The Liberal Lie, The Conservative Truth

Exposing the Liberal Lie through current events and history. “Republicans believe every day is the Fourth of July, but the democrats believe every day is April 15.” ****** "We will always remember. We will always be proud. We will always be prepared, so we may always be free." RONALD REAGAN

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Two Reagan conservatives who believe that the left has it wrong and just doesn't get it!

HISTORICAL QUOTE OF THE WEEK - "Always bear in mind that your own resolution to succeed is more important than any other." ABRAHAM LINCOLN

Sunday, September 28, 2008


We have listened for more than a week now as Barack Obama and Democrats like Barney Frank and others continually blame John McCain, the Bush Administration and Republicans in general for the massive collapse on Wall Street that has taken place.

Unfortunatly this canard being spewed by Democrats is playing well with the American people in light of the $700 billion dollar bailout which is extremely unpopular and is being pushed by the Bush Administration. A move that because of continual Democrat obstruction over the past ten years in preventing Republicans from actually regulating Fannie Mae and Freddie Mac where this problem began then working its way through the financial system and providing regulatory oversight of these ,"government sponsored enterprises," which portrayed themselves as the guru of , "affordable housing," thus recieving backing by all Democrats and a few Republicans with Democrats accusing Republicans who were trying to regulate these GSE's of creating a witch hunt.

Using the affordable housing issue as a screen, these GSE's, Fannie Mae and Freddie Mac were allowed because of continual blocking by Democrats to continue virtually unregulated as they flooded the market with sub prime bad loans many of which were bought up by institutions like Lehman Brothers and Merrill Lynch which have since gone belly up along with Fannie and Freddie.

Now because of the bailout caused by this Democrat debacle, Republicans who have warned for years and tried to force regulatory oversight to prevent the collapse are taking a hit since the GOP is now faced with being the party in charge of the White House when saving the financial markets is necessary and keeping this from having a further ripple affect on the rest of the economy.

I have already posted about the 2005 move by Republicans which was co-sponsored by John McCain on the Senate floor which would have prevented this debacle from happening if it were not for blocking by Democrats. The 2005 Federal Housing Regulatory Act which was introduced in committee by GOP Senators Elizabeth Dole, John Sanunu and Chuck Hagel is considered to be the most important piece of economic legislation of the 109th Congress. After McCain's co-sponsorship on the Senate floor, Democrats blocked the bill through proceedural measures thus allowing it to die without a vote.

Additionally Democrats have been spending the week claiming that deregualtion by Republicans was the cause of this financial meltdown when just the opposite is true. As a matter of fact the very deragualtion in the banking industry that Democrats are crying about allowed banks to attract more than $100 billion dollars in new capital in the last year replacing their sub prime related write downs allowing them to weather this financial storm. It is also deregulation that has allowed the banking acquisitions of Bear Sterns and Merrill Lynch saving taxpayers billions in having to resolve these two investment firms.

Other deregulation by Republicans are found in long-distance telephone rates, the trucking and airline industries and securities brokerage which has actually reduced cunsumer costs because of

During the attempt by Republicans to regulate the GSE, Democrats lead by Barney Frank and Christopher Dodd accused regulatory minded Republicans of attempting to end affordable housing and claimed that it was a ploy for the rich which is a typical Democrat mantra. When in fact the regulatory legislation that was being pushed by Republicans recognized the coming of the meltdown we have seen and would have stopped it well before it affected the financial markets thus the need for this massive bailout would have never existed.

Other Democrats like Barack Obama sat back and quietly looked on as this was happening and only recently when they have seen a political opportunity jumped on the regulatory band wagon in order to blame Republicans, John McCain and the Bush administration.

All the while Obama and his Democrat cronies recieved hundreds of thousands of dollars of campaign contributions from Fannie Mae and Freddie Mac which looks to have bought their blocking and their silence. These campaign donations did NOT come from individuals as Democrats have been trying to claim but from Fannie and Freddie's Political Action Committee or PAC.

Now these same Democrats who fought regulation which would have prevented this debacle are deriding Republicans as the cause and placing the major blame on Bush and McCain who both time and again tried to stop this collapse.

