The President as Opening Act

Jindal’s response will provide more perspective on America’s future than Obama’s address

I already know what Barack Obama is going to say tonight. The president and his Democrats are about as well-disguised in their socialist roots and intentions as the guys who robbed a Denver convenience store wearing women’s thong underwear on their heads to obscure their faces.

Obama will carry on and superficially appear to be just optimistic enough to satisfy former President Bill Clinton and the rest of the pundits and insiders who feel as though the current president is talking down the economy too much. But even though he may avoid using words like “catastrophe” and phrases like “this is a recession from which we may never recover,” don’t look for optimism from the president at more than just a superficial level. Optimism doesn’t fit his legislative needs. Radicals need crisis from which to operate.

I’m not certain that the entire speech will be economy-driven, either.

He’ll likely go into brief but soaring rhetoric about education, enough perhaps to get a [deserved] dig in about former President Bush and No Child Left Behind, but certainly enough to satisfy the teachers’ union.

I’d also be willing to bet that he will definitely spend a decent amount of time speaking about our healthcare system, as it is inarguably intertwined closely with our economy and is a focal point of the plans for America crafted meticulously by the Democrats over the past 14 years. I’m not certain how specific he’ll get, though, as the specifics of the plan–between the government handling of medical records to the way it would weigh cost-effectiveness of treatment against necessity–get a little scary.

Furthermore, while I doubt foreign policy will take up as much focus as it would in a traditional State of the Union address, he might address it here — but, for a number of reasons, don’t look for him to discuss in detail the $900 million he’s authorized and committed to send to Gaza. Why not specifically address it? First, the money will be sent directly to Gaza for rebuilding efforts–through the United Nations (which had been extremely critical of Israel during the recent conflict) of course–rather than to the West Bank. Generally, see, we’ve traditionally focused any help in the region on the West Bank rather than Gaza, as Fatah controls the former while the terrorist group Hamas controls the latter. Secondly, he may avoid specifics because, well, we’re in an economic crisis and the notion of sending close to a billion dollars to people who, just a few months ago, were lobbing rockets at Israeli civilians may not go over well.

Of course, Obama will also likely paint the Republicans as obstructionists. He’ll undoubtedly say that he was disappointed in those Republicans who let their principles–those pesky principles!!– get in the way of the administration’s attempts to save the nation from impending doom. Of course, there will be no mention of how the Democrats wrote the book on obstructionism over the majority of the past decade, how they stonewalled judicial nominations and brought up hundred-year-old Turkish conflicts in order to put the lives of our servicemen and servicewomen in danger and derail Bush administration efforts in Iraq. No, no mention of obstructionism on the Democrats’ part. Only those pesky, principled conservative Republicans.

Honestly, I know what the president will say tonight. I don’t need Obama’s remarks to realize the direction in which the Democratic party is drifting, or the direction in which the Democratic party leadership will take this country. Their actions over the past four weeks have been enough to show that empty promises of bipartisanship and hopes of pragmatism are just that — empty. I may not be able to completely predict, word for word, what Obama will say, but I know enough to know that nothing he can possibly say will teach me anything about the direction of his party or our country of which I am not already aware.

Perhaps that’s why I’m so interested in Louisiana Gov. Bobby Jindal’s response.

Jindal was inevitably chosen to proffer the GOP response by the Republican leadership because he represents the future of the party, but for me his mere selection is not enough, on its face, to give perspective on the direction of the Republican party. Instead, that perspective will indeed come from his words and his delivery.

While the behavior of the Democrats over the past few weeks have made it abundantly clear that they are still up to their old ways despite the plethora of promises for change made over the past two years, the behavior of the Republicans have suggested that the party may have truly learned the lessons of the past four years, and that the party is ready to finally revert to conservative principles and restore that black-and-white, yin-and-yang between the parties spoken about so often by former President Ronald Reagan.

But unlike with the Democrats, I am not certain that behavior belies belief. The Democrats have become a party of radicals, and are acting like it. The Republicans, however, are acting like conservatives, but I’m not so sure they are pushing the party and its platform in that direction.

Jindal’s response, his words, delivery and demeanor, will provide more insight into the future of the Republican party and, indeed, the future of the nation as a whole. How aggressive will he be? How conciliatory? Will it be apparent that Jindal was allowed to be his conservative self or, like with Sarah Palin throughout September of last year, will it seem as though he was stifled by more moderate handlers?

Ideally, I’d like to see the Louisiana governor challenge Obama, and challenge the American people to think about the alternatives to the Obama-Pelosi-Reid plan. I’d like him to point out the cliff’s-edge slide on Wall Street since this bailout mess began with former President Bush, and highlight how the markets have reacted to Obama’s indecision and failing leadership. I’d like him to provide historical context as to the prior failures of Keynesian economics. I’d like to hear specifics, how the Republicans would approach economic recovery by promoting true growth, by slashing corporate taxes, payroll taxes, and capital gains taxes, and I’d like to see examples of where such an approach has worked before.

