New York Times and Ralph Nader criticize Obama for illegally seizing private property and violating disclosure laws
The New York Times and Ralph Nader have recently criticized President Obama for illegally seizing assets from shareholders of Fannie Mae and Freddie Mac, and for illegally avoiding disclosing this information to shareholders.
The fifth amendment requires that compensation be given for such seizures, but Obama did not do this.
Federal disclosure laws require that shareholders be informed of this information immediately, but Obama waited more than three years to tell them.
Neither of these actions by Obama surprises me one bit. These things are consistent with his many, many, many other illegal activities. He has no respect for the rule of law, the constitution, private property, or individual liberty.
The New York Times reports:
Would you buy stock in a company that barred you from sharing in its future earnings? Of course not. Participating in the upside is what stock ownership is all about.
And yet, as of December 2010, holders of Fannie Mae and Freddie Mac common stock were subject to such a restriction by the United States government. They didn’t know it at the time, though, because the policy was not disclosed.
This month, an internal United States Treasury memo that outlined this restriction came up at a forum in Washington.
The memo was addressed to Timothy F. Geithner, then the Treasury secretary, from Jeffrey A. Goldstein, then the under secretary for domestic finance. In discussing Fannie and Freddie, the beleaguered government-sponsored enterprises rescued by taxpayers in September 2008, the memo referred to “the administration’s commitment to ensure existing common equity holders will not have access to any positive earnings from the G.S.E.’s in the future.”
The memo, which was produced in a lawsuit filed by Fannie and Freddie shareholders, was dated Dec. 20, 2010. Securities laws require material information — that is, information that might affect an investor’s view of a company — to be disclosed. That the government would deny a company’s shareholders all its profits certainly seems material, but the existence of this policy cannot be found in the financial filings of Fannie Mae. Neither have the Treasury’s discussions about the future of the two finance giants mentioned the administration’s commitment to shut common stockholders out of future earnings.
Ralph Nader wrote:
“What legal authority does the Administration have, as this section of the memo intimates, to completely wipe out shareholders — even after taxpayers have been repaid (as is likely to happen soon)?”
“Contrary to this statement, neither the memo — nor Treasury’s actions by unilaterally amending the PSPAs — leaves one with the impression that this point in the memo is meant to highlight the importance of repaying the taxpayers. It seems to be setting a precedent for using and abusing the GSEs’ shareholders.”
“Taxpayers should recoup their investment in the GSEs; but the Administration does not have to wipe out shareholders in order for this to happen.”
“This need not be an issue of choosing taxpayers over shareholders. The federal government has similarly recouped taxpayer money used to bailout other corporations (A.I.G., Citigroup, etc.) involved in the financial collapse, but has allowed the shareholders of those companies to share in their recovery. The same should be the case with the GSEs.”
Prices are not just random numbers that get picked out of thin air. Instead, prices communicate information about supply and demand. So when the supply and/or demand situation changes, it makes perfect sense that the price would change accordingly.
Economic theory predicts that when the government sets the price of something lower than the supply/demand equilibrium, the demand will exceed the supply, which is the definition of a shortage. More than 4,000 years of various examples of price controls from all over the world show this to be the case.
Today, the BBC reported:
Argentina pegs supermarket price rises for two months
February 4, 2013
The Argentine government has put a temporary price freeze on all products sold in the country’s main supermarket chains to try to fight inflation.
Argentina’s commerce ministry has asked consumers to monitor prices in the chains.
It wants them to keep receipts and has set up a hotline for shoppers to call if they spot any price rises.
The inflation that’s referred to in that article is caused by the government increasing the supply of money with nothing of real value to back it up. This makes the money worth less, and causes prices to rise. But that’s not a real price increase. So, as inflation devalues the currency, the government’s price freeze will actually force food sellers to lower their (real) prices.
If it really is a “temporary” measure for only two months, it’s possible that inflation might not be severe enough for the price controls to result in a substantial drop in (real) food prices.
