Freedom Was A Friend To Me

Yes, freedom was a friend to me,

When I ran on her hills,

The joy of life, such liberty,

And happiness fulfils.

 

There was a time when freedom rang,

And men came to this shore,

There was a time when children sang,

And none could ask for more.

 

Liberty was a gift to me,

My forebears long ago,

Had paid the price to make men free,

Tis hard to watch her go.

 

I sold her for a sack of beans,

And squandered her like sin,

I bet the house beyond my means,

And nothing did I win.

 

Oh Liberty! Oh Liberty!

Do sing once more to me,

The rousing song you wrote for me,

“From sea to shining sea!”

 

What ‘came of her, I do not know,

Was here, but then she went,

She’s melted like the winter snow,

And left her vap’rous scent.

 

The circumstance of prison now

Has weakened me a bit

But I shall rise, don’t ask me how,

Us Yankees never quit.

 

I cannot lift my pen to write,

And tell this tale of woe,

The glory past(?), the darkest night(?),

I proudly tell it no!

 

 

 

 

 

Do not mock me, my captor brave,

While I lay wrapped in chains,

For I shall stand, my God shall save!

We’ll see just who remains!

 

I slave by day and sleep by night,

The guards stand all around,

To beat me if I state my plight,

And silence ev’ry sound.

 

You cannot captive, free men take,

And force them ground to till,

Though you may bind them to the stake,

You’ll never break their will.

 

A thousand times I gave my all,

Yes, gladly life laid down,

For friends and strangers – all who’d call,

That none would ever drown.

 

But tell me that I have no choice,

And tell me where to run,

Then you shall hear my righteous voice,

The barrel of my gun!

 

Yes freedom, be a friend to me,

And show me just once more,

The children playing by the sea,

The just and open door.

 

I never wished that evil come

And still not to this day,

But ever sought the shining sun

To brighten all, their way.

 

Life is short, our victories few,

We’re weighted down with cares,

We labor long and then make do,

With all we gladly share.

 

In ignorance they bind me so,

And lead me past the gate,

Blindly taunting, they call me “foe”,

But I can’t start to hate.

 

 

 

Free men shall stand on freedom’s hill,

Imposters (she) won’t abide,

The rising proof of man’s free will,

To choose the righteous side.

 

My life, my work, ‘tis mine to give,

You cannot pledge it so.

My heart is free, my life to live,

Wherever I may go.

 

The gates of hell may fury roar,

And frighten all around,

But I have seen the Heaven’s soar,

His armies mighty sound!

 

I cannot forfeit liberty,

E’en while my bones you break,

Your anger gives but strength to me,

The giant to awake!

 

The Spirit now of Liberty,

Stands clearly in the square,

She will not leave, she will not flee,

Tis God who put her there!

 

So listen up, unrighteous men,

Who bring us tiresome yokes,

We too can rage – you’ll meet your end,

When messing with the folks!

 

For taxes high and bounties low

We set King George aside,

Our words are true, our actions show,

We’ll fight for Pilgrim’s Pride.

 

We hold these truths self evident,

Creator’s marks we bear,

We are not slaves to government,

For rights and freedom care.

 

So do not steal my Liberty!

Twas God who gave to me.

I am the owner, let me be,

A People, standing free!

 

 

We solemn vow in heart and mind,

Our freedom not deny,

To stand alert, affirm and fight,

For this we’ll gladly die!

 

I shall not bleed for hypocrites!

Who would not bleed with me.

I shall not ransom pay bandits,

Who labor not with me.

 

Call your lawyers, liars and clowns,

And gallows for me make,

You cannot silence, cannot drown,

Completing your mistake.

 

My field is small, but still its mine,

Its fruit not yours to taste,

Before you rob my precious vine,

I’ll lay it all to waste!

 

You cannot have what is yours not,

To each his own I say,

By force to steal, what I have got,

By labor every day!

 

Call it legal and call it square!

Take everything you can!

You cannot take me unaware,

To barren, vacant land!

 

Your words are void, though sounding full,

Are empty, hollow sound,

They have no weight, no heart strings pull,

Just falling to the ground.

 

With Reagan’s words, throughout the world,

A witness, solid, true,

A patriot, the flag unfurled,

To wave red, white and blue!

