A Conspiracy of Imbeciles

Jimmy Carter, Bill Clinton, Barney Frank, Chris Dodd

Washington is playing you for a sucker
— shamelessly robbing you blind —
and they’re not just getting away with it;
they’re actually being rewarded for it

Here’s what you must do now
to hit them where it hurts

and quite possibly, to save your financial future

Dear Business-Builder,

I sincerely hope that by now, you fully understand how deeply all of us here at The Total Package are committed to your success.

That’s why our team spends hundreds of hours every week and well over one-hundred thousand dollars each year to bring you all the business-building, response-boosting secrets this blog has become known for.  All for free.

But this issue isn’t about any of that.  Because the fact is, there’s an 800-pound gorilla in the room — a crisis that overshadows and dwarfs the importance of our individual careers and businesses.

I’ve avoided writing about this situation here for months.  But now, it’s getting to the point where it could hurt you.  I can’t, in all good conscience, stay silent and let that happen.

Now, I’m well aware that what I’m going to say will be controversial.  The truths I’m about to present will be welcomed by many of my readers.  Many others will be offended by these facts.  For that, I can only apologize in advance — and humbly suggest that if the truth offends you, it just might be a hint that your point of view could benefit from an honest re-examination.

I’m also aware that a few readers will complain that this is another “political” article — and that I should shut the hell up and stick to what I know. 

Fair enough:  I know this stuff.  True, I’m only a high-school drop-out; self-taught in the ways of the world.  But had my first immersion in this very early in life. 

At the age of 12, I could tell you all about the Hegelian dialectic, the foundations of Fabian socialism and the tenets of free market capitalism.  Since then, I’ve devoured the works of Keynes, von Mises, Friedman and many other legendary economists. 

Plus, to create the promotions I do every day for financial clients, I’ve spent my life studying and writing about how the economy and the financial markets work.  I have to eat, sleep and breathe politics and economics just to do my job. 

And although I have, by any measure, passed this 37-year long college-level course in politics and economics with flying colors, I don’t mind telling you that I spent several additional weeks researching and documenting the particulars in this article.

Nevertheless, if it helps, you might try not thinking of this as a political article or even an economic one.  Think of it as an example of how a veteran copywriter tackles a complex subject and makes it simple enough and entertaining enough to engage the man on the street.

And no matter who you are, you would do well to heed the suggestions to help you through this at the end of this article.

That said, let’s dive in …

They call this 800-pound gorilla the “Credit Crisis”
and whether you realize it yet or not,
it is the single greatest financial catastrophe
of your lifetime …

  • It has probably already cost you tens of thousands of dollars and crippled your retirement – whether you know it or not:  Depending on where you live, this crisis has already slashed as much as 35% off the value of your home.  And since home equity is the #1 source of retirement savings for most Americans, it is destroying the retirement dreams of millions.
  • It has cost investors and retirees and pension funds hundreds of billions more:  Skyrocketing mortgage defaults have killed great American institutions like Bear Stearns, Lehman Brothers, AIG, Washington Mutual and more … caused Washington to take control of mortgage giants Fannie Mae and Freddie Mac … and gutted the share value of nearly every U.S. bank and brokerage.  Millions of people who owned those stocks are now hundreds of billions; perhaps trillions of dollars poorer.
  • It has launched U.S federal deficits through the roof:  The attempt to save our dying institutions has caused the U.S. government to spend $25 billion to rescue Bear Stearns … another $80 billion to save American Insurance Group (AIG) … $200 billion to save Fannie and Freddie … $165 billion on last spring’s stimulus package for consumers … and in the next few hours — a few days at the most — Washington will blow another $700 billion attempting to prevent a financial meltdown that could surpass the Great Depression.

    Altogether, that’s more than $1 trillion (one thousand billion dollars!) spent so far in an attempt to fight this crisis … an attempt that may — or may not — prevent, as Treasury Secretary Henry Paulson phrased it recently, “The total meltdown of the entire U.S. financial system.”

  • It is crushing the dollar and killing jobs: A global loss of confidence in Washington’s ability to manage the U.S. economy combined with the tidal wave of paper dollars Washington has created to fight this crisis have contributed to the greatest crash in the value of the U.S. dollar in ages and raised the specter of hyper-inflation. 

    Plus, as banks get stingier with borrowers out of sheer self-defense, this crisis is crushing corporate earnings and share prices.  Private investors, retirees, pension funds and institutions have lost more than $3 trillion in the past 12 months alone.

    And it has stalled the U.S. economy in its tracks.  America’s three largest automakers are now begging Congress for $25 billion to help them survive.  Unemployment is careening higher; costing legions of Americans the ability to provide for their families.

  • It’s pushing the U.S. economy relentlessly towards what may well be a new Dark Age:  With that $1 trillion plus, plus, PLUS being added to America’s skyrocketing budget deficits for 2008 and 2009, there’s a real danger this crisis will also crush the bond market … send interest rates exploding through the roof … and trigger yet another, more intense phase of business failures, stock market losses and soaring unemployment in the months ahead.

And make no mistake: 
It’s not over yet.  Not by a long shot.

Compared to the losses now being suffered in every part of America’s $13 trillion economy, the $700 billion bank bailout that’s being rammed through Congress is like putting a Band-Aid on a sucking chest wound.

And remember:  That money is just to save the banks that have already suffered huge losses from past mortgage defaults.  Not even Washington could print enough money to stop the massive NEW tidal wave of mortgage defaults that’s taking shape now.

The monthly payments on more than six million adjustable rate mortgages with an estimated face value of $1.2 trillion are poised to reset in the months ahead.  Some of the payments on these loans are expected to more than double.  And many of them on homes that are no longer worth anywhere near what buyers owe on them.

That means millions more mortgage defaults are dead ahead no matter what Congress does.  Millions more repossessed homes will flood onto the market and homeowners will suffer even more dramatic losses of home equity as the glut of unsold properties hammers the value of our homes into the ground.

And it means even greater pain for those who had counted on that equity to see them through retirement.

It also means that lenders who are fighting for their companies’ lives will have no choice but to continue raising credit requirements … slashing credit limits … and denying loans to all but the most supremely qualified applicants.

And that, in turn, means that every manufacturer, wholesaler, retailer and service business in America is now facing the specter of plunging sales, profits, share prices and in all too many cases, bankruptcy. 

As those companies slash jobs or vanish altogether, millions of family paychecks will vanish, too.  Nearly every American family is now a candidate for having to live off their savings; many are sitting ducks for bankruptcy and poverty.  And every American child and even the as-yet unborn will suffer the consequences and pay the price for decades to come.

But that’s not what really scares me …

What terrifies me … what wakes me in a cold sweat … is that the single most corrupt, inefficient, incompetent and idiotic institution on face of the planet is now trying to “fix” the problem.

And that especially frightens me because, the closer I examine the roots of this crisis, the clearer it becomes that it was engineered almost entirely by the very bumbling buffoons who are now charged with ending it:  The U.S. government.

And yet nowhere in the media do I see anyone even trying to uncover the roots of this crisis.  What caused it?  How can we make sure it will never happen again?

Instead, they simply report that …

  • Banks and mortgage companies made loans to unqualified borrowers.
  • Banks then sold those loans to Fannie, Freddie and other financial institutions.
  • Fannie, Freddie and others then turned those loans into investment vehicles — and sold them to governments, banks and investors both here in the U.S. and worldwide.
  • When all those unqualified borrowers inevitably defaulted on their mortgages, these investments crashed in value.
  • And when their investments crashed, they pushed institutions and investors who had bought them to the brink – or in the case of Bear Stearns, Lehman, Fannie, Freddie, IndyMac, AIG and many other banks and investment banks, over the cliff.

But nobody I know is asking the obvious question …

“Why did so many smart lenders
make so many stupid loans
to so many people who couldn’t pay?”

It’s clear that lenders granted mortgages to millions of people with no savings or down payment … no proof of income, too little income to qualify and even no income at all … with no assets and with a record for welching on every debt they’d ever incurred; who’d had flaked out on credit cards, auto loans and pretty much every other loan they had ever been granted.

But why?

Why did lenders begin saying “YES” to these abysmal credit risks instead of their standard, resounding “NO”? 

Were the CEOs at the helm of these lending institutions merely overpaid idiots who had no idea that loaning money to unqualified borrowers — and worse; to borrowers who had proven time and time again that they would NOT repay — would come back to bite them on the arse? 

Or were they simply financial masochists; intentionally bankrupting their institutions and destroying their shareholders’ wealth just to get a cheap thrill?

The answer, of course, is neither.  They were simply doing what they were told to do: What Washington forced them to do — under penalty of law.

Here’s the simple, frank truth about this crisis
the mainstream media will never tell you

Here’s a quick timeline — all easily checkable online:

Jimmy Carter

Gee, thanks, Mr. Carter …

1977:  Jimmy Carter rams the Community Reinvestment Act through Congress.  It all began 31 years ago when Billy Carter’s brother Jimmy heard that some lenders were “discriminating” against low-income borrowers …

Now, nobody I know has ever accused Mr. Carter of being the sharpest crayon in the box …  But he did know one thing:  He was by-god incensed — incensed, I tell you — at discrimination of any kind!

Make no mistake here:  Oprah was NOT having problems getting loans; nor were most of the millions of other hard-working, responsible minority wage-earners in America. 

And it’s not like credit was available to low-income white people with no savings, no down payment and lousy credit histories.

But the facts, of course, didn’t matter to Carter.  All that mattered was that someone had used the “D” word, so something had to be done.  Political correctness demanded it.

And so, unfazed by the fact that lenders are supposed to be discriminating when deciding who’s a good credit risk — and blissfully unburdened by even the glimmer of an understanding of the catastrophic long-term impact of his actions — Mr. Carter sprang into action. 

And in no time flat, Jimmy’s Community Reinvestment Act – “CRA” for short — had sailed through the Democratic Congress.

Suddenly, any lender caught denying mortgages and other loans to low-income people faced serious penalties — including denial of applications to open new branches, to do mergers and acquisitions and other draconian measures.

1992:  The Fed drops a bombshell.  In what was then heralded as a "landmark study,” the Boston branch of the U.S. Federal Reserve announced that, despite the many pounds of flesh the CRA exacted from lenders who turned down low-income loan applicants, mortgage discrimination was still pandemic in the financial system.

So in a matter of days, the Boston Fed produced a manual for mortgage lenders nation-wide stating, "Discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."

What if we just gave the homeless houses?

“Hey buddy – forget the beer.
You want a HOUSE?”

So what were these "arbitrary” and “outdated" criteria?

“Oh, little things,” said the Fed.  “Like the size of the mortgage payment relative to income.  And the prospective borrower’s savings or credit history.

“And don’t even bother checking to see if the borrower has any income at all,” said the Fed.  “If you do … and he doesn’t … and you deny the loan … you’re a dirty, no good discriminator!”

“In fact, come to think of it,” the Fed mused, “if the applicant has participated in a credit-counseling program, that means he’s now a responsible borrower.  Better grant him the loan or you’re toast!”

“Oh.  And also?  Welfare payments and unemployment benefits are valid income so you’d better include them when qualifying loan applicants.”

And so lenders did what they were told under penalty of law and the surge of bad loans accelerated.

1995:  Bill Clinton cranks it up a notch. Thirty-six months later, still alarmed at the “discrimination” the Fed had uncovered and eager to reward low-income voters for sending Bubba to the White House, Andrew Cuomo — Clinton’s secretary of Housing and Urban Development — investigated Fannie Mae for racial discrimination.

He “found” it of course — and quickly proposed that fully HALF of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low-income borrowers by the year 2001.

Next, Clinton introduced significant revisions to the Community Reinvestment Act.  In testimony prior to the new bill’s passage, Gene Ludwig — Clinton’s Comptroller of the Currency — explained why reform was so desperately needed: 

“Fifteen years ago,” said Ludwig, “Congress passed the Community Reinvestment Act. But the CRA has never achieved its full promise. 

“The proposed reform package will channel billions of dollars a year in new credit into America’s distressed communities.”

PLAIN ENGLISH TRANSLATION:  Hey, lenders!  You’re still not giving enough money to people who can’t — or won’t — pay it back.  This law ensures that you will!

Bill Clinton

“Don’t want to give loans to lousy credit risks?

“I’ll fix you!”

Staggeringly idiotic.  Right?  But wait — the Clinton administration was only getting warmed up. 

According to the Los Angeles Times, the president and his Democratic majority in Congress "… mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."

Then, the Clinton administration added the final kicker:  Fannie, Freddie and the nation’s lenders would be allowed to turn these subprime loans into securities and sell them to financial institutions and investors world-wide!

Given the fact that Clinton enjoyed a Democratic majority in Congress at the time, it should come no surprise that the revisions sailed through Congress in no time flat.

1999:   It’s working!  Four years later, with low-income borrowing skyrocketing, an enthusiastic Fannie Mae could be heard publicly bragging about “the end of discriminatory lending in America.”

It even singled out its most shining example:  A lender, it said, that worked with community organizers and followed "the most flexible underwriting criteria permitted."

Previously, this lender had made only $1 billion in low-income loans.  By 1992, under the provisions of the Community Reinvestment Act, it had loaned $80 billion to low-income borrowers.  And thanks to Clinton’s “refinements,” that firm’s loans to low-income borrowers were well on their way to surging to over $600 billion.

Angelo Mozilo

“We just did what Congress told us to do. ”

– Angelo Mozilo, CEO Countrywide Financial

So, one might ask, “Who was this virtuous lender that had increased its loans to low-income people a whopping 59,900% in just over one decade?”

You guessed it:  It was the very lender whose demise in 2007 turned out to be the first domino to fall in the subprime lending mess:  Countrywide Financial.

2001:  Bush administration warns of impending doom.  In Bush’s first year in office, the White House’s chief economist, N. Gregory Mankiw, warned Fannie and Freddie’s loans to unqualified borrowers and other complications at the two institutions were creating a huge risk for the entire financial system.

Representative Barney Frank (D-MA) denounced Mankiw, accusing him of having no "concern about housing."

The New York Times fell into lockstep with its Democratic masters in Congress, reporting that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but that it was O.K. — because these entities still had "important political allies" in the Democrats.

Congressional Democrats dug in their heels and made absolutely sure nothing was done to address the impending crisis.

2003: The Bush administration tries to avert catastrophe a second time.  Alarmed by fraud and abuses that had been discovered at Fannie and Freddie, President Bush repeatedly urged Congress to pass a bill increasing oversight on the two companies. 

The Bush administration had every reason to be worried:  A report by outside investigators had concluded that Freddie Mac manipulated its accounting to mislead investors.  Experts were warning that Fannie Mae was not adequately hedging against rising interest rates.

Barney Frank

“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis.”

Representative Barney Frank (D-MA)
Arguing against Republican attempts to reform the two corrupt mortgage lenders in 2003.

Bush’s Treasury Secretary, John Snow, told the House Financial Services Committee, ”There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises.”

After the hearing, two Republican congressmen — Representative Michael G. Oxley of Ohio, chairman of the Financial Services Committee, and Senator Richard Shelby of Alabama, chairman of the Senate Banking Committee — announced their intention to draft legislation based on the administration’s proposal.

”We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed” by the independent agency that regulated Fannie and Freddie, said Oxley.

But once again, congressional Democrats and their lackeys in the media scoffed at the Bush plan to save Fannie and Freddie.  Some went so far as to point at the plan as proof that Republicans hate minorities and poor people.

And Barney Frank (D-MA) now the Chairman of the powerful House Financial Services Committee — the sack of excrement in a suit you see grandstanding on TV as Congress mulls this newest bail-out — denied there was any crisis at all.

“These two entities — Fannie Mae and Freddie Mac,” declared Frank, “are not facing any kind of financial crisis.”

And so, yet another opportunity to avert the crisis that now is — according to Treasury Secretary Hank Paulson — threatening to “completely destroy the entire U.S. financial system” was lost.

The simple truth

Despite everything the Democrats in Congress are telling you now …

Despite all the mindless spin the mainstream media is trying to shove down your throat on the six-o’clock news …

Despite all the talk about how “greedy lenders and incompetent CEOs and lax government regulation” caused this crisis …

Despite the ridiculous claims that only increased government regulation and intensified congressional oversight can end the crisis (regardless of the fact that political regulation and oversight caused it) …

Yaron Brook

“The Government Did It”

“Through the stick of the CRA and the carrot of Fannie Mae and Freddie Mac, the Fed created the mortgage market debacle.”

– Economist Yaron Brook

And despite the lies congressional Democrats and their presidential candidate are telling in an unbelievably hypocritical attempt to hang this crisis on the Bush administration (and by extension, on John McCain) …

The simple truth is, this crisis was engineered and implemented almost entirely by Democrats. 

The more frightening truth is, they once again control Congress — just like they did when the laws were passed that created this crisis. 

And the terrifying truth to anyone who cares about his family’s financial security is that they will probably also control the White House, come next January.

Barack Obama

The CRA the idiotic law that created this crisis also made Obama who he is today.

“Why is that so terrifying?” you ask …

Consider this:  According to his autobiography, Obama spent his years after college and before he ran for the Illinois Senate becoming an expert in real estate law and fair housing while working as a “community organizer.”

What he was really doing was blackmailing Chicago lenders into throwing money at his low-income constituents.  And the club Obama used to bludgeon banks into submission — into granting loans to people with no down payment, no job, no income and lousy credit histories — was called … you guessed it … “The Community Reinvestment Act of 1977.” 

Now, to anyone who has even the glimmer of an understanding of how Washington works, it should come as no surprise that Mr. Obama was well-rewarded for his untiring efforts to force banks to throw money at unqualified borrowers — and it should also come as no surprise that those rewards flowed from the two quasi-private companies that benefited most from the explosion in subprime mortgages:  Fannie and Freddie. 

Recently, we learned that of the hundreds of political contributions made by Fannie Mae over the last couple of years, Obama received the second highest amount — second only to the Chairman of the Senate Banking Committee, Christopher Dodd (D-CT).

Other Democrats were also well-rewarded for this catastrophic explosion in subprime lending with lucrative jobs at Fannie and Freddie.  And four of these former Fannie and Freddie big shots — former CEOs and a board member of these corrupt institutions — have been on the Obama bandwagon since Day One:

Franklin Raines

1. Franklin Raines, former Clinton administration budget director who earned $90 million in his five years as Fannie Mae CEO, from 1999 to 2004 — has been called by the Obama campaign several times for advice on (believe it or not) housing and the economy according to The Washington Post …

2. James Johnson, former aide to Democratic Vice President Walter Mondale, who earned $21 million in his last year alone serving as Fannie Mae CEO from 1991 to 1998 — was appointed to head Obama’s vice presidential selection committee … 

Jamie Gorelick

3. Jamie Gorelick, former Clinton administration deputy attorney general, who earned $26 million as vice chair of Fannie Mae from 1998 to 2003 — has been mentioned as a prime candidate for a possible cabinet position in an Obama administration by insiders, and …

Rahm Emanuel

4. Rahm Emanuel, former Senior Advisor in the Clinton White House served on the Board of Directors for Freddie Mac where he is said to have opposed every reform proposed by the Bush Administration.  Emanuel is credited with being the one man responsible for rallying support for Obama early on among Congressional Democrats.

Take a good, long look at those names and faces:  These, along with the aforementioned Jimmy Carter, Bill Clinton, Barney Frank and Christopher Dodd, are the eight people who created this crisis and who profited the most from it — both politically and financially.

Now, their abysmal economic ignorance, political ambition and mindless greed are killing great American companies … robbing millions of their home equity and their paychecks … driving the federal deficit through the roof … and pushing us to the brink of the greatest financial catastrophe in U.S. history.

Plenty more blame to go around

Now, I make it no secret that I’m no fan of either one of the major political parties. 

Like Reagan, I believe that government isn’t the solution; it’s the problem.  And by studying history, I’ve learned that whenever Washington attempts to solve any problem, it’s a slam-dunk it will only wind up creating two, three or even more far more serious ones.

Even the most casual observer would conclude that as a class, politicians in both parties are notorious for their inability to locate their own arses — even if allowed to use both hands.  Until now, we have tolerated them because they — and the massive, bloated, abusive, oppressive government they have created — have been merely a dead weight on us. 

Not now.  Now, there’s a very real risk that their lust for power, political ambition, corruption and cowardice will cost you your job, your home, and any prospects for a prosperous life.

The ONLY way to limit the damage they do to you, to me and to every other American is to keep Washington on a short leash … prohibit them from dabbling in matters they have no business fooling with … and to strictly limit the size and scope of the government.

“A pox on both their houses,” is my studied philosophy.

So I don’t mind telling you that plenty of Republicans bear guilt for this crisis as well. 

Many are guilty of not having the guts to scream bloody murder while these mindless laws were being passed … 

Of not taking a stand when Bush tried not once but twice to head off this crisis at the pass … 

Or worse; voting with the Democratic majority for laws that elevated populism and political correctness above financial prudence.

And sure:  Many CEOs at our distressed or defunct financial institutions are guilty of the same things. 

And of extending the same courtesies the government demanded for low-income borrowers to the middle class; luring millions of others into more house than they could afford with no-down-payment loans and adjustable rate mortgages with irresistibly low interest rates. 

Plus, the way I see it, there’s no reason why anyone with an IQ larger than my shoe size (11) would invest a penny in mortgages signed by people who had no means or no intent of repaying them.

And of course, millions of Americans are also complicit for allowing themselves to be seduced into taking on more debt than they could ever repay.

But make no mistake:  It took two Democratic presidents working with Democratic majorities in Congress to engineer this crisis.  Without the disastrous “fair housing” legislation imposed on this country by Carter, Clinton, Frank, Dodd and other Democratic lawmakers, this crisis would never have happened.

And never forget; it was the Democratic Party that killed not one but two attempts by the Bush administration to stop this credit catastrophe before the first subprime lender bit the dust.

This is what happens when hysterical race-baiting and populist politics are allowed to subvert prudent business practices. 

This is what happens when despicable politicians are allowed to buy votes from low-income people with laws that endanger your financial survival.

This is what happens when imbeciles — most of whom have never held a real job or have had to make payroll in a company of their own — are allowed to tamper with the economy. 

And now, these same clowns
are about to make matters worse

Unbelievably, these same drooling morons — the very people who caused this mess in the first place — are now charged with saving our economic system from certain destruction. 

Because they are the majority party in Congress, the very Democrats who engineered this crisis — most notably Senate Banking Committee Chairman Christopher Dodd (Fannie Mae’s fair-haired boy and #1 beneficiary of its political contributions) and House Financial Services Committee Chairman Barney Frank (who blocked every early attempt to avoid this crisis) — are running the show.

Joe Biden

And if the current state of the presidential polls are any indication, our next vice president —  Obama’s running mate, Joe Biden, a loyal Democrat while this disaster was being created in Congress — will be available to break any ties on future Senate votes.

And of course, Obama himself — the self-proclaimed “Candidate of Change” — who has never attempted to change or reform one, blessed thing in his entire life …

Who, much to the contrary, shamelessly exploited Chicago’s notoriously corrupt “pay-to-play” political system for all it’s worth and also built his entire political base on the very law that created this crisis …

Barack Obama

… Will soon be lighting up his beloved Marlboros in the Oval Office.

So …

  • The next time you hear that your home equity has vanished into thin air and that your house is now worth less than you paid for it; maybe even less than you OWE on it …
  • Or find that your credit limit has just been slashed or you get rejected when you apply for a loan …
  • Or check your stock portfolio or retirement plan only to find that it’s a mere shadow of what it once was …
  • Or discover to your horror that our massive federal deficit has gutted your buying power and driven the price you pay at the supermarket or gas station sky high …
  • The next time you hear that a friend or family member has been laid-off, is teetering on the brink of bankruptcy and in danger of losing everything he or she has ever worked for …
  • The next time you want to kick the dog because your newly nationalized mortgage or insurance company is suddenly exhibiting all the competence of the U.S. Post Office and the sensitivity of an IRS collection agent …
  • And the next time Barney Frank or Charlie Rangel or Joe Biden or any other one of these unrepentant, hypocritical scoundrels tells you he’s raising your taxes because you’re not shouldering “your fair share” of the $1 trillion burden his blundering has saddled you with …

You know who to thank.

The moral of the story:
If you trust Washington to save you; you’re screwed.

If this crisis proves anything, it’s that these people don’t give a good goldarn about you.  You’re not rich enough to bail out or poor enough to be given a hand-out.

So you, my friend, are on your own.

There are certain things you can do to protect yourself, though.  And with this crisis unraveling at a breakneck pace, there’s no time to waste.

Here’s a checklist I hope will come in handy …

1. Rake in every dollar you can.  First and foremost, it is absolutely critical that you do everything in your power to increase your income while you still can.  Pull out all the stops in your business.  If you work for someone else, work overtime or even multiple jobs if you have to.  Sell stuff you don’t need or don’t use.  Scrape together all the dollars you can.

2. Save every dollar you can.  Guard every one of them like a junkyard dog.  You’re going to need them.  Go through your family budget with a fine-toothed comb and ruthlessly, unapologetically slash every unnecessary expense.  The more you save now, the more you’ll have to see you through when the ca-ca hits the air conditioner.

You might also want to check with a financial advisor to explore ways to cut every payment you have to the bone.  Because when the trillions of counterfeit paper dollars Washington’s now creating out of thin air begin working their way through the economy, you’ll probably be able to repay every debt you owe with dollars that are worth a fraction of what they’re worth today.

Also — whether you realize it or not, your single largest monthly expense is NOT your mortgage or your car or your health insurance or anything else.  Your largest financial burden by far is the government — the federal, state and local taxes you pay dwarf every other expense you have. 

So seeing a qualified tax advisor about ways to make absolutely sure you’re paying the absolute minimum required by law would be a stellar idea.  Be sure not to forget your property taxes.  If your home is declining in value, you may be able to appeal for a downward adjustment that could save you thousands.

3. Watch your bank accounts like a hawk.  Whatever you do, do NOT assume that your bank is safe just because this most recent bail-out proposal is likely to become law. 

Most banks have already suffered massive losses. Many are wounded; bleeding; struggling to survive.  And many still have huge amounts of toxic loans in their portfolios that are steadily eroding their asset bases even further. 

The bail-out is NOT going to replace the money they originally paid to buy those investments — and that means they’ll be booking even more losses as they dump those investments into the U.S. Treasury in the months ahead.

If you have more than $100,000 in a bank, make absolutely sure that no single account at any one bank contains even a single dollar more than the limit that’s insured by the FDIC.  If you’re not clear on the rules, check out the FDIC website at WWW.FDIC.GOV

4. Program your business for success in this tough environment.  If you are starting a business or are considering expanding your business’ product line, carefully consider this new economic environment when setting your strategy. 

Think especially hard about recession-proof products and services — the things people can’t live without.  Seriously consider products and services that cater to the very wealthy who are likely to be least affected as this crisis unfolds.  Also consider things that might help beleaguered wage-earners, consumers, taxpayers, and other business owners get through this alive.

5. Expect stocks and mutual funds to plunge.  If you own stocks — either directly, in a mutual fund or ETF or through a retirement or pension plan — you should seriously consider the risk you’re taking with that money. 

Some analysts, including the ones who have been the most accurate in their warnings about this crisis from the get-go, are warning that, with the economy and stock market now as nervous as a hooker at a snake-handler convention, the next chunk of bad news that hits the wires could be the straw that breaks the market’s back.

And please for all our sakes:

Send this article — in its entirety — to everyone you know.  Post it or link to it on every blog, every forum you can think of.  Send more links to everyone on your Contacts List and to reporters at the newspapers you read and the TV networks you watch.

Write letters to both of your Senators and Congressperson and urge everyone you know to do the same. 

Demand that they repeal the Community Reinvestment Act that caused this crisis (yes, it’s still on the books and still being enforced!). 

Tell them you know what they did to cause this crisis. 

Demand that criminals in Congress who actually DID cause this crisis suffer at least as distressing a fate as the corporate CEOs they’re scapegoating.

The sooner Washington gets the message that we’re on to them and that we’re not going to take it any more, the sooner things can begin to change.

This is YOUR financial future we’re talking about here.  If Washington’s power brokers have proven anything, it’s that they can NOT be trusted to do the right thing until millions of us rise as one and shout “Enough!”

Yours for Bigger Winners, More Often,
Clayton Makepeace Signature
Clayton Makepeace
Publisher & Editor

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311 Responses to A Conspiracy of Imbeciles

  1. Daniel Levis says:

    Thanks for having the stones to call a spade a spade old man.

  2. Clarke Echols (Resident scientist and economist says:


    You’re understating the problem. :-)

    I retired from 30 years of corporate employment and rolled my $313K retirement fund into an IRA to keep Uncle from taking half in taxes.  Six months later the balance was $580,000.

    When I saw one company drop from $150 to $145/share I called my broker to dump my 1000 shares.  He told me the analysts at his company in NY (Paine Weber) had the stock target price still at $170 and I should hang on.  It was "temporary".   When the company went belly up, I got $350 instead of $145,000.  The SEC fined P-W $200M for investor fraud.  They nailed Morgan Stanley $3B for the same thing, if my info is correct.  In two years my $580,000 was dead zero.