But I am skeptical about these price controls being “temporary.” My guess is that the price controls will last a lot longer than two months, and as time goes on, inflation will devalue the real value of the currency enough so that the (real) prices will fall significantly, which will cause shortages. And then the government will wrongly blame the shortages on the supermarkets and farmers, and instead of getting rid of the price controls, the government will take action against the supermarkets and farmers, which will cause the situation to get even worse.
Of course, I could be wrong about all of this.
Anyway, let’s see what happens in Argentina as a result of these price controls.
For the record, here’s what happened after Venezuela set price caps on food a decade ago:
Since 2003, Hugo Chavez has been setting strict price controls on food, and these price controls have been causing shortages and hoarding.
In January 2008, Chavez ordered the military to seize 750 tons of food that sellers were illegally trying to smuggle across the border to sell for higher prices than what was legal in Venezuela.
In February 2009, Chavez ordered the military to temporarily seize control of all the rice processing plants in the country and force them to produce at full capacity, which they had been avoiding in response to the price caps.
In May 2010, Chavez ordered the military to seize 120 tons of food from Empresas Polar.
In March 2009, Chavez set minimum production quotas for 12 basic foods that were subject to price controls, including white rice, cooking oil, coffee, sugar, powdered milk, cheese, and tomato sauce. Business leaders and food producers claimed that the government was forcing them to produce this food at a loss.
Chavez has nationalized many large farms. Chavez said of the farmland, “The land is not private. It is the property of the state.” Some of the farmland that had been productive while under private ownership is now idle under government ownership, and some of the farm equipment sits gathering dust. As a result, food production has fallen substantially. One farmer, referring to the government officials overseeing the land redistribution, stated, “These people know nothing about agriculture.”
Chavez has seized many supermarkets from their owners. Under government ownership, the shelves in these supermarkets are often empty.
In 2010, after the government nationalized the port at Puerto Cabello, more than 120,000 tons of food sat rotting at the port.
In May 2010, after price controls caused shortages of beef, at least 40 butchers were arrested, and some of them were held at a military base and later strip searched by police.
In their 1848 publication Manifesto of the Communist Party, Karl Marx and Frederick Engels wrote:
“The theory of the Communists may be summed up in the single sentence: Abolition of private property.”
Frank Dikotter, author of “Mao’s Great Famine: The History of China’s Most Devastating Catastrophe,” talks about China’s collectivization of farmland
This video is a real life horror tale of famine, torture, murder, and other unimaginable, real world brutalities that happened after Mao collectivized the farmland, housing, tools, food, and other property in China. The author explains that without private ownership, there was no incentive to grow food, housing literally disappeared, everyone became a thief, and people sold their own children for a handful of grain.
Obama administration congratulates Venezuela after Hugo Chavez’s reelection – here’s why I’m not surprised
After Hugo Chavez won reelection in Venezuela, the Obama administration congratulated the country. A week earlier, Chavez had said that he and Obama would vote for each other, if they were citizens of each others’ countries.
So what exactly do Obama and Chavez have in common? They both love government control of the economy, and are willing to violate their countries’ laws in order to achieve that goal. It is only because the U.S. places much tougher constitutional limits on government power that Obama has not been able to carry out these policies as far as Chavez has.
Some time ago, I wrote this post called Here are 95 examples of Barack Obama’s lying, lawbreaking, corruption, and cronyism. I also wrote this other post called Obama gives award to communist Dolores Huerta, and won’t let anti-communist hero Lech Walesa into White House. Those things reveal a lot of information about Obama’s ideology and goals.
It is only because of the United States’ constitution’s strict limits on government power that Obama has not done even worse things. In Venezuela, where the constitutional restrictions on government power are nowhere nearly as strong as those in the U.S., Chavez has done things which are much worse than what Obama has done.
This guy’s tone of voice and calm demeanor make him sound like he could be a trusted teacher, friend, or relative. I think if I knew him in real life, we could be friends, and enjoy each other’s company. He certainly seems well intentioned.