New Online Articles

Much is made, in the U.S. right-wing media, of the alleged socialist tendencies of the current administration. According to this view Barack Obama is an avowed Marxist hell-bent on turning the Republic into a European-style socialist state.

The current occupant of the White House certainly has some leftist leanings, as do many members of the Democratic Party. But it might be more accurate to see his agenda less as a pursuit of socialism than as an extension of policies already initiated under his predecessor.

Let us review these policies, starting with foreign affairs.

As far as the Bush-initiated military conflicts are concerned, little has changed. The withdrawal from Iraq has not been accelerated and proceeds as the previous administration left it. A repeat of the Bush surge policy is being attempted in Afghanistan.

Operations in Pakistan and Somalia are being pursued along previous lines.

China remains the predominant partner, with the Sino-American relationship now being extended beyond the economic realm to the strategic one. North Korea is allowed to fester so long as Beijing allows it, while Russia is being treated as a quasi-pariah, just as before.

The Bush policy of globalization remains in force. The remedy to the economic meltdown is, as previously, seen in government spending and various bail-outs rather than in investment in job-producing activity.

The primary emphasis remains on the financial sector, seen as the foundation and heart of economic activity, as opposed to the real economy. The provision of liquidity to the financial industry, at enormous cost to the taxpayer, remains the primary priority. At the same time domestic investment, which provides employment and income to the taxpayer, remains neglected.

It can certainly be argued that long-established policies cannot be changed within the space of a few months, or even a year. But the continuity between the two administrations reaches further then the above.

In domestic politics the main priority common to both is the continued increase and reach of the power of the executive branch.

Under the previous administration the doctrine of the unitary state was used to enlarge executive power in all areas relating to national security. In parallel the independence of the executive from legislative control was fostered by the generalized use of signing statements, through which the president took exception from many provisions of the bills he signed.

While the previous president used the War on Terror as the justification for increasing executive reach, the current one has relied primary on the economic crisis.

The financial meltdown has not only allowed to extract huge budget increases from a willing congress, but to extend executive reach into many sectors of the national economy. This extension has been accompanied by the creation of various offices and functions, collectively referred to under the term tsar, under exclusive White House supervision.

These offices, and the individuals who occupy them, are outside the regular cabinet structure as well as outside congressional supervision.

The development of such an extra-constitutional governing structure, erected hastily under the cover of economic urgency, potentially leads to the creation of a parallel government hierarchy, free from constitutional checks and balances, and loyal only to the chief executive and his immediate circle.

Such a parallel hierarchy would be similar to the one erected in the Soviet Union by the Communist Party, with cells supervising government departments at all levels. The Communist Party, of course, was loyal only to the Party General Secretary, the de facto sole ruler of the USSR.

A development along similar lines in the U.S. does not necessarily signify the rising of a Marxist conspiracy, as some commentators have suggested. But it does signal a drift away from the principle of separation of powers supported by constitutional checks and balances. As such, it raises two red flags.

First we need to remember that the increased reach of the central government will further lower its efficiency. A bigger government with more extensive powers will not give us a better economy or a more efficient administration, but drifts instead towards the discredited Soviet model, which collapsed not because it was Communist, but because it was massively inefficient.

The second and more important point is that the U.S. constitution is not a quaint, antiquated document. It is one of the towering achievements of human political thought. This nation has been, through the kindness of fate and the wisdom and heroism of its early citizens, been blessed with this extraordinary code of political conduct. It behooves us not to discard it lightly for the sake of ill-guided expediency.

Jacek Popiel’s career spanned military service and international business development. His new book outlines how energy, economics and politics converge on the current world scene. For more articles and information: http://www.viableenergynow.com

The stimuls bill passed seven months ago contained an $8,000 tax credit limited to first time home buyers. At the time many believed it would have the impact of taking a knife to a gun fight. They were wrong. The tax credit combined with historically low interest rates turned out to be the driving force to stem decline within the housing market.

What happens when the tax credit expires on December 1? What happens when inflation takes hold and interest rates are hiked?

Seniors are screaming today because they won’t see any increase in their social security for the first time in decades. Who can blame them? The truth is we are now in a period of stagflation with wages flat or falling while inflation is barely noticeable. Hence no increase is triggered under federal statute. Stagflation historically precedes inflation.

When the Stimulus was passed in the dark of night without any congressmen having read the bill, no one knew what was in the bill. Now we know.

Approximately 9% of the $787 billion has been spent, mostly sent to states for medicaid and unemployment payments. Other than increasing the number of state employees to process Medicaid and Unemployment applications, what other jobs have been created? None to not many. That’s why it was patently deceitful for the president to call this a stimulus bill, over two million jobs have been lost since this stimulus was passed!

The need to rush according to Obama was that he wouldn’t be able to keep unemployment from passing 8% without this bill. Eight months later unemployment stands at 9.7% and 1.3 million will lose their benefits at years end. At least the unemployment rate will seem lower after these people fall off the books!

