Armed Forces Day ... Alan Caruba

 Armed Forces Day

By Alan Caruba

Saturday, May 21, is Armed Forces Day. Unless you are on active duty, a military family member, or a veteran, I suspect this is one national holiday that slips under the radar of most Americans.

I am a veteran, U.S. Army, Second Infantry Division, Second Engineer Battalion, formerly based in Fort Benning, Georgia. If you have ever served in the military, it is highly unlikely you will ever forget the unit in which you spent the most time. Military life indelibly imprints itself on all who have served.

Like my generation and earlier ones, I was conscripted for service by what was called the “Draft”. It ended in 1973, but young men between 18 and 25 must still register for Selective Service in the event a really big war breaks out. I am sure the voluntary military is sufficient, but it worries me that we are taking a great toll on the young men and women in combat zones serving repeated tours of duty.

To my good fortune, I never saw combat, but I look back on the experience fondly because it taught any number of useful lessons. For many it was their first experience with the need to practice a measure of self-discipline. Orders are issued. You obey them. It is the nature of the military that it takes in boys and teaches them to be men.

You have no doubt noticed I have written that it “teaches them to be men.” I do not much care for the creeping feminization of our military. I don’t much like the inclusion of women in the military except in an ancillary capacity exclusive of battle. I understand times have changed, but that doesn’t mean that human nature has.

I don’t believe the military is a place for homosexuals. Bill Clinton tried to integrate homosexuals in the military and was met with such resistance from “the brass” that he saddled it with the “Don’t Ask, Don’t Tell” policy, an invitation to hypocrisy. Recently there was a report that Navy chaplains had been told to get ready to perform same-sex marriages, but that idiotic idea was swiftly quashed, presumably in the name of morality and common sense.

If I sound like some cranky old man nostalgic for “the old days”, I would remind you that, for me, the old days were the Cold War that included some hot wars fought in Korea and Vietnam. From the days of General MacArthur onward, American presidents and Congress had been told not to fight a war in the Far East.

Likewise, every empire that proposed to fight a war in Afghanistan, from Alexander the Great to the former Soviet Union, got their butts kicked, but in 2001, instead of a short demonstration of why attacking the American homeland is a very bad idea, we turned that operation in a decade of wasted money, material, and personnel.

“Regime change” anywhere should be short and brutal. Leave it to the survivors to form a new government. Iraq turned into a quagmire because we invaded with too few troops to police the nation and because L. Paul Bremer, the presidential envoy, disbanded the Iraqi army, instantly rendering thousands of men unemployed and very unhappy about it. Billions of dollars and thousands of American lives later, we are still in Iraq. Expecting Arabs to behave in a rational fashion is a fool's errand.

Ask anyone in the military, particularly in the officer class, and you will discover that no one likes war less than those who must fight it for the politicians and too many ungrateful civilians at home.

We no longer fight huge land wars like those of World War Two. The conflict in Korea ended in a stalemate and a truce that exists to this day. At the time, no one wanted to go to war with Red China and that was probably the right judgment. Vietnam was essentially a lost war by the French, a colonial power, followed by a civil war between north and south. Inserting ourselves into any civil war is unwise. Vietnam became a meat grinder for more than 53,000 young men who came home in coffins.

On a recent edition of “Sixty Minutes”, outgoing Secretary of Defense Robert Gates described his job as “leading a department that is organized to plan for war but not to fight a war. And so everything that I’ve wanted to do to try and help the men and women in the field I’ve had to do outside the normal Pentagon bureaucracy.”

That department oversees a military that is deployed in 150 countries around the world with more than 369,000 of its1,580,255 active-duty in foreign nations. We still have 53,951 in Germany as a holdover from the Cold War. Some 28,500 are still in Korea and 32,803 in Japan. Simply put, there are real threats still in these locations that must be defended.

We are the world’s policeman. If we do not maintain this role, it will go to hell even faster than its current pace.

All of which brings me full circle to the worthy reason for Armed Forces Day. I have my arguments with some of the policies affecting today’s military, but hopefully they are transitory.

I have no argument with the courage, the patriotism, and the power our armed forces—yes, our men and women—project around the world.

