Jimmy Carter's Legacy: Part I, Department of Education
By 1980, Americans had invented a thing called a Misery Index which served to highlight the failures of the President, his policies, and just generally how disillusioned we all were. Time, Newsweek, the New York Times, the Washington Post, The L.A. Times, and just about every other major print news organization ran very well written articles posing the question of just how impossible the job of being President had become, and could anybody actually perform the task. After all, we were all assured that Jimmy Carter was indeed the smartest man to ever hold his office, and if he was a miserable failure, than there truly was no one capable of performing this impossible task of being the nation's chief executive. While it is true that Jimmy Carter, "inherited," most of the problems that he faced as President, it is also true that he made each and every one of the problems inherited worse. By the time the general election of 1980 rolled around, every polling organization told us that the election was too close to call. The day after the election, Jimmy Carter had managed to replace George McGovern as the worst landslide butt whooping recipient in our 204 year history. America had had enough of hope and change, at least for the next 28 years it would seem.
If that story seems familiar with another charismatic come from nowhere President, that just means that you are paying attention. What we Americans have such a hard time learning however is that the consequences of our actions have effects which last much longer than the immediate time frame in which they are implemented. Looking over Jimmy Carter's legacy, since his policies are the spitting image of those policies being inflicted upon us today by our current President, we can see that many of the problems that we face today are as a direct result of electing Jimmy Carter President 32 years ago.
The Department of Education was established as a manufactured outrage to raise our national test scores. It seems that allowing local control of our schools had been producing students who supposedly were not competing favorably with students in the same age group from foreign nations. The whole concept was to give us the gift of a government bureaucracy which would aid the local school boards in raising our education standards to the levels seen in other industrialized nations. The Department of Health, Education, and Welfare was split into the Department of Education, and the Department of Health and Human Services. At the time, America ranked fourth on a standardized scale of measuring student success.
So, here we are 32 years later, and how did it all work out for us. Today, America ranks 26th, on that very same same standardized scale of measuring student success. The Department of Education is entirely at the control of the Public Teachers Union, and the more money we pour into the system to educate our young, the more that money is not used to actually educate our kids, but instead used to line the pockets of the bureaucrats and politicians who are controlling the purse strings. Consider this for one moment, our school districts in this country which spend the most per student, are coincidentally the worst performing school districts. Washington D.C. and Detroit top that list as the most expensive per student districts in the nation. On average, private schools have a cost of one half the cost associated per student as the public system, and yet, the students produced by that system have College Board test scores which are laughably higher than their public system counterparts.
What we get now are excuses such as, "they teach to the test." I am still waiting for someone to explain to me why that is bad, even if it were true, which has yet to be proven. We are told that if we did not have wars to pay for, or a military to feed, we would be able to spend even more on education. Every school district in the nation is constantly putting a bond issue on the ballot to increase taxes for every single election, and the promised improvements never seem to happen. Since the advent of the Department of Education, our children are less capable of performing the most mundane of academic tasks, but somehow feel much better about their capabilities. The result of course is a large collection of 20 something thugs banded together occupying every down town area in the country with Sociology degrees that they have just realized nobody with work to be performed finds useful.
Dennis Miller once asked this wise beyond belief question.
Knowing that our children can not multiply two by two, but do understand how the number four feels is only the second scariest thing about all of this is to me. Knowing that this highly unpopular and only 32 year old federal bureaucracy, which was established by our least popular and generally recognized as our worst ever President, is so entrenched into our psyche, that the thought of removing it causes widespread panic and heart palpitations. The Department of Education has not achieved its original mandate. It has not shown any success at all, and yet, we still insist on treating it as though it were an indispensable piece of America itself.
Do We really want to send our children out into the s*** storm that is adult life completely unprepared? Rather than giving them a degree in Sociology, we should teach them to just repeat, "do you want fries with that today sir?"
When I was a retail manager, working for the F.W. Woolworth Company, I would sometimes interview college graduates for our Assistant Manager Training Program. During the 1980's, these fresh faced little tykes would line up and proclaim themselves to be worth $50,000 per year. My response was always the same. "Why stop there? I am sure that your mother would tell me that you are worth $1 Million per year. The problem you see is that you need to be worth it to somebody. For us here at the Woolworth Company, an assistant manager learning how to run a Woolworth store is worth $300 per week."
The problem is not that our students today are not learning anything. It is that they are not learning anything useful. They are learning how to be good communist citizens just fine. Unfortunately, in a free market system, being a good communist will lead to nothing but a collection of spoiled disillusioned thugs demanding that someone else put food on their tables and supply them with free ipads and such.
Next Friday my look at the Carter Legacy will continue with the Department of Energy.