Jindal should also use his excellent communications skills to explain exactly why he and other Republican governors will likely reject some of the funds from the so-called “stimulus” bill destined for the states. He should talk about the long-term consequences for individual taxpayers like you and me, and do so in a way that each and every person who listened wakes up tomorrow and takes a second look at the man or woman in their own State House. The fate of the Republican party depends upon how people perceive the conservative message, how those traditionally on the right side of the political spectrum are motivated to get involved, get to the polls, and take control of the country. The right outnumber the left in this country — the fate of the nation depends upon getting us mobilized.

Bobby Jindal has a whole lot on his shoulders tonight. His message will be the message of the Republican party as we carry forward through what will inevitably be a rough 2009. It can be muted, an attempt to expand the tent over those in the center of the political spectrum, or it could be solidly conservative, an attempt to patch holes in the tent over those on the right. I hope it is the latter.



  1. MUJERLATINA says:

    Let’s pray for Bobby Jindal that he will be the voice piece for the GOP and that he will speak to the American people about the TRUTH: that we are headed down the wrong, socialist path with the Dems. and Obama — and that we must brace ourselves for a scary economic ride until at least 2010…

  2. sharon says:

    Great article Jeff, I agree, I would love for Bobby more than anything to say that the Governors have managed to actually read the bill, unlike the Democrats and liberals in the house and senate.

    1. I like Bobby Jindal real well.
    2. I an not happy with the media as well as the republican party pushing him down our throat as the next GOP candidate.

    I mean no disrespect to Bobby and wish him well in his future endeavors, I am just a tad tired of the Democratic party and the so called “moderate” republicans defining our party for us. We have settled for too long, and it is the people of this country that will determine in which direction the GOP shall go. I hope he manages to touch on everything you have touched on.

  3. Jeannette says:

    Jindal has actually done something with his life and he may be the one to run for prez in 2012 on the Repub ticket.

    How did Hillary phrase Obama’s inexperience? That she and Senator McCain have the experience and Obama has a speech he made in 2002. Obama has many speeches, but fails to leave anyone speechless.

    There is nothing Obama has said that has invigorated me. He’s said to have taken a cue from Bill Clinton and saying something on the positive side about America’s future at the end of his address, instead of all doom and gloom.

    If he truly believed in America, he would have been on the upside from Day One.

  4. Anonymous says:

    ALAN KEYES… Puts it all on the line about Mr. Obama. A must see!!!

  5. Anonymous says:

    Nice work, Jeff, as usual. Tonight I started exploring the links you put in your articles a little more closely. More good stuff! At this rate, I’ll be up late again. . . .


  6. Anonymous says:

    You were pretty much spot on w/ 0. Haven’t heard Jindal yet but I’m thinking maybe YOU should have made the rebuttal. Hoping he comes out strong on conservatism.

    BTW, I didn’t see 0, just read the transcript but for all the “Reaganesque” hype, it missed the mark IMO. Though his delivery could make a turd shine.

  7. Anonymous says:

    Just saw where Matthews described 0′s speech as Churchillian. Earlier today it was being touted as Reaganesque. Is anyone else catching the irony that they have to invoke strong conservative names to make the medicine go down? It should have been likened to Lenin or Stalin.

  8. Claudia says:

    about all I saw in this speech that he gave tonight was a rehash of his campaign speeches….. he didn’t say anything new, with the exception of the veiled attacks on Bush and the Repbs at various times, he did NOT say anything concrete about how all of this will come about and how he will reduce the deficit that summarily he “inheritd” from Bush, which was a bold faced lie…… He is responsible to over 1 trillion of that deficit, he and he alone (well, with the help of Pelosi and Reid), and he did mention that there will be a tax on Carbon emissions, and an increase of taxation on businesses and the wealthiest 2% of Americans and that the businesses will be under severe orders as well as the Governors and legislators of each state to make sure that all the money is spent according to his rules, and Biden will have an army of overseers to guide that, oh, and every kid will have total kindergarten to and through college educations, and we will all have total state oriented health insurance care that will guide and monitor the way we are treated (but he didn’t say that some of that treatment may be denied because of those medical records being stored and many older people will be deemed needing too much) and a stopage of torturing of Military prisoners and a cut to several integral things that we need to protect our country from invasion or terrorism.

    All in all, it was just another campaign speech and I am severely disappointed in everything OBAMA stands for, and he didn’t change my mind at all on anything important that we know is coming down the pike at us through all of his massive communist ways. He is taking this country, albiet not looking like it from his rhetoric, but he is really taking this country right into Socialism and then to Communism, with not one side-step.

    Reno, NV

  9. Anonymous says:

    Another empty response by another Republican with no ideas. Tax cuts are not the answer for an economy. I don’t know about you nitwits, but $8-$13 bucks a week doesn’t help me. Stop worrying about socialism. One, it’ll never happen in this country. Two, we saw what unrestrained capitalism did under Bush. The rich got richer and the poor got poorer.