© Alan Caruba, 2011
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Alan Caruba's commentaries are posted daily at "Warning Signs" his popular blog and thereafter on dozens of other websites and blogs. If you love to read, visit his monthly report on new books at Bookviews. To visit his Facebook page, click here For information on his professional skills, Caruba.com is the place to visit.

Obama Kicks Israel in the Teeth, Ambushes Netanyahu 

America’s Betrayal of Israel

A Commentary by J. D. Longstreet

A few weeks ago I wrote:  “For the first time in its history, America is on the wrong side.

Our President, with his loyalty to the world and not to the country that trusted him with the sacred duty to be leader of America and Commander-in-Chief of the mightiest military force in all of history, has gone over to the “Dark Side.” He has turned his back on the one nation, which occupies the most important piece of real estate on the globe. He has made it clear he favors the countries, which consider themselves Israel’s most ardent enemies. Israel now knows they stand alone.”  (You may read the entire article HERE.)

On Thursday, May 19^th, 2011, Barack Hussein Obama, the President of the United States of America, sold Israel out. 

Before going further – allow me to say, Obama does not speak for all Americans.  In fact, he speaks for fewer and fewer Americans every day.  With his call for Israel to return to its 1967 borders he has alienated millions of Americans, especially the American evangelical Christians.  And, my fervent hope is that he has awakened America’s Jewish community to his anti-Israel policies. 

Obama backhanded the Prime Minister of Israel, Benjamin Netanyahu today as Netanyahu was preparing to fly to the US to speak before the Congress.  Obama’s speech was a well-planned ambush of Mr. Netanyahu.  It was intended to shake Israel’s Prime Minister and weaken him before his address to the Congress. It was, plain and simple, dirty politics.  But we have come to expect this kind of attack from this American President.  Down and dirty!

With Obama’s public unveiling of his “Throw Israel to the Wolves” policy, he has now publicly declared, for all to see (who will allow themselves to see), that he, Obama, supports Israel’s enemies and their efforts to drive Israel into the sea.  By the way, Americans should never -- for one moment -- forget that Israel’s enemies are AMERICA’S ENEMIES, TOO!

Obama just lit the fuse to the powder keg that will blow up the world.   If Israel is forced to return to the 1967 borders, a nuclear Armageddon will follow.  Israel will not able to defend itself with conventional weapons and will have no choice but to employ its nuclear arsenal to defeat its enemies.  And it will use them with well thought out effectiveness. 

If you think the Middle East is afire today … you ain’t seen nothing yet!  

Let me be very clear here:  ISRAEL WILL NOT LOSE.  Its enemies WILL lose and America will suffer, incalculably, as a result of the Obama’s announced policy demanding that Israel return to the pre-1967 war borders.

For those of our reader who rely on scripture as their guide, and on the accuracy of Biblical Prophecy concerning Israel we refer you to these statements concerning Israel’s home FOREVER: 

Amos 9:15 -- I will plant Israel in their own land, never again to be uprooted from the land I have given them," says the LORD your God.

Jeremiah 3:18 -- In those days the house of Judah will join the house of Israel, and together they will come from a northern land to the land I gave your forefathers as an inheritance.

Jeremiah 23:8  -- but they will say, 'As surely as the LORD lives, who brought the descendants of Israel up out of the land of the north and out of all the countries where he had banished them.' Then they will live in their own land."

Jeremiah 33:7 -- I will bring Judah and Israel back from captivity and will rebuild them as they were before.

Ezekiel 34:28  -- They will no longer be plundered by the nations, nor will wild animals devour them. They will live in safety, and no one will make them afraid.

Ezekiel 37:25 -- They will live in the land I gave to my servant Jacob, the land where your fathers lived. They and their children and their children's children will live there forever, and David my servant will be their prince forever.

Joel 3:20  -- Judah will be inhabited forever and Jerusalem through all generations.