 

You are not George, or Abe or Ron,

For her they labored long,

You can not wear, what they put on,

For they knew right from wrong!

 

You have one chance, one time at bat,

Time’s measure all will take,

Do not squander, and let fall flat,

The People’s trust to break.

 

So soundly strike the metal hot,

To form it to your will,

You can’t destroy this melting pot,

The City on the hill!

 

From ev’ry corner, ev’ry land

We’ve come, make no mistake,

Your commie statue will not stand,

No lies or mischief take!

 

Yes, freedom is a righteous breath,

Like wind that’s blowing here,

You cannot steal it, e’en by death,

Or take it ‘way by fear!

 

So promise this, and to that swear,

Your words are vacant stools,

Where no one sits, no comfort there,

Just twisted, golden rules.

 

The empty swing, no child lifts,

The empty glass, no wine,

Without love, you bear no gifts,

And are no friend of mine!

 

To justice serve, you must deny,

All lies of void and stealth,

To plunder all and thus supply,

The enemies of wealth.

 

The laws of nature clearly state,

What’s good and right and true,

You cannot break, you cannot skate,

On ice that’s broken through.

 

For some sold all and ran away,

And only dreams did bring,

For risking all, they will not stay,

To let you be their king!

 

 

The rules are clear, and all do know,

Yes, deep, within their hearts,

The good guys win, the truth will flow,

We’re stronger than our parts!

 

You cannot fell this mighty tree,

‘Twas  planted, long ago,

By men of courage, constancy,

It will forever grow!

 

An honest word, I take my pen,

And write it plainly here,

Like Hancock and old Benjamin,

I’ll make it ever clear.

 

Though you may take my things of gold,

To freely waste away,

And take my breath, ‘fore I grow old,

My bones will even say:

 

A free man born, In God I trust!

I will not bow to thee!

This land I love, and love I must,

This land of Liberty!

 

The flag will wave on freedom’s shore,

And welcome all again,

Oppression’s voice to hear no more,

Most blessed among all men!

 

Yes, Freedom was a friend to me,

Again, I’ll make her mine!

I will awake and break these chains,

And see her glory shine!

 

The Obama Bubble

 

It’s ironic to witness history repeating itself. But unfortunately those who do not learn from history are condemned to repeat it.

 Just less than ten years ago we watched dozens of “can’t miss” high tech companies evaporate in the Dot com bubble. As the collateral damage mounted, the Wall Street Journal listed dozens of entrepreneurs who went from being worth hundreds of millions to being worth nothing in a few short months. More recently we have watched dozens of mortgage-based banks and Wall Street titans, who a few short years ago were virtually printing profits, slide into the dustbin of history. And again the list of high-flying multi-billion dollar companies being sold for pennies on the dollar is long and stunning. Oh, how the mighty have fallen!

My purpose and thesis in writing this is to suggest that the very same flaws and factors that created two of American history’s most severe financial disasters are currently at work in inflating a political bubble that, like its economic cousins, will undoubtedly end in calamity.

To attempt to understand mass psychology is certainly beyond my pay grade, but Abraham Lincoln had it pretty close when he said, “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.” Realize this: We are all capable of being fooled. Many people walk around in their smug, self-assured, self-confidence totally unaware that they are unaware. For some reason, in the late nineties investors assigned astronomical values to companies with little or no revenue. And again, a few years later in selected housing markets in the U.S. people acted like prices would always go up and that “promises to pay” were as good as gold.    Go figure.

The central elements in every bubble are: a product with an unsound premise, extraordinary promises to the participants, promoters who stir people’s passions, profiteers, pressure, panic and pain.

 The housing bubble is a perfect illustration. It started in the ever vulnerable residential real estate market. But in this case, rather than the typical run-up and collapse of home prices as has happened previously in hundreds of speculative real estate markets, this time the product was a virtually unconstrained expansion of mortgage credit. Traditional qualifying metrics such as income and down payments were set aside and replaced with new features such as zero down, teaser rates and negative amortizations all designed to fuel an enormous growth of mortgage credit. At one end of the bubble, the explosion of mortgage credit brought in lots of participants – first-time (often-unqualified) home buyers, home builders, speculators, homeowners eager to tap their home equity, foreigners eager to catch the wave and even the creation of investment funds designed to capture the tremendous profits promised from the spectacular growth in housing and housing prices.

