AIG spells nationalization of entire insurance industry

A I Jeez

The Wall Street Journal reports that since receiving government aid, insurance giant AIG has begun greatly underbidding its competitors in the insurance industry.  Fed Chair Ben Bernanke acknowledges this practice, and believes it is necessary for AIG to do this, in order to gain enough marketshare to become profitable.

With billions of government handouts, AIG is able to offer peerless premiums.  In a free market, offering such low premiums would be corporate suicide.  But AIG is not a free market participant.  It has government backing.  Bernanke and Treasury Secretary Timothy Geithner have, on numerous occasions, voiced their intent to do whatever is necessary to keep AIG from folding. In this context, risks that would normally bankrupt the company do not restrict its behavior, because its liquidity flows from a seemingly bottomless barrel, the purse of the citizenry.  Losses from these risks will continue to be subsidized, and those subsidies will encourage more risks, and bring on more losses.

Other insurance companies cannot compete with a company that has unlimited liquidity.  This leaves their executives with a dilemma: they can keep their premiums high and non-competitive, and lose all of their customers; or they can lower their rates to meet AIG’s, keep their marketshare, and become illiquid when they are forced to pay out to misfortunate customers.  Both of these options will end in bankruptcy.

When AIG’s competitors are nearing bankruptcy, one of a few results may play out:  they may fail outright, leaving their marketshare available to AIG; they may be bailed out by the government, which starts them on AIG’s path of neverending losses; or, they may be purchased by AIG.  In each of these results, a government-funded monopoly over the insurance industry is established.  This monopoly, like all monopolies, will suffer unnecessary costs and miss opportunities to innovate.

The added costs of a non-competitive insurance industry will be great, even in the unlikely circumstance that it is fully funded by premiums.  It is likely, however, that the monopoly would evolve into a nationalized insurance company, or a government service, rather than revert back to a private insurance corporation.

If AIG’s insurance role becomes a government service, it appears that the costs of that service will be borne by everyone who uses dollars, as the Treasury has started printing large amounts of currency to pay its bills.  This inflation is perhaps the most regressive form of taxation, because it hurts those who are not wealthy enough to protect themselves properly from its effects.

Open bailout opposition letter to Congress

Stolen from you by U.S.

“That government is best which governs the least, because its people discipline themselves.” – Thomas Jefferson

There is a lot of hype in Washington this week, a lot of short-term thinking, but very little honest reflection and philosophically sound governance based on the long term prospects of the American economy.  Jefferson was right: our financial markets have fallen into a cycle of government dependence and therefore no longer discipline themselves.  The American economy has lived beyond its means; to deny this is to declare yourself ignorant and unfit to govern.  We have floated on a cloud of credit, and believed ourselves to be in heaven, and though we have ventured far from earth, the latest liquidity squeeze has allowed us to see just how far we must fall when our economy’s bill comes due.  Though the $700,000,000,000 proposal before you may indeed postpone the payment date, the American people will eventually have to pay dearly for living on money that has been given value–not by production–but by irrational faith, and you can be certain that every postponement will make that future payment more painful than it would be today.  Do not be convinced that there are no free market solutions to this crisis.  The unspeakable ideal of economic freedom will pump more liquid capital into our financial markets than the government ever could, and more importantly, the money generated by such a system would be sound and valuable.  The chronic risks of moral hazard and inflation this bailout poses far outweigh the risks of a brief credit crisis caused by market-liquidated debt.

We cannot become wiser before we admit that we have been foolish in the past.  Market interference was, in most instances, foolish.  The Community Re-Investment Act was foolish.  Taxing capital gains was foolish.  Turning over Congress’ constitutional money-coining responsibility to a private, secretive organization was foolish.  Encouraging irresponsible lending through never-ending taxpayer bailouts was foolish.  Artificially low interest rates were foolish.  Price manipulation was foolish.  Giving up on sound money was foolish.  Losing faith in freedom was foolish.  Ours, however, is not a fated existence.  Nowhere is it written in stone that we must remain foolish, or that we cannot obey Constitutional principles.  If, as Senator John McCain likes to say, you “came to Washington to change Washington,” now is your chance to realize your lofty dreams.  Crisis is the proper time for reform.  Now is the time to embrace real capitalism.  The American people should not be told to fear freedom, as they are being told now, but to embrace it.  The time has come for Americans to be rewarded for their own successes, and held accountable for their own mistakes.  The time has come for the ambitious legislators in Washington to stop fiscally abusing the children of this nation.