    The problem is caused by morons named Reid, Pelosi, Frank, Dodd, Obama, and a host of others constantly on the take who have never done an honest day’s work in their puny, parasitic lives.  It started with Carter and was exacerbated in the Clinton years.  And the ones responsible walk away with $millions in their pockets with the wreckage to their backs.  Carly Fiorina was hired by HP and I left.  A few years later they paid her a pile to leave after wrecking the company, just as I expected.

    AlBore gets filthy rich playing global warming idiots for suckers.  They’re just like Nero, fiddling away while Rome burned.  Society would be well served if they were tried on various offenses, then shot in the public square for malfeasance.  Pelosi likes high gas prices because she wants to "save the earth " (her words, not mine).  She would be of greater worth if she donated her carcass to fuel a coal-fired power plant.

    The Republicans have plenty of egg on their face too.  If they’d stand up and show some INTEGRITY before they go into office, then KEEP it while there, they’d have held control 2 years ago.

    I think it was Thomas Jefferson who said if the banks ever got control of the economy, it would be worse than a standing army.

    But this I *know*:  There is a God in Heaven who’s keeping score and knows where the skeletons are hidden (hiding?).  They are mortal.  They will die.  Judgment Day is not a fable.  They will be held to account, and those wronged will be compensated.  They would be wiser to recognize that reality and conduct themselves accordingly now, while they can benefit.  But if they don’t, they will reap what they deserve, as will all others.

    Right is right because it is right.  Not because it’s someone’s opinion.

    And when a majority of the population chooses what is wrong, that brings destruction on society.  It happened in Rome, Greece, Babylon, Egypt, and in the ancient Americas as well as Asia.  History repeats.  Those who fail to learn its lessons are doomed to repeat them.

    And the thumb-sucking pin-heads who avoid political confrontation and productive confrontation with the facts, who hide behind some professed "disinterest" in "organized religion" will meet the same inevitable accountability for their pathetic lives and what they did with them.

    Everyone is given the power to choose between good and evil, right and wrong.  And those who choose incorrectly cannot escape the consequences, eventual though they may be and later than sooner.  But also those who choose right cannot escape the inevitable rewards that come from doing and being right.

    Spot-on Clayton.

    Let the dogs bark.  The caravan moves on.  And the seedy, seamy, corrupt, self-serving, self-deluding, self-destructive morons behind the mess will eventually rue the day.

    And may those who don’t want anything out of life have fond memories of never having anything…


  3. Joe says:

    Nice sales letter Clayton, especially the bullet points midway through.  If you had a newsletter or product that you were selling at the end of it, I would have bought it in an instant.

    A couple contrarian questions for you:

    1. Would the millions of Adjustable Rate Mortgages that were dished out to anyone with a pulse — even if they didn’t have a snowballs chance of meeting the adjusted payments later on — add to the problem?  How about creating mortgages like an interest only mortgage payment for the first 5 years (or more?)

    2. Would borrowing massive amounts of money from foreign countries to finance the ongoing war in Iraq negatively deflated the value of the dollar?

    3. Would the skyrocketing price of oil and gasoline for a country is heavily dependent on them caused a massive spike in the cost of living, delivery of products and services to the marketplace?  Maybe even depress the economy downward towards a recession?

    4. Would re-electing a president who took the country from a cash surplus to a cash deficient come back and bite the country in the collective arse? (Think about it: Would you let someone keep running your business who cleaned out the bank accounts and maxed out all of your credit lines within a year or two of starting?  Not likely.)

    The answer to all four of these questions is a bittersweet Yes. 

    I agree with Clayton on one thing: we haven’t seen the worst yet.  This upcoming election result doesn’t matter much to me anymore: Whoever wins is inheriting the Titantic after it hit the iceberg and has taken on 3 feet of water.  Worse, we’re handing them a single leaky bucket to try to bail the ship out with.

    McCain and Obama are the best candidates that both parties could come up with to solve the problems of this country?  Pretty sad news if you ask me.

    As for your arguments about Carter and Clinton messing things up… didn’t Reagan, Bush, and the current President have multiple opportunities to remedy the problem before it started collapsing $700 billion dollar banks like Washington Mutual?

    Yep, they did and they didn’t fix the problems either.

    Take care,


  4. John Deck says:

    This is a must read. I just put it on twitter.com. The least I can do.

    This is not a bailout but a liquidity crisis brought on by government management. Once these programs start rolling they are almost impossible to stop becuase of the Obama’ s out there. It steps on their vested interest. 

    Great piece Clayton


  5. Mike says:

    Thank you for the info. I didn’t know this.

  6. Sam McMillan says:

    Bravo!  Neal Boortz (mothership Atlanta WSB) has also been trying to get the word out.  Not near as detailed as you.  Thank you. 

  7. Great article.  

    It’s unfortunate that money and law are not elementary education requirements.  It would make for a better world.

    People intersested in catching up should check out the BAILOUT READER at mises.org:

  8. Steve says:


    You had me at hello… but lost me when you got obviously partisan and your personal agenda came screaming into the equation.

    You are looked to as a highly intelligent and obviously literate voice and counselor. I’ve benefited from, and greatly appreciate, all you’ve given back to us "little folk." Yet.. we’ve also given much to you as well.. patronage and paychecks included.

    The current financial debacle is no more a partisan issue than the price of oil. There is much more at the core of this than Democrat or Republican.

    You eluded to one of the little publicised or discussed Fabian Socialists and when I read that – I thought to myself "Finally! Someone is going to expose the truth who has an audience that might really be able to give it some momentum." Then…

    You dropped the ball and had to go politics. Why?

    The current debacle is not Bush, Clinton, Reagan, or Carter.. although they are all part of the problem BECAUSE they never chose to be part of a real solution.

    This problem is rooted in greed, power, control, and the center of the entire issue is a fiat system, fractional reserve structure, central banking ponzy scam of macro-global proportions that has spanned generations.

    One of the absolute best, although admittedly controversial, books ever written on this topic was "The Creature From Jekyl Island" by G. Edward Griffin. If you really want to get a core understanding of what’s happening, why it is, and where its all headed… at least for a character building and contrarian perspective, not associated with any agenda other than apparently trying to understand the history of the cabal, syndicate and conspiracy that Americans, and indeed the world, have swallowed – hook, line, and sinker.. without questions, then you need to seriously consider this, and several other viable publications, in your arsenal of material helping you to make a non-biased, supremely educated opinion and better, less obviously agenda’d conclusion.

    Your advice is highly appreciated.. including the end actions you recommend in your article, thank you very much for taking the time to make these honest, and potentially unfavorable but necessary and accurate recommendations Clayton.

    I just can’t see why you took this devastatingly important issue… and added further spin and politics to it, when that is exactly the kind of distraction we do not need in this country at this time.

    I’m no fan of the policies or socialist agendas you mentioned in your article or those like them created by any political party myself… it wouldn’t be too hard to put a similarly ugly post together about the irresponsible policies of Republicans that have also contributed to this nations current debacle (looking no further than last weekend; let’s discuss the bailouts and bonuses on Wall Street and whose agendas Paulson or Bernanke, neither of whom are elected officials or representatives having anything to do with Consitutional government, are promoting…) to what end though?

    In fact, let’s face it… it has taken ALL of government to ignore the people and allow this, and much worse, to come to pass. It has also taken the peoples, our, acquiescence to allow them to do this damage. In fact, if anyone can be blamed, its "We The People" for being lulled into a hypnotic state of "Duh!"

    Still respecting you… and still much more to say, but I’ve got to get back to work… I’m a real estate investor/copywriter who is holding on tight… planning my next move, watching… listening… calculating… hoping.

    Just wanted to ask you to consider possibly digging deeper and maybe being more centrist in your arguments… because the obvious, not subtle, agenda of this article you’ve written, what could have been a great service to many, has tainted the value, at least to me, and left a really nasty taste in my mouth Clayton.

    With my deepest respect…

  9. Stewart says:

    Hey Clayton, I am sure glad you went easy on the fools in the government.  If I were you I would have been tougher.

    I’m afraid this country is led by a high functioning moron, and no one in congress has the intelligence or presence of mind to out-think him.  As for your comments about the Fourth estate, well they’d sell their younger daughter for a place at the table.

    This election promises to be an unplatble choice between donkey dung and elephant dung. The reality is both these presidental candidates and the dimwits they have chosen as VP candidated are not qualified to be dog catcher, let alone the leader of this country.

    I hear the strains of a violin playing in the background as my nose crinkles from the acrid smoke of the American empire burning. I suppose the one bright spot, if you will, is that foreigners are repatriating their dollars as they snap up American infrastructure, buildings, farmland, and other tangible assets at fire sale prices.

  10. Colin Noden says:

    Thanks Clayton,
    I saw this coming over two years ago using technical analysis, but I am shocked at the depth of the problem.  I’ve twittered the link and hope that all who visit here do the same.  It has to get out fast.

    Not only USA but the world is tilting.  This is NOT a crisis, it is a profound shift.  And the thing that bothers me is that CNN and other "respected" news sources are ignorant, or intentionally misleading America.  Trust me, the international news people know what is going on.

    How is it that the Country which stands for freedom and individual autonomy is the country whose Government ( and media)  feels that the truth must be hidden from the masses?  Bewildering….

  11. Kalidasa says:

    Thanks for this Clayton. I had been wondering what the cause of all this was beyond the great adjustable mortgage scam. Wouldn’t it be great if the country could be run like a business?

  12. John says:

    Hi Clayton,

    Thank you for posting this article; it needed to be said.

    A related youtube video:



  13. David says:


    Glad you put the effort into this and what you said is the truth as I can say I saw it first hand. It always amazes me that some people can, even after you offer irrefutable facts, still want to blame the people who had their hands tied by others who didn’t agree with the end result.
    As a builder of more than 550 homes, I saw first hand this irresponsible lending practice take hold. In 1998, the FHA allowed the down payment assistance programs to be started and they quickly took hold of the mortgage lending industry. The Nehemiah program as it was called, suddenly took all the "A" credit people out of the marketplace because most people wanted to pay nothing down (who wouldn’t!), which left the "B" credit worthy people. Once they were gone, about 1 1/2 to 2 years into the program, we were left with "C" credit people. To my amazement they were qualifying with credit scores of 520, missed payments within the last 12 months, no money in the bank, and I had to even give them money back at closing!
    Before this people always found money for the down payment, or they could do sweat equity to get into a house. I never saw one of those people get into a foreclosure situation. When the government took the incentive away from people having to earn a home, that was when the fuel was added to the fire and it became the beginning of the end.

  14. Malcolm Smith says:

    It’s a well-written article, but I have to disagree with you. The CRA is really much less to blame than you state.As Robert Gordon, an economics prof at Northwestern points out, about half of the defaults in question here are on loans made by mortgage companies not regulated by the CRA.And Countrywide – the first big domino in the chain – has a history of avoiding the CRA. As the California Reinvestment Coalition points out on its website, "Countrywide accepts NO CRA responsibility to engage in community reinvestment activity in California. None."Finally, in their January, 2008 report, NY law firm Traiger & Hinckley LLP flatly states the CRA was a mitigating factor – not a contributing one to the crisis: "Compared to other lenders in their assessment areas, CRA Banks were less likely to make a high cost loan, charged less for the high cost loans that were made, and were substantially more likely to eschew the secondary market and hold high cost and other loans in portfolio."So blaming the mess on previous Democratic administrations and the CRA just doesn’t ring true.If we want to point fingers, I think we’d be more accurate aiming them at the consistent Republican policy of deregulation that began under Ronald Reagan. That’s what enabled all the institutional money to pour into risky investments.I don’t usually disagree with you, but I think you’ve missed the mark on this one.

  15. Jim Furr says:

    Hi All,

    This "situation" is orchestrated and managed by the Treasury Secretary and the Federal Reserve Head along with entrenched bureaucrats and shoved down congresses thought with a meaningless front of "Debate" that will always result in the Treasury and Fed getting exactly what they want.

    Be not decieved into thinking that the congress or president or political party had ANYTHING to do with this.

    The Fed and Treasury are Pro the Big Money Interests. That is who is behind all of it.

    All else is smoke and mirrors – red herrings.

    Jim Furr ><>

  16. Brian Ridgway says:


    I’ve been reading your stuff for a while, and I have huge respect for you as a writer, businessman and as a person.

    This is a brilliant article, extremely well-written and very cojone-rich.

    An earlier responder to your article noted G. Edward Griffin and "The Creature From Jekyll Island".  Perhaps you are familiar and are too wise to stir the waters into mud for the uninitiated, or perhaps you are not familiar, but here is the deeper view, as I understand it:

    NONE of this is due to incompetence, and most of it is not the ‘simple greed’ it appears to be on the surface. This is a multi-year, long-term, master strategy to ruin the nation, drive us into third-world status and eliminate U.S. sovereignty.

    We (the FREE American sheeple) are the only thing standing between the most hard-core internationalists/globalists and their ultimate intent: Their publicly stated goal to wipe out national sovereignty, ‘reduce’ the world population to a few hundred thousand and then give themselves the planet for a personal playground.

    The wealth of the American people was a HUGE obstacle to their plan, and -come on, you know this- the central plank of socialism is ‘redistribution of wealth’.  Take a GOOD look at where ‘Amerika’s’ money has gone— a really good look. This is an incredibly brilliant, ultra-strategic master-plan to slide the wealth of the American dream right out from under us, as we prepare to usher in the North American Union (which they all publicly deny, but it easily researchable).

    Join the Campaign For Liberty NOW. Just google it.  Join downsizedc.org and DO IT NOW. Start taking action – or, mark my words- you will soon find yourelf unable to take ANY action.

    Not doom and gloom, but ‘keepin it real’.
    Brian D. Ridgway

  17. Michael says:

    Great summation Clayton! 
    I think the "blood in the streets" scenarion described by Baron Rothschild has finally arrived, so it must be a good time to invest, huh?  If this were the USA in 1973 or 1987, I probably would never hesitate since the fundamentals were still sound. 

    Unfortunately, theses times are more like St. Petersburg in October of 1917. Fundamental shifts are happening in the economy, social security, and government simultaneously . . . a perfect storm that threatens our very way of life!

  18. Bruce NC says:

    The new political gospel: public office is private graft.
    Mark TwainMore Maxims of Mark, Johnson, 1927

    It seems that the least capable and most delusional are drawn to politics…where their condition worsens.

    When  things get bad enough, I sincerely hope that We the People will kick these pigs out of the public trough.

    Thanks Clayton

  19. Clayton,

    I agree with every word you’ve said.  And, believe it or not, I’ve been talking about a Depression in 2008 for years.

    I am in the process of posting articles about how the real estate bubble started and how and why it ended.   I’ll have them up on my RoadToWealth.com website over the weekend. 

    The next president has his work cut out for him.  Unfortunately, we have two weak candidates who cannot resolve today’s problems.  That tells me we are in trouble.

    What can save us?  We need to replace all the people in the Congress and Senate.  We cannot afford to have politicians with a 7% – 18% approval rating!
    But it’s the voters’ own fault.  We cannot keep electing the same people as Congressmen and Senators.  some of them have been in office 30 – 40 years!

    Until we change ourselves and throw the crooks out, nothing will change.  We’ll just have more of the same.

  20. Greg Hughes says:

    Yours is the best commentary on this issue I have read.  I hope the entire country finds this article.

    Greg Hughes

  21. Clayton & to everyone reading this article…

    Clayton this is extremely powerful stuff and needs to be said…the problem is…this is not time to review the history (as interesting and factual as I found it).

    I will leave the strong political stuff aside as I am not an American citizen. I am a soon to be extremely impoverished Brit. We too have been massivley sold ‘down the line’ and with absolutely nothing left in the cupboard. This is after many benign years.
    All the political posturing is crap & we have been fooled & robbed blind.

    Let’s get to the point.

    The message you so clearly spell out is absolutely right…I have been staggered that people could not see the train coming.

    I thought I was extremely pessimistic on the outlook, but this is nothing compared to the real situation.

    I also urge your readers to TAKE ACTION NOW! This is not a $1 trillion dollar problem. The bailout is not going to work!

    This is a calamitous environment and requires immediate action. Try and get your assets out of dollars, avoid TBonds. Go for the safest, most liquid assets you can.

    Where that is not possible – HEDGE NOW AT ALL COSTS.

    For those of your readers who are more financially active, I would encourage them to look to start trading, there has actually never been a better time. But you need a disciplined, structured approach.

    There are ways out of this crisis and great opportunities are already presenting themselves, as I am seeing in the markets.

    For instance, the FX markets last week presented some of the greatest trading opportunities I have seen. You may think I am telling you to jump in the fire but I can assure you, this is not the case.

    IBy way of backround, I have been involved in the financial markets for 25 years and have been through some pretty hairy moments, but never anything like this.

    So, Clayton, good on you for saying what needs to be said. I know you work closely with the guys at Weiss Research. Again, leaving the politics aside, you’re absolutely on the button.

    To your readers, I would also urge you to personally take action NOW and tell all your family and friends that they MUST SECURE THEIR FINANCIAL FUTURE. I am not saying this to suddenly join the growing band. I have been warning people since prior to the ‘start of the crisis’ last Summer.

    There has never been a more important time. This means helping family and friends survive and if possible (which it is) prosper in these catastrophic times.

    Watch your money & watch liquidity.

    Kind regards & good luck.

    Ron Carmichael

  22. Thanks Clayton for filling in some gaps. I can’t imagine Australian lenders would accept orders to "lend to anyone with a pulse".

    Y’all must be subconsciously thinking of moving down here to Oz too – nice to finally see "arse" being spelled correctly …

    Live long. Live well.

  23. Roberto, from Chile says:

    Bravo! I like dots over ‘I’s.

    Many of us in this corner of the world feel politicians should be banned from sunlight altogether, yet the mass keeps electing them to run our countries and run away with more than their fair share.

    There’s an old adage stating "people get the ruler they deserve", so any and all efforts aimed at changing the awareness of people so inept, ill-intentioned ones don’t make it to government are welcomed.

    Good job.

  24. Nisha says:

    I just love how one-sided this entire letter is. I guess Republicans had nothing to do with this crisis and it’s all Barack Obama’s fault and President Bush, John McCain and the rest of their cronies, who have been running Washington & Wall Street for the past 8 years or more had nothing to do with it. Yes, McCain postponed (not really) his campaign to go save the country. Well if you believe that, I got some Lehman Brothers stock I’d like to sell you. It’s funny Republicans (of which you are obviously) are always complaining that Obama hasn’t held office long enough but when the crap hits the fan he’s the first one all of you point the finger at. Everyone, Republican and Democrat alike are responsible for this mess. It’s obvious which side you’re on. I just think it’s lame that you use this space to voice such a one sided opinion, but it’s your blog. I’ve said it once and I’ll say it again, white folks are scared to death of a African American man running this country and will come up with anything to keep it from happening. When we get past all the smoke and mirrors that’s what’s really at heart.

  25. Clayton Makepeace says:

    Thanks for the comments, guys …

    Hey, Joe …

    In answer to your point #1, ABSOLUTELY!  You’re right. 

    But as I point out, these "creative" financing techniques were born to draw low-income people into the market.  And as I think I pointed out later in the article, lenders DID screw up by extending these schemes to the general public. 

    And what nobody else wants to say out loud is that intellegent, educated middle class people allowed themselves to be seduced by these kinds of loans and they also bear part of the guilt for this.

    Point #2:  Yes, I agree again.  The trade deficit did damage the value of the dollar.  Mindless Democrats and gutless Republicans spent too much and had to borrow the rest of the money that our bloated, staggeringly corrupt government needed to pay its bills from "we the people" and from foreigners.  So, while the American people were sinking into a debt sinkhole, so was our government.

    That said, though, take a look at a chart of the U.S. dollar index and you’ll see that the greatest damage to the value of the dollar — by far — began in August of last year when Washington began throwing money at this crisis.

    #3.  Yes, again.  And someday, when I write an article about energy, I’ll be more than happy to address that point. 

    But although higher energy prices can slow our economy and even push us into recession as it did in the early ’70s, it’s a stretch to think that they could trigger anything even approaching the massive financial meltdown we’re seeing now.

    #4  Rhetorical question.  Bush is not running for office. 

    Clinton had the dumb luck to be elected at a time when the rise of computer technology, wireless technology and the Internet were creating the greatest economic boom since the Industrial Revolution. 

    Bush was UNfortunate enough to be president when that boom went bust and when terrorists took $3 trillion out of the economy on 9/11. 

    If you can name one thing Clinton did to create that technology boom (other than choosing Al Gore; the guy who says he invented the internet as VP), I’ll agree that he was an economic genius. 

    Otherwise, his greatest economic legacy will be signing the international trade agreements that resulted in the dismantling of America’s industrial base and sending millions of American jobs overseas.

    Finally, if you’ll check the article again, you’ll see that I mention that Bush DID try to reform Fannie and Freddie in 2001 and again in 2003 — but the Democrats in Congress and the media demagogued the issue and killed the administration’s freform bill.

    And Steve, life is politics.  If you’ll re-read the article, though I think you’ll notice that, while I do my best to give the lie to Democratic attempts to lay this crisis on the Republicans, I skewer the GOPers as well.

    A point I didn’t make that I think is important:  These two political parties are only a symptom of the real problem.  The real problem began when they figured out they could "buy" power and public office by confiscating liberty and money from groups that wouldn’t vote for them and gave it to groups that would. 

    That’s why the Democrats passed CRA and that’s the root of most of the corruption and incompetence we see today.

    I would take issue with your suggestion that this article is "partisan" simply because it asks congressional Democrats to take responsibility for creating this crisis and blocking Republican efforts to prevent it.  I also skewer the Republicans for not having the balls to stop this idiocy before the crisis got out of control.

    The crowning riony is that, while Democrats are trying to add MORE money for ACORN to the $700 billion bailout … and as Republicans are finally digging in their heels, the CRA that created this crisis is still on the books and NOBODY has said a word about reforming or repealing it! 

    Why?  Because if any politician suggested such a thing, he’d immediately be labeled a "racist."

    As far as me becoming "centrist," I’m far to the left of the Democratic party on issues of personal liberty and far to the right of the Republicans on fiscal issues.  I guess maybe, on average, that kind of puts me in the middle.  Right?

    In the meantime, though, I’m left with voting for the lesser of two evils, or wasting my vote by going with a righteous candidate with no chance of winning.

    Is this what the founding fathers had in mind?  I doubt it.

    Malcom:  You miss the point.  CRA loans were the first domino:  The primer in the cartridge that ignited the powder, propelling the bullet into the brains of these now-defunct financial institutions.

    And you’re dead wrong about Countrywide.  The company was held up as a paragon of "non-discriminatory lending" as it used the most "flexible" terms possible to increase its CRA lending from $1 billion to over $600 billion.  Quoting California fair housing activists and New York law firms can’t change that fact.

    As far as regulation is concerned, it’s based on what I think is a silly assumption:  That politicians and bureaucrats are somehow better people and more honest than the rest of us are. 

    I reject that notion entirely.  Businesspeople never gassed 6 million jews; politicians and bureaucrats did.  Power corrupts; absolute power corrupts absolutely.

    Oh — and did you notice that the 200 regulators charged with overseeing Fannie and Freddie never lifted a finger to prevent this crisis?

    Regulation is not the answer.  More government is not the answer.  Getting government out of our lives and out of our businesses is the answer.


  26. Clayton Makepeace says:

    Hi, Roberto!  My first wife is a Chilena.  Where are you?  Santiago?  Vina?  Valparaiso?  Gorgeous place!

    Nisha.  Read the article.  I’m not a Republican.  I’m a Libertarian.  Socially liberal; fiscally conservative.  This article takes both parties to task.  It just lays the blame for THIS particular crisis where the facts say it belongs.

    Like you, I’m disgusted with both parties and say so — explicitly — in the article.

    And you know what?  I would LOVE to see an afro-American man or WOMAN run this country — so long as he or she has integrity and is fiercely committed to preserving our liberties, our right to run our businesses as we see fit, and to keeping government off our backs.

    Martin Luther King was right:  We should judge people — including candidates — on the content of their character.  Period.

    So wouldn’t that mean that voting FOR a candidate solely because of the color of their skin … on the basis of race … is also racist?  Hmmmm.

    – Clayton

  27. Clayton,
    Thanks for taking your valuable time to research and present this information.  Most of us agree that while what you’ve presented is correct, it’s only the tip of the gigantic iceberg.  Allowing Barney Frank and Christopher Dodd to be involved in the solution is a travesty.  One of the worst financial decisions ever made in this country was to securitize debt which began with credit card receivables and worked its way to mortgages.  Another really bad decision was made when Wall Street started hiring all those PhDs in statistics and mathmatics to create computer models used to slice and dice these securitized loans.  And perhaps the absolute dumbest decision was believing that all these s0-called geniuses could eliminate the business cycle and minimize risk with their software programs.  The entire financial system has been corrupted by ego and greed.  And you are correct . . . we ain’t seen the worst.  Keep your informed rants coming.  We need more people like you getting on their horses and riding through the streets sounding the alarm.   

  28. Stephen Goodell says:

    I admire your passion on this economic and political calamity.  To a great extent I share your concern and point of view.  However, I believe our consumer excesses and greed are more widespread than you suggest.   I’m extremely concerned.  Over the past two years, I became conscious of the number of times I heard, “We haven’t seen this since the Depression,” from top officials in both public and private sectors. Thanks for taking scarce time to bring this treatise to the table.  I will circulate it. And thanks for all you’ve taught me about marketing. Stephen Goodell

  29. Analía says:

    Great you decided to post this. I already emailed it

  30. karen says:

    Reading and watching the news as well as posts like this remind me of days we all had to practice hiding under our desks in case of nuclear fallout.  I remember keeping a box of my favorite things, like that 3 ft. doll I really loved, pajamas, clean underwear, some clothes – all kept by my bedroom door – just in case we all had to retreat to the basement "fallout" shelter.  The doll is long gone but I can’t help feel I wish it were simple enough to pack a box and think I’d be safe down in the basement.  Yet, the bottom line is we are all in this together – here as well as the rest of the world and somehow it’s up to us – yes, the "WE the People" of the USA and the World to get us out of this.  We have been shown by example of all our "leaders"  that they aren’t particularly concerned about us, any of us.  Wait, I think my "golden parachute" might be on its way -

  31. Gerold Bigorajski says:

    The current sit is described mostly right, however the analysis is missing a crucial point.

    The FED — a consortium of private banks — is printing dollars and lending them to the US government since about 1929, when these same banks manufactured what is known as the 20th century big economic crises. And don’t believe they’re doing so (printing and lending dollars) for philantropic reasons — The US government has to pay high interests for every single buck the FED prints and hands out.

    These interests in the past decades have created debts that by basic economical laws can never be paid back as their grand total including compound interests way exceeds the quantity of Dollars out there anywhere on our planet.

    You could also state that these guys are owning America — and not only America, as basically every nation on Earth owes them trillions of Dollars, Euros, Yen, Pound or whatever currency in the meantime.

    And be sure they decided who was elected for president in the past. And thus they were the guys BEHIND every president since at least 7 decades.

    So guess who manufactured the current crises? I know it sounds a lot like conspiracy theory, so just check the facts about the FED given above, call your local representative and ask him whether the above is true or not. Look up the level of governmental indebtedness for any industrial country at Wikipedia or whereever you like and ask the question not answered there: ‘Who borrows all that money?’

    Sorry Clayton — it won’t matter very much who will be elected beginning of next year. The decision is to let the economy crash on a worldwide basis, and as the guys having made that decision already own quadrillions they surely have the economic power to push it through. So get ready to meet the probably greatest depression and inflation mankind has ever seen.

    Maybe there is an answer to this misery. But I doubt it will be a political one. And it surely will not depend on who’s going to be the next president.


  32. Matthew says:


    Please read, and then re-read response #8.  Until you are up to speed about the federal reserve and their complete control of our money, you will not be able to understand the real problem.

    We do not have a two party system – that disappeared in 1913.  The Reps and the Dems are just a diversion for the real power, which is the monopoly, private, for profit corporation called the federal reserve.  It’s not a federal agency nor does it have any reserves, but it is allowed to regulate money supply and set interest rates without ANY Congressional oversight.

    They are, and have been responsible for every boom-bust cycle since the panic of 1907.  All the while making many trillions of dollars, whether boom or bust, off the backs of us little guys.

    In a recent email, Ron Paul so elegantly stated, "F.A. Hayek won the Nobel Prize for showing how central banks’ manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day – and which are being proposed, just as destructively, in our own."

  33. Steve says:


    Thank you for responding to my comments with well thought out and appropriate rebuttal, none of which sounded in the least bit like the overall tone of your article.
    But, instead leaves me feeling like you may not have intended a one sided sales pitch for the GOP, but that you do have valid points concerning the specific events, in particular related real estate and lenders, of late and that these events may have been postponed… or possibly mitigated, if our elected officials had been more intelligent and long-sighted.

    There is much more than is being discussed or seen here though, and what we are feeling now is only the tip of the iceberg, if what I understand is correct.

    The current events are symptoms… not causes. They are the crop, not the seeds.