  10. Anonymous says:

    I listened to Soetoro’s speech and he is a smooth talker. If only I could believe for one second that the things he said were true I wouldn’t feel so hopeless right now. It just makes me sick the way Pelosi “drools” all over him like a cat in heat and a couple of times it looked like she wanted to pick her nose or something. As the cameras panned the room I kept saying, yep, tax cheats, thugs, traitors, etc. I like Jindal but it was quite annoying the way his mic kept breaking up on this end. For me it was really hard to follow everything he was saying but I was hoping for a much tougher response. God bless America!


  11. Anonymous says:

    “Jindal should also use his excellent communications skills to explain exactly why he and other Republican governors will likely reject some of the funds from the so-called “stimulus” bill destined for the states.”

    Not just Republican Governors:
    Tulsa: Oklahoma Gov. Brad Henry voices funding concern
    Stimulus money may be ‘catch-22’
    BY JIM MYERS – Tulsa World
    Published: February 24, 2009

  12. Andrea says:

    Jindal’s message was realistic, and powerful…he has reiterated what a lot of us have been thinking just using common sense. The stimulus money is going to be a money pit, with short term jobs going to government run offices, to government contractors, and special interest groups..while increasing debt non-stop. I don’t see how it will stimulate much relief for most of the working citizens, and almighty credit is not what makes this country run…we need to get back to what made this country great…not borrowing money from banks, but producing tangible products , having small growing businesses, and creating stable jobs so we can earn before we spend. The theory of creating more credit and asking the public to spend (when we have no money) for an answer to save our country is insane. I am now a Jindal fan……Also….their polls are ridiculous….just like the slanted news media. 1,100 people cannot answer for millions of Americans across the US.

  13. dc says:

    Here’s a plus: Open letter from:

    Charles E. Jones
    Brigadier General US Air Force, Retired

    “We the People of the United States of America” are entitled to know the legal qualifications of the President and Commander in Chief. For the better good and National Security of “We the People of the United States” and for Absolute Command of the Military Forces of the United States, I whole heartedly support the efforts of Dr. Orly Taitz, ESQ for taking legal action to determine whether or not Barack Hussein Obama, aka Barry Soetoro, Citizen of Indonesia and possibly citizen of Kenya, is eligible to become President of the United States and Commander in Chief of the United States Armed Forces.

    Now this is AMERICAN!!

  14. Anonymous says:

    It couldn’t have been any worse tonight. The content was erased by his walk, his talk and poor sound quality. He’s smart, he’ll spin up.

  15. Anonymous says:

    Jindal: Content OK but his delivery was really lacking. He does not inspire me at all. I don’t get the attraction to this guy.

  16. sharon says:

    Well, I thought Bobby did a good job… Obama scared me. I try so hard not to get uptight and fall into the conspiracy crowd, but he is an arrogant man who appears to have absolutely no concern about going anywhere. He does not even attempt to hide his so called “change” – He appears to be very settled in the white house.. Do you think we could become a one party system? Do you think the agenda is really that large? I am getting concerned.

  17. MIDDLE CLASS GUY says:

    Jindal is a good man but I do not understand all the effort to set him for 2012. He has the same problem as Soetoro. He is not a NBC. The press will not stand by and watch as they did with Soetoro.

    Palin needs to get into the race. She is the future of the traditional American agenda.

    Thanks, Ken

  18. tm says:

    Jindal too long,(I understand nerves) to get it going by the time it got interesting and he was “on” it was over.
    Mr. Steele, can we try Palin for next year?
    Did not think the Chairman hit it outta the park either -sounded just like all his campaign speeches with unbelieveable bold face arrogant lies.
    PS I held myself down to not rip the TV apart – it was hard – I sat with my hands under me and rocked back and forth
    This will be a very long 4 years.
    If there is a next State of the Union -unless the chairman outlaws them – I think I will definitely need alcohol to watch it, for the safety of my television.

  19. Anonymous says:

    Senator questions Obama eligibility
    Shelby: ‘They said he was born in Hawaii, but I haven’t seen any birth certificate’

    Posted: February 22, 2009
    6:50 pm Eastern

    © 2009 WorldNetDaily

    Sen. Richard Shelby, R-Ala.

    WASHINGTON – A U.S. senator has weighed in on the continuing controversy over Barack Obama’s eligibility for office by saying he has never seen proof the new president was actually born in Hawaii.

    “Well, his father was Kenyan and they said he was born in Hawaii, but I haven’t seen any birth certificate,” Sen. Richard Shelby, R-Ala., told constituents in Cullman County. “You have to be born in America to be president.”

    Where’s the proof Barack Obama was born in the U.S. or that he fulfills the “natural-born American” clause in the Constitution? If you still want to see it, join more than 250,000 others and sign up now!

    WND has reported on multiple legal challenges to Obama’s status as a “natural born citizen.” The Constitution, Article 2, Section 1, states, “No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President.”