1994, 2000: Remembering the words of Goldwater and Reagan, American median voters want smaller government and balanced budgets, so they elect Republicans; in return, they receive the most rampant growth in government (and public debt) this continent has ever known.  2006: the median American voters want out of a conflict that is unrelated to their security or welfare, so they elect Democrats; in return, the war’s funding is not cut off but greatly increased.  2008: the American people want no taxpayer bailouts, they want to end the bubble-blowing policies of the Federal Reserve, and they want to stop the growing cycle of debt that has ruined a once free economy; in return, they are presented with the largest taxpayer bailout ever, a more powerful and secretive central bank, the largest economic bubble-blowing scheme ever contrived, and more debt than they can ever afford to pay off.

The blindfold has been removed from the American people.  They are awakening to a pattern that reveals self-government as a myth.  The extraordinary actions of the federal government are only serving to remove its mask, revealing its nationalist, socialist, imperialist, authoritarian, unresponsive, evil face.  We can accurately predict that, on matters of true importance, when a particular course of action is supported by more than 70% of the American people, their government will pursue the opposite course, pretending the people are a force of no consequence–an attitude to be expected of King Louis’ court, but not of a republic’s elected leaders.  I need not remind you of the French response to that attitude.  The United States government has lost so much legitimacy that it may not survive the latest proposal, should it pass.  The American people are well-aware of the truly criminal nature of any financial bailout; a huge one will both injure and offend them.  Moreover, it will not come without consequence; their lanterns are burning, their pitchforks are raised, and they are prepared to halt the criminal acts of this government, should it become necessary for them to do so.

Want some bad debt? Bailing on America.

Rights wronged

“I do solemnly swear that I will faithfully execute the Office of President of the United States, and will, to the best of my ability, preserve, protect, and defend the Constitution of the United States.” – Presidential Oath of Office in its entirety

“Stop throwing the Constitution in my face!  It’s just a goddamn piece of paper!” – George W. Bush, (so help us God)

“Go f*** yourselves, America.” – U.S. Secretary of the Treasury Henry Paulson (paraphrased)

“Amen, Mr. Secretary!” -Barney Frank (shockingly not a retard…according to standard definitions), and Christopher Dodd (aka, Oppressive Slimeball)

The unwritten American law: when any financial institution makes any bad loan anywhere, that institution is not accountable for its error: the American taxpayer is.  Actually, for the sake of preserving the market (and when they say “preserving”, they mean “undermining”, the American taxpayer will now prop up any large corporation, assuming it is a complete and total failure.  GM, Ford, Bear Stearns, Lehman Brothers, IndyMac, AIG, Fannie Mae, Freddie Mac, and every other non-competitive corporate loser: do not worry, because the United States no longer believes in capitalism.  Therefore you cannot fail; in fact, as a reward for your magnificently unsuccessful business models, you get free money from the American taxpayer.  The D.C. mafia are perfectly happy to crap all over the average American in order to sustain a politically friendly (albeit criminal) banking system.  What’s the old saying about America’s hospitable nature? Give me your swindling, your greedy, your corporate jet-flying masses?

Guess what, America? Henry Paulson is officially above the law.  $700,000,000,000 is not nearly enough; $2,000,000,000,000 is far from “enough” for the socialist journey upon which your government now embarks.  There will be more to pay, more to print, more to steal from your labor.  This new socialism is insatiable.

America does not have leaders anymore.  It has rulers.  It has owners.  They rule you, they own you, they have spent over a century subverting the supposedly binding agreement between you and them called the U.S. Constitution, and they have the power–through formal taxes and inflation–to take every last real dollar you ever saved, and they will, because their cars aren’t fast enough, their jets aren’t new enough, their diamonds aren’t big enough, and they know you are a bunch of suckers who still think the Presidential election matters.  Wake up and read the Constitution.  You’re getting royally screwed, America, and by a creature many of you still consider friendly: the federal government.  This President, this Congress, these judges and bureaucrats, these candidates–the agents of change–are, for the most part, your masters and your enemies, and if you let them, they will strip you of everything but your soul.

When you ask why or how this could happen–how the freest modern society could fall so far, and become economically depressed and politically oppressed–they will respond as they do now, explaining that they are not accountable, but you are–and sadly, in a way, they will be right.  The further their explanation strays from the truth, the more oppressive they will become, the more dangerous dissent will become to them.  The Constitutionalist will take on the foster name “terrorist”.  The reflective person will be legally termed the dangerous person; the truthful person: an enemy of the state.  As a wise man once said, “truth is treason in the empire of lies.”

