to see him upon our arrival.  The family wanted to be outside by the cargo door to watch the soldier being taken off the airplane.  I could hear the desperation in the flight attendants voice when he asked me if there was anything I could do. ‘I’m on it’, I said.  I told him that I would get back to him.
 
Airborne communication with my company normally occurs in the form of e-mail like messages.  I decided to bypass this system and contact my flight dispatcher directly on a secondary radio. There is a radio operator in the operations control center who connects you to the telephone of the dispatcher.  I was in direct contact with the dispatcher.  I explained the situation I had onboard with the family and what it was the family wanted.  He said he understood and that he would get back to me.
 
Two hours went by and I had not heard from the dispatcher.  We were going to get busy soon and I needed to know what to tell the family.  I sent a text message asking for an update.  I saved the return message from the dispatcher and this following is the text:
 
 
‘Captain, sorry it has taken so long to get back to you.  There is policy on this now and I had to check on a few things.  Upon your arrival a dedicated escort team will meet the aircraft.  The team will escort the family to the ramp and planeside.  A van will be used to load the remains with a secondary van for the family.  The family will be taken to their departure area and escorted into the terminal where the remains can be seen on the ramp.  It is a private area for the family only.  When the connecting aircraft arrives, the family will be escorted onto the ramp and planeside to watch the remains being loaded for the final leg home.  Captain, most of h ere in flight control are veterans.  Please pass our condolences on to the family. Thanks.’
 
I sent a message back telling flight control thanks for a good job.  I printed out the message and gave it to the lead flight attendant to pass on to the father.  The lead flight attendant was very thankful and told me, ‘You have no idea how much this will mean to them.’  Things started getting busy for the descent, approach and landing.
 
After landing, we cleared the runway and taxied to the ramp area.  The ramp is huge with 15 gates on either side of the alleyway.  It is always a busy area with aircraft maneuvering every which way to enter and exit.  When we entered the ramp and checked in with the ramp controller, we were told that all traffic was being held for us.
 
‘There is a team in place to meet the aircraft’, we were told.  It looked like it was all coming together, then I realized that once we turned the seat belt sign off, everyone would stand up at once and delay the family from getting off the airplane.  As we approached our gate, I asked the copilot to tell the ramp controller we were going to stop short of the gate to make an announcement to the passengers.   He did that and the ramp controller said, ‘Take your time.’
 
I stopped the aircraft and set the parking brake.  I pushed the public address button and said,
‘Ladies and gentleman, this is your captain speaking.  I have stopped short of our gate to make a special announcement.  We have a passenger on board who deserves our honor and respect.  His name is private XXXXXX, a soldier who recently lost his life.  Private XXXXXX is under your feet in the cargo hold.  Escorting him today is army Sergeant XXXXXXX.  Also, on board are his father, mother, wife, and daughter.  Your entire flight crew is asking for all passengers to remain in their seats to allow the family to exit the aircraft first.  Thank you.’
 
We continued the turn to the gate, came to a stop and started our shutdown procedures.  A couple of minutes later I opened the cockpit door.  I found the two forward flight attendants crying, something you just do not see.  I was told that after we came to a stop, every passenger on the aircraft stayed in their seats, waiting for the family to exit the aircraft.  When the family got up and gathered their things, a passenger slowly started to clap his hands.  Moments later more passengers joined in and soon the entire aircraft was clapping. Words of ‘God Bless You’, I’m sorry, thank you, be proud, and other kind words were uttered to the family as they made their way down the aisle and ou t of the airplane.  They were escorted down to the ramp to finally be with their loved one.
 
Many of the passengers disembarking thanked me for the announcement I had made.  They were just words, I told them, I could say them over and over again, but nothing I say will bring back that brave soldier.  
 
I respectfully ask that all of you reflect on this event and the sacrifices that millions of our men and women have made to ensure our freedom and safety in these United States of America.

Romanian Newspaper ArticleWe rarely get a chance to see another country’s editorial about the USA .

Read this excerpt from a Romanian Newspaper. The article was written by Mr.

Cornel Nistorescu and published under the title ‘C’ntarea Americii, meaning ‘Ode To America ‘ in the Romanian newspaper Eveniment ulzilei ‘The Daily Event’ or ‘News of the Day’

~An Ode to America ~

Why are Americans so united? They would not resemble one another even if you painted them all one color! They speak all the languages of the world and form an astonishing mixture of civilizations and religious beliefs.