    Some question whether he was actually born in Hawaii, as he insists. If he was born out of the country, Obama’s American mother, the suits contend, was too young at the time of his birth to confer American citizenship to her son under the law at the time.

    Other challenges have focused on Obama’s citizenship through his father, a Kenyan subject to the jurisdiction of the United Kingdom at the time of his birth, thus making him a dual citizen. The cases contend the framers of the Constitution excluded dual citizens from qualifying as natural born.

    (Story continues below)

    Here is a partial listing and status update for some of the cases over Obama’s eligibility:

    New Jersey attorney Mario Apuzzo has filed a case on behalf of Charles Kerchner and others alleging Congress didn’t properly ascertain that Obama is qualified to hold the office of president.

    Philip J. Berg, a Pennsylvania Democrat, demanded that the courts verify Obama’s original birth certificate and other documents proving his American citizenship. Berg’s latest appeal, requesting an injunction to stop the Electoral College from selecting the 44th president, was denied.

    Leo Donofrio of New Jersey filed a lawsuit claiming Obama’s dual citizenship disqualified him from serving as president. His case was considered in conference by the U.S. Supreme Court but denied a full hearing.

    Cort Wrotnowski filed suit against Connecticut’s secretary of state, making a similar argument to Donofrio. His case was considered in conference by the U.S. Supreme Court, but was denied a full hearing.

    Former presidential candidate Alan Keyes headlines a list of people filing a suit in California, in a case handled by the United States Justice Foundation, that asks the secretary of state to refuse to allow the state’s 55 Electoral College votes to be cast in the 2008 presidential election until Obama verifies his eligibility to hold the office. The case is pending, and lawyers are seeking the public’s support.

    Chicago attorney Andy Martin sought legal action requiring Hawaii Gov. Linda Lingle to release Obama’s vital statistics record. The case was dismissed by Hawaii Circuit Court Judge Bert Ayabe.

    Lt. Col. Donald Sullivan sought a temporary restraining order to stop the Electoral College vote in North Carolina until Barack Obama’s eligibility could be confirmed, alleging doubt about Obama’s citizenship. His case was denied.

    In Ohio, David M. Neal sued to force the secretary of state to request documents from the Federal Elections Commission, the Democratic National Committee, the Ohio Democratic Party and Obama to show the presidential candidate was born in Hawaii. The case was denied.

    In Washington state, Steven Marquis sued the secretary of state seeking a determination on Obama’s citizenship. The case was denied.

    In Georgia, Rev. Tom Terry asked the state Supreme Court to authenticate Obama’s birth certificate. His request for an injunction against Georgia’s secretary of state was denied by Georgia Superior Court Judge Jerry W. Baxter.

    California attorney Orly Taitz has brought a case, Lightfoot vs. Bowen, on behalf of Gail Lightfoot, the vice presidential candidate on the ballot with Ron Paul, four electors and two registered voters.
    In addition, other cases cited on the RightSideofLife blog as raising questions about Obama’s eligibility include:

    In Texas, Darrel Hunter vs. Obama later was dismissed.

    In Ohio, Gordon Stamper vs. U.S. later was dismissed.

    In Texas, Brockhausen vs. Andrade.

    In Washington, L. Charles vs. Obama.

    In Hawaii, Keyes vs. Lingle, dismissed.
    WND senior reporter Jerome Corsi had gone to both Kenya and Hawaii prior to the election to investigate issues surrounding Obama’s birth. But his research and discoveries only raised more questions.

    The governor’s office in Hawaii said there is a valid certificate but rejected requests for access and left ambiguous its origin: Does the certificate on file with the Department of Health indicate a Hawaii birth or was it generated after the Obama family registered a Kenyan birth in Hawaii, which the state’s procedures allowed at the time?

  20. Anonymous says:

    Jindal was horrible. Say goodbye to the 2012 ticket.

  21. song! says:

    Looks like the Republicans don’t have any candidates to represent them that qualify under the Constitution to run for President. Could this be why they let Obama’s big problem slide.


  22. Anonymous says:

    Published on Gold Anti-Trust Action Committee (
    Ex-Treasury official confirms gold suppression scheme
    By cpowell
    Created 2009-02-24 22:13

    5p ET Tuesday, February 24, 2009

    Dear Friend of GATA and Gold:

    In an essay published today at, former Assistant Treasury Secretary Paul Craig Roberts confirms that the U.S. government has been leasing gold to suppress its price and support the dollar. The admission is made in the last paragraph of the essay, which is appended.

    CHRIS POWELL, Secretary/Treasurer
    Gold Anti-Trust Action Committee Inc.

    * * *

    Doomed by the Myths of Free Trade: How the Economy Was Lost

    By Paul Craig Roberts
    Tuesday, February 24, 2009 [1]

    The American economy has gone away. It is not coming back until free trade myths are buried 6 feet under.