What Obama, and Israel’s other enemies, fail to understand (Or understand it and choose to ignore it) is this:  That of all the dry land on this planet earth, there is only one tiny little piece of geography that God, Himself, has designated as belonging to a single people – ISRAEL.  What the evangelical Christian Americans rightly understand is this:  When God brought the people of Israel, His people, home and gave them a “state,” a nation, in May of 1948, God had already made it as plain as possible that Israel would never be moved from that land again --- forever. 

It seems so clear that anyone coming against Israel to drive them from that land will be subject to supernatural intervention from God -- on behalf of Israel. That will insure the utter failure of those coming against Israel and, too, it will insure the utter destruction of Israel’s attackers.

I had not intended to climb into my pulpit in this commentary, but it is important that you, the reader, understand that it is not I making these predictions. And HE has a one hundred percent accuracy rate -- plus a record of meting out justice, which is -- complete destruction of Israel’s enemies. 

On Thursday, Obama crossed the line and, in my opinion, will bring punishment to America such as we have never experienced in our history.

If there was ever any doubt where Obama’s sympathies lie -- with Israel, or with Israel’s Muslim enemies, all doubt should have been erased by his revealing speech in which he sold out America’s only friend left in the Middle East and, very nearly, the entire world.

Pray for Israel… and pray that America’s punishment will not cripple her forever.

J. D. Longstreet

Is The World Ending Saturday, May 21st, 2011?

Is The World Ending Saturday, May 21^st, 2011?

America’s End Far More Certain

A Commentary by J. D. Longstreet
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OK.  So the end of the world is coming Saturday, right?  Well, it might.  But frankly, I’ll believe it when I see it.

It is not that I doubt the world will end … it will, I just doubt that anyone – any man – can know when it will occur.

Even Jesus Christ, whom Christians recognize as the SON of God, when asked about the time of the end of the world replied that no one knows – not even the angels in heaven.   Hey, that’s good enough for me!

Predicting the end of the world is definitely not a new phenomenon. Men have wondered when it will all end since, well, since man began to question his reason for being.

It didn’t take early man long to figure out that, considering the other animals around him, man had it pretty darned good.  That’s when man’s curse of insecurity bubbled up to the surface and he began to wonder how long he could expect his good fortune to continue. 

The inscrutable among early humans immediately began to capitalize on that fear as a wonderful motivator of man from which he/she could gather unto himself great power.  Remember, before there was money, there was power.  Today MONEY ranks number one, with POWER an extremely close second, among those who wish to control human behavior.  (See: POLITICIAN.)

Down through the centuries man has predicted the end of the world many, many, many times.  Today we are only cognizant of just a few of the more spectacular predictions and the even more spectacular inaccuracies, and in some cases -- the crazy things people do to prepare for the end.  

The end of the world was predicted for October 22nd, 1844.  Didn’t happen.  In fact it became known as “The Big Disappointment.”

I mention this particular prediction only because I expect there will be a heck of a lot of disappointed people about 8 PM Saturday evening.

There is an interesting post at religioustolerance.com entitled:  

 “44 failed & 1 ambiguous end-of-the-world
predictions that were to occur between 30 & 1920 CE”

I found it interesting and thought you might, as well.  You will find it HERE.

Nowadays, predicting the end of the world is pure folly.  At least, in our opinion, it should be. 

We live in an age when we have the libraries of the world at our fingertips… literally.  There is simply no excuse for being uninformed today. Having said that, I quickly add that we Americans are some of the worst educated people on the globe.  Lack of education leaves Americans wide open for use as pawns by those just a tad smarter.  Only a fool cannot see the evidence of that all around us today – especially in our government.

Ignorance is a powerful thing.  It will destroy a society.  It has very nearly destroyed the United States of America.   I say this to warn Americans not to be too critical of those who will prepare for the end of the world this weekend.  Those folks are no more guilty of ignorance that the millions of American voters who gave us the Obama Administration.  They were used (by those a tad smarter than they) and they are about to be used again.  I mean – the world may not end Saturday, but we are sure as heck approaching the end of America, (as she was conceived by her Founding Fathers, and those who gave their lives to protect her constitutional republic.)

Worry about this weekend if you feel you must.  Not me.  I worry about whether we will be able to rescue our country from the hands of the socialists/communists and progressives who have a strangle hold on America’s throat and are choking the life out of the liberty and freedom of the American people!