    What I feel personally, what is so desperately needed, is an understanding of the core reasons for why this, not just the banks and lenders of today sticking their hands into our already drained pockets, not just the social democrats giving away America to the poor and contributing to the systematic elimination of the middle class… but the entire enchalada, the whole house of crumbling cards… happened in the first place…and an intelligent discussion of potential solutions.

    "Define the problem… discuss the solutions… shoot the criminals."

    Solutions… that obviously do not include a two party system of obvious lackeys and stooges who have their collective puppet strings being yanked by someone else.

    Wasn’t it Rothschild who said something to the effect of…

    ‘I could care less whether Democrats or Republicans are in control, whether the governments are Republics, Democracies, or total Communist Dictatorships… give me the power to print and control the money, and I’ll control them all.’ (paraphrased, not quoted)

    Fiat systems… fractional reserve standards… cartels and cabals of government and private businesses disguised as politically opposed but in truth in bed whoring with each other… are at the very seed of this mess.

    Democrats or Republicans… two sides of the same coin.. which is being tossed in the air and flipped by the real powers holding them.

    Not only here in America either… there is a much bigger play being perpetrated here.

    I’d really like to hear others who understand it from it broader perspective, perhaps you Clayton, help us to see what’s really going on… REALLY… and how we, the most free and, when pissed off, perhaps the most powerful, force in our government,  can prevent this "evil plan" from coming to full fruition on our watch anyway.

    Anyone else for putting personal agendas aside and getting down to the real ogre’s who need to be run out of town at the end of a pitchfork?

  34. Clayton Makepeace says:

    Steve, I get the sense that you didn’t read the entire article.  I think the two of us agree on most things.

    Scroll up and find the subhead "Plenty of blame to go around."  You’ll see that I place the blame squarely on both parties … on the use of populist politics to steal from one group and buy votes from another.  You’ll see that I am NOT a Republican, but a hapless Libertarian who understands that both of the majors are beyond salvation.

    And yes, I could go deeper. 

    I could rant about fiat money and the abandonment of the gold standard. 

    I could rail against Keynsian economic policies and extol the virtues of Austrian economics. 

    I could scream about a system that has abandoned the founding fathers’ intent that only taxpayers should be allowed to vote, thus empowering the uneducated and ignorant to vote for politicians who give them money from the public till and who pass measures that force US businesses to shower them with still more. 

    I could demonstrate how all of these things have contributed to the cancer that’s killing our society, our economy and our nation  today. 

    I could make my case that when the history books are written about the Rise and Fall of the American Empire, future historians will point to these things as the seeds of our demise.

    But that would take 1,400 pages.  This article is only 13.  So gimme a break?  ;)

  35. Clayton Makepeace says:

    Oh — Matthew and Gerold?  Same response:  Great topics for another day!  :)

  36. Michael says:

    Hi Clayton,

    Great stuff.  I really love the line about Jimmy Carter,
    "Now, nobody I know has ever accused Mr. Carter of being the sharpest crayon in the box … "

    I laughed out loud…

    I live in the Seattle area (a.k.a. WAMU Ground Zero) 

    Come to think of it… about 3,500 people here are about to lose their lives…  So now we have ground zero in NY and Seattle. 

    … I’ve already heard office chatter that foreign short selling has caused this mess… 

    … but I think this time we only have U.S. government terrorists to blame..


  37. Steve says:

    ROFLMO… Too true Clayton, too true. ;-)

    You Rock and your perspectives are spot on… thank you for helping me to see the deeper you and showing that you had taken into consideration these important facts.

    I think I just went from Independent to Libertarian.

    My big mouth didn’t ruin any hopes of ever working with you did it? lol…

    Steve Odette

  38. emv says:

    A brilliant read, Clayton – beautifully written and argued even though I feel you are way too soft on Bush and his entourage. Underwriting the seemingly endless "war on terror" has also played a major role here, surely?

    Looking on from the UK, where we’re catching a huge and potentially lethal chunk of highly toxic fallout from your side of the Pond, I have to say that it’s truly gobsmacking – not to say terrifying – that your country is led by such corrupt, greedy and incompetent fools. And it’s also pretty galling to have these people ram down our throats at regular intervals the patronising message that the US is the world’s beacon of "freedom" and "democracy" and the "land of opportunity". Yeah, right.

    I’ll concede immediately that our own politicians are nothing much to write home about either, but how can it be that Obama and McCain have emerged as the "best" your huge and wonderful country can come up with to take over from the totally discredited and deadly Dubya? And let’s face it, how on earth did he ever get elected – and not once, but TWICE? (Though come to think of it, perhaps the first time doesn’t quite count…)

    We in Britain watch what’s happening to your financial system with horror and disbelief while bits of our own follow Wall Street’s lead and unravel at break-neck speed. Many of us are angry that our own politicians also chose to allow an inflated housing market to fuel an era of unregulated and irresponsible lending and cheap credit. I’m among those who have been saying for at least five years that this was clearly unsustainable but my observations generally fell on deaf ears as folk flashed the cash and boasted about the latest "worth" of their homes. It’s no consolation to be proved right.

    The frantic wheeling and dealing in Washington this weekend is akin to fiddling while Rome burns, and it may be that this version of capitalism is now very close to its sell-by date. Maybe that’s no bad thing, and out of all this chaos – and whatever the short-term cost – there will emerge a better way for all of us to do business and with it a more equitable world for our children.

    Thanks again, Clayton, for opening up the debate.

  39. Michael says:

    Although as always Clayton, you make strong points very eloquently and even as persuasively as you’re famous for, I too have to take the somewhat contrarian position and point out that your well intentioned "passionate discourse" appears to me to be somewhat akin to trying to take down a diseased tree by hacking at the leaves and limbs, instead of yanking it out by its roots.

    I agree with Steve above who pointed out that the real greed and corruption started a long time ago on Jeckyll Island when the unthinkable happened. A private group of rich, powerful and extremely greedy men was given total control of this nation’s currency when the Federal Reserve was created. Of course the Federal Reserve is no more "federal" than Federal Express is.

    That was the beginning of the end, and President Wilson knew it when he signed it into law after it was voted through during a rush session of Congress when most members were away on Christmas holiday.

    This ominous quote sums it up:

    "Give me control of a nation’s money and I care not who makes its laws." ~ Mayer Amschel Bauer Rothschild

    This of course also ultimately ushered in the illegal personal federal income tax system to begin to enslave every worker in the United States.

    Clayton, please turn your very apt attention and concern on the real causes and the real culprits of where we are today. Take a look at who really runs "the show" and controls everything. Look deeper into the CFR, the Bilderbergers, the members of the Federal Reserve and the like. That’s the cartel of puppet masters that those "in power" take their marching orders from.

    Take a deep look at the way the mainstream media (MSM) is also now owned and controlled by members of these groups. Notice how public perception is shaped, swayed and even yes, distracted by the endless barrage of spin intended to keep the masses’ minds occupied with things that don’t really matter, so that the things that do really matter aren’t recognized, let alone acted on.

    This whole "meltdown" is more likely the largest intentional transfer of wealth in history, theft by deception perpetrated while hiding in plain sight by the most clever of criminals.

    When more people awaken to how they’ve been duped into financial enslavement under the guise of "freedom", perhaps there will be a possibility of a real correction and a rebuilding of the kind of system of government and representation that is truly of the people, for the people and by the people.

  40. Georjina says:

    Thank God! Finally, someone else who has been watching this fiasco besides me!    Least we forget,  the’70′s had its own recession (I’m old enough to remember odd and even days to buy gas), as did the 80′s when the middle class all but disappeared because their  income level dropped by over 52%.  Lucky them, they became the politically correct ‘working poor’.

    Don’t forget the ‘Fantasy Island’ of the 90′s, when the dot coms also created a feeding frenzy at the IRS for those dumb enough to take stock options from companies that went bust…some are still paying off liens on ‘stock income’ they never received. 

    It seemed everyone looked the other way as long as it wasn’t happening to them personally.  The current crop of Bucket Heads are doing just as those from the past, promise whatever you want but keep looking for a way to get yours before it all goes to hell.


  41. Excellent Clayton!

    I’ve sent this out to all my friends, family, and congressional reps too.

    Mark Hendricks

  42. Joe Derer says:

    "Well done Clayton… you hit the nail on the head.
    Fascist Capitalism is what we’ve had for some time.
    Clayton do you recall what the Fabian Society logo used to be?
    It was one guy holding a globe over an anvel and another guy holding a raised sledge hammer over his head–they would beat the world into submission… and yes Clinton is a member.
    Tavistock Institute is another dark place.
    Thanks Clayton for your excellent piece.
    Joe at AdvertisingCSI@gmail.com

  43. Interesting article and lots of info that the media doesn’t talk about as you say. Highly biased though. You can hardly pin the current situation entirely on the Dems.

    The vast amounts of money that the Bush Administration has pumped into the economy in the last 8 years to fight wars, etc., plus keeping interest rates artificially low during that period is what caused the housing bubble in the first place.

    The Dems may have laid the foundation for this mess, but the Republicans have repeatedly stoked the fire.

    IMO, they’re equally as useless and greedy as each other.

  44. Tim says:

    I look at it this way: I don’t like gun control. The criminals will always have major weapons, and I want to be able to defend myself if someone breaks in to my home, even if it is only a sawed-off .12 gauge.  I might die, but I’m taking someone with me.

  45. James says:

    Clayton as always I enjoy you. I have learned a little more than copywriting and marketing reading your material and those who contribute. There is one fatal flaw in the time line. Bush has had a republican congress up until last year 2007 that contributed to the ills we face today. Which leads me to the same ole conclusions… The Democrats may have opened the door to the sub prime mess but the Republicans profited from it and did not close the door. The Republicans controlled Congress up until 2007 and had the worst President America has ever had. So your time line is not complete accurate or honest.

  46. This is the BEST big picture description I’ve read — by anyone — summing this all up.

    Sadly, this may be the big reason why it’s all spiraling downward, but there are thousands of little reasons, too. I’m not expert, but it seems every time I turn around I read something stupid the US government has done.

    Real stupid.

    Like GMO crops. Just read how the government had to subsidize farmers $9+ billion dollars, because they were growing FDA approved food that suddenly no one outside of Canada was willing to buy. Third world countries wouldn’t even accept it as a donation.

    Or how about how the FDA continually suppresses effective natural products, and strives to keep the population sick and dependent on drugs — a "disease maintenance program."

    Right now we are looking at an economically melt down.

    I suspect we should be grateful.

    The drug companies will fall next.

    Otherwise, what kind of country will the US and Canada have, when 80% of it’s population is sick. Already diseases that were rare amongst children, like diabetes and brain tumors are epidemic.

    It doesn’t take a genius to realize that society can survive if most it’s population is sick, dying, or dead.

    Or maybe it does take genius.

    Anyways, difficult times ahead, leading to a purging that will bring a much more balanced future. Let the current system collapse… take the government and all it’s sold-out departments with it.

    Time to reboot.

  47. "It doesn’t take a genius to realize that society can survive if most it’s population is sick, dying, or dead." — Sorry, I meant "can not survive."

  48. Roy Primm says:

    It’s interesting how you left out our current President for the last 8 Years – And a Republican Majority congress for the last 6 years … Isn’t it enough blame to go around or is this just an all or your guys are wrong – and all of my guys are perfect! Hmm?

  49. Cathy Sutter says:

    Clayton, great post.  You know where I stand since we talked about this stuff last weekend at Carline’s…

    A few comments:  Clarke, loved your post.  Jefferson’s quote is:  "I believe that banking institutions are more dangerous to our liberties than standing armies."

    Steve:  What do you mean by we don’t need this distraction?  From what?  According to Judge Napolitano’s book, "A Nation of Sheep," the government is doing a good job of distracting everyone with the video games, celebrity gossip, and sports…well, there’s a lot more.  However, I do agree with you regarding the Fed.  Creature from Jekyll Island…I’ve read excerpts but not the entire book.

    Malcolm:  hahahahaha…apparently you did not like the "partisan" views, i.e., cutting down the Democrats, assuming that Clayton is a Republican.  His later post reveals that he is not affiliated with either of the two major parties (which we should just eliminate, in my opinion).

    Earlier today, I had a lively "debate" with my stockbroker in Pittsburgh, who is a liberal Dem.  He informed me that it was the Bush Administration that caused the housing crisis.  He got all pissed when I said something about Clinton.  Whoops, I was wrong….it goes all the way back to Carter.  I’ll be on the phone on Monday and will be directing him to this site. 

    Back to comments…

    Jim:  Completely agree with you about the Fed and the Treasury…

    Brian:  Right on!  You are sooo right.  It’s a plan to make the U.S. a third world country. 

    George:  You took the words right outta my mouth.  We need to replace all the members of Congress…get ‘em outta there.  I’ve been saying this for sooo long…it’s the stupid people who keep electing the same imbeciles over and over again.  What’s up with that?  I, myself, am ashamed of Harry Reid, the idiot from Nevada.  Uh, that’s where I live…same thing, people keep voting him back in.  Grrr….

    Or should I remember "Two things are infinite:  The Universe and Human Stupidity.  And I’m not sure about the Universe."  Albert Einstein

    And right:  Why are they in there for years and years???  What a cushy job these idiots have.  If it were a real job, they would have been fired a long time ago. 

    Nisha:  Why would you think Clayton is a Republican?  That got a laugh outta me…

    Your statement that white people are scared to death of having an African American running this country…uh, don’t think so.  I don’t like this man’s past associations.  I don’t really give a darn if he is black, blue, or purple.  "Be careful the friends you choose for you will become like them."  W. Clement Stone 

    And while I’m on the subject…He would NOT be the first black president.  I am fed up hearing this misstatement.  He is not black.  He is half-black.  We called them mulattos when I was growing up.  But this half-black stuff is never mentioned by anyone anywhere on the news or any other program for that matter.  Duh…

    In addition, there have been five presidents with just as much black in them:  Thomas Jefferson, Andrew Jackson, Abraham Lincoln, Warren Harding, and Calvin Coolidge.

    Don’t believe me?  Do some research…you will find it to be true.

    Ron:  Agree with you…get your assets out of the dollar.  I bought silver and am now buying some gold.  Although Clayton mentions that the FDIC insures your money, I really can’t trust that.  I mean, it’s the government...

    You have to have gold, grub, and guns…there you go.  Be prepared.

    EMV:  I agree.  Really, McCain and Obama…this is the best we can come up with out of 300 million people?  Geez… We would do better randomly selecting names from the telephone books.  :)

    David:  Interesting story about your homebuilding days.  Have to say that owning a home is a privilege, not a right…as so many entitlement mentalities think

    I am not voting for the lesser of two evils simply because you will still have evil in the end.  I’ll be there with Clayton, voting from my heart, maybe wasting my vote but at least not compromising myself.  You see, I’m not a sheep…I’m a wolf.  I wonder if I can write in my candidate?  Dr. Ron Paul


  50. Robert Lehrer says:

    Clayton, you wrote a brilliant piece that’ll certainly go in my swipe files.  But you sound more like a die-hard Republican than a Libertarian. 

    As you stated, Ronald Reagan certainly did say that government is the problem, not the solution.   His statement wasn’t wrong, but it sure was hypocritical.   President Reagan grew the Federal budget much greater than any "big-spending" liberal before him did.

    Senator McCain , another Republican, shovels up the same B.S. today.  He talks about cutting spending in Washington…..after he’s supported around $600 Billion of funding to pay for our train wreck in Iraq. 

    Republican Senator Phil Gramm was another large contributor to today’s economic predicament   Political blogger James Moore explains it this way: 
    "A few days after the Supreme Court made George W. Bush
    president in 2000, Gramm stuck something called the Commodity Futures Modernization Act into the budget bill. Nobody knew
    that the Texas senator was slipping America a 262 page poison pill. The Gramm Guts America Act was designed to keep
    regulators from controlling new financial tools described as credit "swaps."

    These are instruments like subprime mortgages
    bundled up and sold as securities. Under the Gramm law, neither the SEC nor the Commodities Futures Trading Commission
    (CFTC) were able to examine financial institutions like hedge funds or investment banks to guarantee they had the assets
    necessary to cover losses they were guaranteeing.

    This isn’t small beer we are talking about here. The market for these fancy financial instruments they don’t expect us little
    people to understand is estimated at $60 trillion annually, which amounts to almost four times the entire US stock market.
    And Senator Phil Gramm wanted it completely unregulated.

    So did Alan Greenspan, who supported the legislation and is now
    running around to the talk shows jabbering about the horror of it all. Before the highly paid lobbyists were done slinging their
    gold card guts about the halls of congress, every one from hedge funds to banks were playing with fire for fun and profit.

    Gramm didn’t just make a fairy tale world for Wall Street, though. He included in his bill a provision that prevented the
    regulation of energy trading markets, which led us to the Enron collapse.

    There was no collapse of the house of Gramm,
    however, because his wife Wendy, who once headed up the Commodities Futures Trading Commission, took a job on the
    Enron board that provided almost $2 million to their household kitty. And why not? Wendy got a CFTC rule passed that kept the
    federal government from regulating energy futures contracts at Enron."

    The point I’m making is that there’s plenty of blame to go around.
    The Democrats are no more responsible than the Republicans for where we are today.   We, not just our leaders our just as responsible.

    Until election laws change so that lobbyists can’t buy influence as easily as they can today, our government will be run by officials that obey the largest contributors, not the general populace.

  51. Dale says:

    King Solomon accurately summed up the situation centuries ago. "Man has dominated man to his injury." Ecclesiastes 8:9 Humans have demonstrated over and over their inate ability to make a mess out of government and ruin businesses and individuals in the process.

  52. Clayton Makepeace says:

    Isn’t it interesting how the Democrats who say they "read" this post never saw the fact that I DID mention Bush’s role in this crisis?

    Isn’t it interesting that the minute they realized that I was criticizing Democrats, they assume I’m a Republican?

    And isn’t it interesting that the Democrats who read this article don’t seem to care about the facts — only about rushing to their party’s defense?

    Isn’t human nature fascinating?

  53. Steve says:


    What I meant by "We don’t need this distraction…" was a direct comment on my initially perceived, and since cleared up, intent of Claytons commentary.

    Reading through it the first time left me feeling like it was a partisan attack on Democrats by a GOP propagandist. Which, I’m sick of listening to from either party, because, as you so aptly qualified…

    All of the rhetoric and distraction, the name calling and character attacks, the blame and mis-direction… are tools of those idiots engineering the Spin Game…

    All of that crap makes me want to puke and is of no value to anyone accept those doing the distracting.

    Once Clayton helped me to understand that this was NOT his intention or purpose and after re-reading the post based on Claytons clarifications, I see that what he was commenting on was only one piece of the puzzle… not the whole puzzle, and that it appropriately points the finger at the correct targets… for what he was addressing.

    "Life is politics" as Clayton said… I am just glad that the real truth is getting revealed here about the deeper issues that the major parties are just puppets in.

    I personally feel that the post by Clayton might have served a greater good by feeling less partisan and more in line with what he subsequently explained his position is… American and Libertarian… and absolutely NOT pro/anti Dem or GOP…

    Regardless, I applaud his well written and appropriate post and more than that, his allowing this conversation and even continued participation with us in it.

    If there were more Americans… or others for that matter… who were willing to put it out there like this, maybe we wouldn’t be in the mess we are in… as a nation, it’s time to stop the ignorance and start taking action, what better way than to put it out there like Clayton has… cudo’s and bravo Clayton… way to go.

  54. Clayton Makepeace says:

    Great discussion, guys!  I could hardly wait to wake up this morning to jump back in!

    Hey, Robert Lechter — a few comments on your comment …

    1. Regarding Reagan’s "hypocrisy" re: Deficits — I’ve heard this argument many times of course, and have always found it curious.

    The fact is, beginning with the Revolutionary War, wartime deficits have always been considered acceptable.  Reagan’s huge military build-up is widely credited with ending the cold war without having to fire a single shot. 

    Plus, if you check, I think you’ll find it was FDR — not Reagan — who ran up the largest deficits relative to GDP.  Plus, I don’t really think it’s fair to debit Reagan for the deficits unless you also credit him with the massive "Peace Dividend" that followed.

    2. Regarding the Commodity Futures Modernization Act of 2000:  You mean the bill that was co-sponsored by not one, not two but three Democrats and signed by Bill Clinton on December 21, 2000 – just before he left office?

    Kinda looks like that James Moore fella forgot to mention those inconvenient little truths — right?  Or the fact that Enron happened on Clinton’s watch too — right?

    Hey — I don’t mind blaming Gramm or any other Republican for boneheaded moves.  And lord knows they’ve made plenty of them.  But calling Gramm "Foreclosure Phil" while failing to mention the fact that this was a bi-partisan bill is less than honest.

    Besides:  Think about CDOs for a second.  Are they really the problem?  Or is the problem that they’re backed by brain-dead mortgages mandated by the CRA?

    – Clayton

  55. Larry says:

    If one has a substantial amount in IRA’s and 401′s, would it be wise to now remove the funds, close the accounts, take the tax hits and early withdrawal penalties, and at least end up with something. Or is it best to just ride it out – any comments or advice from anyone?

  56. Brendan says:

    Wow! If there is any motivation I needed to study copywriting, this is it. I am totally undone… the power of persuasion at its level best.I just wonder how much the Republicans would pay for such a copy master… Well! I am from Botswana, the peaceful diamond and what happens in America affects us too…So I better go and delve into my AWAI programs and The Ultimate Desktop Coach Course…By the way am based in the UK now, which means I am watching to see where the coin falls…Clayton… you’re  a star. Hands down.Better go now… my copywriting juices are warmed up now.

  57. Clayton Makepeace says:

    Here’s a thought …

    Because of the way our government is treating us (like a baby treats a diaper), isn’t it time we the people demanded radical changes in how Congress and the White House are allowed to operate?

    I believe that the American people — conscientious people in both major political parties as well as independents — are quickly approaching the point at which some wonderful improvements in our government may be possible.

    More and more, I’m coming to the view that we need a new Constitution for the 21st Century.

    My dream Constitution would be one that affirms the principles of personal liberty and property ownership (including the money you earn) and privacy and that makes it a crime for any politician or bureaucrat to propose a law that would abrogate those rights.

    One that bars Congress from enacting any law regarding anything you say, believe, own or do — and restricts the government to enacting laws that prescribe penalties ONLY for actions a citizen or company takes that overtly harm others.

    One that institutionalizes personal responsibility — and makes it illegal for Congress to pass any law that protects any person, organization or company from the natural consequences of their ill-advised or destructive actions … and that that also allows the citizens to benefit fully from their prudent actions.

    One that requires Congress to balance the budget every year and that prohibits the mindless federal borrowing and counterfeiting that are destroying the value of our money, our buying power, our quality of life and our children’s futures.

    One that states clearly that the government derives its powers from the people and therefore may not engage in any activity that is illegal for the people to engage in.

    And certainly, one that institutionalizes patronage of all types — robbing the taxpayers to reward constituents — as a crime punishable by tarring and feathering.

    Wouldn’t that be nice?

    What would your "dream Constitution" look like?

  58. mark says:

    Thanks for  a well written piece  Clayton. 

    If this investment by the govt goes as planned most of, if not more than the money invested should be recouped as 94% of Americans repay their mortgages.  The Republicans are asking for legislation included in the bill that would create a default insurance plan that would prevent this from happening again.

    The final bill should be announced by Sunday to ease tension on overseas markets which start trading Sunday night.

    As usual, we’ll get it right and move on to correcting the problem.

    I just recently found your site and enjoy reading your articles. 


  59. Clayton Makepeace says:

    Mark:  Welcome aboard!

    From your lips to God’s ears …

    I love your optimism.  But to my way of thinking, this bill is no panacea.  All it does is allow institutions to offload toxic mortgage-backed investments at massive losses.

    That may help prevent some of the failures of banks, brokerages and insurance firms that otherwise might have occurred.

    It doesn’t address the fact that those institutions have already suffered massive losses and are on life support — and that the additional losses they’ll book when they sell their toxic investments to the Treasury could still be a straw that breaks their backs.

    It doesn’t address the fact that GM, Ford and Chrysler are begging for $25 billion more or that many are calling for Washington to save the U.S. airline industry as well.

    It doesn’t address the six million ARMs that are about to reset (some of the monthly payments on them will double or more) and that a ton of them are on houses with no equity that are no longer worth what homeowners owe on them and can these distressed homeowners can now rent better homes for less.

    It doesn’t address the fact that the growing glut of homes on the market will continue to depress prices and continue to push developers, construction companies, and real estate sales companies to the brink.

    It doesn’t address the fact that banks have shut down the credit spigot for millions and that companies that need consumers to have ample available credit are suffering massive declines in sales and earnings.

    It doesn’t address the impact all this new deficit spending and the likely $2 trillion deficit we’ll see in in 2009 will have on the economy.

    And it doesn’t repeal the dumb law that created this mess in the first place.  Lenders are STILL required by law to loan money to grossly unqualified borrowers!

    My prediction:  We’re about to have the blackest Black October ever in stocks and Washington will soon be bailing out Main Street as well as Wall Street in order to save voters’ jobs.

    Here’s something else I find fascinating; although I haven’t looked deeply into it.  Has anyone here heard of the Kondratiev Wave?  A Soviet economist noticed in 1925 that capitalist economies tend to run in grand super-cycles lasting anywhere from 50 to 54 years.
    Later researchers pegged the average number of years as being closer to about 72.

    Our last Great Depression began in 1929 — 79 years ago.

    BTW:  Did I mess a memo?  When did recessions become illegal?  What new law mandated that the government borrow and print money like it’s going out of style and destroy our buying power in a futile attempt to eliminate a natural phase of every business cycle?

    And has trying that ever worked anywhere?

    Just thinkin’ here …

    Cheers, Mark … glad you’re here!

    – Clayton

  60. Clayton,

    Regarding  your post #57 –

    I would be happy if we just used the Constitution that we began using as our guiding principles on March 4, 1789…just following it would cover most of your dream Constitution points.

    To everyone: Get involved, contact your congressional reps and let them know your feelings — and be sure to watch how they vote, if they don’t vote how you feel, vote them out by supporting someone else. This is how the People can get real change — not the (n)Obama type of "change".

    And remember, it’s the "THEY" that have taught you not to discuss politics and religion (hmmm, I wonder why).

    And isn’t it interesting that the USA was founded by a bunch of guys who loved discussing politics and religion so much that they even mixed the two into our most treasured documents. You can learn a lot about how the USA was really put together at http://wallbuilders.com

    Best to all –



  61. Clayton Makepeace says:

    BTW #2:  I have the perfect replacement law that would fulfill the stated intention of CRA — ending discretionary lending — but that would not allow more disasters like this one to occur in the future.

    It’s only one sentence long:

    Any lender caught denying a loan to any member of a racial, ethnic, religious or sexual  minority group while granting a loan to a non-minority person with a similar savings history, down payment, credit history and income will be given a fair trial and then hung on national TV.

    That oughta do it.

  62. Rudi says:

    an excellent expose of the beginnings of current mortgage crisis in the US. I do not believe in conspiracy theories, nor do I believe that the intent by any of the players involved was the actual destruction of what used to be the US (or is it now the global) financial system. This we can lay squarely at the feet of the law of unintended consequences. In the end it all boils down to two things. Firstly, power grabbing politicians who bribed voters through legalised access to money the voters should never have had access to in the first place. And secondly, greedy bankers who took advantage of the laws to make as much money as quickly as they could because that’s what their incentive systems motivated them to do. Mix the two and you have an explosive situation.
    There have been some references to history, and I think this is important. Empires, and the US has turned itself into one over the last 60 years, self destruct. And this tends to generally happen at the height of its military power, and there is no denying that the US is now the dominant military power in the world.This financial crisis simply confirms to me that the US is on a very slippery slope. Be prepared!

  63. Here’s some interesting comments in a letter sent to Congress from the CEO of a well-run bank, it’s very worth reading:


    Best to you all —


  64. Maribel says:


    I am so glad I never spent a dime on any of your stuff. 

    I do enjoy reading your tips so keep that up – stay out of politics.

    Maribel Arce

  65. John Peters says:

    Clayton – thanks for a good article!

    Its good to read your straight talk, as I myself have been warning people about this coming global financial meltdown for the last 15 years plus. Now, for anyone having researched these issues deeply, it is plain and simple – evident – that the US as a sovereign nation has to be taken out for the new world (dis)order to be ushered in. And as you so brilliantly point out, Clayton, this financial chaos has been in the making for quite a while, setting the stage.

    So let us be honest: No bailout is going to fix this. It is bound to happen, and is happening before our very eyes: the US is being taken down. It is a sad thing, but this financial meltdown is the LAST phase in a national hijacking having global consequences. We just can’t turn this tide: There will be no bills to fix this, no new constitutions possible, nothing at all that can avert this development. People, please stick your fingers into the ground and take a long hard look at things, and you will know that we are in for quite a ride in the years to come.

    Ordo ab chaos” is the slogan for the mega-bankers and the occult megalomaniacs now having their long-planned ultimate dream come true: destruction of all private property and all personal freedom, and the merging of the whole world into one giant melting-pot, over which they will rule, with the devil himself at the top. And praise the Lord, even this dark leader will be taken out, after having been given a short while to rule this world under one central government, as he always wanted to.

