Cuba ...

Cuba – that poverty-stricken island where 1950’s cars still rule the road – says it’s “willing” to normalize relations with the U.S. How nice that they are "willing" at last.   

But it has some conditions.

It wants our trade embargo lifted. It wants us to remove Cuba from our list of state sponsors of terrorism. It wants hundreds of millions of dollars for economic damage it’s suffered over the years from our embargo. It wants us to turn over our naval base at Guantanamo Bay to them.   

That’s for starters. 

I am at once reminded of the immortal words of Dick Cheney to Patrick Leahy. 

As laughable as the Cuban demands are, the sad part is that they could get everything they ask for from the Obama Administration. 

I’m sure Obama is meeting with his people and giving these demands serious consideration. 

I don’t know what the attraction to Cuba is. Apparently there’s something there Obama and the Democrats want, and badly. Maybe it’s the appeal of sun-kissed beaches and mojitos served by attractive young men and women speaking only Spanish. Or access to Cuban cigars.

If that’s all it is, just go to Miami. 

No, there’s something else at stake.  Obama is desperate for some kind of diplomatic success.  He also wants to do something to help nail down the Hispanic vote for Democrats, especially in Florida. Plus, he wants to get rid of Gitmo to fulfill at least one of his campaign promises before his term is up.   

It’s all about his “legacy.”  In other words, it’s all about him.  Again.

Doing this lopsided deal with Cuba – which is flat on its ass economically and has nothing of merit to offer – doesn’t make any sense otherwise.  

When the Soviet Union fell, it was a huge hit to Cuba's economy. Suddenly, the artificial markets in Soviet bloc countries and thumb-on-the-scale market dynamics ceased to exist for Cuba, which isn’t resource rich or had that much of value to export anyway. Then Russia started withdrawing troops and closing installations in Cuba, which took away another part of the Cuban economy.

Now Cuba’s economy is reeling further from the drop in oil prices.  One of its few significant sources of hard currency came from reselling nearly free Venezuelan oil from Chavez on the open market. Now that prices are way down, so is the income. That leaves Cuba in even worse straits, with few options for getting hard currency aside from limited tourism from countries other than us, and remittances from Cubans living abroad.    

There are a lot of Cubans living abroad, and many in the U.S. If you live in South Florida, you may have noticed a few.  

In its glory “Socialist Paradise” days – when its Soviet sponsors subsidized practically everything – the Cuban government exported doctors and revolutionaries to hotspots around the world. During the same time, and continuing today, far more Cubans have exported themselves without government permission, and often at great personal peril, to escape the same Socialist Paradise. 

I guess free universal healthcare and a free college education aren’t enough of a draw when you have to wait on line for your ration of rice and beans, and rely on a black market for anything else like a bit more cooking oil.   

The result of such massive self-exporting is large populations of Cuban émigrés and their descendants living outside of Cuba, but with relatives still in Cuba. The remittances from their relatives are a lifeline for many Cubans still unable or unwilling to leave, and a boost to the Cuban economy.    

Recently, Obama proposed lifting the limits on remittances to Cuban relatives, and also relaxing travel bans on visiting Cuba. This was seen as a nakedly political move to raise his popularity among Cuban-Americans.  The net effect will be to put more money in the Cuban economy. 

Oh, and in return for all of this Obama has some really big demands:

1. Be nicer to political dissidents ...
2. Maybe release some political prisoners ...
3. Consider starting to move away from a one-party political system.  

Ouch.  That’s really going to be painful for the Cuban government. I’m sure the Castros are having a good laugh at all that. 

So, all that aside, let’s look at what really should be on the table:

1. Forget the hundreds of millions in compensation for economic damage from our trade embargo – the Cuban government expropriated private assets estimated at $6 billion in today’s dollar when it overthrew Battista; you really want to bring up compensation?  
2. Okay to lifting the trade embargo – Cuba gets 80% of its food from the U.S. already, but has to pay cash, and has nothing to trade that we want …
3. Okay to taking them off the list of state sponsors of terrorism – they can’t afford to sponsor anyone right now, anyway …
4. Giving back Gitmo? NFW.  It’s our base, our property.  Let us now quote Dick Cheney.