I am also worried about the coming establishment of a Palestinian state, in September, and the nuclear holocaust, which will soon follow.  

I worry that my country has made a conscious decision to forget its founding document, the constitution, and forsake its freedom and liberty and embrace a form of socialism that guarantees the utter destruction of America. 

Talk about the end of the world?  How about we talk about the “end of the world as we know it?”  THAT is not a prediction.  That is an on going FACT. 

Before we poke fun at those “end of the world folks” hadn’t we better consider our own ignorance as an electorate, as a people, as a society, as a country?

We had better get our house in order -- or the end of America is certain.

J. D. Longstreet

The United States of Stupid ... Alan Caruba

 

The United States of Stupid

By Alan Caruba

In 1983, the National Commission on Excellence in Education released a report titled “A Nation at Risk” that documented nationwide failure in American schools. Not much has changed since then and the federal takeover of school curriculums and testing methods has mercilessly continued with the Bush administration’s No Child Left Behind and the Obama administration’s Race to the Top.

They are the top-down approaches to learning that have played a large part in the continual “dumbing-down” of American education. Once the province of local school boards, innovative schools, and individual teachers, the education of children has been taken over by Big Government.

Making matters worse, amid the confusion of federally mandated education requirements, state legislatures are now straying beyond their traditional roles to tinker with schools in unprecedented ways.

A recent example of this involves two bills making their way through the North Carolina legislature – House Bill 766 and Senate Bill 479 – which focus on testing in that state’s public schools. While the motive behind these identical bills may seem to be to “improve” testing, the bills serve only to further dumb-down education through legislative micromanagement.

In the case of North Carolina, the bills not only order schools to administer a specific college admissions test to all students in the 11th grade—the ACT—it also mandates “diagnostic tests” for students in grades eight and 10 that will “align” with the ACT.

In effect, the North Carolina legislature is using the force of law to compel classroom teachers to teach to the test rather than providing a solid education.

Since there is a long established, respected alternative---the SAT---it further reduces the element of choice for local boards.

It begs the question, when does a legislative body possess the requisite knowledge to decide which test is in the best interest of students and their education? Isn’t that a pedagogic, not legislative, question?

Even the uninitiated could be forgiven for thinking that this legislation was rigged from the outset and reflects the best bill writing that special interest money can buy, but it gets even worse.

The North Carolina proposal requires that “students who do not pass the tests adopted for eighth grade shall be provided remedial instruction in the ninth grade.” Using legislative fiat to push weak students from eighth to ninth grade and expecting them to learn new material when they don’t know the old material is a sure fire recipe for utter failure.

Common sense says that not all students at all ages learn at the same pace. Some learn faster than others. Some students come from lower income brackets, are raised by single parents or even their grandparents, and face other socio-economic factors that lead to greater obstacles and fewer incentives to study.

Rather than face this simple truth and deal with it through an effective, flexible policy, North Carolina lawmakers would let struggling students sink even further behind as they are pushed to the next grade level with a vague promise of remedial teaching.

The real problem with such top-down, one-size-fits-all legislation is that, once passed in one State, it spreads to others and, of course, it has its origins at the federal level. That makes it attractive to lawmakers beyond the Tar Heel State where politicians are juggling shrinking state budgets and teacher layoffs with their need for popular poll numbers and reelection.

Education has become highly politicized, providing opportunities for special interests to inject themselves into policy debate. This deliberate dumbing down of education and students has afflicted the U.S. since the 1960s. It shows no signs of being reformed.

Former Attorney General, Edwin Meese III, said, “We must always evaluate policy proposals in light of principles like rule of law and the logic of our constitutional system. The Education Department’s sponsoring and funding of national curriculum runs counter to both laws of Congress and the wisdom of the Founders.”

The Founders who wrote the Constitution, knowing that the best education was locally determined and directed education, did not even mention the word “education” in that document. If for no other reason than this, the North Carolina legislature should scrap these education proposals and make a fresh start.