In my opinion the most important part of the stimulus plan was for infrastructure. This was to put contractors back to work creating jobs, while rebuilding our aged infrastructure to accommodate future economic growth. The problem with the infrastructure portion of the current Stimulus is two fold, it was back loaded to be spent in 2010 in time for congressmen running for re-election to pose for ribbon cuttings (which did nothing for job creation in 2009), and the dollar amount committed was woefully short.

The clock is ticking on the economy as inflation is sure to come, and when it does it will be a long and painful battle to get under control. Anyone remember the 1980’s? Twenty-one percent prime rate? Thirteen percent annual inflation rate? Eleven percent unemployment? With the fiscal irresponsible quadrupling of the annual deficit, the monetizing of the debt by the Fed holding interest rates artificially low, the national deficit to double by 2012, and nearly triple by 2019; this round of inflation could make the Carter years look good. The time to act is now before interest rates go up.

In my opinion there is time to avoid or at least blunt the impact of inflation. How do you do this? By actually stimulating the economy with new jobs and capital, of which the current Stimulus plan does neither. A growing economy will increase revenues to the government, lessening the need to print or borrow more money.

This is what should be done. Instead of wasting the remaining 80% of the $787 billion ($630 billion), eliminate it from being used as directed in the Stimulus bill for every liberal pet project ever conceived, from Pelosi’s millions to save a marsh mouse, to Florida’s millions to build a turtle tunnel under a highway, all the skate parks, and reallocate that money as follows; (1) double the infrastructure funding and immediately get projects off the ground creating jobs now instead of waiting for when it is politically favorable, and (2) implement a $10,000 tax credit for all home buyers, and a $15,000 tax credit for all buyers of new home construction. Both to run now through 2011.

One in every four jobs in this country are tied to the housing market. Housing started the financial meltdown, and housing can lead us to recovery. Implement this plan immediately and watch the housing market boom, along with all related industries. The number of jobs that would be created throughout the economy would stop unemployment in its tracks, get people back to work, and increase government revenues.

Perhaps this simplistic plan makes too much sense for the out of touch representatives in Washington D.C., however they know the Stimulus plan on the books is a proven loser. The Stimulus plan is only stimulating larger government, which in and of itself creates additional costs, does nothing to increase revenues, or to create jobs in the private sector.

A common sense and simple plan. Any bets that less than half the remaining $630 billion would be necessary to jump start an economic recovery? Let’s refund the balance to taxpayers, by that I mean those who actually pay taxes, when the plan succeeds!

Of course this plan can only succeed if the proposed Cap and Trade legislation, and proposed Health Care Reform legislation is defeated. Cap and Trade will cost an estimated two million jobs above any green jobs created, and tax every man, woman, and child in this country with increased costs of living, regardless your position on climate change. Like wise regardless your position on health care reform, the proposed reform is simply unaffordable at $1.2 trillion.

Defeat these two job killing, budget busting pieces of legislation, implement the proposed plan, and then come back at a later date, and implement climate change legislation, and health care reform that actually accomplishes something other than increasing the size of government, and granting government more control over your life.

Fritz Pfister was voted ‘Best Realtor’ by Readers of The State Journal Register in 2007 and 2008. Fritz hosts Let’s Talk Real Estate streaming live Saturday’s at 10am central on WMAY.com. With over 2000 real estate sales, Fritz is recognized as a housing market expert.
Fritz’s website is
SpringfieldHome.com

My recent survey produced a variety of ideas, but most of them had these common elements: replace the Internal Revenue Code with a simpler model, encourage businesses to increase employment, and insist upon tort reform everywhere.

It also brought two disturbing realities into focus: We are painfully apathetic (less than 1% of the people I contacted took the time to respond) and, although we have great problem-solving ideas, few to none of them are included in any of the reforms being considered by congress.

For those who participated, thank you again. I hope that you will appreciate how I’ve synthesized your thoughts and suggestions into the commentary. I also hope that you will find the time to address some of these issues more aggressively with blogs, networks, and elected officials.

Major changes are being proposed in six inter-related areas. All the dots cannot be connected in one article. Government revenue is cut in this article and the next without a hint about a replacement plan. I’ll get to that later, and painlessly for all of us.

So how do we create more jobs?

Perhaps the first step in creating more jobs is to take a giant step backwards and define what a job is. In the simplest of terms, your job is the principal moneymaking activity in your life.

The more qualifications and skills you have (physical, technical, intellectual, etc.) the more valuable you are to employers, customers, and clients. Thus, more practical, job specific, education becomes a vital part of the jobs picture.

For the self-employed, the amount of effort expended, marketing skills, and the product or service itself is as important as the qualifications. But the objective of the job, the career, and the company, is to make money.

Government jobs are of a service, regulatory, and social problem solving nature— unquestionably necessary, but the primary motive is not to create personal wealth or economic gain, hence the thousand-dollar toilet seat scenario. These jobs are paid for by taxes collected from all employed people— except our friends in the “underground economy”, who pay virtually no taxes at all.