I realize Obama may be the worst negotiator as President since Jimmy Carter – who gave away the Panama Canal to a drug-dealing dictator if you remember. But even Obama – or someone in his administration – should see that we should be negotiating from a position of strength, not from a position of weakness.    

We hold all the cards.  The Cubans have no cards. They have nothing to offer in return.  We don’t need this deal, but they sure as Hell do.  It’s as near-perfect scenario you could ever hope for.    

Plus, we have an ace in the hole. We can walk away and just wait.  Time is definitely on our side. The Castro brothers won’t live forever.  When they die – and they will – Cuba will change. 

What scares me anytime Obama is involved in something like this is that he doesn’t understand how to negotiate anything worthwhile. He gives away the store every time.    

He’s like a blind man playing poker with Gypsies.

It may one day be worthwhile to cut a deal with Cuba. I can’t imagine why, or for what purpose, but it’s possible, I guess. 

I just hope we’ll have a sharper player than Obama at the table when and if that time comes. 

Two more years, folks, two more years.  

The decline and fall of the American empire …

Re-read a classic – Pat Frank’s Alas, Babylon – not long ago and something caught my eye.

If you’ve forgotten the book, it’s a cold-war classic from the late 1950s and was an après-le-bomb story set in Florida.  It came out around the same time as Neville Shute’s powerful On the Beach. Both dealt with survivors of an all-out nuclear war between the superpowers.   

Anyway, in the latter part of the book a retired admiral – a former member of the Joint Chiefs – is talking to another character about how and why the world came to such mass devastation from nuclear war.  And how America had practically invited the attack. 

As he was writing his behind-the-scenes account – mainly for future generations, if any – he said he’d been trying to find parallels in history.  He kept coming back to Gibbon’s The Decline and Fall of the Roman Empire.

He said when candidates spent fortunes to win an election, and politicians plied voters with free bread and lavish entertainment spectacles to divert attention from real problems, the writing was on the wall.  It meant Roman leaders were acting tactically, focusing on short-term fixes, postponing the hard decisions, and ignoring or downplaying the real threats.   

This created vulnerabilities – windows of opportunity – that encouraged attacks on what adversaries perceived as a soft and weakened entity.   

It struck me as all too familiar, even though it was written in the late 1950s

Obama and the Democrats are repeating that history in many ways. Current Republicans aren’t helping much either. 

Our political system has been corrupted by once unimaginable amounts of money.  Politicians keep handing out more and more entitlements to the masses to placate them and get their votes.  Our leaders don’t really lead anymore; they are far more likely to follow what pollsters tell them. 

So those who should be running the government and making the hard decisions simply aren’t – they keep kicking the can down the road hoping nobody notices.  

Frankly, we should demand more from our elected officials.  We should demand that they do their jobs, and not just what they think they need to do to get re-elected.  They are putting us all in jeopardy, more so every day, by making us a weaker nation economically, militarily, and – at the risk of sounding narrow minded – ethically and morally. 

We all know this country is a mess. 

The years of Obama with the Democrats controlling the Senate have made it worse.  Before my liberal friends deny that, check your facts.  By practically any rational metric, we’re worse off than before.  HHI is way down.  Labor participation is way down.  The number of people claiming disability and food stamps has soared.  And Obama’s policies have driven down full-time employment and dramatically increased the debt, while making the rich even richer.  

Plus, his foreign policy is a disaster for the United States. That’s most dangerous.   

Our foreign adversaries are emboldened.  All you need to look at is what happened in Benghazi, and how we handled the Syrian crisis. Then we have Iran building nukes, North Korea testing nukes, Russia invading Crimea, and Islamic radicals tearing up the Middle East and Africa. 

Our adversaries aren’t worried about what we might do; they know Obama won’t do anything except talk. Plus, make promises and threats he has no intention of keeping.

Obama continues to try to marginalize all this for domestic consumption. He refuses to acknowledge that his “leading from behind” strategies and diplomatic solutions have all failed.  In Iraq.  In Iran.  In Afghanistan.  In Syria.  In Libya.  In Egypt.  In the Crimea.  And in North Korea. 

In fact, everywhere you look. 