Jimmy Carter's Legacy: Part II, Department of Energy
During the early days of his Presidency, Jimmy Carter proposed a new cabinet level department, the first of two such creations under his Presidency. The purpose of the Department of Energy, as originally sold to the American people was to, "end our dependence on foreign oil." The Department of Energy was Jimmy Carter's solution to the pain inflicted upon our nation by the Opec oil embargoes of the early 1970's, the shortages further inflicted upon us by Richard Nixon's ill advised price controls, and the oil producers' cartel bent on using their monopoly to not only manipulate the market place for profit, but for political purposes as well. Trouble in the Middle East seemingly related itself immediately to a disruption in our supplies here, half a world away. It does not take an economist with the stature of Friedman or Sowell to tell you that cheap affordable energy is literally the single most important resource to keep and grow a vibrant and lucrative manufacturing base. The idea behind the new federal bureaucracy was to have the government aid in the development and production of energy, from within our own borders, so that we need never buy it again from nations who would seek to do us harm, economically, politically, diplomatically, or physically.
Early tests of the Department of Energy:
During the brutally cold fall of 1977, the United Mine Workers began their much anticipated strike for the second time. The coal miners were not working from December 6, 1977 through March 19, 1978. Growing up in West Virginia, we all knew that the strike was coming. Indeed, every electric power company and steel producer in the nation had been building their inventory of bituminous coal and held those inventories in huge stock piles outside of their plants and factories. Every day during that 110 day period, I would go to school during the day, and wear my winter coat indoors, as the heat was kept seemingly just above the point where water freezes, and then go home to do my homework and listen to the nightly national news give a 5 minute long report on how much coal was used that day, how much was left, and how many days of heat we might reasonably expect to have left. That figure was measured against the expected length of winter. There was a concerted national effort underway to conserve electricity, including government sponsored radio spots to turn off lights in rooms when not in use, and to not turn our heating dials up past 65 degrees. Jimmy Carter himself gave a fire side chat from his residence wearing a pastel sweater that became the lore of late night comedians everywhere. Such is the birth of increased governmental scope.
During the early part of 1980, shockingly we managed to get Opec mad at us once again, and they inflicted another embargo upon us. The Department of Energy's response was to set price controls and a new twist was proposed and signed into law. Jimmy Carter went before a joint session of Congress and proposed his Windfall Profit Tax. When the price for oil spiked on the world market, naturally, oil companies began to charge more for their trouble of buying it, refining it, shipping it, and marketing it. The President and his allies noticed that the prices for gasoline at the pump spiked much faster than that process could have actually worked. They decided to create a law which punished those oil companies for making an, "excess," profit beyond what the executive branch felt to be fair. The result of course was a shortage of oil which lasted until the law was repealed in 1988. During the height of the shortage in 1980, the Department of Energy actually had to ration gasoline during the summer months. People with even numbered plates were allowed the privilege of suffering miles long gas lines to purchase fuel on Tuesdays, Thursdays, and Saturdays. People with odd numbered plates had the privilege to by gasoline on Mondays, Wednesdays, and Fridays. Every one was allowed to buy gasoline on Sundays, provided one could find an open gas station, that actually had gasoline to sell.
From the Kinks in 1979.
This is the folly of removing free market principles from the market place. The law of unintended consequences will rear its ugly head, almost immediately, and punish you twice as hard at least. The result of course from the embargo, coupled with the vilifying of speculators, and the windfall profit tax was that companies who made their living on selling oil, only sold enough of the substance to cover their fixed expenses exactly, and then they stopped. The message was that if you only want us to make x amount of profit, so be it. Not one penny more will we earn. So, when Exon Mobile hit the amount of profit approved by the Executive Branch, they simply turned the spigots off. With the magic of price controls, gasoline disappeared even more quickly from the market place. Even Presidents it seems, do not have the power to repeal the laws of supply and demand. Literally, as highlighted by this Kinks song, the price for illegal drugs sold in the United States was less and more easily obtained than the substance which fueled our economic engine.
The two decades long oil crisis of the 70's and 80's was not entirely the fault of Jimmy Carter. The crisis began with the Nixon Administration, as his policies, at least economically and domestically speaking, were more in line with the Democrat Party than with his own. I have found Milton Friedman's observations on Nixon to be quite interesting. He always gave Nixon credit for being the smartest President he had met with, but pointed to his lack of political will to stay with the right course of action. Nixon knew the right answers, but unlike Reagan, was not willing to suffer the ill effects of reintroducing the free market principles once they had been removed. Both Nixon and Reagan knew that there would be a two to three year period in which we would suffer a hangover from removing the bottle provided by excessive government intervention. Nixon was not willing to risk reelection by allowing that hangover to take effect, and Reagan was. What is true however of the Carter Presidency is that he took a problem, and yes it was a major one when he was inaugurated, and he managed to make it worse.