The more government jobs, the more taxation; the more government regulation, the more need for cost analysis of the regulations spewed forth. Consumers ultimately pay all of the costs of compliance, everywhere.

Most self-employed people start off working for others; large or small really doesn’t matter. What matters is that employers hire these people to make the enterprise more productive, safer, more efficient, and more profitable.

In theory, employees must contribute to profitability, and each is compensated based on his or her contribution, as determined by the owners of the enterprise. In larger organizations self-serving executives are able to pillage the profits of the enterprise, to the detriment of both owners and employees.

Employee benefit programs (health & dental insurance, pension & savings programs, investment education plans) were originally implemented to attract and retain the best employees.

Today, employers are reluctant to create jobs because the mandated non-productive “overhead” associated with each worker adds significantly to the cost of running the business— worker’s compensation, unemployment insurance, OSHA compliance, liability insurance, social security contributions, minimum wage/union pay scales, etc.

No job deserves to exist economically if it doesn’t add to the profitability of the business. The more costs per employee, the fewer jobs get created. So how do we create more jobs in this environment?

Corporate Income and Nuisance Taxes.

Politicians have succeeded in demonizing the large corporation by exploiting the greed of obscenely overpaid executives and employees, while ignoring their own complicity in the conflicts of interest and lobbyist graft that steer the legislation they produce.

What Congress, a long line of Presidents, and much of the population have lost sight of is the fact that even the dirtier businesses are job providers. They must be pampered, not pummeled; supervised and reined in but not tethered and broken.

Business income taxes are 100% inflationary; costs associated with employees (yes, even the minimum wage, which some suggest is the cause of our illegal alien problems) result in fewer employees hired. Period. Capitalism is not broken— its success formula has been compromised.

Repealing the corporate income tax, and prohibiting any and all levies, fees, charges, and taxes on any form of business could instantly produce millions of job openings, lower prices, and create new business opportunities throughout the economy.

Repealing business income taxes would instantly make export products more competitive in world markets, as businesses reduce prices while maintaining profit margins. Greater profits should translate into growth in economic activity.

Finally, the elimination of these taxes would make all businesses run more effectively because there would be no need to spend money (or create losing transactions) just to cut the tax bill.

Government Programs:

Tax dollars can create jobs when they are used to: protect consumers and businesses from fraudulent and disruptive forces, fund infrastructure repairs and improvements, protect shareholders from greedy officers and directors, provide free education to the most talented students in all fields, and provide seed capital for new public interest development projects.

Still looking for your ideas on: growing consumer spending, lowering health care costs, helping the environment, reducing the size of government, and producing a fairer tax environment.

Steve Selengut
Sanco Services
Kiawah Golf Investment Seminars
Author: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read” and “A Millionaire’s Secret Investment Strategy”.

The stock market reversal in the last four days should give us pause. The recent economic data appears far more positive than whatever has powered the market rally to date. If we really are at the beginning of a V-shaped rebound, as many analysts are saying, there is no reason for the markets to fall, especially as they are still far below their peaks of two years ago.

Nor is there any reason for corporation insiders to be selling the company stock they own, as they have done throughout the month of August. If the economy is truly beginning to expand, they should instead be holding on to it for dear life.

So how real is the advertised economic recovery and where are the numbers backing it up?

In looking for such data, one first notices that positive numbers are remarkably scanty, and that what can be found is also very selective, with positive numbers emphasized over negative ones. But every economic swing, positive or negative, has a firm foundation somewhere, which can be found if one digs far enough to hit the bedrock. So let us dig.

The first of the layers to be cleared away is the one made up of forecasts and expectations. These are generally optimistic, but let it be remembered that many of the experts now predicting a sharp recovery also expected the Dow Jones to reach 16,000 by the end of 2007. The numbers they had then were much better than the current ones.

Hope springs eternal, but reality does not always follow, and predictions do not add up to hard information.

The second data layer to be removed is the one dealing with inventory replenishment. This is assumed to provide the activity bounce for the next two quarters, but it does not imply a recovery.

Inventories have to be replenished eventually as long as some economic activity exists. The key is at what level. It is only after we compare the inventory level to that of previous periods that we can tell whether activity is rising or falling.

We all have to eat. But what makes the difference to the economy is whether we eat prime steak or the cheapest hamburger. Until that is known, we will not know whether we are doing well or poorly.

The third layer of data that needs to be stripped off is associated with the government stimulus programs. Because government spending is fed by either borrowing or taxes it is a zero sum game: whatever it gives is taken away from somewhere else, even if there is a time lag between the giving and the taking.

This does not imply that make-work programs or social safety nets are bad. On the contrary, they will often feed people who otherwise would go hungry. But what is given to the unemployed is, ultimately and always, removed from the income of those who work, and would otherwise spend or invest it.