Tough love for America (not hate)

The storm is brewing.

For those who understand the economic structure of the United States, and hold–like myself–a neoclassical economic philosophy, the short term and long term outlooks for the status quo are gloomy for the individual, and in turn, for the nation as a whole. An economic system whose stated goals are maximum employment and minimum wage will self-destruct, because it steadily reduces the productivity of labor. Inevitably labor will lose efficiency, wages will stagnate, banks will fail, and inflation will soar; and then there will be a period of pretended stability, during which the average American worker seems less “broke” than usual. This process will be repeated until the government’s burden is greater than the nation’s production, at which point something has to change (probably not peacefully).

There is no safe store of value in the United States today, which is why the nation has a negative savings rate. The system itself is orchestrating its own demise, and I am ready to see the depths of that failure. It is true that I would like to see the United States economy collapse, but only so that it may be rebuilt on a foundation of solid principles–principles of individual liberty and personal responsibility that have all but disappeared from our society.

For my “unpatriotic” short-term wishes and my lofty long-term dreams, my character is under assault by both wings of the ruling elite. When analyzing my character in respect to the U.S. economy, Rush Limbaugh and Sean Hannity quizzically find themselves on common ground with the Al’s of Sharpton, Gore, and Franken, in the collective conclusion that I hate America. But who are the true haters of America–those who wish to control markets and individuals, all of whom show a disappointing lack of faith in their fellow humans, or those who wish to set them free, and rest their faith in the individual? Individual liberty and personal responsibility are the pure sources of our streams, tributaries, and mighty rivers of wealth. When we treat the reservoir of wealth but neglect its sources, we err tremendously, because we unwittingly produce the pollutants we wish to remove.

It is not that I want America to fail–I want America to succeed, but I know it will not if it continues on its present path–a path lined by the barbs of corporate media and political apathy, and leading in the direction of insurmountable debt, insatiable public entitlement, and a tidy totalitarian hell. This America is the one I wish to see fail, and in truth, it is not America at all. The America I love no longer exists. Socialists of all parties disbanded it generations ago, but it will be restored. The inextinguishable embers of liberty will burn brightly once again, fueled by political revolution, only the timing of which is uncertain.

Letter to the regulatory proponent

More regulation is not helping America

“Despite the long term damage to the economy inflicted by the government’s interference in the housing market, the government’s policies of diverting capital to other uses creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they had otherwise been had government policy not actively encouraged over-investment in housing.” – 07/12/2002 (in House, Congressman Ron Paul, R, TX)

The economic problems we are experiencing now are a result of regulation, and we actually wanted them to happen, so that we could have an excuse to propose more regulation. We predicted this recession would happen way back in 2002. We knew it would happen all along, and we were actively warned about it, and we listened, and we decided to let it happen anyway. The Democrats knew it would happen, and so did the Republicans, and they could have stopped it. They didn’t because, quite frankly, they don’t give a sh** about you or me, or anyone else in this country that doesn’t directly help them gain or retain power, or help propagandize people like us. If you think regulation is the answer, read up on Adam Smith and Friedrich Hayek, because you’ve been relying on the “news” for economic information, and they’ve got you painfully brainwashed. Americans now live like feudal serfs, working all of their lives, and never controlling their directions. Socialism is more similar to the tyranny of the past than to the prosperity of the future.

Other things you should know, in your infinite economic wisdom, before you take over the free market and start planning the economy: medical care is only expensive because it is overregulated. any economist will tell you that competition brings down prices, and the government is helping big health/drug companies keep competitors out. the market mechanism actually works pretty well with very little regulation, as long as collusion and monopoly are avoided wherever possible.

And lastly, the reason people work all of their lives at a grueling job for little pay is because the government makes it really hard for them to offer their services at a marketable price, by creating artificial labor surpluses. Workers also give a sizeable percentage of their earnings to government. They also have difficulty using their skills for their own profit because starting a business requires them to fill out long, expensive licensing forms, and they often are discouraged by the added tax burden. Many feel like they can’t go out on their own because they do not know the tax laws well enough, and are afraid they will break the law while trying to help themselves. However, all of these situations help the corporation for which they endlessly slave away, because it keeps the upstarts down. Hooray for taxes.

Nationalists on the Right, Socialists on the Left, compromise for a planned economy with Muslims in concentration camps

The following was a response to the letter that appears below it, and I share as proof that neoconservatives are a little confused about reality–too much Fox News perhaps.  The writer of this rudimentary stream of consciousness–if it can be called that–is to remain anonymous.  I would not sacrifice a friend for a political disagreement, regardless of his obvious flaws.  My next entry will be a response to this.

