Seven Surprises of the First Christmas
14 hours ago
Friday, September 26
What caused this mess?
I don't think Obama personally caused the whole thing, but he did support the failed policies that helped create it. I also don't think McCain and the republicans did everything in their power to prevent this mess, but I do think McCain supported some things that would've helped alleviate it.
Tuesday, September 23
Bail out
By Ron Paul
Special to CNN
Editors note: Ron Paul is a Republican congressman from Texas who ran for his party's nomination for president this year. He is a doctor who specializes in obstetrics/gynecology and says he has delivered more than 4,000 babies. He served in Congress in the late 1970s and early 1980s and was elected again to Congress in 1996. Rep. Paul serves on the House Financial Services Committee.
(CNN) -- Many Americans today are asking themselves how the economy got to be in such a bad spot.
For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.
Unfortunately, the government's preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.
Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.
Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.
Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.
These governmental measures, combined with the Federal Reserve's loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.
When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.
Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is mal-investment, a misallocation of resources into sectors in which there is insufficient demand.
In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.
This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners -- in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers -- builders and other sectors connected to real estate that suffer setbacks.
The government doesn't like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.
I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.
Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.
Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.
The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.
It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.
The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.
Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.
Special to CNN
Editors note: Ron Paul is a Republican congressman from Texas who ran for his party's nomination for president this year. He is a doctor who specializes in obstetrics/gynecology and says he has delivered more than 4,000 babies. He served in Congress in the late 1970s and early 1980s and was elected again to Congress in 1996. Rep. Paul serves on the House Financial Services Committee.
(CNN) -- Many Americans today are asking themselves how the economy got to be in such a bad spot.
For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.
Unfortunately, the government's preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.
Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.
Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.
Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.
These governmental measures, combined with the Federal Reserve's loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.
When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.
Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is mal-investment, a misallocation of resources into sectors in which there is insufficient demand.
In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.
This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners -- in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers -- builders and other sectors connected to real estate that suffer setbacks.
The government doesn't like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.
I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.
Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.
Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.
The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.
It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.
The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.
Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.
Monday, September 22
Ephesians 2
We're going to be discussing Ephesians 2 in our Young Couples Bible study tonight. One of the best verses in the entire Bible (at least in my opinion) can be found in Ephesians 2.
Ephesians 2:8-9
8 For by grace are ye saved through faith; and that not of yourselves: it is the gift of God: 9 Not of works, lest any man should boast.
One of the nuances of that verse that I had never really pondered before was what the word that was refering to in verse 8. The word that is referring to faith. Think about what that means for awhile.
So, not only are we saved by grace through faith, but we can't even take credit for the faith we have that channels grace down to us! Truly we have no room to boast. We could easily think we get some credit for our salvation. I mean, after all, we took that first step of faith, right? But who gave you the faith to take that step? According to Ephesians 2:8 you didn't generate that faith by yourself.
Those of us who have been called to Christ have so much to be thankful for; so much to be humbled by. We were wretched worms living in rebellion to our creator and he reached down, touched us with faith, and channeled grace into our lives unto salvation.
May we rest sweetly in His grip.
I'm looking forward to the Bible Study tonight.
Ephesians 2:8-9
8 For by grace are ye saved through faith; and that not of yourselves: it is the gift of God: 9 Not of works, lest any man should boast.
One of the nuances of that verse that I had never really pondered before was what the word that was refering to in verse 8. The word that is referring to faith. Think about what that means for awhile.
So, not only are we saved by grace through faith, but we can't even take credit for the faith we have that channels grace down to us! Truly we have no room to boast. We could easily think we get some credit for our salvation. I mean, after all, we took that first step of faith, right? But who gave you the faith to take that step? According to Ephesians 2:8 you didn't generate that faith by yourself.
Those of us who have been called to Christ have so much to be thankful for; so much to be humbled by. We were wretched worms living in rebellion to our creator and he reached down, touched us with faith, and channeled grace into our lives unto salvation.
May we rest sweetly in His grip.
I'm looking forward to the Bible Study tonight.
Monday, September 15
Wet Basement
God is good. We had a tiring weekend, and we missed corporate worship on Sunday, but we're so very thankful for our loving family. I told Heidi that I don't know what we'd do without our family. We are humbled by how much help we received.
Weekend timeline:
Saturday:
5:45pm - Left for supper at Jeff & Janel Wiegand's. Basement is dry when we leave.
9:55pm - Come home from Wiegand's. Basement is no longer dry. Water has come up through the floor drains.
10:15pm - My dad, mom, and father-in-law are on their way over to help figure out a way to pump the water out. Obviously we can't expect it to go down the floor drain.
11:30pm - We begin to rig up a way to keep the sump-pump cool while just the intake is submerged in water. They're made to be totally submerged to keep them cool while they run. If we don't find some way to keep it wet, the pump will quickly burn up. My cousin-in-law, Josh Pfaffmann, is here at this point too, and between all of us we come up with this system.
We bring a hose into the basement and secure it to a bucket to contain the spray. The sump-pump is sitting in the floor drain. The whole set up works like a charm and about 1:45am we call it a night. At this point water was pushing up through my basement floor, but it was flowing into the floor drains and getting pumped out. Time for some sleep.
2:15am - get to sleep
6:45am - wake up to check on the basement. The towels we put down over some of the floor cracks are completely saturated and water running into the floor drains, but the system we rigged up is working.
7:30am - After talking to dad and my father-in-law, I decide to just stay home all day and keep an eye on the sump-pump. The biggest worry was that, if the sump should burn up, we would have a situation where we have a garden hose spraying water into our basement and no floor drains. That would be bad...really bad.
8:00am - I call my brother Benj to see if he has any good ideas.