In addition, the transfer of income by the government from one group to another is not a frictionless operation. Some money will always be lost to inefficiency, fraud and the like. Thus a realistic assessment of the effect of stimulus programs needs to give them a slightly negative value: money transferred minus money lost in the process.

When the above three categories of data are stripped away, one must still deal with the selective utilization of the numbers that remain.

One could, for instance, conclude that housing sales are increasing even after the effect of government subsidies is taken away. But housing foreclosures are still increasing as well. Both affect the overall state of the housing sector, and one should not be considered in isolation from the other.

None of the above caveats are taken into consideration in the economic data currently presented to us. First, much of it is anticipatory.

Second, the issue of inventory levels after the expected replenishment is not addressed.

Third, government spending provides a very large part of the alleged economic upturn. Finally, integrated, complete data sets are nowhere to be found.

The question thus remains of whether the economy is in remission, critical but stable, on continuing life support, or still deteriorating. The stock market has gone as high as reasonable optimism would allow. Realism is now about to take over.

Jacek Popiel’s career spanned military service and international business development. His new book outlines how energy, economics and politics converge on the current world scene. For more articles and information: http://www.viableenergynow.com

The faith in the sanctity of the market is the bedrock of the Libertarian creed. It is not so much a philosophy as a religion- only in place of a benevolent God, we have the omniscient market. The market is seen as a perfect, self regulating mechanism. The implication is that, it is far better to let the market take its natural course, than intervene and cause much greater disharmony in the long run. Supporting their hypothesis with innumerable examples of bungled attempts by governments to meddle in the economy, their basic ethos is: the less government the better.

This argument is a bit like someone arguing that we should fire the gardener of a beautiful English style garden in which nature appears to be a cacophony, which naturally makes room for all and finds its own harmony. If one were to follow this advice and fire the gardener, for a time there would be very little visible effect. Nature would carry on, the seasons would bring changes, and life would appear to be going on very much as it had been before.

However, if you were to return to the garden after an absence of several years, the difference would be noticeable. It would look wild and dishevelled. Eventually, there would be no trace of what was once a beautifully balanced garden. This is because, while subtle and barely noticeable on the surface, beneath the surface, nature is relentlessly taking its course. The longer the garden is left, the more difficult it becomes to restore its equilibrium. If left too long, it simply runs to seed and one will pretty well have to start from scratch in creating a new order in the wilderness.

This is precisely what took place with the deregulation of the financial system. Bit by bit, it began to shift. Practices became steadily more and more aggressive and dodgy. The bubble it created drove up the house prices, which helped to keep it all hidden from view. Eventually, gravity kicked in and the artificially stimulated, housing bubble burst. Without deregulation, the bubbles can form from time to time, but of a much smaller duration and magnitude. The sheer size of this bubble was enough to destabilize, not only the local economy, but sent the entire world financial system into a tailspin.

No doubt, the diehard libertarians will attempt to blame the scoundrels who took advantage of the system. What they chose to overlook is that opportunity makes the thief. There are always hucksters looking for a chance to make a quick return and to bend the system to their advantage. Deregulation created a veritable Mecca for the con man. No one feels sorry for the thief who is caught. But, what of those sages who made his job so easy? Are they not just as culpable, if not more?

Over-managing the economy is, no doubt, a mistake, but simply abdicating control to the whims of the market, is nothing short of madness. It is a course that is only ever recommended by those who either are direct beneficiaries of these practices, or feel themselves so well insulated from financial calamity that they are immune to any and all eventualities

John Berling Hardy is author of the e-book “Have We Been
Played?- The Hidden Game Revealed.” The insights contained in
this series give you the Edge. To find out more about the carefully
guarded secret shared by all those who enjoy power and prestige visit
Have We Been Played.com.

In March of this year, the Obama Administration authorized a new federal program to help stabilize the housing industry. The feds poured a mere $75 billion into the Making Home Affordable (MHA) mortgage program intended to avert further foreclosures, assist responsible home owners in retaining their homes and stabilize the nation’s communities.

Home Affordable Refinancing Program (HARP) and Home Affordable Modification Program (HAMP) are the two initiatives under the umbrella of the MHA that are being used to distribute the funding for the program. The programs fall under the U.S. Department of Housing and Urban Development (HUD) secondary mortgage market lenders, Fannie Mae and Freddie Mac. Through the MHA programs, certain homeowners are provided assistance whose loans are either owned or guaranteed by Fannie Mae and Freddie Mac.

Over the following three years, the program is on target to assist three to four million homeowners. Currently, over 230,000 trial modifications have been started; although, over 500,000 is the goal to have in process by November 1, 2009. What’s interesting is that more than 85 percent of mortgage loans out there today are covered by participating service providers.

HARP assists homeowners who are current on their mortgage payments, but are not able to refinance their loans due to a decrease in their home’s market value. Homeowners may be afforded the opportunity to refinance their mortgage to a lower interest rate and to a lower-risk loan solution, both of which are part of the program.

