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The Money Man

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But as the panic seems to be receding, the nation is heading into what Bernanke acknowledges will be a somewhat drawn-out recession. He doesn't know how long the downturn is going to last (most economists are pretty much writing off 2009). But privately he is certain that at least he has avoided the worst: a major depression, according to a highly placed source familiar with his thinking. "We've avoided … those critical errors that accounted for the 1930s," Bernanke declared last Wednesday to the Economic Club of New York.

In line with his mild-mannered persona, Bernanke has been careful to move to the back of the stage. Paulson has been the more visible member of the Treasury-Fed dynamic duo, taking the lead in pushing for congressional passage of the $700 billion rescue package. Bernanke knows that his main job in the rescue was to quickly loan out money. Treasury's purview was to persuade Congress to approve the bailout and appoint people to implement it.

Behind the scenes, Bernanke has played a more powerful role. He has prodded Paulson and an ideologically squeamish White House to go along with him at critical junctures. After he injected $85 billion into AIG insurance on Sept. 16, Bernanke invited Paulson into his sparsely decorated office a block from the State Department and convinced him they needed a more systematic solution. Paulson had to go to Congress to get legislative approval for a huge fiscal bailout, Bernanke told the Treasury secretary, according to two sources familiar with the conversation who would describe it only on condition of anonymity. Paulson agreed.

Even then, however, the two differed on the focus of the $700 billion plan. Bernanke all along wanted a direct capital injection into the banks—the financial equivalent of an adrenaline shot to a stopped heart—as the best way to open up the frozen credit markets. But that would mean partial nationalization—anathema to the free-marketers in the White House and Congress. Paulson held out for an alternative scheme to buy up distressed mortgage securities from the banks. But no one could figure out how to price the securities in a way that wouldn't either sink the banks or rob the taxpayers. After the markets tanked yet again (and Britain injected its own banks with capital, starting the trend), Paulson finally endorsed the Bernanke approach on Oct. 13. Yet even on the day he announced the plan, the Treasury chief continued to proclaim his reluctance to directly buy stakes in the banks. (Asked about Bernanke, Paulson told NEWSWEEK he was "fortunate" to be working with him. He's "willing to make tough decisions," he said.)

Last week, in response to the new approach, the high interest rates in credit markets did begin to ease slightly. Now it's a question of waiting for banks to start lending again, although Bernanke believes the financial system may need another slug of federal money. "The amount of mortgage credit outstanding, if you include both residential and commercial, is on the order of $14 trillion. So $700 billion is only 5 percent of that," he noted. The most the current fund can do is "create some liquidity"—while everyone hopes for house prices to bottom out soon. "He's attacking this as a gigantic plumbing problem," says Gertler. "It's not ideological. It's not political."

Bernanke does seem temperamentally suited to the task. By all accounts, he never seems to lose his cool—unlike his comrade in ARMs Paulson. "Even as a teenager he seemed to have a calming influence on all those around him," says his hometown friend Braddy. Bernanke also prefers to manage consensus from the sidelines. That distinguishes him from his predecessor Alan Greenspan, who in 18 years turned his chairmanship into a czardom

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Posted By: Nowforthetruth @ 10/27/2008 8:17:55 AM

http://www.youtube.com/watch?v=iivL4c_3pck

2001 Chicago Public Citizen Radio Interview criticizing the Warren Court as not radical enough for not pursuing redistribution of wealth.

Says that community organizing is for the purpose of assembling the political power to force redistribution of wealth.
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Posted By: Nowforthetruth @ 10/26/2008 9:35:29 PM

The Kennedy tax cut.

http://www.heritage.org/Research/Taxes/bg1765.cfm

About half way through the article.