    America’s 20th century economic success was based on two things. Free trade was not one of them. America’s economic success was based on protectionism, which was ensured by the union victory in the Civil War, and on British indebtedness, which destroyed the British pound as world reserve currency. Following World War II, the US dollar took the role as reserve currency, a privilege that allows the US to pay its international bills in its own currency.

    World War II and socialism together ensured that the US economy dominated the world at the mid-20th century. The economies of the rest of the world had been destroyed by war or were stifled by socialism [in terms of the priorities of the capitalist growth model: Editors.]

    The ascendant position of the US economy caused the US government to be relaxed about giving away American industries, such as textiles, as bribes to other countries for cooperating with America’s cold war and foreign policies. For example, Turkey’s US textile quotas were increased in exchange for overflight rights in the Gulf War, making lost US textile jobs an off-budget war expense.

    In contrast, countries such as Japan and Germany used industrial policy to plot their comebacks. By the late 1970s, Japanese auto makers had the once dominant American auto industry on the ropes. The first economic act of the “free market” Reagan administration in 1981 was to put quotas on the import of Japanese cars in order to protect Detroit and the United Auto Workers.

    Eamonn Fingleton, Pat Choate, and others have described how negligence in Washington aided and abetted the erosion of America’s economic position. What we didn’t give away, the United States let be taken away while preaching a “free trade” doctrine at which the rest of the world scoffed.

    Fortunately, the U.S.’s adversaries at the time, the Soviet Union and China, had unworkable economic systems that posed no threat to America’s diminishing economic prowess.

    This furlough from reality ended when Soviet, Chinese, and Indian socialism surrendered around 1990, to be followed shortly thereafter by the rise of the high speed Internet. Suddenly American and other First World corporations discovered that a massive supply of foreign labor was available at practically free wages.

    To get Wall Street analysts and shareholder advocacy groups off their backs, and to boost shareholder returns and management bonuses, American corporations began moving their production for American markets offshore. Products that were made in Peoria are now made in China.

    As offshoring spread, American cities and states lost tax base, and families and communities lost jobs. The replacement jobs, such as selling the offshored products at Wal-Mart, brought home less pay.

    “Free market economists” covered up the damage done to the US economy by preaching a New Economy based on services and innovation. But it wasn’t long before corporations discovered that the high speed Internet let them offshore a wide range of professional service jobs. In America, the hardest hit have been software engineers and information technology (IT) workers.

    The American corporations quickly learned that by declaring “shortages” of skilled Americans, they could get from Congress H-1b work visas for lower paid foreigners with whom to replace their American work force. Many US corporations are known for forcing their US employees to train their foreign replacements in exchange for severance pay.

    Chasing after shareholder return and “performance bonuses,” US corporations deserted their American workforce. The consequences can be seen everywhere. The loss of tax base has threatened the municipal bonds of cities and states and reduced the wealth of individuals who purchased the bonds. The lost jobs with good pay resulted in the expansion of consumer debt in order to maintain consumption. As the offshored goods and services are brought back to America to sell, the US trade deficit has exploded to unimaginable heights, calling into question the US dollar as reserve currency and America’s ability to finance its trade deficit.

    As the American economy eroded away bit by bit, “free market” ideologues produced endless reassurances that America had pulled a fast one on China, sending China dirty and grimy manufacturing jobs. Free of these “old economy” jobs, Americans were lulled with promises of riches. In place of dirty fingernails, American efforts would flow into innovation and entrepreneurship. In the meantime, the “service economy” of software and communications would provide a leg up for the work force.

    Education was the answer to all challenges. This appeased the academics, and they produced no studies that would contradict the propaganda and, thus, curtail the flow of federal government and corporate grants.

    The “free market” economists, who provided the propaganda and disinformation to hide the act of destroying the US economy, were well paid. And as Business Week noted, “outsourcing’s inner circle has deep roots in GE (General Electric) and McKinsey,” a consulting firm. Indeed, one of McKinsey’s main apologists for offshoring of US jobs, Diana Farrell, is now a member of Obama’s White House National Economic Council.

    The pressure of jobs offshoring, together with vast imports, has destroyed the economic prospects for all Americans, except the CEOs who receive “performance” bonuses for moving American jobs offshore or giving them to H-1b work visa holders. Lowly paid offshored employees, together with H-1b visas, have curtailed employment for older and more experienced American workers. Older workers traditionally receive higher pay. However, when the determining factor is minimizing labor costs for the sake of shareholder returns and management bonuses, older workers are unaffordable. Doing a good job, providing a good service, is no longer the corporation’s function. Instead, the goal is to minimize labor costs at all cost.

    Thus “free trade” has also destroyed the employment prospects of older workers. Forced out of their careers, they seek employment as shelf stockers for Wal-Mart.

    I have read endless tributes to Wal-Mart from “libertarian economists,” who sing Wal-Mart’s praises for bringing low price goods, 70 per cent of which are made in China, to the American consumer. What these “economists” do not factor into their analysis is the diminution of American family incomes and government tax base from the loss of the goods producing jobs to China. Ladders of upward mobility are being dismantled by offshoring, while California issues IOUs to pay its bills. The shift of production offshore reduces US GDP. When the goods and services are brought back to America to be sold, they increase the trade deficit. As the trade deficit is financed by foreigners acquiring ownership of US assets, this means that profits, dividends, capital gains, interest, rents, and tolls leave American pockets for foreign ones.