General requirements to be eligible for HARP are as follows:

* Must be the owner of a one- to four-unit home
* Mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac
* Must be current on mortgage payments throughout the previous 12 months, which means that you’ve not been more than 30 days late on any mortgage payment within the previous year
* Amount due on your first mortgage is not more than 125 percent of the current market value of your home

HAMP offers options for homeowners that may potentially reduce their monthly mortgage payments, or provide other alternatives that can assist them in keeping their homes. The program helps homeowners who are in the following situations with their mortgage:

* Current, but have experienced recent significant hardship, including hardship that will inhibit their ability to pay mortgage payments going forward
* Delinquent on their mortgage payments
* Currently in the foreclosure process

For full details regarding the MHA, visit the MHA website.

Both sites offer a self-service lookup tool that tells you whether your home loan is owned by either. To find out more about the Fannie Mae or Freddie Mac MHA programs, or to see if your home loan is owned by either, see the information below:

* Fannie Mae
* Phone - (800) 7FANNIE (Hours - 8am to 8pm EST)
* Freddie Mac
* Phone - (800) FREDDIE (Hours - 8am to 8pm EST)

Ki’s website includes a searchable map of homes in the Austin MLS. His site is focused on helping Austin real estate buyers. His site also provides a mortgage widget that shows current interest rates.

“The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems — the problems of life and of human relations, of creation and behaviour and religion.”

– John Maynard Keynes, 1945(1) –

Keynes was far ahead of his time.

Maybe, too far. The crash of 2008-2009 proved that “the economic problem” is still in the front seat. It drives us; we do not drive it.

Will the emerging world of scarcities of absolute necessities — food, air, water — force the change Keynes sought? To date, there has been precious little that is economical about economics. But nature may be preparing revolutionary changes — for the better world Keynes spoke of if those changes are consciously appreciated and managed, for a worse one if unconsciously left to money’s “invisible hand.”

The 2008-9 crisis was a golden opportunity for men to begin to control the economy — instead of it controlling them. The Bush and Obama administrations, by throwing money at the problem, let that opportunity slip away.

Thus, although nature’s coming changes could help the middle class, we will take the more pessimistic but plausible route and assume men will fail to learn — that money will stay in the driver’s seat. What then?

The decline and fall of the middle class would destroy the American way of life, notably its form of government. Contrary to popular belief, that government is not a democracy but a “polity.”

Aristotle wrote that a polity is a hybrid government of democracy and oligarchy based on a large middle class. He believed the polity is the “best” government because the middle class moderates other classes that are incapable of trusting each other.

After noting the crucial importance of the “man in the middle” as a neutral, reasonable arbitrator, Aristotle concluded: “The better, and the more equitable the mixture in a ‘polity’, the more durable it will be.”

As for what could spoil an equitable mixture, he warned that the biggest menace came not from the poor or the middle class, but from the wealthy who seek to convert a polity into an aristocracy:

“[Forgetting the claims of equity], they not only give more power to the well-to-do, but they also deceive the people [by fobbing them off with sham rights]. Illusory benefits must always produce real evils in the long run; and the encroachments made by the rich [under cover of such devices] are more destructive to a constitution than those of the people.”(2)

That avarice and those illusory benefits — above all, so-called “rights” that are given as gifts, thereby retaining and reinforcing the power of the giver — are fueling the economic decay of the middle class and the weakening of its reconciler role.

That decay is the reason why the American polity is starting to unravel. That decay is also why The Great American Illusion, Polity = Democracy, is being exposed for the first time in over 200 years of existence. Finally, that decay is the origin of the loss of legitimacy plaguing not only governments but also families, businesses, schools, and neighborhoods.

The Founding Fathers never said they were building a polity, an oligarchy/democracy hybrid. Not once. They knew the word “polity”; Alexander Hamilton and James Madison used it.(3) However, they only employed “polity” in its generic sense, as a synonym for “political system.”

To that deafening silence I will add a curious footnote. The Founding Fathers referred to Montesquieu as the “oracle” of the philosophy that guided them in constructing the United States Constitution, so that the “legislative, executive, and judiciary departments ought to be separate and distinct.”(4)

Well, according to Montesquieu, the ancient Greeks “called that type of constitution a ‘police’”; he then made this footnote: “See Aristotle, Politics, Book IV, Chapter VIII.”(5) In that chapter, Aristotle analyzed the polity, or oligarchy/democracy hybrid.

It is impossible to argue, then, that the Founding Fathers did not know about a polity or hybrid oligarchy/democracy. It was right in front of them.

Why were the Founding Fathers unwilling to use the word “police/polity,” either in the sense of the separation of powers (Montesquieu) or as a hybrid of oligarchy/democracy (Aristotle)?

Why did they not simply declare openly what they were doing: creating a polity? That is to say, create what Madison characterized in a note to himself this way: “The most difficult of all political arrangements is that of so adjusting the claims of the two classes [i.e., ‘the class with, and the class without property’] as to give security to each, and to promote the welfare of all.”(6)

Answer: on the one hand, such a declaration would have openly admitted that the system they were building had a major oligarchic component. That admission would have been unacceptable to many Americans who had just fought the war of independence and who were sharply divided over whether to adopt or reject the constitution proposed by the Founding Fathers.