    And after this short criminal dictatorship posing as the best thing that ever happened to man, the people of this world will finally see who really rules this world, but then it will be too late for most of them.

    So our focus today should not be mainly on acquiring financial freedom. No, we are talking about spiritual survival here, thats the real issue for the next years to come. In the coming 2-3 years, the world will be thrown into the greatest chaos imaginable as a consequence of the US meltdown triggering a global financial crisis of staggering proportions. And this chaos is all planned and part of the total package, for restructuring of the global order. Then finally a new apparently beneficial order will emerge, but do not be fooled: it will be nothing but smoke and mirrors everywhere, and will be the greatest spiritual chaos ever to haunt this world, portrayed as the new age of freedom and liberty. And when people all over the planet rejoice over this apparently peaceful state of affairs, the end will come, sure as night follows day.

    This is what we have before us the next 4-5 years. It is not going to be funny at all. Mark my words: if you focus exclusively on economics now, it will be too late to focus on spiritual things later on. Many will lack this extremely important spiritual preparation, and will be swept away. So people, please keep your priorities straight, as the day of accounting is hastily closing in on us.

    Stay safe, stay free.

  66. Dan Gallapoo says:

    Thanks for having the brass balls to publish this info.  I would LOVE for you to write an article like this about the founding of the Federal Reserve and it’s effect on this country.Dan

  67. karen says:

    I found this information on Economist Greg Mankiw’s Blog this morning – I thought it would be interesting to check Mr. Mankiw’s insights since Clayton mentioned him in his informative post that certainly has everyone talking as well as thinking:

    "The main problem, we are led to believe, was a Republican ideology of unfettered capitalism that led to insufficient government involvement in the financial system.

    "Senator Obama might want to read this NY Times article from 1999:

    In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders….Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.

    "I am not suggesting that the entire crisis should be put in the lap of the Clinton team. There is plenty of blame to go around. Indeed, the problem goes back at least as far as the Johnson administration, which helped set up a housing finance system that was always fundamentally problematic.

    "If Senator Obama really wants to transcend partisan politics, as he would sometimes have us believe, he might want to give a slightly more balanced view of the history of how this all started. He also might want to take note that the Bush administration warned about some of these problems five years ago and had its reform efforts stymied by prominent members of Senator Obama’s own party."

  68. Clayton Makepeace says:

    Thanks for the advice, Maribel.  I don’t think I’ll take it.  Feel free to keep enjoying all the free stuff, though …

  69. Betsy says:

    I have to admit, when I first read this article, I thought it to be another Republican rant and in some respect I still think it is ( the unflattering photos of the Dems , you hardly trashed the Republicans and you defended George Bush), but I went on to read all of the comments. I want to thank everyone for the education. I had little to no understanding of this crisis, but thanks to all of you I now know that it is time to sell the house, buy the farm and go back to the land. And preferably in another country!

  70. Larry Jacobs says:

    Dear Clayton,

    You wrote an excellent piece. You are one of the finest copywriter I know of. Your words flow nicely.
     You have summarized what media is basically saying and added some more details and pictures. You have really wrote what media wanted you to write, even though you did not realize it. Media generally guides the public in what they want them to think. The mass public is usually always wrong because the media guides them in the direction they what them to go. The media always puts a story on an event of what has happened and tries to explain it.

    The media and you have missed the underlying cause of the entire disaster. Something the press has not picked up on.

    For one to understand what is happening one just needs to study history. Nothing ever changes. History repeats itself over and over again. Yes, the secrets of what is going to happen in the future is in the history books.

  71. Clayton Makepeace says:

    Hey Betsy — wait ’till you see what I do to Bush and McCain in a couple weeks!  :)

  72. Betsy says:

    Thanks, I’ll keep watching and reading. I’ve added you to my favorites. I hope you won’t leave Palin out of the discussion. Is she the not the biggest punch line?

  73. Adam says:

    Maribel, you make me laugh. You’re so glad you never bought any of Clayton’s stuff. Yet, you don’t mind reading the free stuff he gives?!!!


  74. Clayton,

    Here is a new comment. . . and it comes from my wife!

    After reading your thought-provoking piece, she said to me,

    "How come he doesn’t have a TV show?"



  75. Robert Lehrer says:

    Thanks for your input, Clayton.  I’m NOT a Democrat, so my comments stem from my impression that you were pinning the tail on the ‘donkey’ and not the ‘elephant’, as well. 

    Regarding your statement "calling Gramm "Foreclosure Phil" while failing to mention the fact that this was a bi-partisan bill is less than honest:"    Where in my comment do you see the phrase "Foreclosure Phil?"  That came from somebody else’s keyboard, not mine. 

    It’s my understanding that Phil Gramm was the architect of that bill, but he may well have Democratic co-sponsors.  Again, I’m not pointing fingers at the Republicans any more than I am, the Democrats for this mess.  I added the Republicans in my comments only because your post appeared directed principally at the Democrats and not at both major parties in Congress. 


  76. Fernando says:

    #1: Clayton, awesome as always!#2: For everyone saying "Oh no Clayton’s a Republican", please, do yourself a favor, stop looking like asses and read the article.#3: You titled your article "A Conspiracy of Imbeciles". However, the biggest imbecile was not mentioned in your post.  No, the biggest imbecile showed up all on her own in the comments section.  Her name?…


  77. Clayton Makepeace says:

    Once again, everyone, my comments in this article are aimed primarily at congressional Democrats ONLY because the article is about the credit crisis and the Democratic politicians mentioned in the article are responsible for for the legislation that caused it.

    I’m sure that when I take the Republicans to task in coming weeks, I’ll get a lot of notes accusing me of being a "dirty Democrat."

    Wouldn’t it be cool if we could simply process the truth and come to logical conclusions that are uncolored by our party affiliation — and without feeling the need to attach a label to the bearer of the bad news?

    Y’know, we hate Congress (approval rating roughly HALF that of Bush’s)  because they are so partisan.  Maybe THEY’RE so partisan because WE are.  After all — who put them there in the first place?  Ever think of that?

    Nobody’s fault — just the way the human brain works, I guess.

    My concern is that we’ll never be able to extract ourselves from this morass as long as we’re locked in this adversarial mode of thinking.

    The truth no party affiliation.  But they have a funny way of raising blood pressure on both sides of the aisle.

    Cheers, y’all!

  78. Clayton Makepeace says:

    Correction:  That last paragraph should read, "The truth HAS no party affiliation.  But it has a funny way of raising blood pressure on both sides of the aisle.

    – sheesh.

  79. Lynn Nicho says:

    Ditto to the Echols comment for me.  Famous last words of my broker: " Just hang in there."

  80. You summarize the warnings I’ve been reading for years in the Agora financial newsletter. You make the whole story easy to understand for people who do not follow it from start. Something is missing (from my point of view): what are the "recession-proof products and services"? I’m sure that most readers would like to make the right choices. Thank you. 

  81. Cathy Sutter says:

    Clayton –
    This has got to be one of the most interesting topics ever posted on your site!  I am really looking forward to your take on the Republicans…

    As I told you last week, I think they all suck!

    To Maribel, you obviously are not very serious about your career because you refuse to invest in your education.  I am SO glad I bought the UDCC.  If I am not able to write decent copy…with this by my side…it is no one’s fault but my own.  ):


  82. karen says:

    Re:  Comment #80 – on June 23, 2008 – Issue 443 – Clayton addresses: Five Ways to Grow (very) Rich in Tough Economic Times
     - I recalled reading it and you might find some insight too -
    Hope this helps – here’s the link -


  83. Clayton: Thanks for the economics 101 lesson.  It confirms what serious observers of the lunatic asylum have been noticing for most of their lives. Comments by Christopher Tomasulo with his Mises.org link to valuable background info on this fiscal mess plus… the commentary by Clarke Echols are both substantive and informative.

  84. Roy Hotubb says:

    Thanks Clayton.  I’ve been closely following this since stuff since first turning on to Bill Bonner, Ron Paul, Libertarian and constitutional principles etc.. through my discovery of copywriting and AWAI.  I did not realize Carter was the genesis of the CRA.  That explains why housing prices started taking off in ’97 as the Clinton team juiced it.  And then went rampant with the malinvestment spurred by the Fed.

    A few things:

    1) Just like Clinton had nothing to do with the productivity boom of the 90′s, I believe Reagan is "miscredited" with the downfall of the Soviet Union.  It was internal rot caused by the inevitable failure of "central economic planning".  The Soviets didn’t publicly release precise military expenditures so there’s no reason to be certain about the cause or timing of their demise.  That’s just the coventional wisdom, IMO.

    2)  @ Marcel Arse – Clayton’s not "in politics", he’s "in marketing" ya doofus.

    3) My personal constitution would burn with hell-fire the Witch Judge Of Taliban County, TX who put me in jail for three days, on probation for 9 months, made me attend 6 weeks of victim impact classes, cost me about $2k in legal fees and fines, gave me 80 hours of community service and luckily just missed 6 months of drug /alcohol awareness class because my probation ran out before they scheduled me for it.  All this due for a dollars worth of reefer discovered after the cop drove by and then turned around to ask me what I was doing as I prepared to leave my friend’s rural driveway.  Uhhh…leaving it to go home was all.  But, alas, it wasn’t.

    God Bless America.  Vietnam was a great idea.

  85. Steve says:


    I am awestruck by the intelligence of the people posting here… in fact, it gives me a sense of faith in the possibility real change CAN happen (many of the folks I try to discuss these things with just stare back at me with a glazed over look, somewhat like my 21 year old son when I’m trying to teach him something… ;) .

    If people will (and are allowed to) wake up from our hypnotic state of "duh!" and take responsibility, unify, and quit sitting idly by the wayside… we can make a difference.

    #57: I believe the existing Constitution is a sound foundation… principles do not need to be changed. It’s when we start to prescribe chapter and verse that things get manipulated… just ask any lawyer!

    Speaking of lawyers… there is one big change to our Constitution that I think would be of benefit; A "Loser Pays" court system.

    Make frivolous lawsuits and court cramming crap disappear by holding anyone who wants to duke it out in court… loser pays liable.

    Also… streamline the court system to get criminals to trial earlier… and then, make prison… PRISON or ship them out of the country.

    Now… watch the slamming I get for the following… lol :) :

    Also… I suppose…
    America is English… if you want to live here, learn English. America has laws… if you want to live here, follow them.
    America is for Americans… if you want to live here, become one (we’ll gladly accept you).
    America is a SECULAR government… and allows/promotes personal rights – honor them and keep government out of them.
    As Constitutionally Established… keep church and state separate – forever. The Constitution protects the right of ALL faiths, but is not a mandate to PROMOTE the agenda of any one in particular.

    And… your new Constitution should establish this;
    As Americans we have the obligation and freedom to be responsible and accountable for our own well being and actions. Its time for a nation of personally responsible individuals to start being… uhm… personally responsible!

  86. Steve says:

    Oh… and remove, as Jefferson wished he had, the provision that allows government to borrow money. :)

  87. Steve says:

    Err.. and one more, one more thing: I feel for Roy… and think that any law enforcement left after we re-do the Constitution should be there to focus on real crime… not on sticking it to a person who is in possession of one of the most benign substances backing out of his friends driveway, minding his own business.

    Marijuana is an industry… for the legal system – more than the criminals.

    Ok… my face is covered now, start swingin’! :( :)

  88. Betty says:

    Great article… I encourage everyone to send this to everyone in your e-mail database. People need to know the truth!

  89. Amy says:

    Clayton your advise at the conclusion of your article is sound.   What precedes it is missing the mark, you are missing most of the story.  You are pointing the finger at completely the wrong people and even the wrong government.  The truth is the U.S. Government doesn’t control itself, it is controlled.  If you look and dig hard enough, you will see this.  It’s too easy to point at Washington and NOT see who is pulling the strings.   Dig.

    This started well before Carter.  Examine FDR’s term and the repercussions of the plans put into effect then, examine the later  Constitutional ammendments, examine the creation of the Federal Reserve.   (Dig to uncover WHO was behind the creation of the Federal Reserve and the "Great Depression")   And it was going on well before FDR.   Examine what was REALLY going on during Lincoln’s term and what preceded his assassination.  Not what you have been told as a matter of history – but the truth.

    The US Government is not making these decisions now (and did  not make them in the past), they are and were manipulated into making them because the WHOLE financial security of the US economy is being manipulated by "forces" outside of this country.  (Sure there are links within the country, there has to be for things to happen as a matter of ‘government’)   This has been going on for centuries.  It is the reason behind the Revolutionary – not Tea tax!! Money control.

    The White House and Capitol Hill are manipulated and controlled.  They have no power, really.  Those who control the MONEY have the power.  Those who control the MONEY supply, the printing of money and those who manipulate the U.S. Debt have the power.  

    And "those with the power" are not within the borders of the United States.  

    The war in Iraq, the mess during the first Bush’s administration – manipulated.  Iraq and Iran are non-OPEC nations.  The lions share of the U.S. Debt is held by the  Arab Oil nations.  OPEC.   Why do you think we can’t reduce our dependence on Arab oil?  Why can’t we drill  in Alaska which has the world’s 3rd largest crude oil reserve?  What was really going on with the Iran-Iraq war during the Bush Sr.’s term and why did the U.S. manipulate that war into being?   And why did the U.S. fuel it by giving financial and military support to BOTH sides?   Who was profiting? The U.S. certainly did  not to "look good" … the U.S.  looked anything but.   What ties did Prescott Bush have?  To whom?

    When a country is desperate enough, low enough on it’s knees, on the brink of total financial ruin, it’s currency on the edge of becoming totally  worthless – that country will accept anything/any proposal to save itself … even the demise of it’s own borders and sovereignty.   But it has to desperate enough.  The Constitution of the United States will be merely a piece of paper with the planned formation of of North American Union.   And when the U.S. and all her people are desperate enough the North American Union will look like a godsend.  Who needs sovereignty?  Who needs the Constitution – the doctrine that protects and grants us all our rights and freedoms?

    I would ask that before you conclude that the current  and former inhabitants of the White House and Capital Hill came up with these "brilliant ideas" which resulted in the "fine mess" we see today… you REALLY look into who and what is and was controlling Washington.

    The White House and the occupants of Capital Hill are not that smart.    If the U.S. as a nation is anything – it’s naive and starry eyed.  A recipe for easy manipulation. 

    It’s TOO EASY to assume that all this came from the former and current inhabitants of the White House and Capital Hill. 

    Too easy. 

    So I invite everyone so ready to point fingers at our Government (regardless of party)  really do some digging and Googling.  You might just stumnble upon the truth.

    P.S. … Ultimately it really doesn’t matter who is in the White House.  They only follow orders.  Cleverly disguised as "help" or salvation.  

    Enjoy the search!



  90. I sometimes wonder if it would be best if your government makes all that bailout-money available to QUALIFIED borrowers at fair rates: Small and medium sized proven businesses wanting and being able to expand but not getting credit at the banks. That is where the source of the real money is. And the bailout money would not be wasted – it is not enough anyway no matter how high….
    It’s not possible to buy a solution off the rack just by being willing to pay a lot of money for it.
    Markus Trauernicht from Germany
    PS: Having a credit card over here in Germany means paying the full amount outstanding at the end of each month. Some legislation of that kind would make sense too. ;) PPS: My wife and me wanted to open a debit account with Citibank here in Berlin by paying in 4000 Deutsche Mark (about 1500 Dollar) nine years ago. Not possible without showing regular proof of income. Things must have changed….

  91. John Ritz says:


    Like the world-class copywriter you are, you definitely have a way with taking a complex situation and boiling it down for us common folk! ;)

    Personally I would’ve went after the govt even harder, hehe. Unfortunately when the only choice for dinner is a liver and Lima bean casserole, you have little choice but to take it.

    Hard to believe that with 300+ million people in this country, the best we have is Obama and McCain. (OR ____ and _____, fill that in for practically any election).

    Originally I thought Hillary was going to be the nominee, with Jeb Bush on her heels. Then we could’ve had Bush-Clinton-Bush-Clinton-Bush as presidents!

    But the grass always looks greener on one side of the political fence–until you catch that whiff of manure that’s responsible for the greenness. Then you realize both sides really stink.

    As long as the people as a whole have little interest in government and let these goons run the show, govt is only going to continue to run out of control.

    Something will happen at some point (maybe this crisis is that time) where the people will finally say "enough!" But it has to affect them in a deep and profound way for that to occur.

    Nice article!


  92. James says:

    Hi Clayton

    What I’m  seeing a lot of right now is people trying to place the blame. I think  coming up with a solution to this crises is the most 
    Important thing we face. The thing that worries me the most is there is no easy fix and if we believe the doom and gloom that our 
    government says is soon to follow time is not on our side. Bottom
    line the American people have been delt a hard blow and the future of this country depends on the way this crises is handled by our so called government. It’s almost like the bomb squade coming in and if they don’t  cut the right wire well you know Ka Boom.
    One thing I do agree with you on is the government needs to be put on a shorter leash and has to be more accountable to the American people. 

    "Men who hold high places must be the one’s to start to mold a new realty closer to the heart."

    As always


  93. Jonathan says:


    US Moms who lost their children as ‘soldiers’ in Iraq will not want to hear this, but the US military is used purely a department of the Illuminati BUSINESS machine.

    Sadly, there is no glory. It is the well intentioned patriotism of 300 million people I admire from afar that allows this damnable Illuminati to stay in position.

    I hope that open letters like the one you have just written may cause cracks to appear in their safe haven.



  94. Jonathan says:

    Clayton …

    The following list might help a few folks with their money in certain places:

    Keep an eagle eye on these:

    Citibank NA
    Wachovia Bk
    E*Trade Bk
    Sovereign Bk
    National City Bk
    Huntington NB
    First Tennessee Bk NA


  95. Steve says:


    Want a good laugh (English Humor) about the mortgage markets?

    A little lighter side that I think you, in particular, will appreciate in light of the CFR you understand so well…


    Also… this will clearly explain the current fiasco to even the most layperson… :)

    Too funny…

  96. John Michael says:

    As AJ pointed out, the financial issues facing us today go far beyond the Carter Administration, and in fact has nothing to do with partisan politics whatsoever.  If you were to look at it strictly from a partisan perspective however, Bush has done more to bankrupt this country than any other president in history.  He has  been responsible for an increase in the national debt from an already astronomical 5.6 TRILLION dollars when he took office to over $11.3 trillion with the $700 billion bailout factored in.

    But as I said, the real issue has nothing to do with partisan politics.  It is the responsibility of the people who are pulling the financial strings and who control policy making.  Those people are the folks behind the World Bank and the Federal Reserve.  

    In the big picture it actually goes back hundreds of years, but for this discussion our current fiscal crisis began during a private meeting on Jeckyl Island in the early 1900′s when several powerful men gathered, and with Congressional backers set forth a plan to allow THEM to print money and take the control of printing it out of the hands of the government.  From this meeting Congress eventually passed a bill allowing what is now known as the Federal Reserve to print money, and our current monetary system was born.  

    This was unconstitutional, as the Constitution clearly states that the printing of money is to not only be controlled by Congress, but that "No State shall … make any thing but gold and silver coin a tender in payment of debts; …" .   The founding fathers had already seen fiat currencies in action, and were trying to prevent what is now happening from happening again.

    It’s interesting to note here that GW is on video saying that "The Constitution is nothing but a G–D— piece of paper!" (I’ve seen it personally).  The fact that he has done this and has not been convicted of treason speaks loudly to how irrevant he is regarding this issue and deeply the river runs.

    But back to money.  Because we were taken off the gold standard, we now have what is called a Fiat currency.. one which has no backing by anything of value.  Also, money can be printed at will, and with each dollar put into circulation the dollar loses value, and prices go higher.

    This is why printing up an additional $700 billion won’t help in the long run.  It only adds to the national debt, increasing the amount of payback that American taxpayers will be expected to shoulder, and will devalue the dollar even further.

    The answer?  Give the power to print money back to Congress, shut down the Fed, and go back on the Gold Standard or some other form of valuation to support our currency.

    But it’s unlikely that this will happen.  I believe the best thing we can do at this point is to take whatever money you might have in savings and invest in gold and silver coins and bullion, because they will always have value.   The dollar IS going to crash, it’s just a matter of when.  It happened in Russia at one point and after all was said and done it took something like 10,000 rubles to purchase one loaf of bread, when before that a person could retire comfortably on 50,000.  That’s a rather poignant example of what can happen when a fiat currency looses it’s value.

    In addition I think it’s important to note that not only is the current monetary system unconstitutional, it’s also illegal and fraudulent for several reasons.  For example, whenever a credit card or "loan" is issued, the amount of the card or alleged loan is entered into a computer as a CREDIT to the person receiving the card or loan.   Take special note to the fact that I said it was entered into the computer as a credit to the person receiving it and not a DEBIT. 

    This means that the money is ours from the start, but this is never disclosed to us.  Not only that, but we are expected to pay back monies that were given to us as a credit in the first place.  Sounds crazy I know, but it’s true.

    For that reason (among several others), the so called "lending institutions" are committing fraud.  Banks don’t actually make loans because it’s ILLEGAL for them to do so.. they are prohibited from lending their assets. 

    The bottom line here is that the Fed and the World Bank are corrupt institutions, and ultimately it is THEY who are responsible for this mess we’re in.  They control the policies of our government, and they inevitably control us by keeping us poor and indebted. 

    If you’d like more information on the monetary system and the things I’ve presented here you can watch the movie "The Money Masters" online for free.  It’s available on YouTube, or you can purchase it at their website.  Another good one is a short (45min)  movie created in a cartoon format called "Money As Debt" which is also available on YouTube.
    The best,

  97. Alan Stone says:

    Politicians say they’re beefing up our economy.  Most don’t know beef from pork.  ~Harold Lowman

  98. Judy Jones says:

    Wow, thanks for a very insightful aritcle. I had no idea this problem started over 25 years ago. It’s sad that most americans are so complacent when it comes to the truth.  We should be protesting in the streets across this great nation.  And like John Mc Cain calling for those responsible to be held accountable. He was nice by suggesting they be fired. I would perfer a tar and feathering.

  99. Deb Wright says:

    Thanks for a very interesting read and some sound advice.
    I’m amazed that so many comments are either argumentative “No, you’re wrong! This is what really caused it!” or whining that “Clayton’s a Republic/Bush lover/ Dem hater/ prejudiced troublemaker.”
    Just listen to the man’s advice and thank him. He’s doing you a favor! Yes, heads should roll. But you know what? I’m far more concerned about protecting my own financial future–and that’s what the Big Dog is trying to do for all of his readers.
    Oh–and FYI–anyone who’s been paying attention to what Clayton has said in the past knows his distaste for politicians has no bounds.

  100. mark says:

    All the top copywriters agree that MY approach to writing copy produces the best response anyone  has ever used.

    A funny thing happened to  my thoughts while watching the presidential debate the other night.

    Even though he has no experience, Obama seemed to know what he was talking about.

    I can sometimes  easily be led astray.

    I run a lot and recently had a pain in my groin area.  I logged onto a medical website to try and diagnose my problem.

    By the time I was done with my search (about 2 hours later) I determined I had about every ailment described.  Some since birth. 

    Except tennis elbow…

    But as the debate went on I realized Obama had a political swipe file.

    Obama swipes the political ideas of others, than when quizzed about it states:  So and so and so and so and so and so agrees that the  solution I  have put forward  is the best remedy for the problem.


    What the true response should be is:  I agree with so and so.

    But wait, that doesn’t sound like a leader who changes things.

    I’ve never written a sales piece that garnered 100% response.  I’ve never wrote a copy that earned a trillion dollars in revenue.

    But my opening statement is still true.

    I follow all the top copywriters suggestions.

    Thanks Clayton, you’re one of the best.

  101. mark says:

    Tuesday as usual I had another get together with my mom.

    She wanted to go to the antique store in clyde.

    A short drive from my house.

    It was an antique store in an old railroad station along an abondonded rail.

    A little bell rang when we walked in and immediately the smell of old hit my nostrils.

    Old chairs, desks, books, toys, gas pump, knick knacks, dolls, hardwood floors, old pictures… 

    Suddenly like a jolt I realized:  This was the stuff the copywriters of old had  spent countless hours writing sales ads to sell.

    Modern day copywriters study their ads.

    What will the next generation of copywriters study. 

    Will there be an antique store with a table with ebooks spread on it about weight loss, how to make a million with lists, how to increase your google placing?

    Will you be remembered as a copywriter that broke new ground?

    Study the past but create the future.


  102. Cathy Sutter says:

    Mark:  You are soooo right.  Obama’s answers are all rehearsed.  That’s why he sounds so eloquent.  He could have been a movie star since he memorizes scripts so well.  What’s he gonna do without that script?  Your reference to a "political swipe file" was right on.  :)

    Steve:  The reason English is not the official language is because of the blasted senators who voted it down.  If memory serves me right…and that’s a big IF…I believe those who voted it down were, to name a few, Obama, Clinton, Biden, and McCain.  Duh…This was in 2007.  Sorry, need to check that to be sure but isn’t that enough to piss everyone off?

    And I also agree that marijuana is an industry, for the legal system.  Nevada votes have twice voted against the legalization of marijuana.  That’s because they are clueless and really believe it is a "gateway drug."  Probably the liquor industry lobbyists have some involvement in this, doncha think?

    Amy:  You are soooo right:  It really doesn’t matter who is in the White House.  They only follow orders.  The president on down are only puppets.

    Steve:  One more thing…I know the feeling when you are trying to talk to someone about this…I get the same blank stares.  That’s cause the government does an excellent job of diverting the citizens’ attention with video games, celebrity gossip, and sports, as stated in "A Nation of Sheep."  Heck, my own family members think I’m crazy when I start talking about this stuff. 

    Sorry, I don’t know who stated that we should be protesting in the streets, but I fully agree.  So do Europeans, who I talked with frequently when I drove a cab in my last lifetime.  Oh, they’d find a way to arrest us, as they did around six or more months ago when they arrested people for reading the Constitution out loud!

    "A government afraid of its citizens is a Democracy. Citizens afraid of government is tyranny!" – Thomas Jefferson ––Cathy

  103. A video to share:


    Best to you all –

    Mark Hendricks

  104. Hey Mark, that video is awesome!

    What are you guys smoking over there?

    Look at it, who and what are you voting for. You guys must have had it to death anyway, just get rid of the whole bloody lot.

    But following the flow of comments, I am so pleased that you actually might be waking up and wresting back control.

    Haven’t we all been asleep at the wheel and complacent about what all our politicians have been up to. We have been led a merry dance & ‘sold the party line’

    Born & bred in the UK but with a lot of dealings in the US, we got used to tolerating politicians, because ‘someone had to do it’. The trouble is the quality has become poorer and poorer as we all got on with our jobs – what a mistake!

    But I take heart. I like the sentiment & there appears to be a sea change going on. People everywhere are starting to wake up & now starting to rise up against politics & politicians in general.

    ‘Man on the street’ is starting to vent his anger & this will grow as the full realization and severity of the current financial catatrophe hits.

    Clayton as you say, forget the politics or political parties, they are all inept. Having got you into this mess, they aren’t going to get you out of it.

    Also forget the history for now, there will be plenty of time for that later. It will not help you resolve this mess. And remember, all those guys will be going back to explain how fantastic the bailout package is & how necessary etc etc – just remember, they like everyone else, are fighting to save their jobs and these guys are masters at it!

    So yes, a new order is being created. Yes, there is a massive balance of power shift playing out.

    I think one of your readers commented that the US was a military power on the wain. No, the US was formerly a military power, which became an economic power, which is now in decline. One way of trying to maintain this economic might is through military aggresssion.

    This has played out through history. Look at the UK. As Great Britain (some tiny island) became a miltary force to be reckoned with and built an empire. Through the Induistrial Revolution became an economic force, then to slip away as the US took over. The Roman Empire is probbaly the best case.

    Oh, while on the very canned history lessons. Did you know that Kondratiev was executed by the state for his discovery of economic cycles. They considered him dangerous & that his discoveries should not be publicised.

    So be careful about what solutions you put forward to the problem.

    Bottom line & as I think Clayton has made very clear, get the hell out of the markets. Don’t believe what everyone is telling you about the problem being over, ‘buying dips’ or riding this out.
    Please just look at their motivation for saying this.

    Yes, throw them in that category with the politicians – they just want to keep their jobs, even if it means stealing your money.

    Go for safety first. If you can’t liqidate your portfolio quickly, then atleast hedge it (a very poor substitute but better than complacency). Better to over hedge.

    If buying ETFs, like gold ETFs, beware who issued these instruments. Outfits like AIG and other potentially unsafe organisations are the originators of many of these intruments.

    Much as ETFs & ETCs are great, just be cautious.

    Liquidity and security at this point are your greatest concern, there will be terrific opportunities when you can ascertain what is the likely outcome of all this. If you are trading, then that is completely different and I will reserve my comments on that.

    So when you hear all the ‘nice words’ remember the salient facts. Banks are continuing to go out of business. This contagion is spreading extremely rapidly now and it will be difficult to predict exactly where it strikes next.