"President Kennedy proposed massive tax-rate reductions, which were passed by Congress and became law after he was assassinated. The 1964 tax cut reduced the top marginal personal income tax rate from 91 percent to 70 percent by 1965. The cut reduced lower-bracket rates as well. In the four years prior to the 1965 tax-rate cuts, federal government income tax revenue--adjusted for inflation--increased at an average annual rate of 2.1 percent, while total government income tax revenue (federal plus state and local) increased by 2.6 percent per year . In the four years following the tax cut, federal government income tax revenue increased by 8.6 percent annually and total government income tax revenue increased by 9.0 percent annually. Government income tax revenue not only increased in the years following the tax cut, it increased at a much faster rate.
The Kennedy tax cut set the example that President Ronald Reagan would follow some 17 years later. By increasing incentives to work, produce, and invest, real GDP growth increased in the years following the tax cuts: More people worked, and the tax base expanded. Additionally, the expenditure side of the budget benefited as well because the unemployment rate was significantly reduced.
Using the Congressional Budget Office's revenue forecasts (made with the full knowledge of the future tax cuts), revenues came in much higher than had been anticipated, even after the "cost""of the tax cut had been taken into account. Additionally, in 1965--one year following the tax cut--personal income tax revenue data exceeded expectations by the greatest amounts in the highest income classes.
Testifying before Congress in 1977, Walter Heller, President Kenned''s Chairman of the Council of Economic Advisers, summarized:
What happened to the tax cut in 1965 is difficult to pin down, but insofar as we are able to isolate it, it did seem to have a tremendously stimulative effect, a multiplied effect on the economy. It was the major factor that led to our running a $3 billion surplus by the middle of 1965 before escalation in Vietnam struck us. It was a $12 billion tax cut, which would be about $33 or $34 billion in today's terms, and within one year the revenues into the Federal Treasury were already above what they had been before the tax cut.
Did the tax cut pay for itself in increased revenues? I think the evidence is very strong that it did."
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Posted By: Nowforthetruth @ 10/23/2008 6:59:15 PM

Obama in this video, addressing his work with ACORN litigation relating to the community reinvestment act and the failure of Freddie Mac and Fannie Mae, as they relate to the current real estate and financial crisis, states that, and I quote:

"Subprime lending started out as a good idea, helping Americans buy homes who previously could not afford to. Financial institutions created new financial instruments that could securitize these loans, slice them into finer and finer risk categories, and spread them out among investors and around the country, as well as around the world. In theory, this should have allowed mortgage lending to be less risky, and more diversified."

He further states:

???"The original idea was a good one, which was, lets see if we can distribute risk more broadly, and make it easier to provide loans to people who otherwise might not be able to get one."

Listen for yourself. You cannot dispute the mans on words recorded live:

http://www.youtube.com/watch?v=Lr1M1T2Y314&feature=related

Obama in this second video is campaigning at a convention of Acorn and I believe two other "Community Activist" organizations. Ask if he will be their ally if he becomes President, Obama says, quote:

???Yes, but let me say that before I even get inaugurated, during the transition we are going to be calling all of you in to help us shape the agenda. We???re going to be having meetings all across the country with community organizations so that you have input into the agenda for the next presidency of the United States of America.

See and hear it for yourself. Obama promised that Acorn and other groups like it will setting his agenda if elected:

http://www.youtube.com/watch?v=8vJcVgJhNaU
See also: http://www.newsweek.com/id/164972
Stating that Gramm-Leach-Bliley Act wasn't what caused the meltdown, and noting that "economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been."
See also:
http://boards.msn.com/MSNBCboards/thread.aspx?threadid=808692&boardsparam=Page%3d2

Below is a link to C-SPAN video clips of the Congressional hearings at roughly the time McCains attempt at S.190. to fix Fannie and Freddie. See for yourself who said what.

http://www.youtube.com/watch?v=_MGT_cSi7Rs
See also
http://www.newsweek.com/id/164732 from this web site. (oops!) stating that Freddie Mac was spending tax payer money to target Republicans in 2005 who were trying to regulate Fannie and Freddies fraud. Democrats were not targeted, as the were all in the tank with Fannie and Freddie to kill the regulations. Hear that, the article admits that Republicans were trying to regulate Freddie and Fannie, and Democrats were trying to stop it from happening as a means to facilitate the Community Reinvestment Act.