© Alan Caruba, 2011
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Alan Caruba's commentaries are posted daily at "Warning Signs" his popular blog and thereafter on dozens of other websites and blogs. If you love to read, visit his monthly report on new books at Bookviews. To visit his Facebook page, click here For information on his professional skills, Caruba.com is the place to visit.

Newt’s Done! So, Apparently, Is The GOP!

Newt’s Done!  So, Apparently, Is The GOP!

A Commentary by J. D. Longstreet

Newt Gingrich’s ambition to be President of the US did not take a shot in the foot over the past weekend – it was a headshot!  You can stick a fork in him ‘cause … he’s DONE!

Either Newt, or his campaign folks, grievously misread conservative voters concerning the nation’s financial mess and socialized medicine. 

Two things the Gingrich campaign apparently missed:  One is that Conservatives know drastic cuts in government spending must be made to salvage our country.  The other is that conservatives do not like, nor do we want, socialized medicine …  in any form or by any name … period!

No amount of “backing and filling” will get Newt out of this hole.  He might just as well get out of the race -- right now.  Any chance he DID have has vanished. Kaput!

As I survey the Republican field of candidates for President today, I have to conclude the GOP has conceded the raced to Obama and the democrats. 

I must tell you, I have strong suspicions the GOP does not want to have a republican in the Oval Office with the country in the financial mess it is in today.  They do not want to be painted with the same brush as the current occupant -- and they sure as heck do want to create a modern “Hoover Days” presidency.

As an American who believes the US is in dire need of rescuing from the clutches of the socialists in our government, I must tell you that should I confirm that is the policy of the GOP concerning this Presidential Election, I will immediately resign my membership in the Republican Party and become an Independent.

If you take a serious look at the GOP candidates you quickly see they are not the “A” team.  In fact, one would have to conclude they are more nearly the “C” team than even the “B” team.

I have watched the Mainstream Media and their “Mitch Daniels Watch” ad nausium.  The truth is – it will make little, if any, difference for Daniels to enter the race.  Daniels cannot carry the social conservatives. (Social Conservatives are MOST of the conservatives.) In fact, he has NO CHANCE of getting their support -- or their votes.

None of the remainder of the field has a snowball’s chance of making it to the portico of the White House, let alone the Oval Office.

Yes, I am pessimistic ... at least about any chance the GOP will win in November of 2012.  I look at the field of would-be presidents and I say:  “REALLY?  You gotta be kidding me!”

I can only surmise … the GOP REALLY does not want a Republican in the Oval office in 2013. How else to explain their pitiful efforts in recruiting candidates? 

So, we can look for the GOP to really go after the US Senate in an attempt to box-in Obama after 2012.  However, Obama will rule by executive order right up ‘til we have a constitutional crisis.  I mean, the country has to reign in a president’s ability to rule by fiat, through executive orders, by-passing the Congress, which is purportedly, the people’s voice.  There can be no doubt Obama is abusing that privilege and it must be stopped. (That is one of the many reasons we conservatives wanted to defeat Obama in the 2012 election!)

To sum up:  Obama will win with nearly 100 percent of the black vote, 80 some-odd percent of the Latino vote, the vast majority of the labor vote (and labor money), the support of the mainstream media, the liberal vote, the socialist vote, and a handful of Progressive votes.

The GOP candidate will get the country club and blue-blood vote (including the Rinos) while the Tea Party voters, and the other conservatives, (Yes, there are conservatives not aligned with the Tea Party.) stay home.

The plain truth, as I see it, is this:  The Republicans can only win the Presidency in November of 2012 with “Divine Intervention.”

Hey, I call’ em as I see ‘em -- and that’s the way I see this election shaking out.

As I said at the beginning:  Newt is done and so, I believe, is the GOP – at least for 2012.

J. D. Longstreet

Leaders Are Like Eagles. They Don’t Flock!

Leaders Are Like Eagles.  They Don’t Flock.

You Find Them One At A Time

A Commentary by J. D. Longstreet

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I’ve been thinking about leadership the past few weeks.  Normally, I don’t spend a great deal of time sitting around pondering leadership.  However, when a Presidential election looms, I do.