Yes, you are crazy. While you may have a long grocery list of complaints, you seem to be ignoring one of the fundamental truths in life; True freedom, and true patriotism, begin with personal responsibility. Personal responsibility means carrying your share of the load. Think on this for some time before you launch into criticism of others. If every one of us did our part, there would be no need for a Nanny State. However, your laundry list is not linked together by any common ideals, except maybe that you poetically copied liberal talking points (which you also lamented, ironic no?). Personally, I find empty liberal rhetoric to be one of the most repulsive things in our society, if you want to attach values to personal interests.

Americans do not incite violence, but we sure do use it when attacked or when necessary. The deaths of our soldiers is very sad and unfortunate, but so would be the deaths of innocent Americans going about their business in any number of potential terrorist targets. If you are so logical, as you espouse in this letter, how can you not link the conflict in Iraq with the absence of terrorist attacks here, or even in Europe (not since London has there been a large attack). Also, being the true defender of freedom that you are, how do you fail to link the concept of personal responsibility into freedom. Whether or not you agree with invading Iraq, we did it. That cannot change. We must take responsibility and help the country rebuild. Please do not respond to this with the typical empty liberal smears about empire building, controlling the Iraqi government, etc, because we are blatantly doing none of that. We have reaped no huge “oil gains” from the war, and we are not telling Iraq how to run their country any more than we bargain with other world governments. We are providing security, both for Iraq to rebuild, and for ourselves.

Further, you are preaching to the choir about the wastes of big government. Take your song and dance to someone who disagrees about high taxes, bad economic policy (in the whole Bear Stearns mess) if you want to enact change. But remember, change always begins at home.

“Iraq is the perfect stage for the start of Jihad” – Osama Bin Laden. Translated: if we win Iraq, the jihad rolls on.

Letter to the neo-American



I wrote the following to a dear friend and fellow American who will remain anonymous:

When I reflect on our conversations, and consider the compassionate and insightful person I know you to be, I find it hard to believe that you sincerely support the hostilities in Iraq, or that you cannot see through the confines that social planners have built around you. I would like to believe that this world is a bad dream, that the free and prosperous people of our continent could not be so overwhelmed by the narrowness and greed of an unpardonable elite. I would like to think that Americans have always refused to initiate violence–that we, as a nation, have always done what was right for everyone. I would like to wake up tomorrow morning, and be in a country where there are no talking points, no significant news concerning the federal government, no significant power or money in Washington, where the middle class feels accomplished and alive and fearless and capable every single day, and candy bars cost a penny, and freedom really does ring–it is a dream that once was near reality, in the nation firmly built on the philosophical foundations of Adam Smith and John Locke, in the constitution. Instead I will wake up to what, in this nation, should be only possible in a nightmare. I will have to gather my tax information together, and file a 1040, and write a check to the U.S. Treasury, knowing I will never see that money again, and reflecting that it may be spent killing an out-of-work delivery person in a place far away, or bailing out wealthy bankers who got a little too greedy, or throwing more money at a problem no amount could solve, or taking the home of an elderly couple so that it may be bulldozed, and the land granted to some Congressman’s golfing buddy, who specializes in developing strip malls. I will endure the artificially high prices of a market handcuffed by collusion and regulation, and hear about a recession from bank-employed market strategists whose jobs are in no danger; and through all of this, ordinary Americans will come to know the difference between being broke and being impoverished–between being a slave with a generous master, and being a slave with a discontented one–when with all of their honest labor and goodness, the people of this country should have known neither. It is difficult today to read the words of Jefferson or Paine, Goldwater or Reagan, and not become frustrated or saddened by the nuttiness of a nation that has given up on the idea of liberty, only to serve the ever-changing, highly propagandized collective ideal made up by a tiny elite in a city hundreds of miles away. My aim in writing you is only to ease the sadness and frustration I feel for the individuals of our society, and restore my own confidence in my worldly pursuits; I know these things don’t interest you all that much, and I certainly will return the favor by humoring your repulsive stories of creepy crawlies inside dead bodies. But, I feel that if I can awaken you to these issues–that if you, the American _____ ______, in your infinite compassion and enviable wisdom, can recognize the recent errors of our nation’s ways and want to see them corrected before they become our greatest mistakes–liberty may still find a rightful home here. So tell me, am I crazy?

Respecfully,