Now he can’t bring himself to admit that there are organized, violent, merciless Islamic extremists who want to kill us all; Hell, he can’t even call them what they are. 

He’d rather hand out free stuff here – like free community college tuition, and the tease of middle-class tax cuts – to distract the American public from what’s really going on in the world.   

It’s bread and circuses all over again.  And the barbarians are at the gates.     

We’ve created a window of opportunity for our enemies. We’ve abandoned peace through strength. Obama believes that if we are less threatening to the world, we’ll face fewer threats ourselves.  He’s promoted a new strategy – peace through weakness – which shows our few remaining allies and our enemies alike that he’s clueless to how the world actually works.  

But most of all, he’s shown the world that he doesn’t want to get his hands dirty. 

He’s afraid of military confrontations that involve real U.S. troops fighting and killing real bad guys up close and personal. He doesn’t want any possibility that some of our troops might get killed – and he might get blamed – in the process.  He prefers a more antiseptic approach – more like a video game – where our soldiers sit safely in a bunker somewhere and maneuver unmanned drones to unleash Hellfire missiles elsewhere. 

When the Commander in Chief is clearly afraid to send our soldiers into actual combat – no matter how justified the reason – then no one in the world need fear us.   

Now let’s be honest.  There was a time in our youth when we had posters that said “Suppose we had a war and nobody came.”  We might have even believed that.  Everything – including war – had a simple solution to us. Just withdraw, go home, and refuse to fight. 

In hindsight, that was amazingly stupid. Then again, we were probably stoned at the time, too.  Everything seemed simpler when you were stoned.   

Unlike our parents who fought in WWII or Korea, and our friends who served in Vietnam, most of us had never faced a real enemy trying to kill us. Sure, we were children of the Cold War, and we worried about nuclear attacks, but in our heart of hearts we felt the Soviet people were probably just like us and didn’t want to die. War was a somewhat abstract concept to us.

Then came Vietnam and the horrors of war confronted us every night on network news. Soldiers and civilians died in horrible and gruesome ways we never imagined. Cameras recorded fire fights, executions, and monks burning themselves in protest. We had friends who came back wounded, and some who never made it back at all. 

Those of us of a certain age blamed politicians and their ties to the “military/industrial complex” for this. It hardened our views about war in general as useless and wasteful.  It spawned a whole generation of politicians who wanted to gut our military budgets for use in social programs.  For the most part, a lot of us cheered them on, I am sorry to say.   

A tipping point was reached during the brief yet regrettable Jimmy Carter term, which was heavy on symbolism and short on results. When Iran seized our diplomats and held them for 444 days while Carter and the Democrats dithered, we reached a new low. 

We had become the paper tiger. Nobody feared us.

Then Ronald Reagan was elected.  The Iranians quickly released our hostages because they feared what Reagan might do.  And despite continued resistance from the hardcore left and their political allies, we built up our military, advanced our killing technologies, and sent a clear message to the world not to screw with us … or else.

The anti-war, anti-military wing of the Democrat Party was still around, still preaching peace and love, and accusing Reagan and many Republicans of being war mongers and in the pockets of defense contractors.  Reagan blew them off and continued amping up our military. 

By the time the Berlin Wall fell, and a little later the Soviet Union collapsed, most of us had had an epiphany – we understood, finally, that the only realistic path to peace was to scare the crap out of anyone who even thought about attacking you.  

Reagan and the hawks were right, after all.   

Then came Obama. 

He’s managed – singlehandedly – to make America look weak, indecisive, untrustworthy and vulnerable.  Say what you will about George W., while other world leader may have dismissed him as a “cowboy,” they also knew that if he promised something, he would do his best to deliver. 

And he wasn’t afraid to pull the trigger.  Neither was Clinton, for that matter.  Nor was George H.W.  Nor, of course, was Reagan. 

Obama is different.  He doesn’t want us to be a superpower, much less the preeminent superpower.  He strives to be universally loved and praised by the rest of the world for humbling America. Something he, and the far left supporting him, feel is long overdue.   

So far, he's doing a good job at that.  

And that puts us all in jeopardy. 

As a matter of fact, they are Muslims …

What a surprise. 