Indeed, the opponents of the constitution vociferously claimed it would favor the oligarchy. To counter that criticism, Madison put up a brilliant, expedient defense: he, too, vigorously attacked any “pretended oligarchy.”

What, according to Madison, would prevent the proposed constitution from favoring any particular class? “I answer: the genius of the whole system; the nature of just and constitutional laws; and, above all, the vigilant and manly spirit which actuates the people of America — a spirit which nourished freedom, and in return is nourished by it.”(7)

Madison’s remark gives the impression that he was a fervent supporter of democracy. However, that was decidedly not the case. The confidence that Madison placed in “the vigilant and manly spirit” of Americans was diametrically opposed to what he asserted in an earlier article:

“In all very numerous assemblies, of whatever characters composed, passion never fails to wrest the scepter from reason. Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.”(8)

On the other hand, then, Madison did not favor a democracy. The American oligarchy would not have accepted it.

Neither an oligarchy nor a democracy, then. And certainly not a “polity.”

Enter the “republic.” “Republic” was the word the Founding Fathers substituted for “polity.”

In going undetected for over 200 years, the switch was one of the greatest political maneuvers of all times.

FOOTNOTES

(1) “First Annual Report of The Arts Council” (1945-1946).
(2) Aristotle, “The Politics of Aristotle,” translated and edited by Ernest Barker, Oxford University Press, New York, 1962, p. 186. (Book IV, Chapter XII). Translator’s brackets.
(3) “Federalist Papers” 17 and 52.
(4) “Federalist Paper 47.”
(5) Montesquieu, “De L’Esprit des lois,”in “Oeuvres completes II,” Bibliotheque de la Pleiade, Gallimard, Paris, 1994. p. 411. (Book XI, Chapter XI).
(6) James Madison, “Note 1 in Convention of 1787, August 7th,” in Ralph Ketcham, “The Anti-Federalist Papers and The Constitutional Convention Debates,” Penguin Books, New York, 1986, p. 151.
(7) “Federalist Paper 57.”
(8) “Federalist Paper 55.”

Thomas Belvedere is the pseudonym of a political consultant to senators, representatives, governors, and the media. He worked for all levels of government, and for all three branches. An accredited expert witness in federal court, he has a Ph.D. in political science.

He authored “The Source of Terrorism: Middle Class Rebellion.”

For his website, go to Thomas Belvedere.

In writing the American constitution, our Founding Fathers could not say openly they were founding a “polity” or oligarchy/democracy hybrid. Why?

On the one hand, an open acknowledgement of an oligarchic component would have alienated a large portion of the American people who had just won a war for independence.

On the other hand, the Founding Fathers could not declare they were founding a democracy. That admission would have antagonized the oligarchy, members of which were sitting in the constitutional convention as well as in state legislatures that were preparing to vote on accepting or rejecting the proposed constitution.

Madison performed a masterpiece of political positioning in his naming and explanation of the form of government he and his colleagues were constructing: a “republic.” In words certain to please the oligarchy, Madison attacked any republic/democracy “confusion of names” — the

“confounding of a republic with a democracy, and applying to the former reasonings drawn from the nature of the latter. The true distinction between these forms . . . is that in a democracy the people meet and exercise the government in person; in a republic they assemble and administer it by their representatives and agents.”(1)

In rejecting an oligarchy(2) and a democracy, Madison gave the general impression that a republic was neither one nor the other.

Nevertheless, the Founding Fathers could not stop there, because Madison’s definition of a republic cited above closely resembles Aristotle’s definition of oligarchy, i.e., “that some of the citizens should deliberate on all matters. This is characteristic of oligarchy.”(3) Once again, in the 1780s, an outright stamp of approval on an American oligarchy was politically inadmissible. Consequently, Madison had to swing the pendulum the other way.

To give legitimacy to the constitution they were proposing, the Founding Fathers were obliged to resort to what Madison had criticized: a confusion of names. That confusion was performed by . . . Madison. He erased his own distinction between democracy and republic this way:

“In the most pure democracies of Greece, many of the executive functions were performed, not by the people themselves, but by officers elected by the people, and representing the people in their executive capacity.”(4)

The “most pure democracies” governed by representatives: this confusion, this oxymoron, was it made deliberately? The confusion of polity with democracy, as well as of polity with oligarchy, existed in Aristotle’s time. He thought those confusions were good, that

“it is a good criterion of a proper mixture of democracy and oligarchy that a mixed constitution should be able to be described indifferently as either. When this can be said, it must obviously be due to the excellence of the mixture. It is a thing which can generally be said of the mean between two extremes: both of the extremes can be traced in the mean, [and it can thus be described by the name of either] . . .