    The demise of America’s productive economy left the US economy dependent on finance, in which the US remained dominant because the dollar is the reserve currency. With the departure of factories, finance went in new directions. Mortgages, which were once held in the portfolios of the issuer, were securitized. Individual mortgage debts were combined into a “security.” The next step was to strip out the interest payments to the mortgages and sell them as derivatives, thus creating a third debt instrument based on the original mortgages.

    In pursuit of ever more profits, financial institutions began betting on the success and failure of various debt instruments and by implication on firms. They bought and sold collateral debt swaps. A buyer pays a premium to a seller for a swap to guarantee an asset’s value. If an asset “insured” by a swap falls in value, the seller of the swap is supposed to make the owner of the swap whole. The purchaser of a swap is not required to own the asset in order to contract for a guarantee of its value. Therefore, as many people could purchase as many swaps as they wished on the same asset. Thus, the total value of the swaps greatly exceeds the value of the assets.* [See footnote.)

    The next step is for holders of the swaps to short the asset in order to drive down its value and collect the guarantee. As the issuers of swaps were not required to reserve against them, and as there is no limit to the number of swaps, the payouts could easily exceed the net worth of the issuer.

    This was the most shameful and most mindless form of speculation. Gamblers were betting hands that they could not cover. The US regulators fled their posts. The American financial institutions abandoned all integrity. As a consequence, American financial institutions and rating agencies are trusted nowhere on earth.

    The US government should never have used billions of taxpayers' dollars to pay off swap bets as it did when it bailed out the insurance company AIG. This was a stunning waste of a vast sum of money. The federal government should declare all swap agreements to be fraudulent contracts, except for a single swap held by the owner of the asset. Simply wiping out these fraudulent contracts would remove the bulk of the vast overhang of "troubled" assets that threaten financial markets.

    The billions of taxpayers' dollars spent buying up subprime derivatives were also wasted. The government did not need to spend one dime. All government needed to do was to suspend the mark-to-market rule. This simple act would have removed the solvency threat to financial institutions by allowing them to keep the derivatives at book value until financial institutions could ascertain their true values and write them down over time.

    Taxpayers, equity owners, and the credit standing of the US government are being ruined by financial shysters who are manipulating to their own advantage the government's commitment to mark-to-market and to the "sanctity of contracts." Multi-trillion dollar "bailouts" and bank nationalization are the result of the government's inability to respond intelligently.

    Two more simple acts would have completed the rescue without costing the taxpayers one dollar: an announcement from the Federal Reserve that it will be lender of last resort to all depository institutions including money market funds, and an announcement reinstating the uptick rule.

    The uptick rule was suspended or repealed a couple of years ago in order to permit hedge funds and shyster speculators to ripoff American equity owners. The rule prevented short-selling any stock that did not move up in price during the previous day. In other words, speculators could not make money at others' expense by ganging up on a stock and short-selling it day after day.

    As a former Treasury official, I am amazed that the US government, in the midst of the worst financial crises ever, is content for short-selling to drive down the asset prices that the government is trying to support. No bailout or stimulus plan has any hope until the uptick rule is reinstated.

    The bald fact is that the combination of ignorance, negligence, and ideology that permitted the crisis to happen still prevails and is blocking any remedy. Either the people in power in Washington and the financial community are total dimwits or they are manipulating an opportunity to redistribute wealth from taxpayers, equity owners and pension funds to the financial sector.

    The Bush and Obama plans total 1.6 trillion dollars, every one of which will have to be borrowed, and no one knows from where. This huge sum will compromise the value of the US dollar, its role as reserve currency, the ability of the US government to service its debt, and the price level. These staggering costs are pointless and are to no avail, as not one step has been taken that would alleviate the crisis.

    If we add to my simple menu of remedies a ban, punishable by instant death, for short selling any national currency, the world can be rescued from the current crisis without years of suffering, violent upheavals and, perhaps, wars.

    According to its hopeful but economically ignorant proponents, globalism was supposed to balance risks across national economies and to offset downturns in one part of the world with upturns in other parts. A global portfolio was a protection against loss, claimed globalism's purveyors. In fact, globalism has concentrated the risks, resulting in Wall Street's greed endangering all the economies of the world. The greed of Wall Street and the negligence of the US government have wrecked the prospects of many nations. Street riots are already occurring in parts of the world. On Sunday February 22, the right-wing TV station, Fox "News," presented a program that predicted riots and disarray in the United States by 2014.

    How long will Americans permit "their" government to rip them off for the sake of the financial interests that caused the problem? Obama’s cabinet and National Economic Council are filled with representatives of the interest groups that caused the problem. The Obama administration is not a government capable of preventing a catastrophe.