    Interbank money market rates continue to soar and most banks will not even do business with each other, let alone credit worthy businesses and consumers.

    The impact of this is being felt across the board.

    To you all,

    PS Sorry if this is a bit woolly, late at night here in the UK. Might try and put something a bit more cogent together that would help.

  105. Clayton Makepeace says:


    Trying to extinguish the fire without addressing the blazing gas pipe that caused it is idiotic.

    Claims by Bush, Congress, Obama and McCain that they are trying to stop this crisis will have no credibility until they repeal the Community Reinvestment Act.

    – Clayton

  106. Clayton Makepeace says:

    Let’s not just sit here and shake our heads while this bill gets rammed through Congress without addressing the root cause of this crisis!

    Write your Senators and congressperson and demand that any bail-out bill include a repeal of the Community Reinvestment Act.

    You can find contact information here:  http://www.visi.com/juan/congress/

    Sample text:

    Please do NOT approve any bail-out bill that doesn’t include a repeal of the law that caused this crisis:  The Community Reinvestment Act of 1977.

    Addressing the symptoms of this crisis but not the cause would be crazy.

  107. Wanda says:

    I appreciate your expertise on copy writing, however I must question your foray into utilizing your website for a political agenda and bipartisan political commentary.  I understand the value of a captive audience but I doubt that I’m alone in my opinion that when I visit the site I do so for copy writing  purposes and not to be presented with politics.

    And, since this is still a free country in which people can post whatever they want on a website, and people can still make choices, I choose to unsubscribe.  Thank you.

  108. Michael says:

    Like many have already said before … A great article, and partisan through and through… :D

    You just forgot one important part of any sales letter, Clayton: The PS! Something unbiased like ‘PS – Oh, and vote McCain!’ would have done it! ;)

    As an international observer (from the UK), the credit crunch is a great example of greed wrapped up in fake altruism. "Everyone deserves credit, just so long as we can get rich in the mean time". The cruel and harsh truth of course is that the fat cats still get to enjoy their cream while the rest of us get thrown to the dogs…

    As for the Bush administration – they were no better… 1) they could have tried to do something REAL about it, and 2) this may not have been their direct fault, but what’s it matter as they just chose to profit in a different way… oil, weapons and war.

    McCain is the same old thing… whereas (speaking as an outside observer) Obama seems different. Could it be all soundbite and spin? …perhaps. But, with Russia once again rattling the saber, at least the rest of us non-Americans will feel a lot safer knowing Obama’s finger is on the ‘red button’ rather than Senator ‘Angry’ McCain.

  109. Read the proposed bill here, and look closely at pages 21-22:


    Amazing what the Democrats want to put 20% of it to, look up that bill and the Capital Magnet Fund in Google.

    19 ¿
    20 ø(1) DEPOSITS.—Not less than 20 percent of
    21 any profit realized on the sale of each troubled asset
    22 purchased under this Act shall be deposited as pro23
    vided in paragraph (2).¿
    24 ø(2) USE OF DEPOSITS.—Of the amount re25
    ferred to in paragraph (1)—¿
    O:\AYO\AYO08B94.xml [Discussion Draft]
    1 ø(A) 65 percent shall be deposited into the
    2 Housing Trust Fund established under section
    3 1338 of the Federal Housing Enterprises Regu4
    latory Reform Act of 1992 (12 U.S.C. 4568);
    5 and¿
    6 ø(B) 35 percent shall be deposited into the
    7 Capital Magnet Fund established under section
    8 1339 of that Act (12 U.S.C. 4569).¿
    9 ø(3) TRANSFER TO TREASURY.—Revenues of,
    10 and proceeds from the sale of troubled assets pur11
    chased under this Act, øor from¿ the sale, exercise,
    12 or surrender of warrants or senior debt acquired
    13 under section ø113¿ shall be paid into the general
    14 fund of the Treasury for reduction of the public
    15 debt.¿

  110. Update on post 109 –

    The newest emailed to me by my House Rep’s office shows that the pp 21-22 items mentioned above had been deleted. Contact your Congress Reps office to get the most recent updates emailed to you.

    Mark Hendricks

  111. John Gilger says:

    I’m tired of waiting for the revolution against these dolts.

    Any suggestions for a reasonably peaceful, free, and prosperous place to emigrate to? Must have good communications — high speed Internet access.


  112. Marvin says:

    Clayton, you certainly have laid out your argument with the polish and precision.  There’s little left to argue with the points you make. Who could take exception with your assertion that Government is indeed corrupt and I might argue that’s also true if you’re red or blue.  There  are some of us who think that the time has come for a revolution in thinking about how government should work, for the people and by he people.  It may be that this recent financial crisis and the long term damage it will do will stimulate debate on this very point.   Perhaps neither democrats or republicans can be trusted to hold the reigns of power or the purse strings of the nation.  Perhaps real change can only come from the grass roots, from those whose might be classified as collateral damage in the political wars.  

  113. Dave Alston says:


    Someone who says what he really thinks – like it or not.

    Clayton for Pres I reckon, and that’s from a Brit.

    All the best,

    Dave Alston

  114. Lara says:

    Agreed! Clayton for Pres.

    Clayton I agree with your article and your comments. I think I’m joining the Lib party. ;)

    Thank you for the illuminating information. I was just a babe during the 70s crisis so this is my first experience with true economic meltdown. It’s a bit scary I must admit. My bank was WaMu and my current IRA-holder is Wachovia. It was just announced today that Citigroup will probably be buying Wachovia thanks to their poor lending habits.

    Despite my fear I am encouraged by the discussion on this board and similar in other online communities (along with real life communities and homes). Thank you for opening the door and giving us the space to vent.

    And BTW, I am a registered Dem but I didn’t interpret your article as being bias. I’ve read enough of your writing to know you hit both sides hard. :)

  115. Hi Clayton

    Its 4:30am here and I have just read your article and responses from readers! It is indeed an eye opener.

    I don’t live in USA, Australia is where I come from.

    There is no easy way to patch up mistakes of prior governments. I am basically illiterate when it comes to USA politics. I remember back in 2003 when word was leaking around of the possible credit crisis.

    Discrimination can be a catch phrase and what was meant to be a good thing, has gone very wrong.

    Here, in Aus, we have rigid laws for financial institutions when borrowing money for a home or other reasons. Low income families can get a home, however, that is hard as prices in areas throughout Aus are beyond most Australian families reach.

    I learnt a lesson in 1995. I was 25, young, successful, good career, home etc and living above my means. I was relying on existing contracts $250,000 to keep the business afloat. When all is said and done, business partner, bad decision, I lost everything. Had to hand the existing contracts over to colleagues and went bankrupt for a very small sum. It was a time I remember and a valuable lesson. Don’t live so much on credit or you may get into trouble!

    Many people are struggling to stay ahead and just pay there mortgage. This year alone there has been two increases in interest rates. Reality, people are losing their homes for sometimes $25 per week. You cannot get blood from stone!

    I dont envy the USA and the predicament that is affecting everyone. The effects of the financial blowout will be felt on a global scale.

    I think find a workable solution and see what can be done to stop a financial catastrophe from happening.

    Sue in Aus

  116. don fowler says:

    The REAL problem is GREED.  How did these clowns on Wall Street get million dollar paychecks?
    Give a mortgage to anyone as long as we get a commission.  We don’t care if it’s paid back or not.  We’ll sell it to someome

  117. Steve says:


    With regard to #105 and #106 above; your correct that the CRA was a cause, but that it was THE cause I think may be a bigger question.

    Does the Act need to be repealed? Abso-freakin’ lutely (a Southern term)!

    Should it be repealed as a part of ANY plan? No doubt about it.

    Is it going to fix anything or stop this problem from ever happening again? Not even close.

    The problem, as well presented in the comments above by many of your astute readers… is not one bill, but an entire system controlled by International Bankers who hold the purse strings of the world and who expand or contract the money supply at will to suit their own ends.

    Could real estate markets really have thrown the US, and indeed the World into this kind of financial crisis alone? Not even close… in fact, statistically I’ve read that only about 2% of ALL U.S. real estate paper is sub-prime…

    In other words, the majority of bank notes are secured by good, grade A paper.

    The ONLY way a small element of the larger whole could possibly have been blamed for an entire meltdown of histories greatest economic power… is if it’s being spun as the root cause and if other real elements are hiding in the background.

    Your case is well presented and your arguments are sound… your call to action is appropriate, however…

    It’s like painting the scratches on the side of the Titanic while the ship is sinking… because the significance of repealing this bill, on the whole problem, will be so nominal in light of the sinking ship, that it really pales in contrast to the conversation that you opened up here (thank you, by the way… it’s about time someone opened this up for the larger community to see).

    As for "Wanda" or others who feel this is not a copywriting issue… or that this is politics and not business…

    I think you miss the entire point.

    A. When was the last time a piece of copywriting anywhere made you feel so compelled to comment on it like this one has? Like it or not… good or bad… this page and post has gotten momentum and if there was ever an example of how "The power of the pen is far greater than the power of the sword" – I think that this one is an exemplary model.

    Whether it’s about politics or pig pickin’s… the words have definately got the attention of your audience Clayton… thank you for the great copywriting role model you are.

    B. If you feel that this particular political issue has nothing to do with your businesses and that politics belongs the to politicians to discuss. Move. This is the US baby… and it’s about time some of us complacent sheeple get off of our collective arses and say something, do something, take action.

    Oh… and seeing that you don’t feel this is an appropriate business topic… or copywriting topic… I feel you should not take any of Clayton, or anyone elses here, advice on what to do to prepare for the coming storm… you don’t deserve it.

    Go ahead… stand outside of the ark if you like, but as for me and my family… we are heading to the on ramp.

    If you feel that the end result of this or ignoring this issue will be "business as usual" and that it’s more important to discuss your Mothers family cookie recipe… and how to sell it. As a copywriter you’ve missed the mark altogether.

    Look deeper… think clearer… separate yourself from the emotional response that Clayton post, the comments, and your own brain have stirred up (using sound copywriting tactics you should be looking for, btw) and stand back to benefit yourself in more ways than one.

    Thats my take… again. :)

  118. Clayton great post as always and thanks for stirring it up a bit. I can’t wait for the bailout to get done.

    I was talking to my brother from Ohio about your post. He said in the peanut years do you remember out interest in our floor plan was 23%.

    By the way we were in the manufactured home business back then and when manufactures and banks were dropping like flies to the RTC back then we were buying completed mobile homes for 10 cents on the dollar.

    They were flying us around the country buying up all the bankrupt dealers that were sending in boxes of keys to there homes. We made a fortune back then.

    We shipped all the new homes to Canada where we had a dealer up there selling them as fast as we could get them to him. He did well!

    So we have no love for the greedy banks and we look forward to buying real houses here in Florida for 30 cents on the dollar.

    I love the American dream.

    Thanks Clayton!

  119. Gary Long says:

    Hi Clayton!

    As usual you are showing your right-wing, republican bias.

    I am embarrassed for anyone who would write this nonsense. This looks like it was written by someone who doesn’t understand the issues.

    Is your middle name Palin by any chance?

  120. Clayton Makepeace says:

    Hey Gary — give me one fact in this article that’s inaccurate.  If you can’t, consider the fact that it might be your left-wing Democrat bias that’s keeping you from seeing the truth.

  121. Bart says:

    What would you rather have 50 more years of a slow drift into socialism and mediocrity as both the Democrats and Republicans continue their drift left?

    Or a massive shock to the American system that will finally cause people to say enough is enough and vote for something else?

    I have been a libertarian for years and have constantly told my family and friends,

    "Things are going to get a whole lot worse before they get better."

    Looks like that may be upon us.

    The amazing thing is this:  With the technology and worldwide communication available today, a switch back to the libertarian ideals this country was founded on would see almost immediate results.  The change would happen lightning fast.

    For my kids sake, I would just assume take the shock to the system now.   By the time my kids graduate high school, we could be a free market, land of opportunity superpower again.

  122. Clayton Makepeace says:

    Hey, you know what, Bart?  A LOT of Americans agree with you.  CNBC just reported that a Democratic Congressman who voted against the bill says his mail was running 100-to-one AGAINST the bail-out.  Other polls I’ve seen say Americans are against in 22 to one.

    Seems like most people feel that it would be better to have a recession than to blow $1 trillion rewarding Wall Street for making stupid decisions.

  123. Clayton Makepeace says:

    BTW:  For anyone who still thinks I’m a Republican or that I’m stumping for McCain, check this out:  My only political contribution in years …


  124. Folks, you are seeing that massive shock to the system now..!

    The politicians have baulked and decided that they cannot take this massive bailout back to their States and voters and just explain it away.

    I am staggered that this has actually happened but as a commentator and participant in the financial markets, did raise the question of the bailout failing a few days ago in my blog.

    I hope you all have your steel undergarments on & hard hats!
    The reaction will be extremely severe and sharp on everyone and will cause massive fallout but this will not be death by a ‘thousand cuts’, which the bailout would have meant.

    As Clayton and so many other people have been commenting on – the time & need for change – looks as though it may actually be happening.

    I also hope those people reading Clayton’s words or the comments I added, have taken the appropriate action to protect their investments & life savings.

    Markets will become unhinged now, which makes them a very dangerous place.

    Forget the politics and protect your wealth and even prosper.

    Good luck,


  125. Irrational Exuberance? Or Neurotic Paranoia?  Take your pick.  We have both in spades.  Adam Smith got it right in Wealth of Nations.  When government no longer operates as an invisible hand but as a 900 pound gorilla stealing our lunch money, we are overdue for corrective action and that’s exactly what we are getting much to everyone’s dismay.
    We will survive and prosper as long as clear headed thinking becomes a chorus of voices withstanding the temptations for a quick fix.
    God Bless You, Clayton.  God Save our beloved Nation.
    Bill Whetstone

  126. Allen says:

    New Constitution?
    Clayton, now you are talking fantasy. None of us will be alive after the dictatorship that takes over after the revolution in the USA that is coming. It will take decades perhaps centuries until this country IF it continues to exist to once again become what it was supposed to be as outlined by the Articles of Confederation and later the Constitution.

    As bad as some people criticize China, a mess like this would never happen there. The corrupt thieving politicians who are only interested in power for themselves and fattening themselves up like pigs at a trough, would get the fate of pigs… they would be killed. (But not eaten).

    We the people need to learn from that, or be reminded of that.

    We had the most perfect form of government there was. For those who don’t believe it, read the Constitution. Read the Articles of Confederation. It will make you long for those days. That freedom.

    The only major changes should be a strict enforcement of the press. The mainstream media (ABC, CBS, NBC, MSNBC, CNN, New York Time, Atlanta Journal Constitution, Chicago Tribune, Los Angeles Times, Washington (Post?) etc.,) have become nothing but propaganda mouthpieces for the socialist wing of the democrat party. As a student of propaganda they constantly practice one of the most basic propaganda devices as defined by the Institute for Propaganda Analysis — Card Stacking — which is defined as "involves the selection and use of facts of falsehoods, illustrations or distractions, and logical or illogical statements in order to give the best or worst possible case for an idea, program, person or product." To that I would only add "agenda"  after product.

    I think Card Stacking defines the modern mainstream media, as well as the political bloggers of both the Right and Left.

    Me, I’m also a Libertarian in belief and for the first time will vote my conscious though I am not entirely thrilled by Bob Barr (Libertarian candidate for president). He is far, far, better than either wing of the demopublican party… or as I like to call them demorat and republicant. A pox on both their houses.

    Go back to the original Constitution and bring some modern sensibilities to it.
    Men, women, any race any religion have the right and duty to vote… in fact mandate it. And keep the electoral college so big states like New York and California do not have sole control over the people.
    Go back to the State Governors deciding on the Senators in the US Senate.
    Get the government out of schools. Let the parents become responsible for educating their children. It’s not the job of the government local or federal.
    Go back to only those who own property can vote.
    Get rid of the Fed.
    Go back to the gold standard.
    Stop being the world’s policeman, and giving our money to countries all over the world who end up hating us anyway.
    Use the military to protect and defend the USA and it’s citizens wherever they may be… but don’t start foreign excursions… live peacefully,but be prepared to defend ourselves… and use common sense — NOT political correctness in our actions.

    These wishes will never come about

    Great Post Clayton. And I especially love how you took your "lack of education" that some people would see as a weakness, and turned it on it’s head dripping with credibility for you. It’s a lesson we all can learn.


  127. Chick J says:

    When it comes to ranting and tell like it is.  You have no equal.  This is why I love reading your articles.  Keep it up!

    A long time reader.

    Chick J.

  128. JD says:

    I was a kid when Carter was Prez., caused interest rates to skyrocket over night. My dad’s biz was affected he could not make the payments due to the double-digit interest rate jump and the restaurant folded. Now nearly 3 decades later because of peanut policies to make it "fair" for people to purchase homes the economy is crumbling. Hey get over it, life ain’t fair. It is only fair for those who pull themselves up and make a name/biz for themselves. There is plenty of opportunity.Big Businesses needs to stand up and tell the G’vment to stay out! Oh-oh! Now I’ve been tagged as a conspirator (or should I say patriot.)

  129. Dave says:


    An extremely cogent, potent, and thoughtful essay. The carefully chosen photographs are wonderful icing on the cake:

    Jimmy Carter looks like "Opie" from the Andy Griffith show after 40 hard years of excess in drink, drugs, and chasing good-time  women.

    Bill Clinton was caught some years ago practicing his Elvis smirk in the mirror of his single-wide.

    Barney Frank is angry that the Concorde has been discontinued: he wanted to have a look at George Michael’s favorite Hampstead convenience station and still be back in time for the big vote.

    Chris Dodd is shown auditioning for the title role in the live-action version of "Foghorn Leghorn.

    Barack Obama, smoking a cig, look exactly like a guy who attempted to mug my aunt last year–thank God for carry laws!!

  130. Gw says:

    Me and Dick were here sittin’ round and we’re hopin’ you swallow this whole load of shit this website has to offer so’s we can live happily ever after at your expense.  Thanks suckers…er, true Americans.

    GW & Dick

  131. Frank O'Leary says:

    re: Comment #52, by Clayton, Sept. 27 at 4:19 am (See?! Clayton really DOES get up really early!)

    Clayton wrote :
    " Isn’t it interesting how the Democrats who say they "read" this post never saw the fact that I DID mention Bush’s role in this crisis?

    Isn’t it interesting that the minute they realized that I was criticizing Democrats, they assume I’m a Republican?

    And isn’t it interesting that the Democrats who read this article don’t seem to care about the facts – only about rushing to their party’s defense?

    Isn’t human nature fascinating?"

    Yes, Clayton … fascinating, and infuriating! But that’s what makes the game so interesting, isn’t it?

    Despite your essay being written by a master copywriter (you!), a surprising proportion of commenters missed your message. Or rather reacted to subsidiary points, rather than the central issue. That suggests reason, logic and evidence – proofs – are secondary factors in copywriting. Readers believe what they WANT to believe, and SEE what they want to see … even if it isn’t there.

    If we miss the ‘dominant resident emotion’ – the subtler, deeper benefits – we’ve missed it all. From the first few words we put on paper, readers start ‘filtering’ what we’re saying through the prism of their own experiences.

    Dealing with that ‘filtering’ process is manageable for copywriters … if we’re peddling a service/product likely to be of interest to a qualified list.

    Take on issues like religion or politics (or economics) and people have such life-long vested interests to defend that changing their minds is nigh impossible. (Forget about ‘changing their minds’ … getting them to recognize the central issue, rather than the side-arguments, is a monumental challenge.)

    Interesting to see that some folks who are your regular readers are WAY out-of-sync with you on this one. Curious that one such was so incensed as to unsubscribe. Isn’t that called ‘cutting off your nose to spite your face’? As you said, human nature is fascinating!

    What does THAT tell us about how vested people are in defending / justifying their existing dominant resident emotion / world-view? Progress and growth can’t be achieved without change, which can be uncomfortable, but some folks are too glued to their comfort-zones to be able to change. Changing one’s mind – admitting that one has been wrong about some long-held conviction – can be near-impossible for the average person. And appealing to their material survival – their economic situation – can often be futile; there was no material benefit for the Christian martyrs in the Roman forum for holding fast to their convictions, yet they did hold fast, at the cost of their lives. I admire them, agree with their convictions, hope I could emulate them … but that’s not the point. The point is : how would anyone have persuaded them to do otherwise?

    As you said, friend Clayton … telling the whole story would require 1,400 pages, not 13 !

    As to your remark about the Democrat readers being more concerned to rush to their party’s defense … just proves what I’ve always believed: liberalism is not a political philosophy, it’s a species of mental illness. Rushing to the defense of those who steal from you, all the while calling it ‘moral,’ and who would throw you overboard in a heartbeat, can only be called insane.

  132. Alan Stone says:

    re. post #116

    >The REAL problem is GREED.  How did these clowns on Wall
    >Street get million dollar paychecks?

    Although I’m not American, neither live in the U.S., the PRIMARY, REAL problem and question seems to me to be…

    How did (and apparently still does) the American people allow these ( republican or democrat ) clowns  in the oval office ? And to begin with, to even run for office ?  ;O)

    I woke up early this morning with the following tune playing in my mind…

    Back in the U.S.S.R.
    You don’t know how lucky you are boys
    Back in the U.S.S.R.
    ( The Beatles )

    and the question…

    U.S.A -> U.S.S.A -> U.S.S.R ?

    Not funny I know, intriguing at least.

    All the best,

    P.S. It isn’t better over here on the other side of the Atlantic.

  133. Clayton Makepeace says:

    Regarding comment #130:  Is this the best defense you guys have to offer?  No facts?  No logic?  Nothing?

    Doesn’t that make you wonder if you could be WRONG?

  134. Clayton Makepeace says:


  135. Jeff says:


    Absolutely eye opening article. Prior to receiving Wendy’s e-mail I was cursing the ignorant bankers who could employ such unwise lending practices to destroy our economy. Then to learn that this insideous crime on the American people was perpetrated by short sighted politicians for the sole purpose buying votes… I am outraged.  Tarring and feathering is far too light a penalty. 

    The soy milk chugging, Berkenstock wearing PETA members who are posting their moronic comments on here are  simply demonstrating the abismal failure of our public education system that no longer focusses on teaching our children how to think, but rather on how to think "correctly".

    Thanks for your consistant "shoot from the hip" style, honesty, and willingness to put controversial opinions and information out there.  I love the politically themed atricles… more please!

  136. Clayton Makepeace says:

    My thoughts about Congress’ failure
    to pass Bush’s bailout bill …

    Interesting how the media immediately began blaming the Republicans for the bill’s failure to pass — especially since 95 Democrats voted against the bill and that those votes would have easily put it over the top.

    Especially interesting that despite the fact that the bill was rammed down Congress’ throat by the Bush Administration, 133 Republicans revolted, voting against it.  Only 65 GOPers sided with their president.  About one in three.

    Why did 228 representatives from both parties reject the measure?  Have they suddenly found fiscal principles and the stones to vote their conscience?

    Unlikely.  The fact is, the American people have been flooding their representatives’ offices with mail, e-mail and telephone calls ever since Paulson announced the bail-out — and between 95% and 99% of those messages demanded that this bill be defeated.

    Why are the majority of the American people so dead-set against this deal? 

    Lousy marketing!

    The bill was referred to — by politicians and the media alike — as a "Wall Street bail-out."  That was the kiss of death.  In our simplistic, class-warfare, populist way of thinking, the thought of spending $700 billion to save a bunch of greedy bankers infuriated millions.

    If instead, the bill had been promoted as a "jobs bill," the result of yesterday’s vote would have surely been much, much different.

    The truth is, this vote WAS bout jobs:  It was an attempt to save millions of them.

    Because right now, the damage and fear in the financial sector has shut down the short-term paper market.  Hundreds of companies that need short-term financing for operations can’t get it.  If something isn’t done, they’ll have no choice but to curtail operations and lay off hundreds of thousands of workers.

    And because the suffering among banks has compelled them to raise credit requirements for mortgages, auto loans, credit cards and revolving charges.  This, plus consumer concerns about job security, are killing sales of autos, big-screen TVs, appliances and other home improvement items as well as high-end products sold by boutiques and department stores.

    Now, the companies that manufacture, wholesale and retail those high-price items are bleeding red ink.  And as they lose more and more money, they’ll have no choice but to cut hundreds of thousands of jobs.

    If the Bush administration and Congress had done a better job of making these facts clear to the American people, we would probably have demanded that they vote "YES!" 

    Instead, they counted us to go along like sheep, supporting the bill simply because Bush, Paulson, Berananke, Pelosi and Dodd had shouted the "Crisis!" word.

    So what does the failure of the bail-out mean to you?

    Anybody who tells you he knows is full of beans.

    For one thing, nobody knows if the bill would have done anything to slow — let alone solve — this crisis.  Long before the vote, investors in Asia and Europe were already betting that it was "too little, too late."

    For another, you can bet your bottom dollar that Congress will be back with another bill in a matter of days — and that they will NOT make the same mistakes this time.

    And for another, if Congress fails to act, the Bush Administration can always declare a national emergency and rule by executive order as FDR did in WWII when he imprisoned millions of Japanese citizens.  That would effectively give Bush dictatorial powers until revoked by a two-thirds vote in Congress.

    But what if Congress does not act, if Bush does not use the power of the executive order and there’s no bail-out?

    Will the world end?

    No.  We will have a recession.  Millions of Americans will lose their jobs.  Millions more will lose their homes.  Some say, it could be as bad — or worse — than the Great Depression, when about one in four of us was unemployed.

    We’ll get through it, just like we’ve muddled through every recession in the past.  But it won’t be easy; and you’ll be far better off if you heed the advice at the end of the above article beginning right now; today.

    Good luck,

    – Clayton

  137. Clayton Makepeace says:

    Please view this ONLY if you’re interested in the truth …


  138. Sylvia says:

    OMG, a right wing diatribe!  Reaching all the way back to 1977 to blame the democrats? What happened to all the years in between, particularly when Republicans had control of the house? Certainly no "stones" there.  There’s enough "lavish" blame for all

  139. Clayton Makepeace says:


  140. Lucid Lucy says:

    Malcom Smith,

    Your comment – "I think we’d be more accurate aiming them at the consistent Republican policy of deregulation that began under Ronald Reagan. That’s what enabled all the institutional money to pour into risky investments."

    Would you name the regulatory or nonregulatory legislation that you claim caused risky investment over sound?

    I think we all will be interested.

  141. Steve says:

    It sickens me to see the partisan nature of this conversation.

    I’m neither Democrat or Republican… but Independent. I vote for the individuals on each ballot who I feel will best handle the responsibilities of the job at hand – right now, the only person who I see that seems to "Get It" is Ron Paul, and he gets about as much press time as… err… uhm… wait… no one gives this guy any press time… so I can’t even be sure he has it right, but he does have some of it right, to be sure.

    Unfortunately, when issues become partisan instead of American, everyone suffers and is manipulated.

    Clayton… I’m not biased, but open minded, but even my defenses have gone up here from the first read of the initial article because of the presentation of an obviously one sided argument. Which your topic may be… but by making it a hammer against those who perpetrated the crime instead of a plea to eliminate the bad legislation… you’ve instigated defense alarms that I can’t see will help you make your case.

    "This legislation is bad, here’s why… here’s what we need to do about it." Great

    "The Democrats are bad, because they drafted this bad legislation, which needs to be fixed, but not by the Democrats who defend it, by the Republicans who allowed it, here’s what we need to do about it…"

    See how your approach, the second one above, actually serves to defeat your purpose of rallying folks to a solution/cause? It is partisan distraction and can be discussed all day… after you get the results from the first approach above, in my opinion.

    I hate the partisan crap here… makes me sick because it serves NO purpose accept to divide. Its the issues that are important, not the parties, dangit. Am I the only one who sees this?

    It took the entire Congress… House and Senate… to ALLOW everything in the US to be what and how it is. And to fix the mess now, will take a Congress with the Cahones to make difficult choices…

    Andrew Jackson was the last president to fight the real monster, the true "800 lb Gorilla in the Room" by replacing fiat currency with true currency (for lack of a better term). It worked and although a short term mess, the long term (over 70 years) results of a real Free Market Economy adjusted quickly and prospered.

    Lincoln, by creating Greenbacks, accomplished the same thing… interest free AMERICAN notes… not fractional reserve mirages… were a brilliant and masterful solution to eliminate, again, the International bankers who wanted to control the purse strings of the world.

    I am all for a "bailout" – with real American Dollars (Gold will no longer work… and didn’t the last time it was tried either) sans the Federal Reserve, fiat, and a fractional reserve system that is controlled by private interests.

    Or any other REAL solution to the real problem.

    But stoking the Dem or Rep fires serves no end.. none. Division is not a solution to unity, it never was and cannot ever be.

    If there was a way to take the labels off and just look at the facts… if we could discuss the issues and focus on the solution without trying to appoint blame, maybe we could get somewhere as a country.

    But, then again… most people just don’t get it. Which is fine… our President and Congress however… should.

    I also think it’s sad that you are correct…  if the "Bailout" had been SOLD better, it would have passed… and the devastating, long term inflation and other detrimental results will be upon us even sooner.