A properly mixed ‘polity’ should look as if it contained both democratic and oligarchic elements — and as if it contained neither.” (5)

“Democracy,” “oligarchy,” “both,” “neither” — all simultaneously. Now you see it; now you don’t. By leaving it to you to string the beads, Madison left something for everybody.

The equation, Republic = Democracy, was in reality the cover version of another equation: Polity = Democracy. The latter is The Great American Illusion that has never been said aloud. It is behind Madison’s mental slight-of-hand trick that made the difference between democracy and republic disappear. Today, the Illusion is both an unexpressed official dogma and a cultural given. It is taboo to call a polity a polity; nobody does it. One is compelled to call a polity a democracy.

The real life consequence was that the polity has become an imitation of democracy, an “as-if” democracy. The confusion of polity with democracy has been converted into an illusion. Given its unquestioning acceptance around the world, The Great American Illusion is among the greatest political maneuvers of all times.

Once Polity = Democracy is identified for what it is, the Illusion starts to fade, and the real issue before us becomes clear: more democracy or less democracy within the polity? There is no “Third Way.” The polity never mentioned but insinuated to be a democracy: that was the third way.

That way is on its way to extinction. Drop by drop, the bottle is being emptied until the day comes when even the most optimistic of optimists will no longer say the bottle is half full. At that point, to support a polity will be in actuality to support an oligarchy (Aristotle observed that a polity is inclined “more toward democracy.”)(6)

At bottom, any combination of oligarchy and democracy is difficult. Montesquieu said why: “He who has the money is always the master of the other . . .”(7) The ability of the American oligarchy to step out from the shadows, to demand and receive billions of public dollars from Washington in 2008-2009, is a turning point in American political history.

Can the American polity be saved?

In Western civilization, power expands only to the extent it is shared. Recognition of that fact is the essential foundation for what we need — not another renaissance, but a “re-evolution” of the previous Renaissance that gave birth to, among other things, the American Revolution and Constitution.

Tocqueville stated in straightforward terms what is required to save the polity: strengthen the democratic element. “The remedy is above all else, outside constitutions. In order for democracy to govern, there must be citizens, i.e., people who are interested in public affairs, who have the capacity and the desire to participate in them. One must always return to this fundamental point.”(8)

An increase in the populace’s capacity and desire to participate: may any political candidate, office holder, government, or policy be judged accordingly.

The art of creating new institutions and customs to share and expand power would be to the present what the American Revolution was to its era. The urgency for that art is visible not only in (i) inappropriate behavior displayed recently at public forums on healthcare, which clearly showed the lack of those institutions and customs, but also in (ii) the poor quality of stewardship of human and natural resources by governments and private enterprises around the world.

In reality, (i) and (ii) are inseparable. Each chaperons the other.

If the present degradation of the polity, the middle class, and natural resources continues, “Live Free Or Die” will prove to be more than a state motto.

FOOTNOTES

(1) “Federalist Paper 14.”
(2) See Part I, this series.
(3) Aristotle, “The Politics of Aristotle,” translated and edited by Ernest Barker, Oxford University Press, New York, 1962, p. 191. (Book IV, Chapter XIV).
(4) “Federalist Paper 63.” Same for legislative capacity (same paper).
(5) Aristotle, op.cit., pp. 177-8. (Book IV, Chapter IX). Translator’s brackets.
(6) Ibid., p. 174. (Book IV, Chapter VIII).
(7) Charles de Montesquieu, “De L’Esprit des lois,” in “Oeuvres completes II,” Bibliotheque de la Pleiade, Gallimard, Paris, 1994., p. 472. (Book XIII, Chapter XIX).
(8) Alexis de Tocqueville, “Notes et variantes,” in Alexis de Tocqueville, “Oeuvres,” Volume II, Bibliotheque de la Pleiade, Gallimard, Paris, 1992, p. 1,019.

Thomas Belvedere is the pseudonym of a political consultant to senators, representatives, governors, and the media. He worked for all levels of government, and for all three branches. An accredited expert witness in federal court, he has a Ph.D. in political science.

He authored “The Source of Terrorism: Middle Class Rebellion.”

For his website, go to Thomas Belvedere.

State and local governments across the nation are gearing up to spend federal stimulus funds. The U.S. Department of Housing and Urban Development (HUD) birthed the Neighborhood Stabilization Program (NSP) that provides federal stimulus dollars to assist neighborhoods hardest hit by the home foreclosure crisis. The NSP falls under the umbrella of the American Recovery and Reinvestment Act (ARRA).

HUD’s intent for the NSP is to provide assistance to more than 500 communities, cities and counties across America in the form of rent relief, for homeless prevention and to assist low-income families to buy homes. Organizations that are eligible for NSP funding are cities, non-profit agencies and housing authorities.

St. Lucie and Martin Counties in Florida hope to receive some $7.5 million in stimulus dollars. The counties recently applied for the funds through the state’s Department of Community Affairs. Both counties intend on buying foreclosed homes, renovating them and selling them to low-income homebuyers. The other initiative for the funding will be to weatherize neighborhood homes.

