Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

10 April 2009

Massive Socialist Government Gang Extortion

The gang of brutal socialists who have taken over control of the Presidency and Congress have escalated their extortion racket to much the worst levels ever. Have you ever wondered why many very wealthy businessmen and companies have for years donated more money to the Democrats who dislike business from an ideological perspective than they give to Republicans who are commonly thought to be the champions of the fat cats? Heck, have you ever wondered by the delegates to the Democratic National Convention are always wealthier than those to the Republican National Convention?

The answer is in two parts. First, many of these businessmen give more to the Democrats because they are trying to buy them off to keep them from doing as much harm to the businessmen. This is like Chamberlain buying Hitler off by giving him Czechoslovakia. Appeasement is always a popular strategy when the cowardly are faced with an especially vicious bully. The second part of the answer is that by allying themselves with the socialists they actually get a payment from those in power with legislation favoring them in a variety of ways. For instance, complex and intrusive laws will always create great opportunities for trial lawyers, who are massive donors to the major socialist party, the Democrats. Regulations such as the bureaucratically massive requirements of Sarbanes-Oxley bookkeeping procedures will hold back small and smaller mid-sized companies more than really big companies, so the big companies are protected from competition.

Cumbersome Federal contracting laws make it hard for small companies to go after Federal contracts, with their 10 pages of fine print references to many laws imposing obligations and mandates on the company taking the Federal contract or simply bidding for it. Generally regulations putting insurance, pollution, recycling, safety, family leave time, anti-discrimination, the display of tens of posters to employees, and many other mandates fall more heavily upon small and the smaller mid-sized companies than the large companies. The result is that it is common for the largest companies and the wealthiest investors to ally themselves with the Democrat mob than with the Republicans who pretend to stand up for small business interests. Yes, this is more pretense than substance on the part of the Republicans, but they really are a bit less active in doing harm to small businesses.

So, what is our small-time community rabble-rouser up to now that he has his hands on the big-time power of the Presidency? Well, he is unabashedly putting the extortion techniques the socialist Democrat Party has spent a long time perfecting to work. Let us examine how he is doing this.

According to a 9 April report by Eric Dash in the New York Times called "Banks Holding Up in Tests, but May Still Need Help," the 19 largest American banks are being given stress tests led by the Federal Reserve. Testers say there is a wide range of results on the tested banks. Those that fall short will have six months to raise capital from private investors, but if they cannot do this, the Treasury Dept. will make them take taxpayer money. Timothy Geithner says he will take a tough stance. He claims that many banks believe the value of investments and loans on their books is higher than the government does. He says the government will make some banks sell off the assets the government thinks are overvalued on their books at whatever private investors are willing to pay. What an extortion tool? If the bank does not give enough to socialist politicians campaign funds, the government in control of the socialists, declares that some of the banks assets are worth less than the bank thinks they are worth and forces the bank to sell them in a fire sale. Meanwhile, we can be sure that generous Democrat campaign contributors are likely standing in the wings willing to buy up assets at bargain prices offered at the coming fire sales.