Department of Energy, The Adolescent Years:
This is something that I have just learned recently. when our Congress Critters write a new law, including for example those creating new government bureaucracies, they leave the language as vague and impossible for the lay person to understand as they might be able to manage. The rules for the new law, if you can believe it are almost always left up to the Executive Branch to write on their own, and then control is exerted upon that agency in the future by granting them, or not granting them funding. So, when the 96th Congress for example created the Department of Energy, the rules of what exactly that agency would and would not be responsible for, and what broad ranging authority it would ultimately have would depend not upon the law creating it, but upon the Department's new chief, in our example, James R. Schlesinger. Over the years, once the people are appointed to their various positions, and then the hires are made, future administrations are only able to control the existing apparatus through very limited means. This is an important point, because there is a real danger here, to, "We the People," and our republic.
Once a person is hired by the Department of Energy, into a non appointed position, it is damned near impossible to fire them. So, when Joe Democratdonor for example is hired, he is basically there for life. Presidents have the ability to appoint their own people to the top managerial positions, but the underlings hired on previously are still the team that they are stuck with. So, and please follow me to my point here, when a Republican wins the White House, and does not grow the government by hiring more people who can not be fired, and then the next Democrat wins the Executive Branch, Bill Clinton for example, he merely tells his appointees to hire more folks to his or her team. Pretty soon, no matter who is in charge, the organic growth of the bureaucracy tends to favor the big government crowd. Also worth noting is that no matter who is in charge, those agencies will almost always be peopled with staunch supporters of the Democrat Party. Indeed, recent polls of government employees show that the Democrats enjoy a 90/10 polling advantage permanently.
The other thing thing that happens is that restriction on the scope of the agency can only be obtained by limiting its funding. Once the rules are in place, those rules generally tend to stay forever. New rules can be added, but they seldom if ever are eliminated, or altered to grant diminishing authority. So, the respite for electing a small government proponent is at best a temporary solution. Since the non appointed positions can never be eliminated according to the federal human resources guidelines, those people will get paid regardless, and if the budget is slashed to the point where they can inflict no mischief, they'll merely enjoy the 4 year coffee break until the next election. You can bet your bottom dollar that Barack Obama has fully funded everything to inflict maximum regulating hell upon us all. Discretionary spending has doubled during his 42 months in charge so far.
Here is a list of the Department of Energy political appointees.
Here is the list of Department of Energy facilities.
Secretary of Energy
Deputy Secretary
Under Secretary of Energy for Energy and Environment
Office of Civilian Radioactive Waste Management
Office of Electricity Delivery and Energy Reliability
Office of Energy Efficiency and Renewable Energy
Office of Environmental Management
Office of Fossil Energy
Office of Legacy Management
Office of Nuclear Energy, Science & Technology
Under Secretary of Energy for Science
Office of Science
Under Secretary of Energy for Nuclear Security
National Nuclear Security Administration
Office of Secure Transportation
Office of Intelligence and Counterintelligence
Energy Information Administration
Bonneville Power Administration
Southeastern Power Administration
Southwestern Power Administration
Western Area Power Administration
Federal Energy Regulatory Commission
You may have noticed that one of the political appointees is responsible for duplicating exactly the efforts of the EPA, and also enforces exactly what the EPA is already budgeted to do as a part of the Department of the Interior. Both the Department of Defense and the Department of Energy are responsible for monitoring all nuclear materials in our Navy, and nuclear missiles, as well as the Department of Interior. Hospitals across the country now get to contend with the NRC, EPA, Obamacare, DoE, DoD, because they use radioactive material for treating cancer and for x-rays. The funny thing is, often times the rules for each agency conflict directly with one of the others, who also wrote themselves into the picture.
Albany Research Center
Ames Laboratory
Argonne National Laboratory
Bannister Federal Complex
Bettis Atomic Power Laboratory – focuses on the design and development of nuclear power for the U.S. Navy.