"I think the responsibility that the Democrats have may rest more in RESISTING efforts by REPUBLICANS in the Congress to put some standards and tighten up a little on Fannie Mae and Freddie Mac." This quote comes from Bill Clinton.

This Democrat hypocrisy about the Wall Street collapse and in using the terms, "main street," in order to indear themselves as the saviors and the caring mother hen of the people and terms like ,"depression," in order to scare voters is not only one of the largest political scams in our history but is a farce that makes Watergate look like a walk in the park.

Ken Taylor


Blogger Gayle said...

Excellent take on all of this BS, Ken! I agree with you completely!

You and I and all of our conservative friends know that if the Dems can't lie they can't talk!

I'm not for any bail out. I believe we can solve this a lot faster than the government can. They're going to do more harm than good, but if they do pass this bill, they had better all be prepared to lose elections because the White House and the offices of everyone involved in trying to make a deal are getting thousands of calls warning them that they had better not pass it.

I heard this morning that the amount had been whittled in half - $350 billion instead of $700 billion. I still think it's a mistake. Government intervention in the market is not a good thing. And what about that crappy corporation Acorn? Are they going to give it money too? Gads!

1:06 PM, September 28, 2008  
Blogger Rob said...

Ken, you clearly do not understand the issue.

The problem is not a result of Freddie and Fannie. They didn't help the problem, but they are not the cause of the problem. The collapse of the financial industry is a direct result of Wall Street greed.

Lehman, Bear Stearns, Merrill, etc. are the ones who created Mortgage Backed Securities (MBS's). They bought up packaged up mortgages 1000 at a time. They then created derivative financial instruments that they sold to willing investors. The problem is that these financial instruements are highly speculative and are predicated on housing values continuing to rise - which they cannot do indefinitely. Until recently, when the housing market turned, these same Wall Street firms made billions in profits. Now they are seeking a government handout to protect themselves from their foolish mistakes.

Freddie and Fannie didn't create MBS products - Wall Street firms did. The lack of regulation on these instruments is the problem, not on Freddie and Fannie.

Blaming Freddie and Fannie is just plain silly. It is like blaming the company that makes bullets for a murder committed by the individual who used a gun.

1:09 PM, September 28, 2008  
Blogger Rob said...

One other point - do you know how I know this is not just Freddie and Fannie's doing? If you look at the foreclosure statistics, only about 1 percent of all home mortgages are in foreclosure right now. There are another 3-6 percent of mortgage loans (depending on the stats you are looking at) that are behind in their payments. That means that about 95 percent of mortgages in this country are being paid on time.

These are indisputable facts and these figures are not dangerously high - certainly not high enough to bring down the financial industry by themselves. It is the overly complex, high speculative, unregulated MBS derivative products that are the problem.

Here is the problem I have with the whole $700 billion bailout. It is literally just a very small amount relative to the tens of trillions of dollars of MBS's that the Wall Street firms have and which are now at risk of collapsing because of falling home values.

1:11 PM, September 28, 2008  
Blogger The Liberal Lie The Conservative Truth said...

Rob Freddie and Fannie were the start and additionally they held that vast majority of these bad loans. Yes greed has a lot to do with the situation, , the greed in seeing a cash cow in the form of these quick money making sub prime loans and buying them up like kids in chocolate.

Had the GSE's been regulated years ago as the GOP tried to di this debacle would have been far less if at all than it is now.

Why is it also that when you disagree with me your first response is, Ken you clearly do not understand ? Could it be that my understanding does not follow the same line of siccession in how this debacle got started and was ultimatly allowed to continue by Dems ?

Gayle and Rob, I hate the idea of this bailout. To have the American taxpayer pay for this debacle is disgusting. But I also understand the ripple affect it is having and can have on the entire economy if it is not halted. At least it does look like it will not all go to purchase these bad loans but a form of FDIC insurance will be available to allow these companies to get their act together.

At least they will be required to take a lions share of the financial responsibility because of those in the GOP who McCain was able to finally bring to the table by his presence in Washington , the GOP House members who finally had their voice heard and have had this part of their plan adopted!

2:38 PM, September 28, 2008  
Blogger Rob said...