Still, the American tragedy turned three hundred million people into a hand put on the heart.

Nobody rushed to accuse the White House, the Army, or the Secret Service that they are only a bunch of losers. Nobody rushed to empty their bank accounts. Nobody rushed out onto the streets nearby to gape about. Instead the Americans volunteered to donate blood and to give a helping hand.

After the first moments of panic, they raised their flag over the smoking ruins, putting on T-shirts, caps and ties in the colors of the national flag. They placed flags on buildings and cars as if in every place and on every car a government official or th e president was passing. On every occasion, they started singing: ‘ God Bless America !’

I watched the live broadcast and rerun after rerun for hours listening to the story of the guy who went down one hundred floors with a woman in a wheelchair without knowing who she was, or of the Californian hockey player, who gave his life fighting with the terrorists and prevented the plane from hitting a target that could have killed other hundreds or thousands of people.

How on earth were they able to respond united as one human being?

Imperceptibly, with every word and musical note, the memory of some turned into a modern myth of tragic heroes. And with every phone call, millions and millions of dollars were put into a collection aimed at rewarding not a man or a family, but a spirit, which no money can buy.

What on earth can unite the Americans in such a way?

Their land? Their history? Their economic Power? Money? I tried for hours to find an answer, humming songs and m urmuring phrases with the risk of sounding commonplace, I thought things over, I reach ed but only one conclusion… Only freedom can work such miracles.

Cornel Nistorescu

 GOD BLESS AMERICA ! ! AMEN!!!!

I’m concerned that a growing number of voters in this country simply don’t get it. They are caught up in a fervor they can’t explain, and calling it ‘change’.

Change what?, I ask.

Well, we’re going to change America , they say.

In what way?, I query.

We want someone new and fresh in the White House, they exclaim.

So, someone who’s not a politician?, I press.

Uh, well, no, we just want a lot of stuff changed, so we’re voting for Obama, they state.

So the current system, the system of freedom and democracy that has enabled a man to grow up in this great country, get a fine education, raise incredible amounts of money and dominate the news and win his party’s nomination for the White House - that system’s all wrong?

No, no, that part of the system’s okay - we just need a lot of change.

And so it goes. ‘Change we can believe in.’ Quite frankly, I don’t believe that vague proclamations of change hold any promise for me. In recent months, I’ve been asking virtually everyone I encounter how they’re voting.
I live in Illinois , so most folks tell me they’re voting for Barack Obama.
But no one can really tell me why - only that he’s going to change a lot of stuff. Change, change, change. I have yet to find one single person who can tell me distinctly and convincingly why this man is qualified to be President and Commander-in-Chief of the most powerful nation on earth - other than the fact that he claims he’s going to imple-ment a lot of change.

We’ve all seen the emails about Obama’s genealogy, his upbringing, his Muslim background, and his church affiliations. Let’s ignore this for a moment. Put it all aside. Then ask yourself, what qualifies this man to be my president? That he’s a brilliant orator and talks about change?

CHANGE WHAT?

Friends, I’ll be forthright with you - I believe the American voters who are supporting Barack Obama don’t have a clue what they’re doing, as evidenced by the fact that not one of them - NOT ONE of them I’ve spoken to can spell out his qualifications. Not even the most liberal media can explain why he should be elected. Political experience? Negligible. Foreign relations?
Non-existent. Achievements? Name one. Someone who wants to unite the country? If you haven’t read his wife’s thesis from Princeton , look it up on the web. This is who’s lining up to be our next First Lady? The only thing I can glean from Obama’s constant harping about change is that we’re in for a lot of new taxes.

For me, the choice is clear. I’ve looked carefully at the two leading applicants for the job, and I’ve made my choice.

Here’s a question - where were you five and a half years ago? Around Christmas, 2002. You’ve had five or six birthdays in that time. My son has grown from a sixth grade child to a high school graduate. Five and a half years is a good chunk of time. About 2,000 days. 2,000 nights of sleep. 6, 000 meals, give or take.

John McCain spent that amount of time, from 1967 to 1973, in a North Vietnamese prisoner-of-war camp. When offered early release, he refused it.
He considered this offer to be a public relations stunt by his captors, and insisted that those held longer than he should be released first. Did you get that part? He was offered his freedom, and he turned it down. A regimen of beatings and torture began.