Brookhaven National Laboratory
Center for Functional Nanomaterials (under design or construction)
Center for Integrated Nanotechnologies (under design or construction)
Center for Nanophase Materials Sciences
Center for Nanoscale Materials (under design or construction)
Environmental Measurements Laboratory (now affiliated with the Department of Homeland Security)
Fermi National Accelerator Laboratory
Idaho National Laboratory
Kansas City Plant
Knolls Atomic Power Laboratory – operates for Naval Reactors Program Research under the DOE – DOE facility, not a National Laboratory
Lawrence Berkeley National Laboratory
Lawrence Livermore National Laboratory
Los Alamos National Laboratory
National Energy Technology Laboratory
National Petroleum Technology Office
National Renewable Energy Laboratory
Nevada Test Site
New Brunswick Laboratory
Oak Ridge National Laboratory
Office of Fossil Energy[1]
Office of River Protection[2] (Hanford Site)
Pacific Northwest National Laboratory
Pantex
Radiological and Environmental Sciences Laboratory
Sandia National Laboratories
Savannah River National Laboratory
SLAC National Accelerator Laboratory
Thomas Jefferson National Accelerator Facility
Y-12 National Security Complex
Yucca Mountain nuclear waste repository
The Verdict:
How has the Department of Energy done in its 32 years? I am still hearing about our disastrous dependence on foreign oil. So, in its initial mission, the Department of Energy can only be labeled as a miserable failure. The secondary purpose, as highlighted by Jimmy Carter's symbolic instillation of useless solar panels on the roof of the White House was also to develop all sources of energy, oil and gas included, for production here in the United States. Somehow, it only took 32 years, but that mission has changed somewhat. Today the Department of Energy's mission is to prevent in any way possible any source of energy which has proven itself a viable form of energy, from ever coming to market. We often hear the liberals tell us the we can not simply drill our way out of our energy problems, as though not a single one of us has every seen the supply and demand curves in our 7th grade economics class. When President Bush announced the end of the Executive Branch moratorium on off shore drilling, the price per barrel for oil fell by $6 within an hour's time.
There is an old saying in business. If you ever successfully spin straw into gold, no one will congratulate you for the fine accomplishment, they will be too busy finding you more straw. Such is the plight of the oil producers in our society. Their product has proven itself so useful and indeed valuable, that nobody bothers to thank them for bringing it to market. I know that the profit is their thanks, but even with that, there seems to be a certain resentment attached. Oil, and energy in general is now considered a basic human right, and those profits are considered not to be the economic measure of how much straw the oil companies have spun into gold, but how much flesh they have connived from the public in exchange for delivering the basic human right.
The reason that venture capitalists are not investing their money into alternative sources of energy is that they recognize that they will soon lose every penny invested, just like our government did. Jimmy Carter's White House Solar Panels did not ultimately produce enough electricity to power the type writers of the White House secretarial staff. After 32 years of government subsidy into centuries old forms of energy being labeled as the technology of the future, we still get less than one percent of our electricity needs from those sources, at a cost which when all of the DoE's meddling is calculated, is thousands of times higher than the more efficient conventional methods which our government is attempting to bankrupt. There is not one thing embarked upon by the Department of Energy than can objectively labeled as even remotely useful or beneficial to our country. That's being kind. The truth is even worse. This federal behemoth is actively seeking now to do damage to our nation, and is succeeding in that attempt.
Next week's installment will look at Iran and that nation's impact upon today.
Jimmy Carter's Legacy: Part III, Iran
As a young teen kid growing up in the mountains of West Virginia, I got to see a lot of political contradictions, and more importantly, a lot of the consequences of those contradictions. while in the 9th grade, Iran went through a revolution. I knew two people at that time who's fathers were members of the Shah's government. One was a child attending a private school in the area, who simply found himself abandoned in America once the revolution took place. The other was the daughter of a single mother, her father's existence was simply a mystery to every one in town. As it turns out, Tiffany's father was Ali Tabatabaei, the Shah's ambassador to the United States. Those of us in our little circle of friends watched the nightly news every evening, as they reported about the young democrats and their brave struggle to over throw the thuggish oppressive regime of the Shah. The next day, our friends would vehemently oppose that meme so expertly amplified by a press corps more interested in pushing a political agenda than in reporting actual facts in any type of objective manner. The truth of the matter was that the Shah of Iran knew much better than did any member of the press what he was up against when dealing with the Islamists whom he had exiled 30 years previously. The Shah understood all too well, that in order to defeat an enemy that worshiped death over life and were willing to use their own children as bombs and human shields for instance, you would need to be every bit as brutal in your retaliation to their attacks. He also knew that in order to maintain that victory, he would need to remain every bit as hard when dealing with those still existent and very active enemies.
Unfortunately for the Shah, and the 90% of Iranians that were not hard line Islamists, 1976 saw America elect a President who ran on a platform of Hope and Change. For those of you who have not figured it out yet, Hope and Change boils down to Marxist economic theory and projecting American weakness abroad when the question of helping our allies is concerned, and projecting American might when the question of chastising our allies is concerned. The economic malaise of the Carter years is well known, but time has worked its magic to place those years beyond the memory of most. The Carter years also saw one of our only allies in the Middle East, Iran, turn into our bitter enemy and saw a soviet invasion of Afghanistan that lasted 20 years. You may have noticed that both countries have managed to make the news recently.