    Discouraging that "getting a bill passed" is more important than really looking at the problem and getting past the "who-dunnit" and look at the "fix it and prevent it from happening again" as a country… not representatives of special interests or party affiliations.

    Democrat, Republican, Independent, Libertarian… this is the kind of thing that needs to stop. I’m an American and I vote for America… I sure as hell am not voting for a person just because of a lable any longer…

    Sheesh people… step back from the partisan B.S. – don’t let ‘em drag you into the distraction, and get educated about the core problems here… and the real potential results. Our very lives and freedoms depend on it.

    You know… I’ve not heard one politician discuss the real problem other than Ron Paul… who gets laughed off or boo’d for knowing the facts… well, at least some of them anyway… I don’t know his whole platform, he wasn’t given one, so I can’t be for or against the guy – he was squelched before he could speak.

    What all of this tells me… and what will, I believe, happen with a "new" bill… is that it’s gone too far and regretably, may take real consequences for people to wake up.

    It’s this kind of mass ignorance and the overwhelming frustration of trying to help people at least do their own research and come to a real conclusion, that breeds apathy and empowers the crooks to keep raping.

    It’s kinda like trying to discuss religeon with a dogmatic… it aint gonna happen, because facts are irrelevant… the defense of dogma is set firm, right or wrong.

    Clayton – you will understand this better than many here… you ride, right?

    Here is what we motorcycle enthusiasts have known forever about a subject as simple and benign as motorcycles, yet as emotionally opinionated among the pupulace as politics or religeon, for instance….

    "For those who understand, no explanation is necessary, for those who do not understand, no explanation is possible."

    Why people want to defend a position instead of find the facts and the truths, is beyond me… no matter though. The ignorant and the intelligent will pay this time… maybe, the consequences are what is needed to wake people up – maybe, they never will.

  142. OneForTheTruth says:

    Very good piece Clayton, but most people are to ate up to understand anything except what the blow hards on TV tell them to. America is going down the tubes and not very many people seem to give a damn, they are afraid to get evolved, or are so in love with what people look like instead of what they have done in the past. I’ve heard people say I’m voting for so and so because they look good and can make wonderful speeches, what a crock.  Good Luck in the Future maybe I’ll see yopu at the soup kitchen sometime.

  143. Clayton Makepeace says:

    You’re right Steve; I did let my frustration shine through.  Doing so was cathartic for me.  It also helped engender much of the positive emotion you see in the 142 posts above.  If this had been a straight-faced, academic article, almost nobody would have read it.

    Plus, even without the invective, I knew that anyone who loves congressional Democrats is going to hate the article simply because it documents how their beloved party caused this mess. 

    And I knew that anybody who hates Bush is also going to hate the fact that he tried twice to increase oversight of Fannie Mae and Freddie Mac in order to head off this crisis but in both cases, was blocked by the very congressional Democrats who now blame the crisis on the Bush administration’s "lax oversight."

    So once I decided to write this article, it was inevitable that no matter how I presented these facts, there would be people who would attack me as a "right wing loon."

    (NOTE:  While a few have railed against this article, nobody — not one living soul — has offered a solitary fact to refute anything said here.)

    And so, to make this otherwise dry subject come alive for those with open minds as well as for those who are predisposed to be distrustful of the Democrat agenda and Congress as a whole, I chose to have some fun with it.

    In short, I knew my audience and was keenly aware of how would probably receive this article before I wrote Word One.

    I also knew that a tiny handful of readers would unsubscribe because I told the truth and took a stand.  A small price to pay in order to feel that the folks who heed my advice will be much better off for it.

    In reality, though, my objectives in writing this were really much larger than simply to scream, "The Democrats Did It!."

    I hoped …

    1. To counter the mindless anti-Republican babble being plastered all over the media by Frank, Pelosi, Obama — the very people who did, indeed cause this crisis and who did, as the record shows, block every attempt to head it off at the pass.

    2. To point out that this crisis is the result of social engineering and that historically, all such attempts end in similar failure.  (Remember LBJ’s $2 trillion War on Poverty?  Poverty won.)

    3. To also nail Republican lawmakers for being cowardly; allowing themselves to be intimidated by accusations of racism that attached themselves to those who tried to warn that this was coming two years ago.

    4. To shock people into realizing that it would be the height of folly to trust the institution and the political parties that — whether by commission or omission — caused this disaster to now solve it.

    5. To offer concrete steps my readers should be taking right now, today, to help insulate their families from the worst effects of this crisis going forward.

    So, mission accomplished …

    – Clayton

  144. Dave says:

    It will be interesting to see how this all pans out. Not being a fortune teller I would suggest everyone prepare for the worst and hope for the best. Take your lessons from previous history…we may be about to repeat it.

  145. David Blaise says:

    Hey Clayton,  the marketing of this program was certainly a problem.  But I don’t think it’s the main marketing problem…

    The main marketing problem is that there’s no risk-reversal or money-back guarantee on either this plan or our politicians!

    Both parties attempt to market themselves as the solution, but record low poll numbers for both the President and the Congress indicate it’s not a Democrat or Republican problem.

    It’s a trust problem.

    We just don’t trust either of the political parties with our tax dollars any more, because the government seems to mismanage everything it touches, regardless of who’s in power.  Social security ring any bells?

    We all know that marketing can get people to buy things (even poor political candidates.)  But it can’t make a bad product good…  and that’s what we’re dealing with today.

    We have a lot of inadequate (or at best, average) politicians marketing themselves as brilliant…

    But there’s no risk-reversal!  When they fail to perform, we can’t send them back for a full refund!  All we can do it take our losses and hope for the best next time.

    You can call the package anything you want.  But until we get to the point where we feel we can trust any of them with our money, it’s going to be an uphill battle.

    David Blaise

  146. Mike says:

    To the "sensitive" people: Is there a problem or not? If so, was its origin Main Street? Wall Street? Or DC? (Note: it didn’t originate in three places at once!) The markets lack trust in the current system. Is that because they are partisan?Thanks Clayton. It’s plenty clear to those willing to see beyond the parties and personalities that those parties and personalities screwed up and that they aren’t the best people to fix things given their blindness, loyalties, and campaign contributions.

  147. David Henry says:

    Clayton – you’re a marvel!  I mean that seriously.  I thoroughly enjoy your blog and marketing.  I agree with you – Congress, as usual, blew it big time.  Now, it’s not Wall Street, but Main Street USA that will be suffering the consequences. 


    PS – #133, get real!!  I read in USA Today of how many AMERICANS have defected across the Atlantic to live "your" brand of Utopia!  We’ve succeeded before, we’ll do it again – just like the time(S) we have saved your ass!

  148. Cathy Sutter says:

    Jeff:  I guess I missed the PETA members posting moronic comments…I am a PETA member.  Uh, what’s Berkenstock?  Guess I don’t own any. 

    And if you knew me, you would see that I am not in any way interested in being "politically correct."  Ever hear Bill Maher speak?  He doesn’t care what he says or who he says it to, and neither do I.

    Steve:  Yes, Ron Paul is the only candidate that made sense but the media would not hear of it!  Oh, now they are bringing him on their programs (Fox, CNN, etc.) and asking him questions, what he thinks…and so on.

    It is a crime that most of the American people paid no attention to him.  They were instead mesmerized by the media, who in reality, controls every election. 

    Ron Paul wanted to eliminate the IRS and the FED…bring our troops home, close US bases around the world (700 bases in 130 countries–ridiculous), in other words, quit policing the world.  And bring back the gold standard.  Wouldn’t that be interesting?  Hmmm…oh well, wishful thinking.

    Oh, he is now officially endorsing Chuck Baldwin, who is running on the Constitutional ticket.  So I’ll "waste my vote" but at least I won’t be voting for the lesser of two evils because, after all, it would still be evil.

    Oh, BTW, I love your quote "For those who understand…"  I need to keep that in mind when talking to Obama supporters who think it’s OK to tax the rich and give to the poor.  Uh, I think that’s called "redistribution of wealth" or, in other words, Socialism.  I have come to the conclusion that his supporters have that entitlement mentality.  Whoops, I’m sure I’ll get some hell about that statement.  Just remember:

    "A government big enough to give you everything you want is strong enough to take everything you have."  Thomas Jefferson

  149. Clayton… great research, great writing great info! Fabulous summary on the current state of affairs!   John

  150. Gary Fisher says:

    Absolutely out of the park, Clayton!  It’s sad to see the poor blind partisans scattered among the comments above trying to pin the blame on the current President and his Party, but at least it proves there may actually be a few live Democrat voters …

  151. Elleyne Kase says:

    Highly, highly, highly recommend you read, "The Creature from Jekyll Island." Get the full story… it’s about the "fiat" monetary system that has DESTROYED every country AND CORRUPTED EVERY POLITICIAN that has adopted it. You think you have delicious decaying matter to create a declaration of outrage now, wait till you read that. Also recommend go to Bill Moyer and his interview with Andrew Bacevich. It has two parts, make sure you go to the second one because it has the comments about both candidates. Evidently Moyer came out of retirement to bring this kind of reporting out because no one was doing it.
    If you are able to get the book mentioned above (it’s out of print now but I got mine on Amazon) go to page 307. It starts, "It is said that those who are ignorant of history are doomed to repeat its mistakes. It may come as a surprise to learn that the Federal Reserve system is America’s fourth central bank, not its first. We have been through all this before and, each time, the result has been the same. Interested in what happened? Then let’s set the coordinates to our time machine to the colony of Massachusetts and the year 1690."
    If you want me to send you some copies from pages of this book, like the pages that follow that chapter opener, I will be happy to do so. There is an invitation to do this by the author, who gives permission in the book. Send me a PO Box # and I’ll send some pages. The author, Edward Griffin, has done a lot of research, its well annotated and weighs in at 600 pages. BUY IT.

  152. Dear Clayton, Thank you for a very informative article. I am a custom home builder located in the Upper Penninsula of Michigan. This area is somewhat insulated from the big swings of economy. Since the mines closed in the 60′s it has been pretty much a depressed economy until the 90′s when the 2nd home market exploded. I have always believed we would stay insulated until this year and be at the end of the whip. In addition to all of your recommendations I endeavor to keep a great positive mental attitude, look for every opportunity -cleverly disguised as adversity, help others get through this, think "out of the box", work harder and smarter than ever, and simply be happy with what God has given me. I will, however, ask Him for more and more.
    Brian Brzoznowski

  153. Scott Stroud says:

    Clayton – At the beginning of your article you asked us to read this as a copywriting/marketing exercise.  In that light, it’s a brilliant piece of craftmanship.  I don’t align myself with either political group, so couldn’t take offense at a single word, and you’re absolutely right that the entire ‘fix’ was so poorly marketed that the masses would rather languish in poverty than accept it.  It will be interesting, if painful, to see how this all plays out.  Thanks for your even keel and your perspective.
    Scott stroud

  154. Nancy Webster says:

    Last night on Jay Leno, Russel Crowe suggested that the economic crisis in America could be relieved by giving every US citizen a million dollars. It would save a lot of money and would put the money where it will do the most good. People would first of all pay off their mortgages and credit cards. Then they would buy goods and stimulate the economy. Many would start businesses and send their children to good schools. I think it’s an excellent plan.

  155. *sigh*

    Clayton’s absolutely right to hit Carter’s 1977 nail on the head–I don’t care how partisan it sounds–because government intervention in the market system is EXACTLY how we got into this mess in the first place.

    If left-brained presidents and a socialist congress hell-bent on selling us down the river hadn’t bullied their way into the financial markets to begin with, threatening lending institutions with investigations if they didn’t give away housing loans to every Tom, Dick and Susan who wanted one regardless of ability to pay, we wouldn’t be here.

    The free market system isn’t "fair," folks, and not everyone is "entitled" to a house with a picket fence.  The traditional vetting of individuals applying for loans that required assets, down payment and proof of income that has served the market for decades was suddenly thrown under the bus by worthless politicians out to buy themselves a legacy and a huge block of voters.

    I blame our gutless-wonder Republicans for not screaming loud enough and long enough to bring this to anyone’s attention. Oh no, let’s not make waves, let’s stick our heads in the sand and pretend it will go away. SHEESH! 

    So while most of Congress preens with righteosness about how they’re giving Everyman the chance to own a home, and poisons the market with bad paper (after raking in millions for themselves in the process), they then have the audacity to point fingers at everyone else.

    Even when the crooks are thrown out of Fanny and Freddie for cookin’ the books, guess who hires them to manage their campaign and advise them on economics?

    The scary thing is, that all this poison paper has seeped into every corner of the market, even overseas, so Clayton’s analogy of a bandaid on a sucking chest wound is pretty accurate.

    In the name of Almighty Fairness, Democrats have stuck their fingers where they don’t belong, and the result is akin to letting a 5-year-old play with the operating instruments during neurosurgery. 

    The only way I can see us getting out of this without brain damage is to clean house completely come November, and instead of spending another $700 Billion on stopgaps, cut corporate taxes and eliminate capital gains taxes, which are crippling the very sector that creates all the jobs. EVERY time taxes are cut, and this has been proven throughout our history, the economy rallies.

    We need to get Government off our backs and out of our markets, period. That’s not partisan, it’s just common sense.


  156. David says:

    Clayton, You are wrong – The Community Reinvestment Act of 1977 has NOTHING to do with this crisis!

    You say:  " These "creative" financing techniques were born to draw low-income people into the market."  Not so – there was another incentive driving the train.  The paper was sold and they were out of the deal before the loans were done – so why would banks / lenders care whether a dog or cat’s paw was on the dotted line – let alone unqualified minorities?

    You say "in 2001Bush administration warns of impending doom."  With control of both houses and chairs on the banking committees for 6 years, what stopped him from doing something about it – while Greenspan flooded the markets with cheap money?  It couldn’t be payoffs from his Wall Street & K-Street paymasters, could it?

    Having spent 25 years in the gambling business on the Vegas strip – here’s a lesson about money and human nature that never occurred to the dumb asses elected and appointed to prevent this – Bush, Paulson, Berananke.  Vegas casinos know that if money can be stolen, it will be, 100% of the time.  If a system can be gamed, it will be, 100% of the time.  And their regulations and systems of handling money reflect this understanding.  If there are no cops on the monetary streets, this will happen forever – it’s just human nature.

    Your title:  "A Conspiracy of Imbeciles" can apply to the people that let this happen on their watch – Bush, Paulson, Berananke.  And in my opinion it applies to anyone who voted for Bush and his K-Street talking parrots in the house and senate.  No buck ever stopped at this moron’s desk and the damage he created on all fronts is beyond any measure in American history.  The dems offer no alternative either – but at least their last president had a 3 digit IQ.  

    Other posts have covered it well (39-89-96 & "39 brilliant post") but you really have to go back to Jeckyll Island and come forward to understand why our political and monetary system is a total FRAUD.


  157. David says:

    This from any e-mail  right after AIG collapsed, and it’s interesting to note that the government was going to bail out AIG for $85 billion. Here’s where the bailout  can be very profitable to each and every working American.  Our population is about 301,000,000 +/-and out of that 301,000,000 approximately 200,000,000 are 18+ and working these figures might not be totally accurate, but you can get the gist of the situation.If we take 85 billion and divided by 200 million.  That’s approximately $425,000 for every person 18 years and older.Now all that money would not be tax-free.  So let’s assume a tax rate of 30%.Every individual 18 years or older has to pay $127,500 in taxes.That’s sends $25,500,000,000 right back to the government.But it also means that every adult 18 years and older as $297,500 in their pocket.A husband and wife have $595,000.And that’s with just $85 billion.What would that equation be like if we added another $615 billion.Now wouldn’t that be fundamentally sound for our economy.And all that with no partisan or bipartisan challenges or arguments.We can call this the We Deserve It bailout plan for the American worker. Dave
    PS.  This does however open a whole new CAN of worms.

  158. Clayton Makepeace says:

    Thanks, Apryl … seems the truth is "partisan" when it challenges a person’s political affiliation.

    David, I painstakingly documented how the CRA did, indeed create the crisis.  Saying "it ain’t so" doesn’t invalidate a single one of the facts presented.  

    As far as selling paper is concerned, do you remember the S&L crisis of the late 1980s and early 1990s when 747 Savings and Loans failed? 

    That happened because S&Ls didn’t sell the loans they’d made.  Selling the paper was a prudent strategy financials used to reduce loan risk.  The explosion in sub-prime loans didn’t occur until after 1992 with the Clinton changes to "fair housing" regulation.

    Bush tried repeatedly as the article says to stop it and he and his fellow Republicans were called racist and accused of hating poor people for their trouble.

    If they bear guilt, it’s for not braving the political fallout and repealing the law — as I say in the article.

    Show me where I’m wrong and you’ll have a convert.

  159. Ron Ellis says:

    Clayton, Lindbaugh had a similar analysis that i did not pay attention to because he is a partisan. Your conclusion (mainly democrats who forced banks to lend to unqualified borrowers is responsible) is also a little hard to swallow. I know you mentioned republicans but naming them as you did the democrats would lend a measure of fair analysis.

    The mortgage default rate is say 10% and if all 10% were unqualified that still would leave 90% paying their mortgage. I own some real estate, and if the 10% dead-beats that I rent to bring me down then there would most definately be other "fish to fry". Carter was the president over 28 years ago. Were the deadbeats that his policies helped to buy homes waiting until the end of Bush’s presidency to default? Until the majority of voters kick the party affiliations and become independent, then the system will continue to game us. The monied folks (world citizens)realize that as long as the majority from either party seek blame in the other party they (world citizens) will continue to rake it in at the expense of us all.

    Ron- a fan and customer.

  160. Barbara says:

    Clayton,  Couple things come to mind. 

    *  First of all I have to agree, your mostly one-sided political rant turned what could have been an informative piece into just that, a rant.  

    *The Republicans have been in control of the House and Senate for the majority of the last 20 years, including the time when you say that Bush tried to fix Fannie and Freddie, yet you blame the Democrats  for shooting down his efforts.  If the Republicans had really been on top of things, they could have passed it anyway. Clinton had 8 years of a Republican Congress, so he couldn’t have rammed anything through without some help from your boys.  So, to blame this as heavily on the Dem’s as you tried is not quite accurate.

    *  The CRA is NOT the only reason for failed mortgages etc.  Many of the foreclosures are on million dollar properties and second or third homes.   The "poor" didn’t create this problem.  A lot of RICH guys who wanted to get even richer did.  Poor people didn’t create credit derivitives, over leverage, and purposely overrate securities, or sell fraudulant mortgages.  Rich people (Dem’s and Repub’s alike.)

    *  I’m certain that Washington has had plenty to do with creating this mess, but why is it you and most everyone who has commented here are not blaming the multi million dollar Best and Brightest on Wall Street? Did the excuse that "Jimmy or Billy or Barney thought it up" ever fly in your house?  It never did in mine.  If I did it, then I paid the piper – and so did my kids.  If we don’t hold the Wall Street Masters accountable, then we get what we deserve.  Has anyone seen a single Financial CEO coming to the table with a sugestion on how to fix this mess?  Has any one of them come forward to make their plea for what kind of help they think they need, or how they plan to pull themselves (company) out of disaster? No one on Main Street can screw up this badly and then sit back and just wait to be rescued.   So, let’s have some very public meetings with the Brain Trusts that created credit derivitives and leveraged the dolloar at 30-1, and make them earn their keep.  I say, if they want any of our money, have them come to the American people one by one on prime time, and tell us how it is THEY screwed up and what they are going to do to help fix it.

    If our kids screw up, we don’t just ride to their rescue and make everything better.  We make them take some of the heat, try to figure out how to fix their problems, and pay the price of their poor choices.  You seem awfully willing to give Wall Street a very big excuse  to be pointing the finger at Washington, and Democrats in particular.  I’m not so willing.  I want those who were being paid millions to care for their investors best interest to be accountable.  We are surely fools if we make this a political problem and ignore what was allowed to happen by people who should have known better.

  161. Wow ! Clayton you opened a can of worms and I like the slug fest.

    The one thing everybody forgets it’s all about the MONEY!

    Man the housing market that is in crisis is only 5% to 8%. That means that 92 to 95% of us are making our payments.

    So today it’s about the banks, last month was about the oil prices.

    Crude is below $100 but how much you still paying for gas?

    How  about corn for ethanol now look at food cost. Hell they used to dump it on the ground because they couldn’t give it away.

    Why did you think they lowered production on oil? Simple we are not using as much. Cut production raise the price.

    Do you think we are done with oil prices? Not hardly!

    When you can bring done companies that have been around for over 150 years how do you think the little guy can make it.

    The largest Chevrolet dealer in the USA just filed for bankruptcy and closed 14 dealerships in 12 states. They were bleeding cash of $2-5 million a month since early 2007.

    All I am saying is do not point fingers because this does not get the job done. You as an American have the right to vote. Just take the time to do your homework and vote with your head not your heart.

    This will take years to get through and we will all survive as always.

    Thanks Clayton.

  162. Clayton Makepeace says:

    Glen — regarding oil and gas prices; something I can’t help noticing …

    In 2002, oil was $27 a barrel and gas was around $2.30 a gallon. 

    So when oil sextupled in price to around $150, why didn’t those greedy oil companies jack up gas prices by a factor of six — to $13.80 a gallon?

    And if we didn’t complain then, is it really fair to complain now?

    Hmmmmm ….

    Actually, most the gas stations here and in Georgia and other places are out of gas — most people hare having trouble getting the stuff at any price.  And when stations get a delivery of petrol, the lines are around the block.

    Seems we get most of our gas from the refineries that just got hit by Ike.

    As far as pointing fingers is concerned, IT IS ABSOLUTELY ESSENTIAL THAT WE DO PRECISELY THAT!

    Because in reality, neither Washington Democrats nor Republicans are responsible for this disaster.  We the voters are. 

    Unless and until we learn from history, we are condemned to repeat it.

    Unless we learn to stop responding to class-warfare populist rhetoric and actually THINK through the legislation they try to sneak through on us …

    Until we pay attention to the FACTS and not merely political spin as reported in unashamedly biased media outlets …

    Until we are fully educated and engaged and ready and willing to scream from the rooftops when these miscreants unveil their latest scheme to rob Peter to pay Paul …

    … We’ll be destined to continue paying the price for Washington’s fraud, abuse, corruption and cowardice.

    If there is a silver lining in all this, maybe it’s that with this crisis about to hit each and every one of us on a very personal level …

    More people will begin to fully grasp how directly and deeply Washington impacts the value of our money, our job security and our ability to hang on to the things we work so hard to earn.

    And if that realization causes many of us to stop this silly knee-jerk defense of a corrupt political party and instead, defend our families first, that would be a really nice side benefit.

    Cheers, buddy!

  163. Robert says:

    Let me see if I can get this straight. We’re in crisis because lenders made loans to high risk borrowers.Subprime loans were made because the loan would be sold to some other entity leaving the original lender to enjoy the profit without the risk. The institutions that bought the loans did so with the belief that in the end they were "too big to fail." I can’t believe that I am hearing this nonsense phrase again and again by the media. Too big to fail? Really? Please direct me to the Roman Empire.Now that we’re in the soup we have to raid the assets of taxpayers because otherwise there  won’t be any cash to make more high-risk loans.Am I missing something?PS We tried this before in the Great Depression.  Instead of allowing the liquidation of insolvent institutions and biting the bullet for a period of time, we headed off liquidation and ended up swallowing many bullets for more than a decade. Wake up.

  164. Terry Moore says:

    While it’s obvious you or some intern took a great deal of time and effort to write your rant, it still strikes me as typical neocon drivel.

  165. Judy says:

    Clayton, Thanks for having the courage to detail the origins of the current financial mess.  In looking at the historical threads that have brought this about it seems that since Hoover and FDR there has been a creep toward socialism that always begins with the word CRISIS.
    Then it becomes quite easy for people to trade individual freedom for the promise of security.  The mindset shifts gradually–the old frog in the pot analogy–until the original guarantees of liberty based on personal responsibility ensconsed in our founding documents are discarded for a nanny state that provides security womb to tomb. A chicken in every pot became a home, a car, and now some are pushing for a digital tv for every one.  I hope you will continue this conversation as it is non-partisan and requires the best minds of our collective generations to redirect societal decay.

  166. Clayton Makepeace says:

    Now, I want all of you to look at post #166.  Don’t be too obvious; it’s not polite to stare.

    Notice:  While exactly ZERO Republicans rushed to the defense of THEIR guys in Congress when I said they were gutless and failed us by not violently opposing CRA and these other idiotic laws …

    THIS is the quality of critique I’ve gotten from partisan Democrats ever since I posted this article last Friday.

    Without a single fact to bolster their case, they have no choice but  resort to name-calling.

    "Don’t confuse me with the facts," they’ve essentially said, "you’re just a partisan Republican.  A dirty … a filthy … uh … NEOCON!  Yeah, that’s it, you’re a NEOCON!"

    OK.  That really hurt.  Ouch.  That’ll leave a mark.

    Terry, since you evidently have no actual facts to support your  views, all I can do is repeat what I said at the beginning of this article:  "I humbly suggest that if the truth offends you, it just might be a hint that your point of view could benefit from an honest re-examination."

    Now, here at The Total Package, we believe that words actually have meaning.  So let’s take a look at what "Neocon" means.

    The term was coined in 1973 by a socialist, Michael Harrington in 1973 to describe OTHER LIBERALS who had come to believe that leftist policies had failed — and who had subsequently shifted to the right.

    Now, since I am only half-liberal (the social half) and have not changed those views since the 1970s when I first became a Libertarian …

    And since my ultra-conservative views on fiscal policy (far to the right of most Republicans) have also not changed since then …

    Using the term "neocon" to describe me misses the mark by a country mile.

    Call me an "unrepentant, unreconstructed Libertarian bastard" if you like.  That would be absolutely accurate.  And I wear that moniker like a badge of honor.  Hell.  I may even have a tee-shirt made with that emblazoned across the front!

    Finally, Terry, I can only say that if, instead of defending your family … and instead of demanding legislation that would strengthen our country and our economy …

    If instead of doing those things, you insist on rushing to defend corrupt, failed politicians who tax you, confiscate your liberties, who have destroyed your home equity and the buying power of your money and who are about to cost you your livelihood …

    Then all I can say is, you’re about to get what you deserve.

    – Clayton

  167. Clayton Makepeace says:

    Yeah, Robert, I’d say you got it almost right.

    You forgot the part about Congress forcing banks to make those bad loans by imposing draconian penalties on those who didn’t  …

    And the part about Congress telling Fannie and Freddie they had to buy those loans …

    And the part of Congress refusing to regulate fraud at Fannie and Freddie when it hit the headlines in 2003.

    Otherwise, you got it straight.

    And I must also agree that bailing out these failing institutions would be a monumental blunder.

    Just remember, though:  When those institutions fail, your access to credit dries up.  So does your employer’s.  So does, if you own a business, your customers’.

    And of course, when that happens, thousands of "innocent" companies that never touched any of these lousy mortgage investments will go bust and millions of workers will lose their jobs — their ability to support their families.

    That means NOT bailing out the guilty institutions is going to cause tremendous pain for all of us.

    OK by me — I’d much rather deal with a multi-year recession than to come out of this with a country and an economy in which anyone can make any stupid mistake they want and expect the rest of us to bail them out.

    I mean — we’ve done that for the lowest levels of the economy since LBJ’s War on Poverty, and just look what that got us:  Millions who now believe they can forgo an education, get knocked up at 14, smoke crack — anything — and the taxpayers will bail them out.

    They’ve learned that there are no consequences for their actions.  I say let’s NOT teach CEOs the same lesson.

    Plus, I’d rather endure even a recession that lasts up to a decade than to have several trillion more fiat dollars killing the value of everything I earn and everything my children earn and everything my grandchildren earn for decades to come.

    So let’s learn our lesson … eliminate the laws that allowed this to happen in the first place to make sure this never happens again … and brace for the consequences we all must now endure.

    Batten down the hatches, my friend; I hope you’ve got a LOT of money saved up.  You’re going to need it!

  168. Rick says:

    Well done! You have managed to aggregate most, if not all, of the salient points relative to this issue into a very readable text. Your conservative credentials are fully validated.

    Those who decry you for bias are simply burying their heads in the sand. Shame on you folks. The facts remain the facts, from Carter’s magnificent ignorance to Clinton’s knowing complicity, all occurred. It is very true that Ronaldus Magnus, and #41, were not able (or maybe unwilling) to upset that apple cart; but don’t forget that congress was controlled by the democrats during those years, and there was not a snowball’s chance in hell they were going to put real controls on what was effectively their personal cash cow.

    I did notice one factual error (I may be wrong), and one omission. If memory serves, in 1994, Newt and the "contract with America" gave control of the house to the Republicans, which they maintained until 2006. However, since the election of Arlen Spector (back when Hector was still a pup), the RINO’s (i.e. John McCain, Lindsey Graham) have been able to slowly wrestle away much control of the party from the conservative wing. Ergo the problem the party faces today, and a contributing factor to this debacle.

    To his credit though (which is difficult for me to admit), John McCain warned of this collapse, of the Freddie and Fannie crash, and its ripple effect on the market back in 2005.