Do you possess such strength of character? Locked in a filthy cell in a foreign country, would you turn down your own freedom in favor of your fellow man? I submit that’s a quality of character that is rarely found, and for me, this singular act defines John McCain.

Unlike several presidential candidates in recent years whose military service is questionable or non-existent, you will not find anyone to denigrate the integrity and moral courage of this man. A graduate of Annapolis , during his Naval service he received the Silver Star, Bronze Star, Purple Heart and Distinguished Flying Cross. His own son is now serving in the Marine Corps in Iraq . Barack Obama is fond of saying ‘We honor John McCain’s service…BUT…’, which to me is condescending and offensive - because what I hear is, ‘Let’s forget this man’s sacrifice for his country and his proven leadership abilities, and talk some more about change.’

I don’t agree with John McCain on everything - but I am utterly convinced that he is qualified to be our next President, and I trust him to do what’s right. I know in my heart that he has the best interests of our country in mind. He doesn’t simply want to be President - he wants to lead America , and there’s a huge difference. Factually, there is simply no comparison between the two candidates. A man of questionable background and motives who prattles on about change can’t hold a candle to a man who has devoted his life in public service to this nation, retiring from the Navy in 1981 and elected to the Senate in 1982.

Perhaps Obama’s supporters are taking a stance between old and new. Maybe they don’t care about McCain’s service or his strength of character, or his unblemished qualifications to be President. Maybe ‘likeability’ is a higher priority for them than ‘trust’. Being a prisoner of war is not what qualifies John McCain to be President of the United States of America - but his demonstrated leadership certainly DOES.

Dear friends, it is time for us to stand. It is time for thinking Americans to say, ‘Enough.’ It is time for people of all parties to stop following the party line. It is time for anyone who wants to keep America first, who wants the right man leading their nation, to start a dialogue with all their friends and neighbors and ask who they’re voting for, and why.

There’s a lot of evil in this world. That should be readily apparent to all of us by now. And when faced with that evil as we are now, I want a man who knows the cost of war on his troops and on his citizens. I want a man who puts my family’s interests before any foreign country.

I want a President who’s qualified to lead.

I want my country back, and I’m voting for John McCain.

The following has been attributed to State Representative Mitchell Kaye from GA. This guy should run for President one day…

‘We the sensible people of the United States, in an attempt to help everyone get along, restore some semblance of justice, avoid more riots, keep our nation safe, promote positive behavior, and secure the blessings of debt-free liberty to ourselves and our great-great-great-grandchildren, hereby try one more time to ordain and establish some common sense guidelines for the terminally whiny, guilt ridden, and delusional. We hold these truths to be self evident: that a whole lot of people are confused by the Bill of Rights and are so dim they require a Bill of NON-Rights.’

ARTICLE I:
You do not have the right to a new car, big screen TV, or any other form of wealth. More power to you if you can legally acquire them, but no one is
guaranteeing anything.

ARTICLE II:
You do not have the right to never be offended. This country is based on freedom, and that means freedom for everyone — not just you! You may leave the room, turn the channel, express a different opinion, etc. but the world is full of idiots, and probably always will be.

ARTICLE III:
You do not have the right to be free from harm. If you stick a screwdriver in your eye, learn to be more careful; do not expect the tool manufacturer to make you and all your relatives independently wealthy.

ARTICLE IV:
You do not have the right to free food and housing. Americans are the most charitable people to be found, and will gladly help anyone in need, but we are quickly growing weary of subsidizing generation after generation of professional couch potatoes who achieve nothing more than the creation of another generation of professional couch potatoesThis one is my pet peeve…get an education and go to work..don’t expect everyone else to take care of you!

ARTICLE V:
You do not have the right to free health care. That would be nice, but if it would turn out the same way as current public housing, we’re not interested in public health care.

ARTICLE VI:
You do not have the right to physically harm other people..If you kidnap, rape, intentionally maim, or kill someone, don’t be surprised if the rest of us want to see you put away for the rest of your sorry life.

ARTICLE VII:
You do not have the right to the possessions of others. If you rob, cheat, or coerce away the goods or services of other citizens, don’t be surprised if the rest of us get together and lock you away in a place where you still won’t have the right to a big screen color TV or a life of leisure.