It is fruitless to discuss the situation in Iran or Afghanistan today without consideration of the Carter policies of 36 years ago. When Jimmy Carter announced that his foreign policy would focus on, "human rights," the young teen age version of myself was thrilled. At last I thought, we, the bastion of freedom and justice for the world to see would help to free countless multitudes of oppressed people around the globe. I remember being thrilled when Jimmy Carter himself worked to see to it that the U.N. established a blue ribbon panel on Human Rights. The predecessor to the U.N.H.R.C. of course met with much fan fare, and found the tiny nation of Israel to be the only violator of Human Rights on the planet, besides Iran. The response from our President, that self proclaimed champion of human rights, was to praise the thoughtful and groundbreaking work of the U.N. panel. Thus began my transformation from liberal to conservative, which would take a few more years, but that is where it started.
The Shah lost his ability to control the Islamist militants bent on building their caliphate in Iran when Jimmy Carter effectively abandoned that nation. America's change in policy was swift and sudden. Over night, Jimmy Carter basically told the Shah, and all who opposed him that the United States would not help him at all with any military support. The young Democrats, who like in so many other instances, were merely pawns used to be the shock troops of the revolution, were soon forgotten once the revolution itself was complete. There is a reason for that of course. They were the very first to be hunted down and executed by the Mullah's once the revolution was completed. The Soviets called these types of people, "useful idiots," when describing their well documented plans to take over our own nation. It seems that once the revolution was done, they were no longer useful. It was also apparent to the Mullahs that young democrats who would overthrow the Shah for being a thuggish brute would be even more disillusioned once they saw what the Islamists had in store for them. You don't want young students who have already shown a knack for successful revolution to still be around for your shot at being an even more oppressive regime.
Iran went from being a staunch ally to a bitter enemy literally within one year's time. In the 34 years since 1978, Iran has attacked our sovereign soil, (embassies are considered such,) held hundreds of Americans hostages, committed multiple terrorist attacks upon our interests and people, sponsored terrorist attacks to be committed by others, created Hezbollah and used it as a proxy to wage unending warfare against Israel, Usurped power in Lebanon, Assassinated political leaders in Lebanon and Syria that would not bend to their will, and all of this because of Jimmy Carter's Hope and Change becoming U.S. foreign policy.
The direct result of the Carter Presidency upon the Middle East was that it forever became an even more dangerous place than it was before his Presidency. Every Administration since Carter has had to face a vastly more dangerous and aggressive form of militant Islam. What was once only a minor irritant for Americans had been transformed almost immediately into the most dangerous and aggressive enemy we had ever seen. While it is true that their current level of technology is no match for our own, they have something that we do not. This is an army completely unfettered by the basic human instinct of self preservation. They will not be burdened by the desire to protect their loved ones. They worship death and view martyrdom as the ultimate act of devotion for their God of darkness. When the Italians invaded Northern Africa, someone asked Irwin Rommel how an enemy armed with only rocks and sticks could hope to defeat the heavily armored Italian Army. He answered how can the Italians hope to defeat an enemy willing to fight their army with rocks and sticks. Eventually, the Italians had to ask Rommel for help in completing that conquest.
This part of the Carter legacy is pertinent today, because it is being played out all over again, exactly as it happened in 1978. The parallels between Iran and Egypt are stark. The reporting of the main stream media is exactly the same. A group of young doe eyed students effected a coup, and the hard liner Islamic Militants seized power once the useful idiots had completed their tasks. The useful idiots were among the first to be rounded up and executed as martyrs, and anyone who dares to dissent with the shift to Sharia Law will be dealt with brutally. The indigenous Christian population is scrambling to get out, and those who choose to remain live in constant fear of being slaughtered. Now it seems that the good people our President supports are just ducky with necrophilia. Hope and change has a strange consequence attached to it. But who could have seen it coming? Only 48% of the country who remembered Jimmy Carter, that's who. Cross Posted at Musings of a Mad Conservative.
Many of life's lessons are capable of imparting more than one pearl of wisdom. The brightest and best among us are capable of learning not only from their own mistakes, but from those so thoughtfully provided by others as well. Enron provides one such example of this in action. Two years before Enron exploded, the company fired her accountants, Arthur Anderson, and hired a rival firm, Anderson Little. The reason given to Arthur Anderson and the shareholders of Enron was that the accounting giant, "did not possess the creative thinking and vision that management was seeking to push their company to the next level." This red flag, which was the response to Arthur Anderson's refusal to publish the corporate report produced by Enron without the disclaimer's Arthur Anderson demanded as an accompaniment to their signature was ignored by Anderson Little, who signed of without demanding a similar disclosure. Anderson Little won that particular piece of accounting business, and now there are 7 major accounting firms instead of 8. The other lesson Enron provided, as most of their employees had 90% or more of their 401k's in Enron Stock, was that your financial advisers are probably right when they jump up and down and scream about diversification. (As a side note, if anybody reading this has more than 5% of their 401k in their company's stock, change it immediately, you are playing Russian roulette with your retirement.) Another pearl of wisdom provided by the Enron example is that governments will misidentify the reasons for a problem developing, and then propose and implement solutions that will do almost the exact opposite of what they promise as the over reaching solutions. We got Sarbanes Oxley as a result of Enron, a broad reaching law that made committing a crime extra double illegal and created a new level of compliance for publicly traded companies designed to prevent nothing. It costs U.S. consumers Billions though, each and every year.
