Ron Paul on the current mess

Bailouts will lead to rough economic ride – “the government’s preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention. Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership. Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.

Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks. These governmental measures, combined with the Federal Reserve’s loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.

When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable. Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.

I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.

Additionally, the government’s actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term. The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.

It is time this process is put to an end.”

Youtube with Ron Paul on Fox News about the AIG Bailout – 9/17/08

So you think we have only two choices for President? Think again! Cut through all the crap and Write-In Ron Paul for President!

Update 09/30/08 – Saw this today and just HAD to add it here. It is so right. When a business fails, they SHOULD close and file for bankruptcy. Let the market correct itself. (Thanks for the nice comments!)

Bankruptcy, not bailout, is the right answer – “The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared. The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company. Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This “moral hazard” generates enormous distortions in an economy’s allocation of its financial resources. Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street’s hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents. The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.” – Source

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Electrical field could boost gas efficiency

20% boost…hmmmm…

“According to Rongjia Tao, Chair of Temple’s Physics Department, the small device consists of an electrically charged tube that can be attached to the fuel line of a car’s engine near the fuel injector. Report on PDF – Electric-Field Assisted Fuel Atomization. With the use of a power supply from the vehicle’s battery, the device creates an electric field that thins fuel, or reduces its viscosity, so that smaller droplets are injected into the engine. That leads to more efficient and cleaner combustion than a standard fuel injector, he says. Six months of road testing in a diesel-powered Mercedes-Benz automobile showed that the device increased highway fuel from 32 miles per gallon to 38 mpg, a 20 percent boost, and a 12-15 percent gain in city driving. Temple has applied for a patent (20030089596 – May 15, 2003) on this technology, which has been licensed to California-based Save The World Air, Inc., an environmentally conscientious enterprise focused on the design, development, and commercialization of revolutionary technologies targeted at reducing emissions from internal combustion engines. / Method and apparatus for increasing and modulating the yield shear stress of electrorheological fluids – Abstract – A method for increasing and/or modulating the yield shear stress of an electrorheological fluid includes applying a sufficient electric field to the fluid to cause the formation of chains of particles, and then applying a sufficient pressure to the fluid to cause thickening or aggregation of the chains. An apparatus for increasing and/or modulating the transfer or force or torque between two working structures includes an electrorheological fluid and electrodes through which an electric field is applied to the fluid such that particles chains of particles are formed in the fluid and, upon application of pressure to the fluid, the chains thicken or aggregate and improve the force or torque transmission. (via zpenergy.com” – Source

Axon 100mpg wonder car

2010? No telling what will happen by then.

“It’s just a car. it’s called Axon, and it’s just a car. It has a petrol engine, four wheels. So why is it supposed to be the greenest breakthrough in the automotive sector? “Because it can do 100 miles to the gallon with less than half the CO2 emissions of an average car,” said Steven Cousins, the founder of Axon. Axon Automotive, a new British car company – no seriously – has built its first model out of carbon fibre. The engine is made of metal, yes, but almost everything else is carbon: The chassis, the structure, even the body. The engine is innovative, of course, but it’s someone else’s bright idea – a two-cylinder, 500 cc block, and tiny, at 26 kg. It was designed by Ptech in Norfolk, and it’s pretty high-tech, for all that. If something goes wrong, you send the engine to Norfolk, where they read the built-in black box, discover what the fault was, and send you a new one back while they fix the old one. The first cars should appear on the road in 2010, and should cost £10,500 – and should reach 85 mph top.” – Source

Ionizing Radiation Extends Life

Now this is fascinating!

“Low radiation doses extend human life, Russian biologist says. Ionizing radiation affects genes, which are responsible for cell ageing. X-rays and gamma rays in low and medium doses extend life of various laboratory animals on 10-29% is not surprising. Small doses of radiation promote immunity and cell division, as well as initiate other mechanisms of cell defense. But another explanation exists. Russian biologist tends to think that exposure to radiation damages DNA molecules and causes formation of free radicals, which in their turn, lead to premature aging and death of cells. However, first cells that die are usually the most sensitive to stress and unable to repair their DNA. Death of these cells does no harm to the whole organism, because new healthy cells quickly replace dead ones. Perhaps, this is the way an organism reacts on low radiation does and on any other externally induced stress.” – Source

Video – Peter Schiff PREDICTED THIS HOUSING MARKET DISASTER

“The guy they’re laughing at is Peter Schiff, economic advisor for Ron Paul. Peter Schiff was recently on the Fox Business, and Fox’s Cashin-in. He is the author of Crashproof:How to profit from the coming economic collapse. Peter Schiff is a regular contributer to Fox Business news, and is the president of Euro-Pacific capital. He is an economic advisor for Republican Presidential candidate Ron Paul. Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, commodities, gold and the dollar, he is becoming increasingly more renowned. – Source. / And this video interview from January 1st, again warns of imminent collapse and where Schiff supports Ron Paul. / Think we only have 2 choices for President? Think again.”

