By Stan Marszalk
Ever since Barack Obama was elected president in 2008, Americans have heard a lot about “progressivism,” Saul Alinsky’s “Rules for Radicals” and the “Cloward-Piven Strategy” of orchestrated chaos – basically, intentionally causing an existing system to break down in order to “rescue” it by instituting a new system. In other words, a “fundamental transformation.”
Conservatives believe this is Obama’s playbook, while liberals dismiss it as rightwing paranoia. But consider Obama’s economic policies with this paradigm in mind.
For any economy to function properly depends on the availability of capital and credit, raw materials, manufacturing capacity and production, and labor. To intentionally cripple an economy, one or more of these elements would have to be controlled or withheld.
American leaders have been overloading the economy with debt to pay for goodies promised to the populace since long before Obama, but the first big push for outright misallocation of capital (something strongly promoted by progressives) started with the Community Reinvestment Act of 1977, signed by Jimmy Carter. After all, the two principal economic engines driving the U.S. economy were automobiles and housing. The Act forced banks to misdirect their investment capital to areas and individuals that previously did not merit credit because of the high risks involved.
Thus, in place of 30-year mortgage loans that in the 1960s had fairly strict standards and required 20 percent down, we ended up with “liar loans” and 0 percent down, all with the support of Fannie Mae and the blessings of progressive officialdom. At the peak of the housing bubble in 2007, there were roughly 450 trillion dollars’ worth of derivatives and mortgage junk bonds floating in the world markets, while the combined total of GDP of all world economies was estimated at only 57 trillion dollars! Once the housing bubble burst, it almost took the developed capitalist countries down for the duration, and we are still suffering from the after-effects of this blowup.
The 2008 financial fiasco has brought us the Dodd-Frank legislation that will generate many thousands of pages of new regulations and put a stack of new restrictions on the financial community. It has also brought with it a number of new councils, committees, offices and bureaus that will give us an army of new public servants! Much of this legislation is still not too well understood and many regulations still have not been hatched by that new army of bureaucrats. But one thing is certain: It will substantially increase the operating costs of the banks. The large money center and regional banks can ill afford it, but the burden will be beyond the capabilities of the small, privately owned local institutions that in due course will fold.
In the end, the government will control the allocation of credit, capital flows and the uses of money.
During the past three years, the progressive planners in government have been strong-arming the heavily regulated banks into refinancing previously defaulted loans at substantial losses to investors and banks themselves. The latest data indicate that 46 percent of such refinanced loans now have defaulted a second time, paving the way for a second financial bubble in the future.
Before we leave the subject of housing and its effect on the economy, consider the new federal rule unveiled by HUD, dedicated to “Affirmatively Furthering Fair Housing.” What that means is a forced integration of housing through zoning laws, infrastructure planning, financial policy and transportation. For an extreme example, it might transplant a “welfare case” from his cardboard box under an overpass into an upscale gated community! What a wonderful example of equality! But one thing is for sure. It would shatter the values in the housing market and achieve one of the goals of the Cloward-Piven Strategy: Push the dissatisfied population to the brink of rioting so the authorities can step in with remedies that result in a new form of government.
As an added “benefit,” this new regulation will also re-energize school integration whose previous incarnation was the government’s intensely controversial forced-busing program.
Finally, if you ask a reality-based economist what is the single most effective way to grind an economy to a crawl, he will have to agree it is curtailing the availability of abundant and affordable energy. This is one reason the Environmental Protection Agency has become one of the favorite tools of progressives in controlling the economy. It came into being to enforce the Clean Air Act of 1963, signed by Lyndon Johnson. Since then, it has muscled its way into almost every area of environment and production, exploding into a force of 17,000 bureaucrats. It mandates, enforces and punishes.
EPA has expanded into a monstrosity that will ultimately strangle this country, as all its actions have the net effect of diminishing the availability of affordable energy. The recently planned additional use of ethanol will increase the cost of automotive fuels, ruin millions of older automobile engines and sharply increase the cost of food and anything else moved by road transport. (They are also looking at how to restrict fracking, which would otherwise unlock untold amounts of domestic energy sources.)
Add to this Obama’s declared war on “dirty coal” and you will see a sharp increase in the promised skyrocketing electricity costs, which in turn will affect everything from household power to production and manufacturing in this country. (Even driving the Volt will cost more!)
All of this will have an enormous effect on the middle class. Although the announced goal of the EPA is to improve the quality of life, the middle class just will not be able to afford all that wonderful quality.
What is disconcerting about all of this is that the right-of-center politicians, journalists and commentators who should know better get preoccupied with some relatively insignificant issue the progressives throw out to them to obsess and fight over, all as a diversion to keep us from focusing on the main agenda and goal of Obama, which is so well defined by the Cloward-Piven Strategy. It is the main method by which Team Obama is attempting to accomplish the promised “fundamental transformation” – another term for “revolution.”
After earning his degree in aerospace engineering and a graduate degree in business, Stan Marszalk spent three decades in the defense industry working on advanced projects of singular importance to national defense. Concurrently, for 42 years he published and edited newsletters dealing with Wall Street and the markets. Since leaving the corporate world he has remained active in the analysis of political and business issues.