Fresno County, along with the City of Fresno, has received a total of $18 million in NSP funding to address the abundance of local area foreclosed homes. Officials have already interviewed several developers that will be hired to buy, renovate and sell or rent the homes to low-income families.

Blighted areas will benefit the most from the funds. A byproduct of the dollars will be construction jobs associated with renovating the properties.

Massachusetts may see some activity soon in many of their local cities and neighborhoods, since the state applied for funds in the total of $54 million. Boston Community Capital, alone, applied for $50 million in NSP funds in order to broaden the organization’s ability to assist the state’s residents who are facing foreclosure on their homes. The group has already committed $4 million in assistance to purchase abandoned property, loan funds to small developers renovating vacant properties and assist struggling homeowners in keeping or buying back their homes.

Connecticut has thrown their hat into the ring for $45 million in NSP dollars, which will target the state’s four most hard hit cities. The Connecticut Consortium falls under the state’s Department of Economic and Community Development (DECD), and will be responsible for allocating the funds to local communities. Low- to middle-income families will be the primary beneficiaries of the program.

Chicago received $5.4 million in stimulus funds earlier this year. The city’s goal is to reinvest profits made from selling renovated properties back into other foreclosure properties.

Ohio was allocated $45 million NSP dollars to jump start the housing market in blighted neighborhoods. The intent is to allocate the stimulus money quickly, so that communities will be enabled to attack the growing numbers of abandoned and boarded up homes.

Kentucky was awarded $44 million, Evanston, Illinois applied for $39.4 million and Virginia received $45 million. Brad Pitt even entered the fray with his Make It Right Foundation. If funding is approved, it will benefit New Orleans and a project the group will launch in Newark, NJ. His organization, as part of a consortium of non-profits, is asking for $65 million.

Ki works to help buyers searching for Austin Texas real estate. He has worked in real estate for almost a decade. He maintains a searchable Austin MLS directory on his website. His site has current information on mortgage rate trends.

Mortgage rates fell this week to the lowest point since May 28, 2009. Whether May 28, 2009 is the summer is open to some debate. The summer solstice usually is considered the technical beginning of summer which occurred on June 21st this year. Some consider Memorial Day the beginning of summer which was May 25th. Either way this is the lowest we have seen the 30 year mortgage rate in the last 3 months.

The question of course is why mortgage rates are falling. Generally once the economy starts improving interest rates should rise. I think what has happened is that while the actual economy has improved the expectations about the economy have fallen. During the last 2 months people thought the economy might experience a V shaped recovery. Basically once the economy turned around it would recover quickly.

But since that time more people are now expecting a U shaped recovery. Basically the economy is going to recover but it’s going to occur more slowly. On the positive side these lower expectations could be lowering mortgage rates. Here are mortgage rates for the last few weeks.

Aug 20, 2009
30-yr 5.12 15-yr 4.56 5-yr ARM 4.57 1-yr ARM 4.69

Aug 13, 2009
30-yr 5.29 15-yr 4.68 5-yr ARM 4.75 1-yr ARM 4.72

Aug 06, 2009
30-yr 5.22 15-yr 4.63 5-yr ARM 4.73 1-yr ARM 4.78

Jul 30, 2009
30-yr 5.25 15-yr 4.69 5-yr ARM 4.75 1-yr ARM 4.80

Jul 23, 2009
30-yr 5.20 15-yr 4.68 5-yr ARM 4.74 1-yr ARM 4.77

As we can see for the last few weeks the 30 year mortgage rate has been hovering from 5.20 to 5.29 until this week when it abruptly fell to 5.12. In addition to rates we like to look at mortgage payments. We took today’s rates and translated them into a mortgage payment for a 200k loan. We also did the same thing with rates from August 6 (2 weeks ago) and rates from January 15 (6 months ago).

Aug 20
30-yr $1088.35
15-yr $1536.12
5-yr ARM $1021.7
1-yr ARM $1036.07

Aug 06
30-yr $1100.69
15-yr $1543.3
5-yr ARM $1040.88
1-yr ARM $1046.91

Jan 15
30-yr $1068.75
15-yr $1545.36
5-yr ARM $1104.4
1-yr ARM $1060.23

As we can see there is some savings compared to 2 weeks but nothing too substantial. Compared to 6 months ago a mortgage payment would be 1.83 percent more. So basically we are seeing rates and mortgage payments slightly higher than 6 months ago and slightly lower than the last few months.

What we are going to see moving forward depends on the economy. If we experience a V shaped recovery we should expect mortgage rates to move up quickly. This is because the massive amount of money the US government has poured into the economy during the recession should lead to inflation when the economy recovers. But if the economy experiences a U shaped recovery and continues to lurk around in the doldrums we should see low interest rates for the next few months.

Ki lives in central Texas and works in the real estate market in Austin. His website escapesomewhere provides a mortgage rate widget along with a mortgage calculator widget.