ARTICLE VIII:
You do not have the right to a job. All of us sure want you to have a job, and will gladly help you along in hard times, but we expect you to take advantage of the opportunities of education and vocational training laid before you to make yourself useful. (AMEN!)

ARTICLE IX:
You do not have the right to happiness. Being an American  means that you have the right to PURSUE happiness, which by the way, is a lot easier if you are unencumbered by an over abundance of idiotic laws created by those of you who were confused by the Bill of Rights.

ARTICLE X: (should be the first amendment)
 This is an English speaking country. We don’t care where you are from, English is our language.  Learn it or go back to wherever you came from!

(and Last but not least….)

ARTICLE XI:
You do not have the right to change our country’s history or heritage. This country was founded on the belief in one God. You are given the freedom to believe in any religion, any faith, or no faith at all, with no fear of persecution. The phraseIN GOD WE TRUST is part of our heritage and history, and if you are uncomfortable with it, TOUGH!I just think it’s about time common sense is allowed to flourish.Sensible people of the United States , speak out, becauseif you do not, who will?

You think the war in Iraq is costing us too much?

Read this:

Boy am I confused.  I have been hammered with the propaganda that it is the Iraq war and the war on terror that is bankrupting us.

I now find that to be RIDICULOUS.

I hope the following 14 reasons are forwarded over and over again

until they are read so many times that the reader gets sick of reading them.  I have included the URL’s for verification of all the following facts.

1.      $11 Billion to $22 billion is spent on welfare to illegal aliens

each year by state governments.     Verify at: http://tinyurl.com/zob77

2.      $2.2 Billion dollars a year is spent on food assistance programs such as food stamps, WIC, and free school lunches for illegal aliens.

Verify at: http://www.cis..org/articles/2004/fiscalexec.html

3.      $2.5 Billion dollars a year is spent on Medicaid for illegal aliens.

Verify at: http://www.cis..org/articles/2004/fiscalexec.html  

4.     $12 Billion dollars a year is spent on primary and secondary school

education for children here illegally and they cannot speak a word of English!

Verify at:  http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.0.html

 5.      $17 Billion dollars a year is spent for education for the

 American-born children of illegal aliens, known as anchor babies.

Verify at http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html

6.  $3 Million Dollars a DAY is spent to incarcerate illegal aliens.

Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html

7.  30% percent of all Federal Prison inmates are illegal aliens.

 Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html

8.&nbs p; $90 Billion Dollars a year is spent on illegal aliens for Welfare & social services by the American taxpayers. Verify at:

  http://premium.cnn.com/TRANSCIPTS/0610/29/ldt.01.html

9.  $200 Billion Dollars a year in suppressed American wages are caused  by the illegal aliens. Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt..01.html

10.  The illegal aliens in the United States have a crime rate

that’s two and a half times that of white non-illegal aliens.  In particular,  their children, are going to make a huge additional crime problem in the US Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0606/12/ldt.01.html

11.  During the year of 2005 there were 4 to 10 MILLION illegal aliens that crossed our Southern Border also, as many as 19,500 illegal aliens from Terrorist Countries.  Millions of pounds of drugs, cocaine, meth, heroin and marijuana, crossed into the U. S from the Southern border.

Verify at: Homeland Security Report:  http://tinyurl.com/t9sht

12.  The National Policy Institute, ‘estimated that the total

cost of mass deportation would be between $206 and $230 billion or an average cost of  between $41 and $46 billion annually over a five year period.’

Verify at:  http://www.nationalpolicyinstitute.org/pdf/deportation.pdf

13.  In 2006 illegal aliens sent home $45 BILLION in remittances

back to their countries of origin.

Verify at: http://www.rense.com/general75/niht.htm

14.  ‘The Dark Side of Illegal Immigration: Nearly One Million

Sex Crimes Committed by Illegal Immigrants In The United States .’

Verify at: http://www.drdsk.com/articleshtml

The total cost is a whopping $ 338.3 BILLION DOLLARS A YEAR. 

Why are we THAT stupid?

If this doesn’t bother you then just move on.  If, on the other hand, if it does raise the hair on the back of your neck, I hope you forward it to every legal resident in the country including every representative in Washington, D.C. - five times a week for as long as it takes to restore some semblance of intelligence in our policies and enforcement thereof.