At the other end of the bubble were the creators, promoters and peddlers of the latest and greatest permutations of mortgage-backed (i.e. collateralized) debt obligations (CDO’s). From massive mortgage originations in firms like Countrywide, Washington Mutual and Golden West Financial, ever-growing “promises to pay” were sliced and repackaged into CDO’s by an innovative Wall Street. Complicit profiteers in the rating agencies blessed as “Triple A” what is now derisively known as toxic waste. In turn, these products were sold throughout the globe, helping to soak up some of the American dollars that were being spent overseas on billions of consumer products, and helping to further inflate the housing bubble. The realtors profited, the loan originators and refinancers profited, the investment bankers profited. The home buyers and the homebuilders profited.

It was the arrival of the miraculous, too-good-to-be-true, money machine….until the pressure of reality intervened. The cracks in the scheme started to appear as the housing market’s climb started to stall from its own weight as more and more people could no longer afford their escalating, monthly commitments. People who had counted on being able to sell and close-out their housing bets at any time found the market for their over-priced houses was gone. Defaults led to foreclosures which led to vacancies and thousands of unsold homes which led to housing price declines which in turn fueled more defaults, unsold housing inventory and even further price declines. Panic started to enter the scene as the market for CDO’s, which depended upon the cash flow from people actually paying their mortgages, collapsed. And the pain became widespread. People lost their homes, builders lost their jobs, realtors and bankers suffered losses and lost jobs, and Wall Street and investors lost billions.

In hindsight, the pattern seems obvious and the outcome totally predictable. Like a massive Ponzi scheme, an unsustainable proposition was put into motion by literally millions of people and having run its course, totally collapsed. Many of these people who joined the Housing Debacle were themselves participants, victims or at least observers of the Dot Com bubble. The fact is that the Nasdaq’s meteoric rise in the late nineties worked for everyone in the game – until it didn’t. Likewise, all of the players in the American Mortgage Scam reaped huge dividends – until they didn’t. Lincoln was right when he said “you can fool some of the people all of the time and all of the people some of the time”. But the reason that he added “that you can’t fool all of the people all of the time” was based on his wisdom and the unavoidable historical fact that a fraud is a fraud is a fraud.  Eventually what is unsustainable, no longer is sustained and reality replaces illusion.

But no sooner are we busy recovering from the deflation of one enormous bubble than another bubble starts to emerge. Like a Three Ring Circus, one act is barely over and the next one goes into full swing. But we are not talking about theatrical entertainment and make-believe but rather the financial well-being, freedom and welfare of millions, if not billions, of people.

The next bubble is the Obama bubble. It began with a too-good-to-be-true product: an inexperienced, charismatic street organizer who makes his way to the top of the political heap as a kind of rock star making incredibly ambitious promises. If it sounds too good to be true, it probably is. But still his promoters step forward to silence our doubts, to marginalize the deniers, and to satiate the masses who have bought into his illusions. The profiteers who stand to gain from the power of expanded government all salute, mindlessly, as their leader effortlessly tasks them to commit previously unthinkable sums to his schemes. We are promised new sources of energy that will replace the power of fire. We are promised health care for all from a totally capable federal bureaucracy. We are promised ethics and transparency and a college education for all without expense. We sign-on for this and submit to that. It is a blitzkrieg of inspired rhetoric and mind-exhausting change. We hear the cheers, the historic parallels, and endure a non-stop assault on our tradition of time-measured change. Sincerely and earnestly he tells us to hurry and rush to spend more money in a single splurge than has ever been spent before on something no-one, not even he, has yet to read. Without time to digest this, we are fed another massive bailout for mortgages, and then another course of largesse, and yet another…. Keep eating, keep swallowing, take it in, pile it on. Hurry, hurry, hurry.

The Obama Bubble is expanding rapidly as his massive agenda is confidently and quickly being put in place. Hindsight will make his sleights of hand clear to all. As for me today, and many other Americans observing the daily usurpation of their property and economic futures, I am not fooled. The markets are not fooled. There is no free lunch and money doesn’t grow on trees. A fraud is a fraud is a fraud.