Ken, when I say you don't understand an issue (and I don't always say it), it is for the very simple reason that your posts make little sense if you did understand the issue that I question you on.

By what you posted today, it seems clear to me that you simply do not know what a Mortgage Backed Security is or what the bailout is intended to do.

Keep in mind that the Bush/Paulson plan has nothing to do with buying up individual mortgages or preventing foreclosures. It is to buy up billions of dollars in MBS instruments that have lost value on Wall Street. There is a huge difference.

Do you even know what an MBS derivative is? Correct me if I am wrong, but I don't think you do. If you don't know what an MBS is, then you do not understand what the bailout is all about.

Freddie and Fannie have their problems, but most certainly they are not the reason for the collapse of Wall Street for the reasons I stated above.

I don't really care if you believe that they are the root cause of the problem. It is completely wrong and it is just silly when one considers the reality of the MBS issue, but if you want to take a position that is not based in fact then be my guest. Other readers should learn more because the conclusion you draw is just plain wrong - this is not an opinion, it is a fact.

I would be happy to explain it to you (or any other reader) if you have questions, or you can choose to remain in the dark - that is up to you.

3:02 PM, September 28, 2008  
Blogger The Liberal Lie The Conservative Truth said...

Rob, I understand an MBS, basically a set of mortgage loans whose cash flow is backed by the principle and the interest payments.

When so many of these loans collapsed due to default of the loans by people who did not have the capability to pay them back, this is what has cuased the huge default that led to the collapse.

Investment companies like Lehman Brothers and Merrill Lynch greedily bought up massive amounts of these cash cows and as such when they were in default it basically killed there portfolio and cash flow. Causing bankruptcy!

The bailout is designed to purchase these MBS from the market in order to stop the drag they are causing by having all of this dead weight on the market because the value of these is only a fraction of what they originally were which makes them just a load of bad paper.

All of this began with the corruption and unregulation of Fannie and Freddie and had they been placed under control years ago when the GOP was trying to foreseeing this collapse and the affects it would have on all of Wall Street as well as the ripple on the rest of the economy this could have been avoided.

These to GSE's were allowed to go unchecked and using the guise of affordable housing grew so large and shared the wealth , so to speak, with Wall Street and especially the large investment companies creating a bubble that being left unchecked had to burst and that is what it did when this melt down began.

Yes it is greed and corruption but Fannie and Freddie are the beginnings and could have been the end if they had been stopped.

While now they only comprise a portion of the collapse their unregulated use of bad loand practices which reverberated throughout the financial community caused this whole debacle.

Now we have worthless MBS's that that part of the bailout will place in limbo to remove their drag from the market and allow breathing space to regroup and hopefully have them repurchased at a profit in the future.

Having a good protion of this useless paper bailed out in the form od FDIC type insurance to force these companies to share the burden is at least some progress away from government controlled situations that I despise.

3:27 PM, September 28, 2008  
Blogger Rob said...

Your description is close, but your assumptions about the issue are still wrong. Just as I thought.

You do recognize that the default rate on home mortgages is not much different than at any other time in the history of home mortgages? Again, only 1 percent of home mortgages are in foreclosure. Do you think it is higher than that?

If you accept that defaults are not all that significant - and they are not relative to any other time - then you must also recognize that blaming Freddie and Fannie is just plain silly.

The problem is that Wall Street firms created a complex and ultimately faulty investment security - the MBS. Fannie and Freddie had nothing to do with the creation of the MBS.

Investors are not buying mortgages when they purchase an MBS, they are buying an artifically-created investment derivative from mortgages. The problem is that Wall Street firms overvalued the assets in what amounts to the world's most expensive Ponzi scheme. They overcommitted to investors based on the idea that home values would rise indefinitely. Now as home values plummet (through normal market forces), they are recognizing that they issued out tens of TRILLIONS of dollars of MBS's through a faulty scheme for pricing that they cannot possibly pay back.

If you think that the problem is mainly because Freddie and Fannie have too many mortgage loans in default, why isn't the government just buying up these home mortgages? BECAUSE THAT IS NOT THE PROBLEM. It is the faulty investment vehicles themselves that are the problem. No matter what happened to Freddie and Fannie, the MBS's were doomed to failure unless housing values rose forever (which is just impossible).