Heavily armed Muslim terrorists shouting Allahu Akbar slaughtered a dozen people in a well-organized attack on a satirical Paris magazine as retribution for publishing cartoons and stories they found offensive to the Prophet Muhammad. One of these terrorists also shot a wounded cop in the head on their way out.    

The same magazine had been firebombed by offended Muslim terrorists three years earlier.   

In the Middle East, multiple videos have been recorded by Muslim terrorists working under the ISIS banner showing them sawing the heads off of innocent captives.  They’ve also recorded and distributed several videos of their mass executions of defenseless, bound and half-naked male prisoners.  Female prisoners, according to ISIS press releases, are handed out to loyal ISIS fighters to be wives or slaves, either of which may be sold or traded by their male owners.  ISIS also uses the promise of free captured women as wives or slaves as a recruiting tool to attract new fighters. 

Muslim terrorists from Boko Haram have killed hundreds of innocent Nigerian villagers at a time while also kidnapping their younger wives and daughters to be awarded as wives to Boko Haram fighters or sold as slaves.  They have also kidnapped young males from the same villages to become child soldiers.  In their latest attacks a few days ago it’s reported that they killed over 2,000 Nigerian villagers in a matter of a days – shooting most, but burning some to death.   

Muslim terrorists retaliated against a government crackdown and massacred children in a Pakistan school and also burned alive female teachers there in December of 2014.  

Over the years since the 1990s Muslim terrorists have blown up nightclubs in Indonesia, subway stations in the UK, cut the heads off British soldiers on a public street, killed an unarmed honor guard in Canada, blown up embassies around the world, and sent suicide bombers into restaurants, theaters and other public areas to kill and maim innocent people across the globe.  That’s just a smattering. 

And lest we forget, Muslim terrorists attacked us on 9/11 killing thousands of our fellow citizens, much to the glee of other Muslims who literally danced in the streets at the news. 

Forgive me if I have lost patience with the apologists and appeasers who constantly claim that this has nothing to do with the Muslim faith, that the culprits aren’t “really” Muslims, or that these are just random acts of violence by a few extremists.  I cannot understand how anyone can fail to see the connection.  But for those who apparently can’t, let me sum it up:

The motivations of today’s Muslim terrorists do in fact come from their faith.  They want to establish an Islamic state worldwide, implement Sharia Law in place of existing laws, and kill or convert anyone who opposes them.  They want to eliminate democracy entirely and replace it with an absolute theocracy based on a book written in the 7^th Century.  They see personal liberty, freedom of speech, freedom of expression, diversity of faith, equality, and other Western concepts since then as abominations and affronts to Islam, so these need to be discarded in the return to the bedrock teachings of Islam.     

It’s time everyone understands and acknowledges all this.  Sure, not every Muslim is a terrorist.  Since there are more than a billion and a half Muslims worldwide the number of actual terrorists among them is statistically small.  Still, refusing to correctly define who is cutting off heads, blowing up innocent people, executing unarmed prisoners, and enslaving captured women and children – and why they are committing all these atrocities – is stupid. 

To downplay the probability that these acts are connected puts us all at risk.  They are connected, and there’s obvious cooperation among the perpetrators on a global level.   

There is also no way to negotiate with them.  There is no “compromise” or political solution possible.   That’s something else that needs to be understood by everyone. 

These murderers believe what they are doing is in the greater service of Islam, justified by the Qur’an.  To many Muslims worldwide they are heroes; defenders of true Islam against corrupting Western influences and backsliding “Muslims” in name only. Mass murder, decapitation, and enslavement are all simply necessary means to an end – the defeat of Islam’s enemies through jihad, the return of Muslims to the true faith,  and the establishment of a new world order based on the Qur’an.   

The apologists say that we are misinterpreting the isolated and random acts of a few extremists as reflective of Muslims everywhere.  “Few” seems to be the operative argument. 

However, there are now tens of thousands of heavily armed soldiers with increasingly sophisticated weaponry, computer skills, and tactics, actively recruiting thousands of additional new fighters worldwide every month. This “few” is also supported – at least in sprit – by millions of like-minded Muslim followers.  So much for a “few extremists.”

What’s the appeal to so many Muslims?  And why now? 