8:45am - It's decided that Benj and my father-in-law (Max) would come over and help me install a sump-pit in the corner of my basement. Benj goes to his work and rounds up all the necessary tools and supplies and comes over.
11:00am - Work begins in earnest on the pit. Concrete saws, jack hammers, post hole diggers, crowbars, and mud.
12:30pm - We are lucky to have hit the pipe that goes from the floor drains out of the basements. That means we can tie the floor drains directly into the pit, ensuring that they'll drain properly.
5:15pm - We make a run to Menards to get a few supplies to hook up the pump.
6:30pm - My mother-in-law brings supper over.
7:30pm - Back to the pit.
11:00pm - Done. Here's the final installation.
Here's some miscellaneous pictures of the basement and a video at the bottom.
Weekend timeline:
Saturday:
5:45pm - Left for supper at Jeff & Janel Wiegand's. Basement is dry when we leave.
9:55pm - Come home from Wiegand's. Basement is no longer dry. Water has come up through the floor drains.
10:15pm - My dad, mom, and father-in-law are on their way over to help figure out a way to pump the water out. Obviously we can't expect it to go down the floor drain.
11:30pm - We begin to rig up a way to keep the sump-pump cool while just the intake is submerged in water. They're made to be totally submerged to keep them cool while they run. If we don't find some way to keep it wet, the pump will quickly burn up. My cousin-in-law, Josh Pfaffmann, is here at this point too, and between all of us we come up with this system.
We bring a hose into the basement and secure it to a bucket to contain the spray. The sump-pump is sitting in the floor drain. The whole set up works like a charm and about 1:45am we call it a night. At this point water was pushing up through my basement floor, but it was flowing into the floor drains and getting pumped out. Time for some sleep.2:15am - get to sleep
6:45am - wake up to check on the basement. The towels we put down over some of the floor cracks are completely saturated and water running into the floor drains, but the system we rigged up is working.
7:30am - After talking to dad and my father-in-law, I decide to just stay home all day and keep an eye on the sump-pump. The biggest worry was that, if the sump should burn up, we would have a situation where we have a garden hose spraying water into our basement and no floor drains. That would be bad...really bad.
8:00am - I call my brother Benj to see if he has any good ideas.
8:45am - It's decided that Benj and my father-in-law (Max) would come over and help me install a sump-pit in the corner of my basement. Benj goes to his work and rounds up all the necessary tools and supplies and comes over.
11:00am - Work begins in earnest on the pit. Concrete saws, jack hammers, post hole diggers, crowbars, and mud.
12:30pm - We are lucky to have hit the pipe that goes from the floor drains out of the basements. That means we can tie the floor drains directly into the pit, ensuring that they'll drain properly.
5:15pm - We make a run to Menards to get a few supplies to hook up the pump.
6:30pm - My mother-in-law brings supper over.
7:30pm - Back to the pit.
11:00pm - Done. Here's the final installation.
Here's some miscellaneous pictures of the basement and a video at the bottom.
Wednesday, September 3
Landscaping
Here are some pictures of the brick edging that Josh did for us while we were away this past weekend. We love it. It really adds a lot to the front of our home. Thanks again Josh! Your servant heart is an inspiration.
Tuesday, September 2
Weekend Updates
I realized today that's it's been a full two weeks since I've updated this. Usually I use some break time at work to keep this updated, and lately, well, there hasn't been much break time at work. We've been cranking on a project for ICC that just went to the printer this morning. It feels so good to be able stretch a little bit now that I'm out from under that deadline.
Heidi & I went to Michigan over Labor day with the Snyders to visit Jake & Meika. We were sorry we had to miss the Sabetha wedding, but we had an amazingly wonderful time in Michigan. It was good to catch up with friends we hadn't seen in awhile and make new friends also. The weather was absolutely perfect the entire 3 days. We spent Saturday on the beach at Lake Michigan playing volleyball, swimming, and relaxing. We had a lot of good late-night discussions. We learned that Jake refuses to ever change his children's diapers. :-) Meika's praying that will change when the time comes. My wife learned that Benedryl does not put her to sleep, but, in fact, does the exact opposite. Kenton & I both affirmed that we are very thankful we don't have to drive in Chicago traffic on a regular basis.
In other fun news, Heidi & I came home to some wonderful landscape work that was done while we were gone! We now have brick edging along the front of our home thanks to Josh Gerber! That man has the most servant heart of anyone I've ever met. Thanks again Josh! We really owe you big time. My Heidi & I keep saying that we just may have to name our first-born boy after him for all he's done for us. I'll have to take some pictures of the beautiful work he did and post them here.
Heidi & I went to Michigan over Labor day with the Snyders to visit Jake & Meika. We were sorry we had to miss the Sabetha wedding, but we had an amazingly wonderful time in Michigan. It was good to catch up with friends we hadn't seen in awhile and make new friends also. The weather was absolutely perfect the entire 3 days. We spent Saturday on the beach at Lake Michigan playing volleyball, swimming, and relaxing. We had a lot of good late-night discussions. We learned that Jake refuses to ever change his children's diapers. :-) Meika's praying that will change when the time comes. My wife learned that Benedryl does not put her to sleep, but, in fact, does the exact opposite. Kenton & I both affirmed that we are very thankful we don't have to drive in Chicago traffic on a regular basis.
In other fun news, Heidi & I came home to some wonderful landscape work that was done while we were gone! We now have brick edging along the front of our home thanks to Josh Gerber! That man has the most servant heart of anyone I've ever met. Thanks again Josh! We really owe you big time. My Heidi & I keep saying that we just may have to name our first-born boy after him for all he's done for us. I'll have to take some pictures of the beautiful work he did and post them here.
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