Choosing a leader is a dangerous thing.  America should have learned this lesson from the results of the election of 2008.   We are paying dearly for our monstrously bad choice in a national leader.

When I look at our nation’s leader today, I am reminded of something someone said a while ago.  I don’t remember who said it, nor do I remember the exact words the original author used.  But if I may be allowed to paraphrase -- it goes something like this:  “ In times of dire danger or distress, there almost always appears one who has all the answers and knows exactly what to do, what course of action to choose.  Often, however, that person is insane.”

America is approaching another moment of decision.  It behooves us all to search diligently for someone to lead America back to her proper position as world leader.   We Americans chaff at following.  We are totally unfit for following.  We are a nation of leaders.  It is our birthright.  It sparkles in our DNA. 

America has no king -- because we refuse to follow a king.  We do not recognize the “Divine Right of Kings.” 

It is a near impossible mission for a nation, such as ours, to choose one from among us to bear our nation’s colours, to represent us before the world.  Often we get it wrong. Occasionally, we get it right.  At our last time of choosing – we got it wrong.

In roughly eighteen months we will have a chance to correct that national mistake and save our country.

There are always devastating consequences resulting from bad choices.  The deadly consequence America faces is the loss of its freedom, of its liberty, of it’s very “self” as a nation.    Yet, there is reason enough to believe that we, as a nation, are set to repeat that mistake -- and doom our country.

Someone once said:  "A true leader has the confidence to stand alone, the courage to make tough decisions, and the compassion to listen to the needs of others. He does not set out to be a leader, but becomes one by the quality of his actions and the integrity of his intent. In the end, leaders are much like eagles...they don't flock, you find them one at a time."(Anonymous)  (I have this “pearl of wisdom” written inside the flyleaf of my Bible.  It has been there for at least twenty years.  It is a frequent reminder of how few leaders there actually are.)

I thought of this expression as I observed the “flock” of Republican Presidential candidates grace the debate stage in South Carolina a short time ago.  Maybe it’s my nature, but I automatically question the motives of ANYONE who actually SEEKS a leadership role, especially if that role is a position of power over me.

Allow me to offer an example of what I see as a REAL leader.

Remember Moses?  God chose Moses to lead his people, Israel, out of bondage in Egypt.  He announced his decision to Moses, as the Bible tells us, through the “Burning Bush.”  If I may be allowed to paraphrase, it went something like this: 

God to Moses:  “Moses, I want you to go down to Egypt and tell Pharaoh to let my people go. Then I want you to lead them out of that ace and take them to a land I will show you.” 

Moses to God:  “Why me, God?  I’m not the guy, you want!  Nooo!  I’m no public speaker.  I stutter and stammer and, well, I’m not the one you want for this mission.  Hey, why not send my brother Aaron.  He’s the guy you REALLY want.  Not me, Lord.

But as is His wont, God prevailed, Moses, went, Pharaoh caved, and Israel walked away a free people after four hundred years of slavery.  

Moses was a reluctant leader.  He was, nevertheless, one of the greatest leaders of men ever to live.

Lao Tzu, traditionally considered the founder of Taoism, once said the following:  "A leader is best when people barely know he exists, not so good when people obey and acclaim him, worse when they despise him.... But of a good leader who talks little when his work is done, his aim fulfilled, they will say, "We did it ourselves."   (Does this remind you of a current national leader?)

Here in America, we have a year and a half to decide, each for himself, or herself, whom our next President should be.  (My personal decision is already made, but he is reluctantthat he is reluctant) plus his many attributes that just scream L E A D E R! assures me that my choice is practical and sound. to lead America.  THAT fact (

The fate of America, indeed, the fate of the world, is at stake.  America is desperately needed, once again, in the role of global leader.   We have tried all the rest.  Isn’t it time we turned to a person reluctant to seek the reins of power?  Yes, I think it is.

This not the time for Americans to follow an “uncertain trumpet.”  We need a strong, capable, visionary, with proven leadership skills, willing to accept the call of his people to get out in front and carry our banner, our ensign, into whatever may befall us as a nation. 

Unlike today, Americans WILL rally to a leader -- not because HE thinks he deserves it, but because WE think he deserves it.