First, the hard and fast rules have always been there for devout Muslims; this isn’t something new, and those rules are a comfort to many Muslims in a changing world. One of the appeals of Islam is that there are clear-cut rules, unchanged for centuries, for practically everything.

As the world has become smaller because of better communications, more people have been exposed to Western culture through movies, TV shows, books and the Internet.  This hasn’t always been positive.  Devoutly religious people are often offended by what they see.  It may be acceptable in the U.S. to air a show based on slutty girls, sexual innuendo, infidelity, binge drinking, and drug abuse.  But not in more conservative countries and cultures.   

What is broadcast in primetime here every night can be deemed morally depraved in many other parts of the world.  We make jokes about adultery; other cultures stone adulterers to death.  It’s the same with revealing fashions on women, drug use, and bare breasts – we don’t get wound up about these things anymore.  Yet in some other cultures police will arrest women for not fully covering every part of their body but their eyes, and drug use is punishable by hanging.       

Like in the Muslim world. 

Our harmless entertainment is the worst pornography to others.  To many Muslims our acceptance of alternate lifestyles, sex outside of marriage, women having the same rights as men, even swimsuit events in beauty pageants, is just more evidence of our culture’s continuing slide into moral chaos, and our worship of the material over the spiritual world.  We give Muslim terrorists plenty of ammunition when it comes to drawing distinctions between Western culture and what they propose.   We wallow in it and broadcast it worldwide.     

We also arrogantly believe democratic elections are the solution to most societal ills.  With democracy, people are empowered to make changes.  So democracy must be a good thing.  Well, not everybody in the world agrees. 

Much of the world prefers predictability and stability over democracy; they’d rather be told what to do.  That’s why so many attempts to install democratic governments fail in certain regions. 

Some predominantly Muslim countries, such as Turkey and Egypt, have tried democracy.  They’ve forged more secular states and tried to suppress Islamic fundamentalism for years.  However, Islamic fundamentalists win democratic elections against more progressive and secular Muslims practically every time. 

It’s happened many times in Turkey and more recently in Egypt. In both those countries, the military has staged coups to take back power from elected Islamic fundamentalists.  In Turkey – perhaps the most progressive of the Muslim countries – it’s a repeating pattern:  fundamentalists get elected and start pushing a theocracy; the military overthrows them and promises new elections; after a while new elections happen and fundamentalists get elected again.  And so on.

To think that fundamentalists make up a very small part of the Islamic faith is a serious mistake.  Islam by its nature and design is a conservative belief system tilted more toward fundamentalist rather than moderate interpretation. The major schisms in Christianity are over literal versus figurative interpretations of the Gospels of Jesus Christ.  The major schisms in Islam are over who should have been in charge after the death of Muhammad – there’s much less quibbling among Muslims over how to interpret the Qur’an. 

To devout Muslims, Islam is the only true faith. There is but one God and His name is Allah.  Muhammad is the final Prophet sent by Allah.  The Qur’an tells them that every other faith is a sham. Followers of other faiths are essentially heretics and have but three choices:  convert to Islam; or pay a tax to support Islam; or be killed.  That’s pretty much it, according to the Qur’an. 

There’s no parallel to that in the statements attributed to Jesus. 

Does the “convert, pay tax, or die” all sound familiar? Yes, it’s the same theme from the Muslim terrorists in Boko Haram and ISIS today.  Only they usually skip over the convert or pay tax part and jump right to the kill option. 

Apologists cannot walk back from is what’s in the Qur’an.  They struggle when interviewed on TV about whether the “few extremists” are “misinterpreting” the Qur’an about jihad, taking captives as slaves, or attacking and killing the enemies of Islam.  They try to change the subject, because they know the Qur’an explicitly condones all those things. 

Granted, the Bible has some gruesome passages as well.  The Old Testament God could be particularly testy and brutal – think Abraham, Noah, Job and what happened to Sodom and Gomorrah.  However, most of today’s Jews and Christians have accepted that the Bible can’t always be taken literally and while considered divinely inspired it was not actually written by God.

It’s not the same with devout Muslims and the Qur’an.