Car Works Pushover Gate (Feb, 1951)

What a slick way to setup a self-opening gate!

“William Benke got tired of jumping in and out of his car to open the gate to his west Texas ranch. So he invented the automatic gate at left. The car pushes down the gate (top photo); rides over it (center); then, after hydraulic checks hold it down, it rises (bottom). Hawley Mfg. Co., Houston, makes the Push-Over Gate.” – Source

Small Wind Energy on the Rise in US

Grassroots energy generation, gotta love it!

“According to the American Wind Energy Association (AWEA), interest in small wind technology is on the rise. The association says 10,000 turbines were sold in the U.S. last year and that number is expected to grow by 20 percent a year. Consumers can choose from hundreds of models on the market ranging from US $14,000 to $60,000. The industry says the average U.S. household uses about 1,000 kilowatt-hours (kWh) of electricity a month. These units can produce between 400 to 1,000 kWh per month depending on the available wind.” – Source

Nuclear Detection By Cellphone

As long as that phone is on, you can be tracked and information gathered, even to turning it on without you knowing so you can be recorded.

“Researchers at Purdue University are working on tech that will turn every cellphone into a roaming nuclear weapon sniffer and are lobbying Congress to legally require cellphone users and carriers to participate. The Distributed Nuclear Detection by Ubiquitous Cellphone project would be kind of like the massive cellphone dragnet in The Dark Knight, but it would look for terrorists sneaking dirty bombs and nuclear weapons instead of the Joker.” – Source

Solar Panels Are Vanishing, Only to Reappear on the Internet

Now here is a market for gps, security and offensive protection systems.

“Police departments in California — the biggest market for solar power, with more than 33,000 installations — are seeing a rash of such burglaries, though nobody compiles overall statistics. Investigators do not believe the thieves are acting out of concern for their carbon footprints. Rather, authorities assume that many panels make their way to unwitting homeowners, sometimes via the Internet. Beyond California, solar-power markets are comparatively small, so thefts are still rare — but they are spreading. In the last 18 months, Oregon’s highway department has lost a few panels used to power portable traffic message boards. In Europe, where the solar industry is well-established, thievery is entrenched, and measures to ward it off have become standard, including alarm systems and hard-to-unscrew panels. But in the United States, installers are just coming to grips with the need for alarms, video cameras and indelible engraving of serial numbers.” – Source

Inventor offers High Efficiency Vehicle Modifications – Needs Investors

This guy really needs a group or company to back him up. He has several versions, all novel and interesting.

“Video – Car Inventor Tony Fini – You may have seen Local Inventor Tony Fini driving around the southtowns in cars he built from scratch. He said they get between 40 and 100 miles per gallon. “Combination of the transmissions and the weight loss, in the smaller vehicles, the combination of things.” The retired Frontier industrial arts teacher has built seven experimental vehicles in the garage and basement of his Blasdell home. Oe of the cars uses electricity and solar power and some are gasoline powered, but use hydraulic motors. One 1904 Curved Dash Olds replica gets 100 miles per gallon. One of his cars, the Jeep-like vehicle, is 25 years old. Fini said it gets between 40 and 60 miles per gallon, and he doesn’t just drive it around. He’s also taken it to Toronto numerous times and also to the outskirts of Chicago. People have asked about them. While they get great mileage, Fini said he’d have to mass produce them to be practical. “I’ve told them $35,000-40,000 if I have to build one custom made just for you. On the other hand, if we run a line of 100 of them, I’m sure I’d get that down to about $12,000.” Fini said he spent about a quarter of a million dollars of his own money. “I went to the Department of Energy, I went to the national bureau of standards, I even went to the McCarthur Foundation, zero.” Fini said it took him about nine months to build each vehicle.” – Source