J. D. Longstreet

The Fannie Mae Mess ... Alan Caruba

The Fannie Mae Mess

By Alan Caruba


It was a relatively short Wall Street Journal article on Saturday, May 7th. “Fannie Mae Falls Back Into the Loss Column.”


“Fannie Mae reported a net loss of $6.5 billion for the first quarter as a weakening housing market dashed hopes that the company had stabilities,” wrote Nick Timiraos. “Fannie said Friday it would ask the government for a fresh taxpayer infusion of $6.2 billion after paying dividends to the Treasury.”


What we are witnessing—and paying for—is the way this “government-sponsored enterprise” (GSE) has distorted the nation’s housing market since it came into being. Freddie Mac is another GSE that shares the blame.


In a Cato Institute Policy Analysis by David Reiss, the author notes that “Fannie and Freddie are extraordinary large companies: together they own or guarantee more than 40 percent of all the residential mortgages in the United States. This amounts to more than 4.2 trillion dollars in mortgages.”


In a free market economy, when did anyone ever imagine that the government would “own or guarantee” the vast bulk of home mortgages? And why? This is the result of socialist policies that assert that everyone should have an imagined “right” to own a home when common sense says that not everyone could qualify for this.


The result was a storm of “ninja loans”, no job, no assets, and in many cases no down payments to secure the loan. The full story, however, is much worse. In an April Business Week commentary, “The Destruction of Economic Facts”,  economist, Hernando de Soto, noted now the development of systems to record facts regarding the ownership of property that “organized, standardized, recorded, continually updated, and easily accessible” ensured that the essential trust required to engage in commerce have been destroyed.


“Over the past 20 years,” wrote De Soto, “Americans and Europeans have quietly gone about destroying these facts. The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded.”


“The results are hardly surprising. In the U.S., trust has broken down between banks and subprime mortgage holders; between foreclosing agents and courts; between banks and their investors—even between banks and other banks.”


Little wonder, then, that Reiss, an associate professor at Brooklyn Law School, says the “current state of affairs presents an opportunity to reform the two companies (Fannie and Freddie) and the manner in which the residential mortgage market is structured.” His answer is that both should be privatized so they can compete on an even playing field with other financial institutions.”


While acknowledging that, during the 1970s, Fannie and Freddie, along with Ginnie Mae, “effectively created the secondary mortgage market”, Reiss warns that “the two companies have two of the most powerful lobbying machines in Washington” citing them as “poor agents of public policy…with unmatched influence.”


Fannie and Freddie are classic examples of why government should be restricted to its role of protecting consumers and kept from engaging in commercial enterprises. Alice Rivlin, when she was the director of the Office of Management and Budget, warned that GSE’s were created because wholly private financial institutions were believed to be incapable of providing an adequate supply of loanable funds at all times and to all regions of the nation for specified types of borrowers.” That, however, is not a function of government.


As we have seen in the financial crisis of 2008, the combination of untraceable owners of “bundled” mortgages as securities and the inability of the GSE’s to meet their accumulated obligations—the 40 percent of mortgages they owned—combined to force the government to provide billions in public funds to protect and sustain them. And Fannie is back, hat in hand, asking for $6.2 billion more!


The U.S. government has to get out of the business of guaranteeing the investments of GSEs because, as Reiss notes (1) the cost of the government’s guarantee is hidden because it is off-budget; (2) the cost is particularly difficult to quantify; and (3) the guarantees are not capped by the government.


This nation is sharply divided between unrealistic liberal advocates of programs and agencies such as the GSEs and conservatives who correctly fear the growth of government, particularly into sectors of the economy that should remain in the hands of private institutions that must act with a measure of prudence that open checkbook of government does not permit.


Reiss’s analysis states that “Fannie and Freddie reflect what is worst in GSE design.” Like all elements of government, “After fulfilling their purpose of creating a national mortgage market, they have taken on monstrously large lives of their own.”


It is going to require a lot of political courage to take the steps necessary to save the economy and protect it against future abuses such as Fannie and Freddie.


© Alan Caruba, 2011