Muslims regard the Qur’an as the only unpolluted and uncorrupted word of Allah, delivered by the Archangel Gabriel directly to Muhammad.  So the Qur’an and Allah’s word are one and the same.  There’s no wiggle room.  According to the Qur’an, slavery is okay, it’s okay to slaughter Islam’s enemies who refuse to submit to His will, and there’s a special place in Paradise – an exalted level – for martyrs who die in battle on behalf of Islam.  Inshallah. 

That’s one reason Muslim terrorists have little difficulty getting folks to strap on suicide vests.  It’s a holy war to them.  Die as a martyr and go to Paradise.   

Modern Western civilizations have a hard time addressing or even thinking about becoming engaged in what might be seen as a holy war.  Especially against Muslims, given what happened in the Crusades to reclaim the Holy Land.

Moreover, we don’t know how to fight terrorists who don’t fear – but actually welcome – their own death.  We also can’t understand celebrating the enslavement of others, much less the slaughter of innocent and defenseless people as an act of faith.  It’s as if tribes of barbarians from the distant past suddenly appeared in this century, armed with today’s sophisticated weapons, focused on eradicating all vestiges of what they view as a corrupt and decadent Western civilization.    

Make no mistake:  that’s what this is about.  It’s not about religion and which version of God you worship.  It’s about cultures.  It’s about Muslim terrorists’ desire to have rules and laws from the 7^th Century imposed on a world they see as depraved, immoral, and out of control.   

Like it or not, we’re in a real war, with real weapons and real casualties, against a variety of groups and individuals tenuously bound together solely by their hatred of other cultures they view as morally and spiritually weaker than their own. 

We hear a lot about ISIS, Al Qaeda, AQAP, Hamas, Hezbollah, Taliban, and Boko Haram as if these are separate and have nothing in common. Part of this is politics – taken individually, Obama and others can downplay the bigger threat. That’s really why Obama and his spokespuppets won't use the words “Muslim” or “Islamist” when describing these terror groups.   

To concede that they share a common goal – which they do – is to admit that we are essentially clueless on how to deal with this threat. 

Which we are. 

Today’s Muslims terrorists have their eyes on the long term.  The terror events we are experiencing now are just a wakeup call; a recruiting tactic and call to arms for Muslims everywhere to join their cause in a mighty jihad against a world that’s lost its bearings, slid into moral depravity, and turned away from the one true faith.

It’s their way of proving to the rest of the world, and to other Muslims, that they have nothing to fear from Western powers like the U.S. and its European allies.  Our leaders are impotent, and our militaries are useless against them, they claim, and so far they’re right.  They use the West’s reluctance to engage them directly in battle as a sign of weakness. 

The truth is, they actually want us to go into a full-scale war with them.  They reason that this will cause the billion and a half Muslims worldwide to join them in defense of Islam against the infidels in the final holy war predicted in the Qur’an. 

They think they are setting a trap for us from which they will ultimately emerge victorious. 

It’s long past time to call their bluff.  We need to kill all the Muslim terrorists now, not one at a time or in small groups with drones, but with an onslaught of real weapons, real bombing campaigns, and yes, real boots on the ground. 

We need to cauterize the areas they now control to stop the spread of their infection. 

It’s time to drop the political correctness and recognize that yes, indeed, these are Muslim terrorists.  They may also be radical extremists and radical Islamists, but they are Muslims first and foremost.  And they are following basic tenets of Islam that apply to all Muslims.   

That means we can’t close our eyes and pretend that Muslims in our military, in our communities, and around the world are immune to the appeal of an Islamic society based on the Qur’an.  Just because someone publicly opposes the terrorists’ tactics doesn’t mean they don’t also privately agree with what they are trying to accomplish.  

The first step is to identify the Muslim terrorists for what they are.  Muslim terrorists.

The longer we avoid doing that, the weaker we look in their eyes.  And our weakness only invites them to launch more terror attacks and recruit greater numbers of followers.   

The end of Uncle Sugar ...

The government can’t bail out everyone and everything.

The days when Uncle Sam picks up the tab for bad decisions, acts of God, and acts of terror must end. This applies to everyone – states, Federal agencies, corporations and individuals. 