    Finally, to those of you who choose to claim political bias to justify your contrarian positions to this post, PULL YOUR HEADS OUT!

    To your success,


    If you’re 20 years old, and not liberal, you have no heart.
            If you’re 40 years old, and not conservative, you have no brain…

  169. Clayton Makepeace says:

    Uh … that’s fiscally conservative and socially liberal, Rick.

    Oh — do any of you use Twitter?  I’m posting on there several times each day.

    Great way to see the copy I’m working on while I’m working on it and to get a sneak peek at how I spend my day.

    Just point your browser to http://www.twitter.com and look for me:  @cgmakepeace.

    Cheers, y’all!

  170. Kelley Eidem says:

    Although I’ll admit I didn’t read the whole thing, what I read was right on!

    The other night a professor who was an expert on this stuff dropped a bombshell. Paulson and the Democrats cry that the housing crisis totals $100 billion. Well, they are lying through their teeth.

    If one adds up all the homes in that have been foreclosed and added in the homes that are more than 90 days late, the only way it reaches $100 billion is to include the entire mortgage balances due, not just the PAST DUE amounts.

    So at most it’s $100 Billion for the homes, which leaves $600 billion for WHAT! For hedge funds losses and the like.

    Would someone please tell me where in the Constitution it is enumerated that taxpayers are required to become after the fact cosigners to bad business deals?

    Each time one of those bad transactions took place, a commission or fee was paid to someone.  Now they want us to pay them a commission a second time!

    When the story of the rise and fall of the US is written, an entire volume will need to be devoted to this gargantuan cover-up masquerading as a bailout.

    The economy can take care of itself. The Founding Fathers were wise enough to include bankruptcy in the Constitution. It’s the fertilizer that allows the economy to re-bloom after an economic winter.

    Right this minute, there are people toiling in anonymity whose ideas and products will be the engines for future economic boons. For instance, my own blog and book could put $2 trillion in savings to the consumer economy.


    By providing a cure for cancer that costs about $20! In the area of cancer, it’ll save $100 billion a year. In 20 years, that’s TWO TRILLION DOLLARS.

    That, my friend, is how the economy will be restored…by allowing the market to work itself out.

    The best to you.

    Kelley Eidem
    Together we can cure cancer – one person at a time!

  171. David says:

    OK Clayton, about the CRA (159) – you said:

    "Show me where I’m wrong and you’ll have a convert."

    I tracked down a little help from Business Week to illustrate my point that the CRA had nothing to do with this crisis.  Here’s some facts that show – blaming the CRA is just more right-wing propaganda.

    Business Week:

    CRA applies only to banks and thrifts that are federally insured – meaning the law doesn’t apply to independent mortgage companies.  The worst offenders, the independent mortgage companies, were never subject to CRA — or any federal regulator. Law didn’t make them lend. The profit motive did.

    50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations.


    Clayton, the CRA is a moot point in all this.  Why would Lenders give a hoot about the CRA or whoever was filling out a loan app when they are selling the paper and "bailing out of the deal?"  The real questions lie in how commercial and investment banks can do business like this with no oversight.  This is about greed, fraud and payoffs to congress by de-reg lobbyists like Phil Gramm.

    Oil is also being gamed by de-reg – notice how fast it went to $147 – followed by a $40 billion selloff in July – and back down to the $90′s.  That’s because investment banks and others can take unlimited future positions on the London exchange without disclosure or regulation.

    Ripping off the people and stealing is as easy as shooting fish in a barrel. 

  172. John Barber says:

    Geez Clayton who can you blame for AIG’s demise? Put down the Scotch and check out some of the facts. Nearly two-thirds of the loans that were made were refi’s. The other problem is a TOTAL failure by this Republican administration to take the responsibility for  anything.  They started with 9/11 and are ending with fiscal chaos. What caused most of this was the rubber stamp Republican Congress that was led by, oh never mind their in jail on trumped up charges, right!
    Only in America can we blame a 4 trillion dollar disaster on the poor. Stick to writing copy Clayton.

  173. Recoil says:

    Great article by the way.  You mention that the marketing of the bail out plan was horrendous… maybe that was intentional… maybe not… Perhaps, if you want to look like you’re trying to fix the problem, when you really believe the problem should fix itself, you market a fix with intentionally poor marketing… that way your public perception is better than if you did nothing, yet you may get the strong fix you desire…

  174. Rick says:

    Clayton: I stand corrected.

    Although, I must point out, in my lexicon, [LIBERAL], even socially liberal, has become a dirty word and come to mean anything but liberal.

    Today, I perceive liberal to mean "government regulation", intended to legislate equal poverty for all; except for those who are in a position to leverage circumstances to their advantage, of course.

    I trust (and hope) you are referring to its original meaning as  our founding fathers intended: as in the LIBERTY and FREEDOM to live your life as you see fit without the government’s tentacles attached.

    So there’s my two and a half cents, for what they’re worth.

    Thanks for the attention.


  175. Jeff says:

    Response to Cathy 149.  As I was driving to work this morning, I realized the folly of my comment – PETA members would of course not wear Berkenstocks (cork soled leather sandles and clogs that were highly fashionable with most of the stuck inthe 60′s Boomers I know). And you are right that you certainlyhave no problem stating your opinions.  Neither does Bill Maher, I just happen to disagree with 90% of his opinions.

    One of the other commentors ont his forum said that the true casue of this debaucle can be traced back to Jekyl Island… I think there is a lot of truth to that comment.  The Federal Reserve Act was the single biggest crime ever committed against the American people. Ron Paul has the right idea in going back to teh gold standard.  Unfortunately, those in political office who try to accomplish this usually end up being martyred for their cause… Lincoln and Kennedy both come to mind.

  176. Dave says:

    When did John Barber get out of rehab?

  177. Martin says:

    Dear Clayton,

    Once you believe that the politicians from one political party are all good and those from the other are all evil, then all your fancy economic theory footwork becomes irrelevant.  Dogma of any kind makes a very poor foundation for intelligent analysis of any problem, including this one.    

    It is your blog.  However, I would highly recommend you stick to copywriting sir. 

  178. Clayton Makepeace says:

    David, I can’t find the quote you mention anywhere in the Business Week archive.  Send it, please?

  179. Clayton Makepeace says:

    YEAH, DAVID!!!

    Our first post from the left side of the aisle that actually contains citable facts!

    Congratulations, my friend!  :)

    YOU ARE RIGHT:  CRA did NOT require non-depository lenders like Countrywide to make loans to unqualified borrowers.  It applied "only" to tens of thousands of banks and S&Ls and their branch offices across the country.

    YOU ARE ALSO RIGHT when you say that one article in Business Week maintains that CRA had nothing to do with the mortgage crisis.  However several other articles in that same publication take a decidedly different opinion — including this one:

    "Governments, observed the authors of the Declaration of Independence, exist to secure the rights of individuals to life, liberty, and the pursuit of happiness.

    "Earlier this decade, however, Washington decided that these inalienable rights included home ownership — and not merely home ownership, but "affordable housing."  One could argue that the seeds of the crisis were planted in 1977, after the well-intentioned Community Reinvestment Act passed."

    It is also worth mentioning that the article you cite defending CRA is based on testimony given by economics professor Michael S. Barr, a "fair housing" activist in Detroit and former special assistant to Clinton’s Treasury Secretary, Robert Rubin.  Not exactly what you’d call an "objective source," so any data presented by him should be double-checked.

    Meanwhile, however …

    ** It is a fact that CRA was responsible for hundreds of billions of dollars in loans to unqualified buyers.  That was the entire purpose of the law.

    ** It is a fact that the Clinton "refinements" to CRA were responsible for a huge surge in subprime lending among banks and S&Ls, and that others — including Countrywide — used CRA as cover for imprudent loan practices.

    ** It is a fact that other Clinton administration fair housing measures — including a further lowering of lending standards and the mandate that Freddie Mac buy every subprime loan it could get its hands on — did, in fact, apply to every lender, including Countrywide.

    **  It is a fact that in 1999, Fannie Mae itself praised Countrywide for using the Clinton administration’s mandates in the most aggressive ways possible to grow its subprime portfolio from $1 billion B.C. (before Clinton) to a level that eventually reached $600 billion.

    ** It is a fact that Countrywide was the first domino to fall in the subprime lending debacle and that the subprime mess was the lighted fuse that ultimately detonated the broader credit crisis.

    See?  Tinkers to Evers to Chance.

    Thanks for your post.

  180. DAVID EAGLE says:


  181. Richard Nuetzel says:

    Great Article.  Since newspapers and TV aren’t going to tell this story, why can’t a number of conservative organizations band together to pay to run full page ads in newspapers around the country to get the word out?  I would be willing to contribute to that.

  182. Allen says:

    Regardless of the source…

    Facts ARE Facts.

    He is another expose’ on what led up to this mess
    It’s entitled:
    Your scorecard for understanding mortgage scandal
    Find out who’s who in the ‘Rogues Gallery’ of economic crisis

    and you can find it at:

    It’s quite interesting, and points just who got preferential loan terms, who benefited and got millions in salary, who was and is benefiting from campaign donations.

  183. ms. rancier says:

    Well Clayton, I just lost all respect for you. 

    Though with this post you certainly do show your skills –  you can  spin any topic in your favor.

  184. Drayton Bird says:

    I would recommend that anyone reading this glorious series of exchanges takes a look at the latest from Denny Hatch’s Business Common Sense about AIG.

    This wonderfully sums up what I  increasingly tend to think are the great problems of both democracy and capitalism: the scum rise to the top, which is bad; but the scum  are laughably incompetent, which is worse.

    We (I say "we" because the rest of the world is affected) now have had the full benefit of the bizarre decisions of Mr. Bush for a few years, and now face the likelihood that either one of two people without any significant experience of running anything will have the fate of the world in their hands.

    Meanwhile great financial institutions have been run for years by criminal kleptomaniacs who – in the case of the head of AIG – are so bad at numbers they can get their sums wrong by some $60 billion. Interesting times.

  185. Clayton Makepeace says:

    Thanks, Drayton!

    Hey — I hear you’re planning a grand event over there in Jolly old England.

    Where can we learn more about it?

  186. Thanks for making Clayton’s point, Ms. Rancier,
    Good grief, Madame, can you not see that facts are not spin?  But let’s chuck all the facts out the window and forget Clayton Makepeace McCain and Obama et al for a moment, shall we?

    I, personally, know a ‘community organizer’ who was trained in
    Chicago. (She is currently home ‘raising babies’ as she says, while her husband is bringing home the bacon for the family.) She, now, says she will certainly be voting ‘against’ Obama, because she knows ‘the game’ and doesn’t want her kids to grow up in an Obama world putting the muscle (via cries of racism, etc) on banks and savings and loans to make fabulous ‘loans’ to people who could never repay them. (That is what a ‘community organizer’ does.)
    Now, just a simple question, Ms. Rancier, and lets put politics out the window in this case, too: How would you expect the world or even simple commerce to be benefited by banks being forced to make loans to people who cannot repay them?
    Please answer. I would sincerely like to learn from you, OK?

  187. MattV says:

    Thanks Clayton!

    The truth hurts… and as evidenced by the liberal posts above, it REALLY hurts.

    Great piece – that’s one for the eternal swipe file.

  188. Malcolm Smith says:

    Oh, dear! David is the first poster to offer "citable facts?" Guess my references were chopped liver.As to the question posed in your e-mail today… No, you weren’t able to defend your original article against David’s comments. There’s no proof offered to back up your so-called "facts" at all.Deregulation allowed the banking industry to go insane with high-risk debt. Cronyism and outright fraud and deception by the ratings firms turned that debt into attractive investments.The CRA? Let’s allow the Federal Reserve to speak for me here:"Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution’s individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution’s CRA activities should be undertaken in a safe and sound manner."

  189. Drayton Bird says:

    Never mind the economy and the politicians – I’m so confused at the moment it’s a disgrace, Clayton.

    I’ve just recovered from doing our week in Brussels which had people flying in from Australia – plus the funniest comment from the head of the Latvian Direct Marketing Association who called it "the most valuable week since I learnt to read and count."

    We’ve already got bookings for next year – 40 places only.

    In November I’m joining Ken McCarthy here in London … but I doubt if anyone reading this is interested in my gala performance in Kazakhstan (Kazakhstan?? Yes. Would I lie to you?) later this month.

    Liverpool anyone? It’s where I was born – and that’s the plan for the Spring … after Bulgaria, Romania and Serbia. It may be exhausting, but it keeps the creditors guessing.

    Which brings us neatly back to the banks – and one more point. A lot of this stuff  is driven by media hysteria. Yesterday I saw a headline in a paper here: "FT Index in free fall." What was it?  5.3%.

  190. Jonathan says:

    "Facts are facts."

    How naive.

    Clayton – you just lost a customer.

    Although I have voted along Republican lines before and voted for Bush the first time around, the Republican Party has done nothing but hijack our values and taken them so far to the right with their catering to the evangelical Christian sect and their way-too-cozy relationship with big corporate America.

    Obama is the only candidate I trust who will restore balance and look out for the middle class. Enough is enough.

    Everyone sees "facts" through the prism of their own personal perspective.

    Did you really think this posting was really going to change someone’s mind? Or was your intent to lose sales?

    One out of two isn’t bad.

    "There is a God in Heaven who’s keeping score…"

    Yeah, right.

    Maybe His math is a little rusty.


  191. David says:

    Hey Clayton – thanks for your response.  I just want to add a few comments and bail out – as I don’t want to take more response time from "my favorite marketer."

    Suffice to say that ascertaining what weight or % of the problem to apply to the CRA is very complex – the right says this – the left says that.  But here is something that makes the CRA argument a stretch:

    The CRA came in 1977, so why did massive foreclosures start 27 years later in 2004?  OK, Clinton got his hands on it in 1999 – so people who got mortgages under CRA were making payments for 5 years and suddenly couldn’t afford their houses? … hmmmm 

    Here in Vegas, many thousands of homes were dumped by speculators and I assume that’s the case across the country – so that has to be factored into the mess.

    I’m not a lefty or righty – I’m just a casino guy that followed the money and concluded from research that our gov has become a total fraud.  I understand human nature and how money, inside influence and "juice" work.   

    I agree with Ron Paul & Nadar on many of the issues.  It’s hard to imagine that politicians who want to dump the Fed & IRS can’t get a vote.  Goes to show that Bill Mayer is right on when calling voters total morons.  That’s a huge problem because nothing short of a national uprising and petition to amend the Constitution is going to restore a gov for the people.  Until then, we are being gamed to death.


  192. Clayton Makepeace says:

    The tally so far …

    By my rough count, we’ve had about 71 unique posts generally agreeing or strongly agreeing with the conclusions in the above article …

    25 who generally or vehemently disagreeed without presenting a single fact to refute the article (many of them accusing me of being a partisan Republican, a McCain supporter or <gasp> a "neocon") …

    These posts included …

    Two posts suggesting that because they disagree with me, my Constitutional right to free expression should be revoked and that I should be confined to writing ONLY about marketing issues …

    And of course, there was Maribel, who is thankful that she has never bought any of our products but just can’t find it in her heart to stop scooping up all the free stuff we offer …

    Ms. Rancier who has "lost all respect" for me because I voiced an opinion with which she disagrees (again no particular reason; she just disagrees) …

    And one lady — Wanda — who has canceled her free subscription.

    Plus, we enjoyed two posts from one gentleman and scholar named David — who, bless his soul, actually presented A FACT in defense of his position that CRA had nothing to do with this crisis and that therefore the Democrats were not culpable.  (Yay, David!  :) )

    All in all, a productive, invigorating exercise, don’t you all think?

    So what marketing lessons can we learn from all this?

    Here are a few for your consideration …

    1. If you address a complex issue with simplicity and humor, it will be read.

    2. If you personalize a problem by eviscerating "the enemy" — the people your prospects believe are the cause of their misery — you will win those readers’ gratitude and trust.

    3. Giving your prime prospects release by expressing their fears, frustrations and desires in ways they haven’t — and then validating those dominant emotions — is ample compensation to convince a majority of them to read what you have to say.

    4. Using as many specifics as possible to make your case — dates, names, quotations and third-party sources — is a powerful way to diffuse objections before they have the chance to arise and to establish iron-clad credibility.

    5. Moving through your material linearly — either chronologically or by presenting benefits in descending order of their value to readers (or leading with your most valuable benefit and closing with your most surprising one) — creates a sense of momentum that makes reading seem effortless.

    6. Providing a new or different perspective on a problem and delivering actual value — like the personal action plan at the end of the above article — can cause readers to send your copy to friends and family and to post links to your copy on Twitter and other social networking sites, giving you far more eyeballs than you’d otherwise get.

    7. If you really want to crank up your reader’s temperature, include unflattering pictures of your common enemy.

    8. People who are offended by unflattering photos of their heroes and/or disagree with any point made in your copy are unlikely to read the rest of what you say.  So KNOW YOUR AUDIENCE!

    9. No matter what you do, you will offend someone.  The more you craft a message to appeal to a particular group, the more complaints you will draw from other groups.  But that’s really OK — you can’t make an omelet without breaking a few eggs.  And besides; with real promotions, most complaints are made while people are ORDERING!  :)

    10. THE MOST VALUABLE LESSON OF ALL:  When you find ways to connect your copy to a major news event, readership goes through the roof. 

    Because whatever is in the headlines is at the top of your prospects’ minds.  And whatever they’re thinking about, they also have strong curiosity and strong feelings about.

    And  when you connect with your prospects’ most powerful resident emotions, your response soars.

    Class dismissed.

    Your Loyal but Unrepentant, Unreconstructed, Libertarian Bastard,

    – Clayton Makepeace

  193. Brian Duvall says:

    RE: Comment #107 by Wanda…

    I recommend that you and all the other readers on here reconsider your emotional response.

    If you want to unsubscribe… ignore the message and simply learn from the content and approach. Look at the magnitude of the response Clayton has created… with just the written word.

    Clayton’s Website is about teaching us HOW to engage people so that they take action. Boy, are they taking action!

    He has hit upon a topic SO deeply rooted in our emotions that people are wanting to take actions of all kinds… to the point that without specific direction or a product to buy, they will offer their own suggestions.

    Consider how people have even ready every single comment that followed. How readers are coming back to this post to keep reading. How people are spreading the article to others, taking it viral.

    Consider the impact this will have on Clayton’s search engine results as it gets posted everywhere and linked to all over the net. Expect to see him on page one of Google when people search on the topic.

    He could easily launch a new product on the subject (I doubt that he is, I’m just saying). Tactics like this are pure genius. This is what we should ALL be learning to do.

    Find a niche you know something about and that has an audience. Hit their emotional hot buttons and offer a solution. It’s what he teaches in the Ultimate Desktop Copy Coach program.

    Clayton whacked our emotional hot buttons with this one like a kid with a stick whacking a hornet’s nest. Now we’re all buzzing exactly the way he wanted us to.

    This has been an interactive lesson on the very essence of Direct Response Marketing. In the words of one of my favorite movies… "Thank you for smoking."
    Way to go Clayton!

  194. Clayton Makepeace says:

    P.S.  Watch this.  I promise it won’t make you mad; it’s hilarious.

  195. Kevin says:

    Clayton…..your history of what happened is fairly complete, but you failed to mention a very significant piece of legislation that passed in 1989 – the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

    This Act did, among other things, substantially change the Home Mortgage Disclosure Act (HMDA). HMDA was enacted by Congress in 1975, and originally only applied to banks and savings and loans. Under HMDA, banks and savings and loans were required annually to report their mortgage lending activities to the federal government.

    The intent was to have a way to see how well the financial institutions were complying with the Community Reivestment Act. The only information required to be reported was the number and dollar amount of loans, by census tract. Initially, HMDA data simply helped the public and regulators track where an institution was lending and, more important, where it was not.

    FIRREA contained 2 very important changes to HMDA. 

    First, FIRREA expanded the coverage of HMDA to include ALL mortgage lenders, not just banks and savings and loans.

    Second, data collection expanded to include race, sex, and income levels for each loan application, along with whether the application was approved or denied.This new, expanded HMDA data was first released in 1991 (lending data from 1990).

    The key piece of information from this data was that African-Americans and Hispanic borrowers were denied loans at 3 times the rate as white borrowers. Some community advocates immediately equated these disparities with discrimination, although the HMDA data still omitted much of the information considered in mortgage underwriting, including such critical factors as the applicant’s credit history and current debt load.

    Then came the Boston Fed Study. The conclusion of this study was that there was a smaller but still real disparity between white and minority rejection rates even after controlling for legitimate underwriting factors. Both scholars and the lending industry vigorously disputed that finding, criticizing both the design and the execution of the Boston Fed Study.

    Bank regulators began to use HMDA data, especially denial-disparity ratios, to identify institutions on which they would focus fair lending examination efforts. These efforts led to several Department of Justice investigations and enforcement actions.

    Community activists used analyses of individual institutions’ HMDA data in attempts to stall bank mergers, bring negative publicity to those institutions, or obtain lending commitments from the institutions.

    Lenders, under pressure from regulators, responded to the findings by making their underwriting criteria more flexible and convincing Fannie Mae and Freddie Mac to do the same.

    Lenders also created new products that were tailored to lower-income borrowers and increased their outreach efforts.

    It is also interesting to note that FIRREA required Fannie Mae and Freddie Mac to provide more loans to low and moderate income borrowers. And it formally required “CRA ratings” of federally chartered banks.

  196. MattV says:

    RE #193 (Clayton)

    Well said -

    The saddest point, which you neglected to mention, is how unfortunate it is that Maribel, Ms. Rancier, and Wanda are allowed to vote in the upcoming election… and there are millions of others who think like them who will be voting, too. 

    I tremble at the thought.

    Clayton, I pray they all cancel their subscriptions, memberships, and return all products they’ve bought from you – because that way, there’s fewer people out there learning what valuable information you teach  – thus giving me a bigger advantage over them :-)  

    After all… if Obama gets in office, I’ll need that advantage to afford to pay my increased taxes and bail out the rest of middle and lower class America.


  197. Clayton Makepeace says:

    Funny you should mention this, Matt … Wendy and I were just joking about it this morning.

    See, when the Democrats are in control, investors are desperate for help protecting and growing their money.  The market for investment newsletters grows and they buy other investment products, too.

    In fact, the investment newsletter industry saw its greatest growth when Carter and Clinton were in the White House.  By contrast, the ’80s saw slow growth and the 2,000s have seen a dramatic shrinkage of our market.

    Now, I’m thinking, although Obama will surely raise my taxes by — what? — 33% or so, the simple fact that the Democrats are in charge will probably double or triple my income next year.

    So this morning, I suggested that The Redhead — a die-hard Republican — vote for Obama so we can make a bundle next year.  She said, "I’d cut off my right hand first." 

    Always fun to get the Redhead’s motor running …

    Me?  I think McCain is toast.  He screwed up royally by endorsing that brain-dead $700 billion bailout Bush proposed.  Depending on which poll you study, the population was 95% to 99% dead-set against it. 

    If instead, "Mr. Reform" had presented an innovative bill that included provisions designed to sell the middle class on the plan — that appealed to homeowners and taxpayers and not merely rubber stamped Bush, Paulson and Bernanke’s lame brained "bail out the Wall Street idiots and crooks" idea — I’ll bet he would have taken the lead in the polls instead of falling farther and farther behind.

    So buck up, my friend … find a product or a client that will thrive thanks to Obama and the Dems and turn lemons into lemonade.

    Me?  I’m voting Libertarian.  We won’t win, but maybe we can at least inject a little of the fear of God into those bastards in Congress …


  198. Clayton Makepeace says:

    Right on with your bad self, Kevin! 

    I came across that story when I (NOT an "intern") was researching this article and chose to skip over it as it is a bit technical.

    Thanks for posting this important information here!

    – Clayton

  199. Brett Owens says:


    As you encouraged, I’ve posted your article in its entirety on my blog, with links back to your site.  I am honored to be able to post this gem.

    I also plan to vote Libertarian, as a protest vote against these clowns.

  200. Hey, Dave — this might help with your comments blaming Gramm for “deregulating” the sale of mortgage backed securities …

    According to Business Week, Clinton was asked in an interview if he regretted signing legislation in 1999 that repealed the Glass-Steagall Act of 1933, which had separated commercial and investment banking.

    “No, because it wasn’t a complete deregulation at all. We still have heavy regulations and insurance on bank deposits, requirements on banks for capital and for disclosure,” Clinton said emphatically in the Business Week interview.

    The Gramm-Leach-Bliley Act passed the Senate on a 90-8 vote, among them 38 Democrats, some of them quite vocal supporters of the deregulation bill, including Sens. Chuck Schumer, John Kerry, Chris Dodd, John Edwards, Dick Durbin, Tom Daschle, and Joe Biden.

    “Schumer was especially fulsome in his endorsement,” observes The Wall Street Journal.

    Now, according to The Journal, these facts will likely come as news to many, including the national press corps and presidential candidate Barack Obama, who are promoting the idea that deregulation is to blame for the mortgage market meltdown.

    In the interview, Clinton provides extensive insight into his thinking then about financial deregulation.

    “I thought at the time that it might lead to more stable investments and a reduced pressure on Wall Street to produce quarterly profits that were always bigger than the previous quarter,” said Clinton.

    “I have really thought about this a lot. I don’t see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn’t signed that bill.”

    One of the writers of that landmark legislation was McCain adviser and former senator Phil Gramm, a man Obama described last week as “the architect in the United States Senate of the deregulatory steps that helped cause this mess.”

    Clinton was asked if he believed Gramm had sold him “a bill of goods” on deregulation.

    “Not on this bill, I don’t think he did. You know, Phil Gramm and I disagreed on a lot of things, but he can’t possibly be wrong about everything,” Clinton said.

    “On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I’d be glad to look at the evidence. I can’t blame (the Republicans). This wasn’t something they forced me into.”

  201. Stewart says:

    Hi Clayton,
    Wow, I am sure amused by the animosity and intolerance you have surfaced in some people. Probably the same people joining the kum- by- ya club for a group hug later on.

    I for one appreciate your insights on such a complex issue:) Personally, I feel both political parties and the so-called "independent" media are playing us all for suckers.

    Their idea of a level playing field is to get rid of the middle class and just have a tremendous under-class. I fear we will have a feudal state run by multinational corporations enforced by the lap-dogs in Congress soon if Americans don’t take back their government from the lobbiests.

  202. Paul says:

    An interesting thing being said by politicians is that the "Market is Broken." 

    Not at all, it is adjusting based on past events, including regulations and law based on politics, not economics.  The thing that scares me the most is the group of people (Congress) who are crafting the "rescue plan." 

    One of the quotes I remember from my first micro-economics professor was that it’s a pretty good job because you can be wrong nearly all the time and still make a good living :-)

    This entire mess is an obvious cluster *($^"&*$%, magnified by many forces and incompetent "leaders."  Another big crock is them acting like "bipartisanship" is such a lofty ideal.  We send them there to lead.  If they get along great, if not, too bad.  What we need are results.  I’m just worried about the results we’ll get from the current band aid


  203. Alan Stone says:

    @ David Henry (post #148)

    >PS – #133, get real!! 

    Sure David. It was a real question.  Out of concern.  And a "bit" provocative too I must admit.

    >I read in USA Today of how many AMERICANS have defected
    >across the Atlantic

    Hmmm… Have you noticed how people and the media adore putting labels on others – and even more in turbulent times ?

    >to live "your" brand of Utopia! 

    Thank you for putting the word -your- in quotes.

    >We’ve succeeded before, we’ll do it again

    Sure, I’ve no doubt about it. But please note: regarding these issues, the world we live in means we = everybody, not only Americans.  It will inevitably be tougher where it all began though.

    >- just like the time(S)
    >we have saved your ass!

    Sure David. And although I didn’t lived then, I’m forever grateful for that to the U.S. and Americans.

    However, to keep things in balance…

    Who do you think saved yours so far since Americans started living "rather" exclusively on credit ? Think Chinese, Arabs, Europeans, etc… Of course, they’re not doing it without self-interest. Just like Americans did in the past with regard to Europe.  ;O)


  204. Eldo Barkhuizen says:


    Thanks for a BRILLIANT exposé.

    And Brian Ridgway’s comment (no. 16) is spot on. As Shakespeare said, "All the world’s a stage . . ."

    Eldo Barkhuizen

  205. Kurt says:


    Fantastic work. I used to work at Fannie Mae as part of a dozen years in the mortgage business. I worked both as an investment banker and in politics as Legislative Staff in the US House. Your analysis is spot on.

    I’ve been sending this page to many of my old friends in politics and the smoking crater that was the mortgage industry.

    This page is getting enough links so that you are #1 for the broad match search: conspiracy imbeciles. Who could ask for more? Congratulations.


  206. Sharon Quinn says:

    Thank you for speaking out. I often feel like a lone wolf howling at a vacant moon when it come to inspiring people to act like free people and insist upon political integrity.  We need some other political parties, but that moves too far from the point I need to make NOW. 

    I find all your presentations to be of quality, and that has my respect, and thus, has moved me to comment.

    We must ask ourselves why we sat en mass silent about the three ring circus that we call our "political process."