Taking a few of the MBS's off the books of Wall Street firms - the same firms that created them - won't actually do anything. There are literally trillions of dollars of bad MBS's in the system. That is why I do not support the bailout.

The 200 economists from around the country wo don't support the bailout don't support it for largely the same reason.

The free market should be allowed to flush out the big Wall Street firms who made the bad bets on MBS's. It will be painful, but eventually smaller and mid-size banks will get larger and will replace them. Simple market forces should be allowed to play out.

4:49 PM, September 28, 2008  
Blogger The Liberal Lie The Conservative Truth said...

I agree that market forces are the best solution that is why I like the idea of the FDIC type insurance rather than just straight buyout money.

But Rob you have to admit that the faulty loans which became huge cash cows are what drove investments which eventually lead to the collapse and those loans did for the most part either originate in or because of the Fannie and Freddie example.

Had the loans not been there in the first place these faulty MBS's would not have been in existance.

While only a small percentage of the homes are in forclosure there are a considerable more on the books in default but not yet forclosed because the debt is not being paid. This to adds to the bad paper.

Again the bubble created by the bad loans and the huge housing market which was also in some ways associated with the loans because builders sensed a false market in part because the sub prime market made home mortgages available to a large number who would not qualify had the criteria for home loans not been losened in order to meet the pressure of the affordable homes idea also through Fannie and Freddie.

I will admit that it is good to hear you talk about free market solutions. It does show a fiscally conservative side that I had not seen in you before ! LOL

I do not like government solutions for market problems. I had many misgivings about the AIG bailout not the least of which is the 79% control that the government has now because of the 86 billion dollars. Government control means the doom of any business.

I understand that some regulatory needs are necessary to control greed and corruption that is the very reason the SEC was created in the first place after the crash of 29.

But a free market can only be a free market if it is allowed to solve its own problems and handle its own trouble makers. The problem is that many of these trouble makers have been allowed by their own companies to get out of control.

That is also why Freddie and Fannie were doomed to failure because they are government sponsored and politcs has had control preventing necessary oversight. And the evidence shows that the GOP pushed for that oversight while Democrats claiming to protect the affordable housing issue prevented it.

The investigations that are beginning by the FBI of Fannie, Freddie , Lehman Brothers and AIG will be interesting to say the least.

6:03 PM, September 28, 2008  
Blogger Rob said...

It is your party's President that wants to socialize everything - he is the one who wants to end American capitalism. Dems didn't nationalize Freddie and Fannie. Dems didn't nationalize AIG. Dems believe in the free market, but it is the Dems who have always pushed for regulation because unfettered capitalism is how we end up with things like MBS's - which is the cause of the Wall Street/financial system meltdown.

I completely disagree with you that Freddie and Fannie created the problem, or that mortgage defaults are the cause of this problem. They contribute to the problem - certainly. But, the creation and spread of the MBS's is the problem.

I have an easy way to argue this. You and I - the American taxpayers - now own Freddie and Fannie. There is no risk to Wall Street firms or their MBS's from defaults on Freddie and Fannie mortgages. These mortgages are backed by the full faith and credit of the United States.

Yet still, Wall Street is crashing. If it was as simple as a some bad loans, Bush's socialization of Freddie and Fannie would have taken care of the problem.

The fact is that the mortgage default rate is not dangerously high, it is about what we would expect in a normal downturn. It is the MBS instruments themselves that are the problem.

6:49 PM, September 28, 2008  
Blogger Marie's Two Cents said...

Great Video Ken,

You know if there was a Republican to be blamed for all this he would have already been named, tarred, feathered, career destroyed and in jail by now.

1:38 PM, September 29, 2008  
Blogger Mike's America said...

Rob: It is YOU that "clearly" doesn't understand the issue.

Fannie Mae and Freddie Mac were the fuse on the powder keg.

Get a clue Rob.

P.S. Ken: That video lays the blame where it belongs. No wonder Rob doesn't want to hear it.

1:18 AM, September 30, 2008  
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