 

Dividing and Conquering the Home Mortgage Baby

The housing market today is not any different from any other marketplace in any other time or place. The laws of supply and demand are still in effect. Sellers and buyers are still trying to optimize their outcomes in every transaction, even to the point of seeking a federal bailout. And if the government wades in (further) bringing wheel barrows full of cash, all of the transacting parties will act to serve their own self-interest. At a high enough price all homeowners are sellers and at a low enough price all properties can be sold. If the government acts to lower interest rates, prices for homes will rise because cheaper money reduces the effective price to the buyers (who always prefer a lower price). And if the government intervenes to “cram down” the principle due on a mortgage, homeowners will become sellers because they can turn the write-down of their mortgage into a higher “net price” when they sell. Every action of government impacts the marketplace but does not alter the fundamental rules of the marketplace.

If we are to fabricate or endorse specific types of governmental interventions in the home mortgage market, we should seek to apply the first rule of medicine: “First, do no harm.” To do no harm in this case means to limit waste, corruption and theft. The simple act of changing interest rates or becoming a buyer or seller or lender makes the government a factor and changes the equation for all marketplace participants. So our goal should be to limit fraud, which we can define as someone receiving something of value greater than what they deserve in an honest transaction. In a typical example: you bought your house for $300k four years ago, and you still owe $300k on it but today it is only worth $200k. Your down payment, if you had one, and any equity from any payments that you’ve made, are gone. Your interest rate is high and you can’t refinance to a better rate because you’re “under-water”. The bank is ready to foreclose and you’re prepared to walk away. Not a pleasant scenario.

Let’s establish some facts and make some assumptions that we might use to build a solution to this dilemma. First, in reality, although your name may be on the mailbox, you are not the home owner, you are the home renter. The bank or whoever holds your mortgage or pieces of your mortgage is the owner and what they really own is 1) the net proceeds that they could receive after processing your foreclosure or 2) the value of the rent that they can receive from whoever occupies the house going forward. The second “fact” is that at this point we have an asset on somebody’s books for $300k and a market that only values it at $200k less transaction costs. Someone has a substantial unrealized loss. Third, let’s assume you have to live somewhere and that you’re able and willing to pay something toward your rent or mortgage each month and that you would like to continue living in the same house. Fourth, is to make no judgments. You may have expected to flip your house and make a profit but got “caught” when the market went down, you may have signed a bad mortgage and have been tricked into a larcenous interest rate, or you may have run up second mortgages on cars and vacations with equity that is no longer there. No matter, just simply that if we the taxpayers are going to help you out, then going forward you must live in the house and meet your revised obligations.

My proposal: The federal government or some agency that it funds and empowers steps up and puts $100k, the amount that you are under water, on the table with the following strings attached to limit waste and fraud. The $100k is structured as a personal loan to you to use to pay down your principle on your first or current mortgage(s). To reduce the attractiveness to you of taking the foreclosure route, the loan is offered interest-free, payable over 15 to 30 years. You in turn, offer the $100k to your lender in return for a good interest rate on a new, $200k mortgage, the current market value of your house. The lender is delighted to avoid the loss of more than $100k and gives you a good rate, even though you have zero equity and housing prices might still be declining. You are happy because you’re not homeless and your monthly payment has been substantially reduced. And your local taxing authorities, state and local governments, are happy because you’re still paying property taxes. The old $300k mortgage(s) are paid-in-full and your lender is made whole and can resume his lending business. And the taxpayers are only stuck with the cost of an interest-free loan.

Now, the sticky parts. All is well if you stay in the home and make your low interest payments on your mortgage with your bank and your personal loan with the federal agency. But what if you can’t afford to pay even the reduced monthly payments? Or what if home prices decline further and you choose to default? Or what if home prices rebound somewhat but not enough to cover your two loans? To what extent do we end up putting your bank or the taxpayers (who as the default buyers always want to minimize their costs) at risk?

It is difficult to enforce morality. And there are always extenuating circumstances for even the best-intentioned borrowers.