    If truth be known, the "banking problem" is the least of our worries. Our economy faces two much more serious problems. One is that offshoring and H-1b visas have stopped the growth of family incomes, except, of course, for the super rich. To keep the economy going, consumers have gone deeper into debt, maxing out their credit cards and refinancing their homes and spending the equity. Consumers are now so indebted that they cannot increase their spending by taking on more debt. Thus, whether or not the banks resume lending is beside the point.

    The other serious problem is the status of the US dollar as reserve currency. This status has allowed the US, now a country heavily dependent on imports just like a third world or lesser-developed country, to pay its international bills in its own currency. We are able to import $800 billion annually more than we produce, because the foreign countries from whom we import are willing to accept paper for their goods and services.

    If the dollar loses its reserve currency role, foreigners will not accept dollars in exchange for real things. This event would be immensely disruptive to an economy dependent on imports for its energy, its clothes, its shoes, its manufactured products, and its advanced technology products.

    If incompetence in Washington, the type of incompetence that produced the current economic crisis, destroys the dollar as reserve currency, the "unipower" will overnight become a third world country, unable to pay for its imports or to sustain its standard of living.

    How long can the US government protect the dollar's value by leasing its gold to bullion dealers who sell it, thereby holding down the gold price? Given the incompetence in Washington and on Wall Street, our best hope is that the rest of the world is even less competent and even in deeper trouble. In this event, the US dollar might survive as the least valueless of the world's fiat currencies.

    *(An excellent explanation of swaps can be found here.)


    Paul Craig Roberts was assistant secretary of the treasury in the Reagan administration. He is coauthor of "The Tyranny of Good Intentions." He can be reached at

    * * *

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  23. Anonymous says:

    Moderator-Please delete this comment, if it was posted twice. I wasn’t sure if it posted on the first try.

    God! what a bunch of pissy whiners. I used to love to come to this site and read all of the excellent comments from citizens that seemed to draw on an internal strength, ready for the fight that they knew was coming. There was fire and strength and American grit plastered in every syllable that was posted.

    Now, wwaaaah, ee, ee, waaaaah! Oh, poor us, forget about it, we’re doooooooomed.

    Get over yourselves and nut up. You haven’t even started this fight and already the liberal democrats are making serious mistakes.

    If you did nothing, you still might be able to win back congress in 2010. If you work hard, it will be like eating snow cones in Phoenix. And infinitely more satisfying.

    Quit complaining and whining. It makes you appear weak and believe it or not, many liberals are reading your posts and judging your attitudes by what is going on.

    I know. I live with two of them that read conservative posts regularly and report back to a liberal student group that reports back to a community group, that reports to others, up and up.

    They want you to give up and quit the fight because the sooner you do that, the less trouble there is for them. If you haven’t noticed, when conservatives get the loudest and start making fun of Obama, feeling strong about their position and making waves, team Obama gets flustered and starts having trouble and looking stupid.

    Like I say, I live with a couple of these reader/posters and they are the most out of touch, spoiled, girl/guy I know.

    I don’t talk about my political views with them, actually I didn’t know that I felt so strongly Republican until I started living at this house, but as soon as I can afford or find a different living situation I am moving.

    But please, for the love of God, quit whining and rediscover your boldness and determination. These liberals are giant groups that work in teams and many post as “Republicans” that are disappointed in their party and feel that the democrats are going to just win anyway so what’s the use.

    Stop, stop, stop… seriously, these people that upset you so much, are complete idiots. Don’t let a bunch of punks take down America. Obama is the biggest punk of all, imagine what he was probably like in college, that is who you are dealing with. That is who has you so worried about losing your country. Are you really going to let that happen.

    I’m not, that’s why I finally posted this.

  24. Anonymous says:

    I agree with Claudia’s post above that Obama was rehashing his campaign speech full of socialist promises like:

    1) free college tuition to the kids who join his ‘civilian volunteer’ movement/army (and forget that most of those currently dropping out of high school and college AREN’T SMART ENOUGH to finish college, or they would be);

    2) socialized medicine (which he SAYS will be ironed out by members of BOTH parties….but we saw how much input Republicans and conservatives had in drafting the so-called ‘stimulus’ bill, so don’t hold your breath. He’s already killing babies. Next will be the elderly, denied health care and left to die, then ‘elimination’ of the retarded and disabled, and ‘mercy killing’ of everyone else with a ‘problem’ or incurable illness. Note that he INSISTED “health care reform must be passed THIS YEAR”);

    3) taxation on the “wealthiest 2%” and a promise of “no raised taxes on anyone making under $250,000″ (though he forgot to mention the tax increase EVERYONE will get when Bush’s tax cuts expire);

    4) and the “cap and trade” carbon emissions penalties/taxes that will drive most of our energy producers into bankruptcy, and leave Americans (many of which are now unemployed) with a choice of either buying exhorbitantly expensive electricity or having no electricity at all. Aside from Global Warming not existing, and carbon emissions having no effect on weather temperature, and American energy plants already eliminating smokestack pollution (unlike China, which must be trying to reduce its population through respiratory disease), the elimination of coal as an energy source in this country is INSANITY, unless Obama’s INTENTION is the destruction of an entire industry and, consequently, thousands of Americans freezing to death every winter and dying of heatstroke every summer.