We can’t afford it anymore. It’s also cultivated a dangerous mindset that nobody needs to take responsibility for their own actions. It encourages stupidity at the personal and corporate level. Why bother to protect yourself when the Feds will bail you out?   

It rewards those who ignore the most fundamental rule of life: shit happens.

Because shit happens, rational people and companies buy insurance – they are betting that shit might happen; insurance companies are betting that the risk of shit happening to the insured is acceptable at a certain cost.  It’s a purely logical business proposition. 

Generally, insurance companies assess their risk based on past experience and future probability. They use history, math, and science in their calculations.

When the government gets involved in insuring things, it uses none of those things. The only thing that matters is politics, and optics. That’s why the government routinely takes enormous hits – at taxpayer expense – insuring things it shouldn’t, and at laughably low rates.  

Whenever, by pure chance, it manages to avoid a beating on insuring something, and even makes a profit, Congress moves swiftly to make certain that doesn’t happen again.  Recently, when by pure dumb luck, the government started making a profit on student loans the outrage in Congress was huge. Democrats in particular made it seem like the government was harvesting organs from student borrowers, rather than just getting a short-term bump from interest rates.      

Politicians always want to be the good-guy, the kindly grandparents, and the person who can kiss the boo-boo and make it go away. They relish any opportunity to take away the hurt and make the world all right again.  And, of course, take credit for it. 

If Congress had an anthem it would be The Candy Man as sung by Sammy Davis, Jr. 

Politicians love to insure stuff, or at least subsidize insurance for the politically connected. Farm-state politicians push price supports – a form of insurance – to protect farmers from basic supply and demand. Green-energy companies get their loans guaranteed – a form of insurance. Homebuyers have FHA mortgages guaranteed – a form of insurance.  Bank depositors have their savings guaranteed by the FDIC – insurance. People who live in flood zones have long relied on subsidized insurance.     

The government, which means taxpayers, usually loses on insuring stuff because, unlike private insurers, politicians are loathe to cut their losses and move on.  Instead, they’ll keep shoveling our money down the rat hole and pretend nothing’s wrong while hoping things will fix themselves. When private insurers are defrauded, they’ll refuse to pay out on bad claims; when something government insures goes bust, even when there’s criminal misconduct involved, politicians usually just huff and puff and promise it won’t happen again.

A perfect example is the savings and loan fiasco. The FSLIC provided government-guaranteed insurance on deposits held by S&Ls.  In the late 1980s over 740 S&Ls failed, mainly because of bad real-estate investments, fraudulent mortgage-lending practices, and cooking the books to hide losses. The collapse of one S&L alone – Lincoln Savings & Loan headed by Charles Keating – cost the government $3 billion.  By the time the smoke cleared, it’s estimated that taxpayers got hit for over $120 billion to bail out the S&L industry.

What did Congress do?  They rolled the FSLIC into the FDIC and called it a day.

Oh yes, five Senators had to face the Senate Ethics Committee.  Two years earlier they’d intervened on Keating’s behalf to stop a Federal Home Loan Bank Board investigation into his shady practices, in exchange for campaign money.  Remember, Keating’s the same guy who ultimately cost U.S. taxpayers about $3 billion. 

Three Senators got a slap on the wrist; two others were found to have used “bad judgment.” 

The one Republican in the so-called Keating Five, and one of the “bad judgment” guys, was John McCain (R-AZ).  Later, in a stunning display of hypocrisy, he co-sponsored the McCain-Feingold Bill on campaign finance reform.  Since then he’s been an outspoken critic of the influence of special-interest money on government. He should know. 

Did our government learn its lesson from the S&L crisis?  What do you think? 

When the markets collapsed in 2008, because of – let’s see – bad investments, fraudulent mortgage lending practices, and cooking the books to hide losses, it was like the S&L crisis all over again, only many times worse. 

How did this happen again? 

When the government assumes all or part of a risk, this opens the door for – and actually encourages – people and companies to make stupid decisions they wouldn’t otherwise make.  

Politicians in both parties in the 1990s wanted to boost home ownership among low-income people, who typically have with poor credit histories. To do this, they required lenders to make more mortgages available to people who wouldn’t ordinarily qualify, with the promise that the government would back these “subprime” mortgages. This encouraged lenders to lower their standards for approving mortgages.  And the floodgates opened. 