But my feeling is that your current mortgage balance, less any onerous fees or penalties assessed by your lender, is your responsibility. You can owe it to a bank or to an agency of the government on favorable or unfavorable terms, but it is still your responsibility. Many people in Nevada and Florida made fortunes for years on real estate, building and selling and lending like there was no tomorrow. You may have bought into that game, and if you did, you own it. The people in Kansas and Kentucky who did not see their home values appreciate, should not be obligated to pay your mortgage. You may have gotten a zero down mortgage that reset at some stratospheric level. I feel your pain, and I am willing to underwrite better terms for you going forward, but it is still your balance due, not mine. If taxpayers pay off or pay down your debt and house prices rebound and prices double are you going to come and share the upside with us? Don’t laugh, if inflation ever becomes a serious issue, people who buy cheap houses today at low interest rates will look like geniuses tomorrow.

Any solutions to the mortgage mess that involve wealth transfer are ripe for abuse. If banks are forced to write-down the face-value of their loans, that in effect, transfers that amount from the bank’s owners to the borrowers even though the money is presumably gone. Who in their right mind would ever make a loan for $300k to someone and ask them for only $200k back? And, if the government can intervene in a private contract and dictate new terms favoring one party over the other, are we not introducing enormous uncertainty and the potential for corruption into all future business contracts? If the government forgives your personal debt, doesn’t that represent a transfer of wealth from one group of citizens to another?

In effect, what I am proposing is somewhat like the traditional, low-interest  Student Loan Program. In return for a social good, which in this case is you being able to afford to stay in your home and the resolution of the national mortgage mess, we the taxpayers and the banks will divide your current mortgage into two affordable pieces. Piece one will be a fairly traditional, good interest rate home mortgage with a typical lender, who, if not having perfect terms, at least has much better terms. The second piece will be an interest-free, long-term, unsecured, personal loan to you from your fellow taxpayers. (We know where you live!)

Solomon, in ancient times, in resolving whose baby was living and whose was dead, offered to divide the living baby in two, forcing the mothers to acknowledge the truth. We simply offer to divide the current dead mortgages into two pieces, so that we can breathe life back into the lives of homeowners and banks without killing the taxpayers.

 

Just How Will The Fat Cats Get By?

Just how will the fat cats get by,

On one half-mill a year?

And how will their eyes ever dry,

When they can’t shed a tear?

Call me heartless and call me numb,

(But) I made it to the top.

For I’m much smarter than those dumb,

My ride should never stop.

 

My custom shirt and custom suit,

Have lost their zip, and press,

I’ve been knocked down, by Barry’s boot,

Been punished for success.

 

The toxic assets smelled so sweet,

When burning others’ logs,

But now they’ve taken out my seat

And sent me to the dogs!

 

The word is out all over town,

And they’re all wond’rin’ why,

Cash, comps and perks are headed down,

Can those fat cats get by?

 

Half a mill, might sound big to you,

But it won’t pay my rent!

There just is no way, to make do,

I’m mad, and broke and bent!

 

Half a mill, won’t pay my tax bill.

I’m hurt, beyond repair!

It insults, a man of my skill,

To stoop, to who knows where?

 

At half a mill, I cannot give,

A dime, to politics.

On half a mill, I cannot live,

Out, even in the sticks!

 

Who is to pay the nannies now?

The condos, cars and cooks?

It cannot be! No way! No how!

He’s treating us like crooks!

 

The Yankees will not know my name,

When I call them on the phone.

For I’m no longer in the game -

Just a dog, without a bone.

 

The angle of my head will change!

The doorman will not snap!

My lifestyle is now out of range.

The bailout was a trap!

 

Class warfare was a pleasant game,

When I was on the top,

But “O”, the pain, to take the blame,

And see my earnings drop!

 

We lost some coins along the way,

Our trash, it never stank.

But handcuffs! When you cut our pay,

Would think we robbed the bank!

 

Half a mill is a bitter pill

To swallow in this town

And half a mill, won’t pay the bill

To make my sorrows drown!

 

My kids at school are laughing stocks,

Since dad went on the dole.

My marriage, too, is on the rocks

Since, I can’t pay the toll.

 

My trophy wife is packed to go,

My friend, no longer greets

And who will fetch my cup of Joe,

When I live in the streets? 