As the Berenstain Bears would say, the Community Reinvestment Act provides several great examples of what not to do. One day in 1977, the weekly long CBS propaganda broadcast, 60 Minutes, aired a piece detailing how Black and White patrons seeking home loans were treated differently and shown houses of differing values and in different neighborhoods. While the network news team came up woefully short in presenting actual evidence to back up their claims, they were able to provide ample snippets of situations designed to invoke an emotional response. it did not take long for Congress or our President to react either. This is where our current economic crisis was born.
The original act passed in 1977 gave the government permission to intrude itself upon the risk committees of companies who made their living by lending money to people who wished to purchase houses. That intrusion manifested itself as a panel of politically appointed bureaucrats with zero real world experience in lending money or analyzing risk telling people facing actual consequences what aspects to risk taking that they must legally now ignore and what they were now allowed to consider.
In 1989, the law was amended to now dictate that special interest advocacy groups could demand non public records from financial institutions in order to perform their own quantitative analysis which would compete with the banks existing risk committees. Those special interest advocacy groups were then allowed to publish their opinions in a very broad manner as to how they rated the performance of the institutions based on what ever their particular interests may be.
In 1991, the law was amended, as per the schedule established with the 1989 amendment to now have a government agency rate an institution's performance as well, based on the data collected not by themselves, but by the special interest groups mentioned before. It also introduced monetary incentives to banks for approved behaviors in the form of tax credits for meeting the criteria of the concerned advocacy groups.
The 1992 Amendment saw the introduction of special tax rebates going to banks with a qualified percentage of minority and or female ownership. It also introduced Fannie Mae and Freddie Mac being directed to purchase mortgages from banks made to low income households and in qualified neighborhoods, presumably in areas considered to be decaying urban areas.
In 1994, we decided that the prohibition against banks being allowed to cross state lines was in order, but only for those institutions that were approved by the CRA board. Advocacy groups were solicited for their input into this activity, and thus even more pressure was brought to bear on activity which further disregarded internal risk committees.
The 1995 changes saw the functional end to any internal risk assessment. This was the year that welfare receipts including the housing and food allotment became legal to use as proof of income. It was also the year that the government exerted pressure to decrease down payment standards. Regulators were also given the ability to use ethnic standards and comparisons of the number of total loans written in order to grade compliance with the act. In other words, a bank was now forced to write so many loans to Black customers and so many to Asian customers, etc. These numbers were considered irrespective of the number of applications taken.
1999 saw the end of the Glass Steagall Act. Banks were now fully capable of acting as broker dealers fully participating in selling securities. This is where mortgages were first pooled together, bundled and then sold as an investment product.
The 2005 changes to the law merely served to re clarify the special interest standards imposed by the 1995 changes. As the demographics of our nation changed, so did the quotas for the numbers of loans made to specific ethnic groups, whether a borrower would have existed or not.
The 2007 change to the law may be perhaps the most insane of all. Ethnic barriers were removed and replaced with the phrase low income. That's right, banks were now being forced to loan large sums of money to people identified as not capable of paying it back, and were now legally obligated to make a specific number of such loans as dictated by their total asset value.
To add the cherry to the top of idiocy, in 2008 we decided that it would be a good idea to tie the number of student loans allowed to the CRA compliance.
For those of you keeping score at home, every addition to the act from 1995 onward legally mandated banks to loan money in a, "predatory," manner.
So now you may ask, what does all of this mean?
The broader lessons we can take from this act are numerous. Social engineering of our capital markets do not work out well at all. Social engineering does not benefit our society. Equality of the rules governing our society as they apply to every citizen is a good thing, forcing an equality of results will end ultimately in disaster. More importantly, even the least talked about aspect of a President's 4 year term in office can have a far reaching impact upon American life, and indeed world living standards 31 years after that President enacted his vision. Prior to the financial crisis, Jimmy Carter's name invoked discussions on the energy crisis, Iran, stagflation, the Misery Index, rampant unemployment experienced during the 70's, but almost no one saw this one act as the disaster that it would become. Republicans talked of a need to reign in Fannie and Freddie during the earliest part of the Bush 43 years, but this particular act was not only left alone, but actually bolstered during that time frame.