Government-subsidized mortgage backers like Fannie Mae and Freddie Mac were then persuaded to buy up, bundle, and remarket these shakier investments to other banks and investment firms, who snapped these up. Without the government backing these, indirectly, nobody would have touched these.   

Of course charlatans, speculators, and deadbeats jumped in. The housing market took off with all this new money on the table. Prices soared. Speculators were buying and flipping properties in weeks if not days using bank money instead of their own.  So they had little skin in the game.   

By 2008 Fannie Mae and Freddie Mac owned or guaranteed over $5 trillion in mortgage debt.  Many of those mortgages were bad.  They’d been given to people who didn’t really qualify under normal circumstances.  Many couldn’t afford to pay today’s monthly payments, much less future payments when their bargain-basement teaser rates might go up.

Everybody was counting on housing prices to continue to rise.  Instead, the market stalled and prices started to fall.   A lot of people now owed more on their mortgages than their house was worth.  So people with little skin in the game walked away from their mortgages.  The glut of houses in foreclosure forced prices down further, spurring more “jingle mail” as it’s known. 

Via Fannie Mae, Freddie Mac, and the FHA, Uncle Sam was left holding a lot of bad paper. Maybe as much as $800 billion or more in tax dollars will be spent on this bad bet.     

Another stellar investment with your tax dollars.  And for what?  To help mortgage crooks like Countrywide make millions?  To help speculators?  To help real-estate agents?    

Our government has also rolled the dice on green-energy projects – and lost big.  It’s now exposed to over a trillion dollars ($1,000,000,000,000 ) and rising of student loan debt. 

How is it dealing with these? 

Well it’s continuing to hand out green-energy loan guarantees, lauding a track record of $30 billion in loan guarantees with only about a 2% default rate, so far.  (For reference, 2% of $30 billion is still a $600,000,000 loss, and it’s still early.)

On student loans, the Obama folks want to increase access to student loans for even more people.  There’s already a program they pushed to forgive all or part of a student’s outstanding loan balance if he or she – wait for it – goes to work for the government or a politically favored non-profit organization.  Just what we all want, right? 

I guess McDonalds and Wendy’s are all full up on people with Masters or Ph.D. credentials in Obscure French Poets of the 15^th Century.  So why not encourage them to go into government?   

The bigger question is why is our government even involved in these things? And when it foolishly decides to insure something, why doesn’t it at least use the same risk-assessment criteria that private insurers use and charge appropriate rates in return? 

The answer, as always, is politics. Having the government as your backup calms private insurers.  Subsidizing what should be much higher rates makes businesses and consumers take risks they probably wouldn’t otherwise. Neither subsidized rates nor loan guarantees make for rational decisions.        

Politics distorts reality. The belief that the government can afford to pay for anything and everything that occurs when shit happens is fed by politics. 

This also encourages stupidity.   

There’s no rational reason in the world why our government underwrites flood insurance. Or provides financial relief for people who live in the paths of hurricanes or tornadoes.  This may seem like the “humane” thing to do but it only encourages people to live where and in structures common sense tells them they shouldn’t.  Absent government-subsidized insurance, or the promise that government will bail them out when – not if – disaster strikes, maybe they wouldn’t.  Or they’d at least take steps to protect themselves and their property better.   

It’s your right to live on a flood plain, on a barrier island, below sea level, or in the path of hurricanes and tornados. But it’s not our collective responsibility to pay for your decision should shit happen to you – in what is only a matter of time – because you’ve chosen to live there. If the real insurance rates without government subsidies to offset that risk are too high for you, then perhaps you should move to a safer place. 

Commonsense?  Sure.  But so is not borrowing $100,000 to pursue a whim that has absolutely no market value outside of academia.  So is not funding a blue-sky green energy venture that can’t attract any outside investors without a loan guarantee.  So is not guaranteeing loans for houses or whatever that private lenders are not willing to underwrite on their own. 

We have to stop assuming risks that the free market wisely refuses to cover.  We need to stop subsidizing stupidity as well. 

Congress needs change how it spends our money.  Or we need to change Congress.