 

Yes, all is gone, I too, must leave

There’s nothing left to do,

But I must share a secret peeve:

Barry, I voted for you!

 

A Lobbyist? Yes, I will be!

For me, some hope remains!

From Wall Street’s bonds, I’ve been set free!

Unshackled, banker’s chains!

 

An American Tradition

 

America has a long tradition of practicing the notion of “he who pays the fiddler, calls the tune.” One of the most significant ways in which this tradition has been applied is the belief that where taxpayer funds are used, the taxpayer (e.g. the government) has a say-so in howthe monies are to be spent. But partially because money, once mixed with other funds is indistinguishable, and partially because the government has numerous unique points of leverage and power, it takes only a modest amount of money for the government to take on a principle role in the direction of the affairs of the recipients.

Two recent events have led to some new applications of “tune-calling” which challenge some of our historic notions of the limits of government intervention. First, the bailouts of the banks and auto industry that began last fall have led to numerous calls from politicians, the media and the public to modify the behaviors of these firms. Large bonuses, now funded by the public, are being criticized. Salary caps for executives are being prescribed. Corporate jets and spending on professional sports has come under review since it is now “on the public dime”. Even such mundane matters as redecorating the executive suite have become subject to public scrutiny now that they are being financed by “us”.

And second, a woman in California has just given birth to octuplets, adding eight more children to her previous six, for a total of fourteen. All of these children were conceived through invitro fertilization at public expense, since the woman has no husband and no income. The significant costs of delivering and caring for the fragile newborns is also a matter for public funding which has resulted in the predictable outcries. And the further consideration that this test-tube family will forever be on the dole has incited many to call for interventions and new restrictions. Moral outrage, arguments for common sense, a call for limits on the number of embryos all are boiling into the public arena. Some have even argued that if the mother eventually profits from media promotions of her family that she should remit these monies to offset the expenses that she has caused the state of California.

As we hasten down this road of public financing of commercial activities and public health, it might be good to look ahead at the eventual implications of inviting the public camel into our tent. If Uncle Sam is going to be a major stockholder in the domestic auto industry, is it not reasonable to expect that he will be able to determine what kind of cars are to be produced, how far they can be driven and how much they will be sold for? If our Uncle is to become our banker, is it not reasonable to expect that he will be able to determine who can borrow, how much can be borrowed and the terms of credit that we receive? If national health care is the logical expansion of our current patchwork of public health care funding, is it not reasonable to expect that the Public will be able to determine limits on invitro fertilizations, whether or not a pregnancy is “viable”, and ultimately the number of children a mother can deliver?

We used to laugh at the Soviet-era Yugos as the folly of centralized planning and the product of non-capitalist societies that were too poor to deliver quality consumer goods to the masses. We nodded our heads silently when we heard of China’s “one child policy” as something appropriate for a society that lacked the resources and skills to feed itself. And, still today, we look at nations like Cuba, North Korea and numerous African countries and recognize that their poverty is a direct result of their failure to create a positive system of self-government. It is certainly easier to see the speck in our neighbor’s eye than it is to see the log in our own. 

We long ago ceded the control of our children’s education to a publicly-funded process and have accepted the numerous consequences that have resulted. Years ago we bought into the federal income tax system and have progressively accepted the logic of disclosing all of our financial affairs and the reality of sending huge amounts of treasure to Washington. We have long-accepted regulations for automobiles, banking, and healthcare but now it appears that we are ready to further “partner-up” with Uncle Sam in ways that would have seemed foreign or excessively-intrusive a few years ago.

As a child growing up in New England near the massive but abandoned textile mills that filled so many towns, I learned about child labor, industrial safety and industrial pollution. Later I learned about immigrants and textile barons and discovered that my great-grandfather was both an immigrant and a factory owner. This knowledge brought both pride and pain to me as I considered his success, and ultimately mine, could have involved the exploitation of children, immigrants and the environment. But over the past century, to our credit, we have rectified these wrongs often through labor laws and environmental regulations to the point that these failings are no longer relevant. Yet I wonder, given all the new roles for the government that we are discovering, if we couldn’t ask Uncle Sam to play an old tune from that mill-town era that has new relevance today?

Fiddler, can you play, “I Owe My Soul to the Company Store”?