One of the other lessons here is how hard it is to repeal a bad law. Even after the crisis became the crisis it is, and even after its causes became well known to anyone paying attention, CRA is still the law of the land today. Fannie and Freddie were left out completely from any consideration of the Dodd Frank Law, which was supposedly passed as the response to the crisis. The answer of our banks of course to the continuing prospect of the mandates that say, if you lend money to anyone, you must lend also to people who will not be able to pay you back, is to simply not lend any money. Who can blame them?
Unfortunately for the Shah, and the 90% of Iranians that were not hard line Islamists, 1976 saw America elect a President who ran on a platform of Hope and Change. For those of you who have not figured it out yet, Hope and Change boils down to Marxist economic theory and projecting American weakness abroad when the question of helping our allies is concerned, and projecting American might when the question of chastising our allies is concerned. The economic malaise of the Carter years is well known, but time has worked its magic to place those years beyond the memory of most. The Carter years also saw one of our only allies in the Middle East, Iran, turn into our bitter enemy and saw a soviet invasion of Afghanistan that lasted 20 years. You may have noticed that both countries have managed to make the news recently.
It is fruitless to discuss the situation in Iran or Afghanistan today without consideration of the Carter policies of 36 years ago. When Jimmy Carter announced that his foreign policy would focus on, "human rights," the young teen age version of myself was thrilled. At last I thought, we, the bastion of freedom and justice for the world to see would help to free countless multitudes of oppressed people around the globe. I remember being thrilled when Jimmy Carter himself worked to see to it that the U.N. established a blue ribbon panel on Human Rights. The predecessor to the U.N.H.R.C. of course met with much fan fare, and found the tiny nation of Israel to be the only violator of Human Rights on the planet, besides Iran. The response from our President, that self proclaimed champion of human rights, was to praise the thoughtful and groundbreaking work of the U.N. panel. Thus began my transformation from liberal to conservative, which would take a few more years, but that is where it started.
The Shah lost his ability to control the Islamist militants bent on building their caliphate in Iran when Jimmy Carter effectively abandoned that nation. America's change in policy was swift and sudden. Over night, Jimmy Carter basically told the Shah, and all who opposed him that the United States would not help him at all with any military support. The young Democrats, who like in so many other instances, were merely pawns used to be the shock troops of the revolution, were soon forgotten once the revolution itself was complete. There is a reason for that of course. They were the very first to be hunted down and executed by the Mullah's once the revolution was completed. The Soviets called these types of people, "useful idiots," when describing their well documented plans to take over our own nation. It seems that once the revolution was done, they were no longer useful. It was also apparent to the Mullahs that young democrats who would overthrow the Shah for being a thuggish brute would be even more disillusioned once they saw what the Islamists had in store for them. You don't want young students who have already shown a knack for successful revolution to still be around for your shot at being an even more oppressive regime.
Iran went from being a staunch ally to a bitter enemy literally within one year's time. In the 34 years since 1978, Iran has attacked our sovereign soil, (embassies are considered such,) held hundreds of Americans hostages, committed multiple terrorist attacks upon our interests and people, sponsored terrorist attacks to be committed by others, created Hezbollah and used it as a proxy to wage unending warfare against Israel, Usurped power in Lebanon, Assassinated political leaders in Lebanon and Syria that would not bend to their will, and all of this because of Jimmy Carter's Hope and Change becoming U.S. foreign policy.
The direct result of the Carter Presidency upon the Middle East was that it forever became an even more dangerous place than it was before his Presidency. Every Administration since Carter has had to face a vastly more dangerous and aggressive form of militant Islam. What was once only a minor irritant for Americans had been transformed almost immediately into the most dangerous and aggressive enemy we had ever seen. While it is true that their current level of technology is no match for our own, they have something that we do not. This is an army completely unfettered by the basic human instinct of self preservation. They will not be burdened by the desire to protect their loved ones. They worship death and view martyrdom as the ultimate act of devotion for their God of darkness. When the Italians invaded Northern Africa, someone asked Irwin Rommel how an enemy armed with only rocks and sticks could hope to defeat the heavily armored Italian Army. He answered how can the Italians hope to defeat an enemy willing to fight their army with rocks and sticks. Eventually, the Italians had to ask Rommel for help in completing that conquest.
This part of the Carter legacy is pertinent today, because it is being played out all over again, exactly as it happened in 1978. The parallels between Iran and Egypt are stark. The reporting of the main stream media is exactly the same. A group of young doe eyed students effected a coup, and the hard liner Islamic Militants seized power once the useful idiots had completed their tasks. The useful idiots were among the first to be rounded up and executed as martyrs, and anyone who dares to dissent with the shift to Sharia Law will be dealt with brutally. The indigenous Christian population is scrambling to get out, and those who choose to remain live in constant fear of being slaughtered. Now it seems that the good people our President supports are just ducky with necrophilia. Hope and change has a strange consequence attached to it. But who could have seen it coming? Only 48% of the country who remembered Jimmy Carter, that's who. Cross Posted at Musings of a Mad Conservative.