On another front, the socialists are launching still another attack on start-up companies in Silicon Valley. They want to regulate venture capital firms to prevent systemic risks. Geithner wants to force these VCs to register with SEC and file reports with them on their investors and their investments, so that investors will be protected from schemes such as Bernie Madoff's Ponzi scheme. This is odd. The SEC did not save anyone from Madoff though his firm was long registered with the SEC as an investment advisor and for decades as a broker-dealer. Very odd, indeed, it is. The Wall Street Journal Opinion piece by James Freeman linked to explains:
The entire venture capital industry is smaller than the Madoff fraud. VCs invest a total of $30 billion each year, far less than one-tenth of 1% of U.S. financial transactions. Venture investors -- affluent individuals and institutions -- are putting up equity and know that they can lose it all. SEC regulation could have the same negative impact on them that it had on Madoff's investors: creating an illusion of safety in what is an inherently risky endeavor. Or the regulation could become so severe that it actually does eliminate risk from venture investing, killing the innovative ideas that can only be funded by risk-takers.
The VCs use very little debt. The banks dealing with them are well-secured by the assets of the companies for the small amounts they loan to them. There is no reason for Washington to poke its nosey nose into the VC business. There is a strong downside.
Attempts to limit risk pose a systemic threat to American technology. Venture capitalists, mainly veterans of the tech industry, are deeply involved in the companies they back, often helping to recruit each of the key employees at a start-up. This hands-on feature of venture investing means that innovative companies and their backers tend to cluster in areas like Silicon Valley. If the VCs move offshore, that's probably where the next generation of companies will be born.
Cypress Semiconductor CEO T. J. Rodgers points out that the Democrats have already heavily burdened America's technology industry. Sarbanes-Oxley has imposed multimillion-dollar compliance costs since 2002. The SEC then forced companies to count stock options twice, once as dilution of stock and then as an expense. The result is already a disaster. Only one Silicon Valley company had an initial public offering of stock in all of 2008! Are the socialists purposely destroying the growth of Silicon Valley firms because Silicon Valley has had something of a reputation for being somewhat libertarian? I believe that this is a big factor in this attack on these rather independent-minded and innovative businessmen. The socialists hate business and they hate independence, rationality, and innovation even more.

Of course, we have already observed the socialists taking control of the banking and financial industries and not wanting to let go. We have seen them dictate who will manage GM and seen them micromanage which vehicles will be produced by American automakers, while dictating minimal changes for the United Auto Workers Union. They continue to encourage high risk home and auto loans for new purchases, while using the risk of defaults on prior risky loans as a club to gain control of banks and other financial institutions.

The Waxman-Markey American Clean Energy and Security Act of 2009, sets grounds for anyone "who has suffered, or reasonably expects to suffer, a harm attributable, in whole or in part," to government inaction to file a "citizen suit." The term "harm" is broadly defined as "any effect of air pollution (including climate change), currently occurring or at risk of occurring." [See the Washington Times, 10-11 April 2009 edition.] Thus, any environmentalist person, imagining that he may one day suffer harm from global warming, will be able to sue the U.S. government to take drastic action to prevent global warming. If they find a sympathetic court, the U.S. may be held responsible for the harm of what may well be results caused by natural forces, and forced to take drastic action against fossil fuel users whether they have in fact caused harm or not. It also rewards the massive contributors to socialism among the trial lawyers, once again.

The mandated extent of the replacement of dependable coal-fired electric power plant capacity with undependable wind and solar alternative energy sources will be certain to result in widespread electric blackouts. The governments will undoubtedly then play a role in further rationing energy, giving more to favored users and less to the politically unfavored. No doubt, unionized industries will be allowed more access to energy than will un-unionized businesses. Large companies with sufficient political pull (givers of large campaign contributions) will get energy, while small businesses will not get it.

The tax system is also to be skewed to give the socialists much more power. They tried to take the influence of wealthy people over charities away by greatly reducing the tax deduction for charitable giving by the wealthy. This was checked, for now. They use taxes as never before to put the wealthy under the feet of the mass of less wealthy voters. They are using the tax system to bind college graduates to their cause, which reinforces the tendency of young college graduates to spout the propaganda of socialism which they were infected with while in public high school and college. They will then be enrolled in government service agencies, which will complete their indoctrination. The tax system also favors selected industries such as the alternative energy industry, so that they become dependent clients of the socialists.

Rules favoring the easy unionization of small businesses will also favor the socialist-oriented unions and hurt an enemy of the socialist cause. The broadening of the Clean Air Act to cover carbon dioxide emissions will give government another tool to control our lives, which they will also use to pick winners and losers based on political pull. Tariffs, created under the guise of discriminating against polluters, low-paid workers, and non-union labor users abroad, will give the socialists still another tool to use to pick winners and losers in American industry.

Make no mistake, the Obama socialist gang wants control of every aspect of your life. It is a massive extortion ring. They are seizing power rapidly and with a breadth of attack which is mind-boggling. This assault on the rights of the individual has been long dreamed of and long planned. The worst thing is that it was very clear that Obama was the Messianic leader of just such a gang during the election process, but most Americans refused to see what was almost immediately before their eyes. He still has most Americans hypnotized even as most are now beginning to criticize his various programs.

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