    As for our nasty ‘dependence on foreign oil’ which Obama plans to eliminate through American turbine and solar panel production, why can’t foreign oil be replaced with AMERICAN oil, drilled on U.S. land and in U.S. waters? Why is American oil drilling not considered part of the solution?

    If wind and solar were the EASY, CHEAP answer, we’d already be using them. Anyone building a rural home knows how very, very expensive wind and solar systems are, and how INEFFICIENT they are in producing electricity. T.Boone Pickens has spent billions for wind turbines, but needs the government to spend billions on transmission towers to get his electricity to the city….where consumers will pay MORE for their ‘free’ wind energy than they’re currently paying–and Dallas already pays one of the highest electric rates in the country. Add to that the cost of hundreds of thousands of solar panels in Western deserts, along with transmission towers, and ‘free’ solar electricity makes coal look dirt cheap.

    This is Obama’s BRILLIANT plan for rescuing the economy…to pay only UNION WORKERS (read his executive orders) to build wind turbines and solar panels which, when connected to transmission towers built and installed by union workers, will provide a TINY FRACTION of the electricity produced by the coal industry, at a higher cost to consumers WHO CAN NO LONGER AFFORD ELECTRICITY ANYWAY, because they’re non-union, WHITE CONSTRUCTION WORKERS who’ve lost their jobs (‘stimulus’ jobs go to minorities), and even if they still have jobs they can’t afford electricity, because the PRICE OF ELECTRICITY SKYROCKETS as coal-burning power plants, which can’t afford cap and trade taxes, shut down (also shutting down coal mines, which lay off miners, since demand for coal plummets as power plants close). As more coal-burning plants shut down, the greater the SHORTAGE OF ELECTRICITY grows, and the greater the shortage grows, the HIGHER THE PRICE grows, so that, even if there’s enough electricity produced for you to buy some, you won’t be able to AFFORD to buy any.

    If that’s the economic turnaround we’ll have just from Obama’s energy policy, imagine what he, Pelosi and Reid can do to our HEALTHCARE.

    My stomach turned almost from the beginning of this charade last night.

    When the Supreme Court Justices filed in, **beaming from ear to ear**, KNOWING FULL WELL THEY’VE TURNED THEIR BACK ON THE CONSTITUTION, shirked their duty, and betrayed the trust of the American people by facilitating the illegal usurpation of the U.S. Presidency by a foreign-born, narcissistic, EVIL SATANIST intent on replacing what’s left of our Republic with Communism, and driving our nation into BANKRUPCY and third-world poverty, so that we can become slaves of his ‘handlers’, it was all I could do not to throw up. HOW CAN THOSE NINE TRAITORS LOOK AT THEMSELVES IN THE MIRROR?

    The ‘Obama Lovefest’ by our Congress was more than I could bear. Every sentence from his mouth brought a standing ovation, clapping and cheering for his socialist rhetoric, once empty but now ominously foretelling of what lies in our near future. Can our Congressmen all be so BLINDED by this snake charmer, or are they just as evil as Obama?

    Then there was Pelosi – so enraptured with Obama, she looked like a 13-year-old girl having her first fantasy about her favorite movie star, magically standing in front of her. THESE are the FOOLS we have leading this country???

    For me, the highlight of the evening was when Obama, making excuses for closing the Guantanamo prison, promised the terrorists will pay for their crimes. Did you notice that Pelosi immediately leapt to her feet (as she, VP Stooge Biden, and all the Democrats had done with his every sentence all evening….but a camera pan of the Chamber revealed that ONLY A HANDFUL of Congressmen stood to applaud that remark.

    Is seems even our liberal, socialist Democrats in Congress can see the folly in turning Radical Islamic Terrorists loose on American soil.

    Score one tiny one for the Gipper.

  25. whats_up says:

    Middle Class Guy,

    Why would you think Jindal is not a Natural Born Citizen, he was born in Louisiana, that right there qualifies him.

  26. song! says:

    Jindal is not qualified to be President because he is not a Natural Born Citizen..

    both parents had to be citizens of the US..

  27. whats_up says:


    Thats incorrect, according to Federal Code you only have to have been born in the United States which Jindal was, no where in the US Code does it state that both parents must be american born.

  28. song! says:

    No sorry you are wrong. I believe the Constitution in spite of the Resident of the United States, BO, says differently.

    But, not to be argumentative, really, I found Jindal, to be uninspiring…I had hoped for more>


  29. whats_up says:


    I am wrong? Please point in the Constitution where it says that both parents must be American, you wont find it there. The only place that defines natural born citizen is US Code, I am sorry you dont like it, but that is the way it is.

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