Jimmy Carter's Legacy: Part IV, Community Reinvestment Act
As the Berenstain Bears would say, the Community Reinvestment Act provides several great examples of what not to do. One day in 1977, the weekly long CBS propaganda broadcast, 60 Minutes, aired a piece detailing how Black and White patrons seeking home loans were treated differently and shown houses of differing values and in different neighborhoods. While the network news team came up woefully short in presenting actual evidence to back up their claims, they were able to provide ample snippets of situations designed to invoke an emotional response. it did not take long for Congress or our President to react either. This is where our current economic crisis was born.
The original act passed in 1977 gave the government permission to intrude itself upon the risk committees of companies who made their living by lending money to people who wished to purchase houses. That intrusion manifested itself as a panel of politically appointed bureaucrats with zero real world experience in lending money or analyzing risk telling people facing actual consequences what aspects to risk taking that they must legally now ignore and what they were now allowed to consider.
In 1989, the law was amended to now dictate that special interest advocacy groups could demand non public records from financial institutions in order to perform their own quantitative analysis which would compete with the banks existing risk committees. Those special interest advocacy groups were then allowed to publish their opinions in a very broad manner as to how they rated the performance of the institutions based on what ever their particular interests may be.
In 1991, the law was amended, as per the schedule established with the 1989 amendment to now have a government agency rate an institution's performance as well, based on the data collected not by themselves, but by the special interest groups mentioned before. It also introduced monetary incentives to banks for approved behaviors in the form of tax credits for meeting the criteria of the concerned advocacy groups.
The 1992 Amendment saw the introduction of special tax rebates going to banks with a qualified percentage of minority and or female ownership. It also introduced Fannie Mae and Freddie Mac being directed to purchase mortgages from banks made to low income households and in qualified neighborhoods, presumably in areas considered to be decaying urban areas.
In 1994, we decided that the prohibition against banks being allowed to cross state lines was in order, but only for those institutions that were approved by the CRA board. Advocacy groups were solicited for their input into this activity, and thus even more pressure was brought to bear on activity which further disregarded internal risk committees.
The 1995 changes saw the functional end to any internal risk assessment. This was the year that welfare receipts including the housing and food allotment became legal to use as proof of income. It was also the year that the government exerted pressure to decrease down payment standards. Regulators were also given the ability to use ethnic standards and comparisons of the number of total loans written in order to grade compliance with the act. In other words, a bank was now forced to write so many loans to Black customers and so many to Asian customers, etc. These numbers were considered irrespective of the number of applications taken.
1999 saw the end of the Glass Steagall Act. Banks were now fully capable of acting as broker dealers fully participating in selling securities. This is where mortgages were first pooled together, bundled and then sold as an investment product.
The 2005 changes to the law merely served to re clarify the special interest standards imposed by the 1995 changes. As the demographics of our nation changed, so did the quotas for the numbers of loans made to specific ethnic groups, whether a borrower would have existed or not.
The 2007 change to the law may be perhaps the most insane of all. Ethnic barriers were removed and replaced with the phrase low income. That's right, banks were now being forced to loan large sums of money to people identified as not capable of paying it back, and were now legally obligated to make a specific number of such loans as dictated by their total asset value.
To add the cherry to the top of idiocy, in 2008 we decided that it would be a good idea to tie the number of student loans allowed to the CRA compliance.
For those of you keeping score at home, every addition to the act from 1995 onward legally mandated banks to loan money in a, "predatory," manner.
So now you may ask, what does all of this mean?
The broader lessons we can take from this act are numerous. Social engineering of our capital markets do not work out well at all. Social engineering does not benefit our society. Equality of the rules governing our society as they apply to every citizen is a good thing, forcing an equality of results will end ultimately in disaster. More importantly, even the least talked about aspect of a President's 4 year term in office can have a far reaching impact upon American life, and indeed world living standards 31 years after that President enacted his vision. Prior to the financial crisis, Jimmy Carter's name invoked discussions on the energy crisis, Iran, stagflation, the Misery Index, rampant unemployment experienced during the 70's, but almost no one saw this one act as the disaster that it would become. Republicans talked of a need to reign in Fannie and Freddie during the earliest part of the Bush 43 years, but this particular act was not only left alone, but actually bolstered during that time frame.
One of the other lessons here is how hard it is to repeal a bad law. Even after the crisis became the crisis it is, and even after its causes became well known to anyone paying attention, CRA is still the law of the land today. Fannie and Freddie were left out completely from any consideration of the Dodd Frank Law, which was supposedly passed as the response to the crisis. The answer of our banks of course to the continuing prospect of the mandates that say, if you lend money to anyone, you must lend also to people who will not be able to pay you back, is to simply not lend any money. Who can blame them?
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