     When candidates were not allowed to freely and equally participate in debates
     ( and a there WERE a FEW worthwhile honest ones worthy of high office of President, etc.)  receiving equal and fair reporting by the presses,
    and we en masse did not demand that we get equal access to the  candidtates and their viewpoints, WE SCREWED UP.  

    Now, we have only the troublemakers as our choice on election day…what a shame, and we permitted it with our passiveness. 

    I wonder will we stop this nonsense and start making this election process other than a sham?

    I know we are "tired" and "busy" and the like, but, this is simply not a good enough response when our "leaders" make the term, leader, a variation of the oxymoron theme, and we do know it. 

    This crisis is so dangerous, and we still act like it is  "just another pissy thing".  It is cutting at the heart of how we live, move and have our being.  YIKES!

    Do we know it?  Of course we do, we complain, we rant and rave, we get upset, we call in on radio shows/or NOT, we write letters to the editors/or NOT, ad naseum.  

    I mention this because it’s a vital part of the accountability equation we are participating in, as well as something we COULD change IF we had the WILL to do so, (that is the ouch of the Achilles Heel, is it not??!).

    But I am putting this aside for a moment, so as to make a point that I feel is more cogent to
    If and only IF
    WE insist
    upon the morons  in office
    (we keep electing, thus, choosing)
    Complying to OUR WILL
    to be free and safe in daily living, not their will, which is likely greed or ignorance based.

    Other than the important points of action you outlined in this article, there IS another action we could take that would stabilize the current mess - mortgage defaults, loan defaults, rapidly declining dollar value, job losses, yada yada…

    It is such an obvious, rational, and reasonable action to take, that I amazed that everyone isn’t buzzing about already.

    I posit this strategy for our stability because it is DOABLE, and the wins are multi-valent, and the losses, are shouldered by the creators of the losses, as is moral and just, and simply right.

     Common sense, a woefully lacking gift of clarity that SHOULD be a prerequisite for leadership, dictates this as a step in the right direction of regaining balance without rewarding the wrong doers.

    1.  Repeal the legislative act you cast a light of awareness upon herein.

    2.  INSIST the government NOT bailout the intentional errors of "judgment" of lenders lending to those of bad credit  risk, with the added inanity of doing so with the inevitable financial time-bomb of a variable interest rate attached, that
    from a no-brainer point of view,
    was going to explode into defaults and
    crescendo into an economic collapse benefiting the Machiavellian contrivers who were orchestrating this mess for their own selfish gain.  

    Since this much is obvious, here’s a path to restoring sanity, balance, and enforcing consequences.  

    3.  The lenders need to reissue the mortgages
     at the rate they originally approved them at
    to those who
    "defaulted" /forced into payments beyond their income ability
     to meet ballooned-up payments.

     Borrowers were making the payments, they need the house to live in, the bank needs some money coming in accord with the contracted expectation, etc.  

    Think about it>>
    This would re-up declining home values as the homes would be lived-in as mortgage payments would be resumed "covering the debt" againmaking good on the investment sales,as a domino effect of stability would resume, etc. Restoring economic movement againmore like it was before the greedsters raised the variable rates making payments impossible while dynamiting our  economic  structures  into  poverty, inflation, ad naseum. Any business owner would consider working out an arrangement to keep payments coming in rather than having nothing come in on a debt.Who bails us out when we make really ignorant business choices?  Yeah, you do get my gist!
    Besides, have you noticed the raping profits made on a mortgage?  

    They won’t lose like they wail they will, and NO ONE has the RIGHT to crash an economy for their greed.  

    IT is a matter of ill-WILL; let us demand that they absorb their cocky stance, and make them reissue "those forced-default mortgages" at the rates they approved, lock the rate at the rate they approved the buyer for, and allow the borrowers/people to pay as they have income to do so…

    There are creative ways to resolve this without TAXING YOU AND ME.

     Besides, we didn’t create the dibacle, and we need the WILL to refuse to bear the brunt end of it.

    Our apathy, hand-wringing, acting powerless to this, our refusal to ‘get off our whatever" that has us stuck in SILENCE, or our simply griping while sucking up will be the way we enslave and destroy our prosperity.

    NOW,  our passiveness is our greatest enemy. 

    Can we afford to be idle, to hope they will do what is best? 

    Our hearts know better, like it or not we MUST SPEAK UP and NOT TAKE, "NO" FOR AN ANSWER!

    This whole "thing" is a matter of WILL.  It is a situation that can be reversed!  

    Lay the ax for rectification at causal actions, not the outcome, and restore a balance.

      Fragile?  Maybe… yet, like any balance beam,  IF you "pull in the extremes" closer to the pivotal center point, the tipping action is minimized, and in this case, that would be a very good thing, indeed–for America and the world market!

    We MUST insist upon solutions that restore equilibrium, and bailout is the farthest thing I can thing of restoring stability; it rewards the irresponsible and it WILL encourage more abuses since the consequences will not endured by its perpeTRAITORS*.

     Consequences are powerful because they experientially instruct us to self correct our errors

    We know this "stuff", we just act like/pretend that we don’t.  How silly of us, eh?! 

    I encourage us to not act like puppets, fools, imbeciles, rather as the LEADERS our "leaders" seem remiss to do and be.

    Seize the moment before it is gone, robbed…

    All to Love, Sharon
    *PS> I spell perpetraitors as I see the word communicating better.

    PPS> I apologize IF this sounds preachy, my intention is to wake up and take action.  Thank you for the honor of your time.  I hope to have stirred some juicy thoughts in your wonderous mind, and some forthright action from your insightful heart.

  207. Senate Bill details …

    1. New debt ceiling:  Federal debt ceiling raised from $10 to $11.3 trillion — $37,666.66 for every man, woman and child in the US.

    2. $700 billion for Wall Street:  Authorizes the Secretary to establish a Troubled Asset Relief Program (“TARP”) to purchase troubled assets from financial institutions.

    Authorizes the full $700 billion as requested by the Treasury Secretary for implementation of TARP.

    Allows the Secretary to immediately use up to $250 billion in authority under this Act.

    Upon a Presidential certification of need, the Secretary may access an additional $100 billion.

    The final $350 billion may be accessed if the President transmits a written report to Congress requesting such authority.

    3. Troubled Asset Insurance for institutions:  Requires the Secretary to establish a program to guarantee troubled assets of financial institutions.

    The Secretary is required to establish risk-based premiums for such guarantees sufficient to cover anticipated claims.

    4. FDIC Insurance upped to a quarter-million:  Temporarily raises FDIC insurance to $250,000 per account until December 31, 2009.

    5. Oversight out the wazzoo:  Establishes the Financial Stability Oversight Board to review and make recommendations regarding the exercise of authority under this Act. In addition, the Board must ensure that the policies implemented by the Secretary protect taxpayers, are in the economic interests of the United States, and are in accordance with the Act.

    The Board is comprised of the Chairman of the Board of Governors of the Federal Reserve System, the Secretary of the Treasury, the Director of the Federal Home Finance Agency, the Chairman of the Securities and Exchange Commission and the Secretary of the Department of Housing and Urban Development.

    Tons of additional investigative and oversight reports required from everyone from just about every federal agency and executive you can name. 

    FBI empowered to investigate fraud in the development and advertising of financial products.

    6. Anti-Foreclosure Measures:  For mortgages and mortgage-backed securities acquired through TARP, the Secretary must implement a plan to mitigate foreclosures and to encourage servicers of mortgages to modify loans through Hope for Homeowners and other programs.

    Strengthens the Hope for Homeowners program to increase eligibility and improve the tools available to prevent foreclosures.

    Extends current law’s tax forgiveness on the cancellation of mortgage debt.

    Allows the Secretary to use loan guarantees and credit enhancement to avoid foreclosures. Requires the Secretary to coordinate with other federal entities that hold troubled assets in order to identify opportunities to modify loans, considering net present value to the taxpayer.

    Requires federal entities that hold mortgages and mortgage-backed securities, including the Federal Housing Finance Agency, the FDIC, and the Federal Reserve to develop plans to minimize foreclosures. Requires federal entities to work with servicers to encourage loan modifications, considering net present value to the taxpayer.

    7. Taxpayer protections:  When Treasury buys assets at auction, an institution that has sold more than $300 million in assets is subject to additional taxes, including a 20% excise tax on golden parachute payments triggered by events other than retirement, and tax deduction limits for compensation limits above $500,000.

    In order to cover losses and administrative costs, as well as to allow taxpayers to share in equity appreciation, requires that the Treasury receive non-voting warrants from participating financial institutions.

    Requires that in 5 years, the President submit to the Congress a proposal that recoups from the financial industry any projected losses to the taxpayer.

    8. Expires in 15 to 27 months:  Effective until December 31, 2009, may be extended for one additional year.

  208. For more detail, point your browser to:  SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

  209. A second bail-out program kicked in today. See below for details on the FHA’s new “Hope for Homeowners” program.

  210. My opinion?

    The Bush/Paulson bill was crap: No oversight to speak of, no provisions to recoup the taxpayer money from the insitutions that would benefit.

    The House bill stunk; but not so much.  More oversight, but the taxpayers were still 100% on the hook.

    This Senate bill ramps up oversight to monumental levels and requires that the institutions that benefit will ultimately pay for the bailout. 

    We’re kind of giving the banks a $700 billion advance so they’re less likely to fail now, then requiring that they repay the loan beginning five years from now.

    There are some time bombs in here, though … can you find them?

    – Clayton

  211. Details on the FHAs “Hope for Homeowners” program (the “other” bail-out):

    Eligible borrowers must:

    have taken out their mortgages on or before Jan. 1, 2008 and have made at least six payments.

    be unable to afford their current loan, but did not intentionally miss payments.

    have a debt-to-income ratio of at least 31%.

    live in the house and not own other homes.

    have provided accurate information on their loan documents and not been convicted of fraud in the past decade.

    Under the program, borrowers will get:

    a 30-year, fixed rate mortgage of up to $550,440.

    a new appraisal and loan for no more than 90% of the home’s value.

    released from second mortgages and prepayment penalties.

    But homeowners must pay a premium of 3% of the loan’s value upfront, and 1.5% of the outstanding mortgage amount annually. Also, they must share any appreciation in the home’s value with the FHA when they sell.

    The law allows the FHA to insure up to $300 billion in new loans.

  212. Rezbi says:

    The one thing I agree with you on is the fact that all politicians are scum ad not to be trusted.

    I’m not into US politics but, as for blaming just democrats for what has happened is going a little too far.

    Being a Muslim, I’m sure you can understand how I feel about the trillions spent killing Muslims, making thousands homeless and leaving hundreds of thousand under constant fear for their lives, isn’t exactly something to be ignored.

    How much worse the economy of the US has become due to all of these costs.

    Maybe if the Bush administration had concentrated on using all that money to save lives in the US, instead of ending lives in other parts of the world, this situation may not have been as bad as it is.

    Essentially, while I’m sympathetic to the ordinary men and women of the US, it’s your government that has placed you in the position you are in… and it’s not just because of what the democrats did.

    You’re screwed either way, even with the next lot coming in.

  213. OK — I have a full schedule today, so I’m going to give you my analysis of the Senate bill:

    1. It’s going to launch inflation and interest rates into the stratosphere:  With the loan guarantees and other provisions in the Senate bill, it will cost taxpayers well over $1 trillion.  Throw in another half-trillion or so that has already been spent by Washington to fight this crisis, plus the $300 billion for the “Hope for Homeowners” program that opens its doors today, and given the fact that the 2009 budget deficit was already projected to be nearly a half-trillion, this is hugely inflationary.

    That means:

    A) Washington will have to unleash a tidal wave of treasuries to pay for these massive new deficits, which will drive interest rates sky-high and

    B) When it runs out of buyers for its debt offerings or awakes to find interest rates sky-high, print the rest which will be hugely inflationary.

    Bottom line:  Prepare yourself for soaring interest rates and inflation as far as the eye can see.  Every dollar you earn and spend will be gutted of its value, so everything from energy to groceries and many other essential things you buy will soar in price.

    HOWEVER, our dying corporations will cut many prices to the bone just to attract customers for their autos, electronics, computers and other discretionary items — so the “official inflation rate” will not fully reflect the actual rise in your cost of living. Gas and groceries and other essentials will soar while the price of many other items will sink.

    2.  This bill will trigger a whole new avalanche of mortgage defaults and foreclosures:  Exploding interest rates will cause monthly payments on six million adjustable rate mortgages to soar over the next few months, making it impossible for millions of homeowners to make their payments. 

    Banks and other institutions that own those mortgages will get creamed.  The value of the mortgages in the Treasury’s portfolio will crater.

    Bottom line:  There is absolutely no hope that the mortgages the Treasury uses your tax money to buy will ever produce a profit; no hope the $700 billion will ever be recovered.

    3. It is still a “free pass” for the lending industry:  Legislation delayed is never money in the bank.  There’s no guarantee that between now and 2013, Congress won’t cancel or postpone the provision requiring that financial institutions repay the taxpayers for this bailout. 

    In fact, if the financial sector is still reeling from the impact of sky-high inflation and interest rates, you can bet your bottom dollar this provision will never be enforced.

    Bottom line:  You not Wall Street are paying for this.

    4. It still may not pass:  Nearly all of the Senators who voted against the bill last night are up for election.  That means they’re listening to their constitutents.  But ALL of the representatives that will vote on this bill tomorrow are up for election. 

    The latest polls still show that the American people absolutely, positively hate this bill.  Any House member who votes for it is taking his political life in his hands.

    Bottom line:  If this bill fails on Friday, look for a bloodbath on Wall Street and possibly the “weekend massacre” of one or more major U.S. financial institutions.  

  214. Rezbi, I agree completely.

  215. Credit Crisis is spreading to Main Street … watch for a tidal wave of business consolidations in coming months:

    1.) Hale Business Systems, Mary Kay Cosmetics, Fuller Brush, and W R. Grace Co. Will merge and become:

    Hale, Mary, Fuller, Grace.

    2.) Polygram Records, Warner Bros., and Zesta C rackers join forces and become:

    Poly, Warner Cracker.


    3.) 3M will merge with Goodyear and become:


    4. Zippo Manufacturing, Audi Motors, Dofasco, and Dakota Mining will merge and become:


    ZipAudiDoDa .

    5. FedEx is expected to join its competitor, UPS, and become:



    6. Fairchild Electronics and Honeywell Computers will become:

    Fairwell Honeychild.


    7. Grey Poupon and Docker Pants are expected to become:

    8. Knotts Berry Farm and the National Organization of Women will become:

    Knott NOW!


    And finally…


    9. Victoria ‘s Secret and Smith &Wesson will merge under the new name:



    (OK — I didn’t make these up; our graphic designer Craig Burgwardt sent them to me.  But hey — we need a little levity today; right?)

  216. Rezbi says:

    Thanks, Clayton, I’m glad there are a few people who understand how we feel.

    I constantly say this, and I know I speak for the majority of Muslims throughout the world, we don’t blame the American people for anything.

    As with all countries, the atrocities are committed by governments, and that includes the so-called Muslim countries nowadays: Take a look at Pakistan for a perfect example.

    Unfortunately, because I’m a Muslim, almost everything I say seems to be taken the wrong way.

    Yet, if a non-Muslim person said the exact same thing no-one would bat an eyelid.

  217. Peter Black says:

    Clayton…for what it’s worth…I don’t think you answered Malcom.  For example, his claim that CRA MITIGATED the problem instead of triggering.As to Libertarianism…that’s a long discussion.  However, I think we can point to a long list of "private sector" problems for which Libertarianism offers or offered no solution:  slavery and racism in America…child labor… poor sanitation and public health…the pollution choking our lungs and destroying water sources…the ills associated with poverty…40 million Americans without health insurance.Great read, as always, though. 

  218. Peter Black says:

    I would have to say that the pictures you used were unflattering.  So does that mean you think you’re writing to a conservative/Libertian audience?

  219. Peter Black says:

    "(NOTE:  While a few have railed against this article, nobody – not one living soul – has offered a solitary fact to refute anything said here.)"Not true.  Malcolm did, but you dismissed him and certainly didn’t disprove what he had to say.Moving on…Where is your ire about Iraq and the $1-3 trillion washed down the drain…the $1 million innocent lives lost…and the U.S.’s shredded standing in the world?Hopefully, you’ll move on, too, to our shredded Constitution (spying on Americans anyone?) and our new torture policies.Looking forward to it…

  220. David says:

    Hey Clayton & you brilliant readers of the Total Package:


    There is another Bill in the Senate that is so ominous that it transcends the bailout  scam.  As copywriters and citizens, you can kiss your right to free speech and expression goodbye when it passes.  It has already passed the House 405 to 6.

    If fact, when you study this, you’ll see that many of the posts in this thread could be used to label the writer a terrorist and put them in prison!

    Watch out Clayton – your article could land you in the crowbar hotel!

    Senate Bill 1959
    Violent Radicalization and Homegrown Terrorism Prevention Act

    Just look at this language in this damn Bill:

    " ideologically based violence’ means the use, planned use, or threatened use of force or violence by a group or individual to promote the group or individual’s political, religious, or social beliefs "

    So how are they going to use the definition or meaning of force?  Here are some definitions – FORCE:

    A person or thing regarded as exerting power or influence.

    The powerful effect of something.

    A group of people brought together and organized for a particular activity.

    Under the guise of fighting terrorism, they are diabolically crafting wording in a law that can be selectively used against anyone who criticizes or advocates a cause ‘determined’ to be against the Gov!

    In my opinion, the Fed and IRS are behind this Bill.  The internet is exposing the legality of the IRS – as an illegal de-facto collection agency for a private cartel of bankers known as the Fed.  Currently, they are using the Justice Dept to go after people who are exposing this fraud.  Ex-IRS Senior Official Shella Jackson was put in prison while giving seminars on the illegality of the IRS.

    Bill Benson, painstakingly researched the 16th Amendment over several years and "PROVED" it was never legally ratified.  On January 10, 2008, the Federal District Court in Chicago issued a permanent injunction against him on the grounds that he was falsely telling people the 16th Amendment was not ratified.


    See where this is going?  I believe Senate Bill 1959 will give them all the teeth they need to bring down websites, label protesters as terrorists or go after anyone they want to.


  221. James Yuille says:

    Clayton, as a committed 35 year + Libertarian, having grown up with the
    Austrian School of Economics; Von Mises, Hayak and Friedman, I am delighted
    to see someone with similar beliefs come out of the closet and stating what to me is
    is obvious.

    My late father founded a Libertarian political party here in Australia nearly 30
    years and was laughed at and pilloried in the media for daring to be different.

    The current financial situation was inevitable. Governments around the world
    should be ashamed of themselves for letting it happen.

    Migrate to Australia, Clayton; you’d be welcome here!

  222. Yes, Peter, you’re right.  I did miss Malcom’s posts.  I’m toast now, but I’ll address his comments and yours first thing in the morning.


  223. Brian says:

    "Suddenly, any lender caught denying mortgages and other loans to low-income people faced serious penalties — including denial of applications to open new branches, to do mergers and acquisitions and other draconian measures."

    CRA did not compel lenders to lend to unfit borrowers.  In fact, the Act explicitly said loans should be granted "consistent with safe and sound operation".  Banks making unsafe and unsound loans are in violation of CRA, not a victim of it.  Lenders only faced "serious penalties" if their reasons for denial were unreasonable.

    Your rhetorical trick of blurring the two meanings of "discrimination" here should be exposed to daylight: bankers are expected to discriminate between applicants’ objective measures of financial stability, and CRA does not ban that, it requires it.  CRA prohibits banks from engaging in racial discrimination.  In fact, it doesn’t even prohibit racial discrimination — it just says that banks will be judged on their performance in this area, and that judgement will be taken into account when they ask permission to open new branches, etc.

    I honestly don’t know how color-blind banks were in 1977.  It’s possible that this law was a complete waste, that every bank granted mortgages strictly based on objective financial data from the applicant, and that loan denials were completely independent of skin color.  In that case, CRA would be useless, but not harmful (except for the wasted money in implementation), since it would just legally codify existing practice.

    But CRA didn’t require banks to lend to unfit borrowers.  It required them to refrain from denying loans to fit borrowers, which is quite different.

  224. doug says:

    That is a lot of BS to fit on one page . . . 

  225. Peter Black says:

    From the Providence Journal…Accomplished Googlers can probably find the original talking points off which dozens of conservatives made essentially the same case: The Community Reinvestment Act of 1977 caused the financial crisis.For example, a Wall Street Journal editorial lumped CRA together with far more plausible causes of the meltdown. This liberal-inspired law, it complained, "compels banks to make loans to poor borrowers who often cannot repay them."In fact, the CRA had about zero to do with today’s problems. Its accusers are "know-nothings," Aaron Pressman writes on BusinessWeek.com. He says the law "was actually weakened by the Bush administration just as the worst lending wave began."The Community Reinvestment Act requires federally insured banks and thrifts to lend in the low-income neighborhoods where they take deposits, but consistent with safe banking practices. It was created to stop redlining, the practice whereby banks refused to lend money in certain areas – read minority neighborhoods – regardless of their residents’ credit histories.The most obvious clue that CRA did not cause the mess is its date. The musical Annie opened in 1977, and the Eagles’ Hotel California was the No. 1 song. That was a long time ago, 31 years to be precise. If the CRA created this time bomb of lousy loans, why didn’t it go off in 1980 or 1996?The writing of crazy mortgages for low-income people – loans with exploding interest rates, brutal fees and no demands for documentation – was a post-2003 phenomenon. In 2004, the Bush administration actually slashed CRA regulation, freeing small banks and thrifts from its toughest standards."These institutions no longer had to make subprime loans to low-income people," Mark Thoma, an economist at the University of Oregon told me. "That should have reduced the volume if the CRA was driving it." On the contrary, subprime lending increased.CRA was a minor player in the mortgage orgy. Since the late ’90s, half of subprime loans have been made by independent mortgage companies not subject to CRA rules, University of Michigan Law School professor Michael Barr told Congress in February. Another 30 percent came from affiliates of banks or thrifts with little CRA supervision. That left only one in five subprime loans fully governed by CRA.Furthermore, companies not covered by CRA made subprime loans at more than twice the rate of lenders that were, according to Janet Yellin, president of the San Francisco Federal Reserve Bank. The idea that CRA brought the banks down is "just ridiculous," Mr. Thoma said.The ugly truth is this: The redlining that led to the passage of CRA has been replaced by reverse-redlining. Lenders didn’t have to be dragged into low-income neighborhoods. They rushed in. It was there that they could push their complicated mortgages onto the elderly, blacks and Hispanics, and then sell the loans to somebody else. At least 40 percent of the holders of subprime mortgages could have qualified for cheaper prime mortgages, according to one study.Far from being spurned by financiers, low-income Americans have become their cash cow. Payday lenders are listed on the New York Stock Exchange. Operators go into poor neighborhoods pretending to be retailers. The product they "sell" – be it a used car or new sofa – is just a hook to saddle the trusting buyer with a loan that eventually costs them several times the ticketed price.Yes, low-income people can be credit risks. That cannot be ignored. But this financial scandal is the work of fat cats, enabled by a permissive government. There’s something highly indecent about blaming it on an innocuous law meant to remove some of the unfairness in the lives of the working poor.

  226. OK … first, let me say that I owe Malcom an apology for not addressing his posts sooner and for failing to mention him among the other ONE posters who eschewed name-calling and presented an actual defense of Washington Democrats.

    Please forgive me, Malcom — there are just so many here, I honestly missed a couple of your comments.

    Now, Peter, this article is about how government — particularly Democrats in Congress and the White House — planted the seeds of this credit crisis and blocked early attempts by Bush and McCain to reform Fannie and Freddie. It is not about slavery, racism, child labor, poor sanitation, public health, pollution, poverty, 40 million Americans without health insurance, the war in Iraq or the treatment of military prisoners.

    However, it is my belief that not only does libertarianism address all these issues, its solutions are far superior to anything now being floated by either major party. Why don’t you check out the party platform at LP.ORG? For more insight, I’d suggest you read The Law by Frederic Bastiat.

    Secondly, I explained why I chose these unflattering pictures. Yes, the U.S. alternative health market is largely made up of people who already despise these Democratic politicians. They tend to be distrustful of the political establishment and fiercely independent, preferring to take responsibility for their own health and lives rather than trusting the government or the health industry to do it for them. And judging from the overall response to the article, it seems that most of our Total Package readers agree with them. That is the audience I’ve written to for 37 years.

    Now, to Malcom’s comments …

    MALCOM: “As Robert Gordon, an economics prof at Northwestern points out, about half of the defaults in question here are on loans made by mortgage companies not regulated by the CRA.”

    CLAYTON: Gordon is correct — and that half got the ball rolling. Then, mortgage companies responded to Clinton’s heightened mandate — and of course, seeing how much money CRA lenders were making — followed suit. Meawhile, again under a Clinton mandate, Fannie and Freddie ramped up their buying and securitizing of CRA loans. The rest is history.

    MALCOM: “Countrywide – the first big domino in the chain – has a history of avoiding the CRA. As the California Reinvestment Coalition points out on its website, “Countrywide accepts NO CRA responsibility to engage in community reinvestment activity in California. None.”

    CLAYTON: Again, true. CRA applies only to depository institutions (banks and S&Ls) and not to other mortgage lenders. Countrywide used CRA guidelines and was praised for it by Fannie. Countrywide sold $600 billion in subprime loans to Fannie – and Fannie bought them because the Clinton administration demanded it.

    MALCOM: In their January, 2008 report, NY law firm Traiger & Hinckley LLP flatly states the CRA was a mitigating factor – not a contributing one to the crisis: “Compared to other lenders in their assessment areas, CRA Banks were less likely to make a high cost loan, charged less for the high cost loans that were made, and were substantially more likely to eschew the secondary market and hold high cost and other loans in portfolio.”

    CLAYTON: You’re quoting a law firm that has a vested interest in the CRA. Traiger & Hinckly makes a bundle due to the CRA. No credibility. Moot point.

    MALCOM: “If we want to point fingers, I think we’d be more accurate aiming them at the consistent Republican policy of deregulation that began under Ronald Reagan. That’s what enabled all the institutional money to pour into risky investments. Deregulation allowed the banking industry to go insane with high-risk debt.”

    CLAYTON: You place far to much faith in regulation, my friend. Fannie and Freddie had more than 200 regulators overseeing them. Those regulators’ reports said “Everything’s fine” — right up until these GSEs failed.

    CRA and these other “fair housing” bills created an environment that encouraged destructive business practices … punished any lender who didn’t want to make bad loans … provided a market for these toxic loans at Fannie and Freddie. Paying millions of dollars to thousands of regulators did nothing to stop or mitigate this crisis.

    MALCOM: “Cronyism and outright fraud and deception by the ratings firms turned that debt into attractive investments.”

    CLAYTON: Agreed. But again: The CRA and Clinton fair housing mandates came first. Had they not existed, there would have been no toxic loans or mortgage instruments and therefore no need to rate them.

    MALCOM: “Let’s allow the Federal Reserve to speak for me here: ‘Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution’s individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution’s CRA activities should be undertaken in a safe and sound manner.’”

    CLAYTON: As I point out in the article, the Fed has no credibility in this. The Clinton Fed’s mandate to lower lending requirements are a major reason why our economy is tanking right now. This quote reads more like a dress-rehearsal for a defense witness than a statement of objective fact.

    Besides — the Fed’s defense of the CRA is specious. The law punished lenders accused of denying low-income loans — but NOT lenders who, to satisfy the law had little choice but to engage in unsafe and unsound business practices.

    Hope this helps …

  227. Brian, I think I address your point in my post to Peter and Malcom above.

    The good news is, we now have THREE dissenting voices presenting intelligent opinions.  YAY!  :)

  228. Clayton,

    You’re a master communicator. This post was so good I told my friend about it (in a bar), he went home, googled you (because I forgot to email him the link) found the article and read it… then told me about how good, clear and on point it was when he saw me next (at the bar of course) haha.

    And your marketing lessons are worth their weight in Gold. I’m constantly amazed… in short… you’re the man!

    Later :)

  229. Brian says:

    Brian, I think I address your point in my post to Peter and Malcom above.

    No, you just repeat the unsupported claim that CRA required banks to write bad loans.  I (and Malcolm) have quoted the text of the law, and it requires exactly the opposite.

    If you have a list of banks that were punished under this legislation for refusing to make bad loans, I’d be happy to read it.  I admit I don’t know a lot about this matter, and it’s possible that the enforcement was not in line with the very clear text of the law.  But if that’s the case, you should be able to produce examples.

  230. PJ says:

    Unfortunately, this astounding jerk has drowned some very salient points in a swamp of vitriol, senationalism, and racism.
    I don’t agree with the bailout. But this guy has such an insulting manner that he’ll probably turn more people against his postion than he could ever hope to gain. Lowest common denomonator.
    Perhaps had he not dropped out of high school and attended university, he would have learned better persuasive techniques. He should be sentenced to read and re-read Plato’s dialogues for the next ten years before he attempts to write anything ever again.

  231. Obama Supporter says:

    When Rich Schefren mentioned during his Ustream yesterday that he talks to Clayton Makepeace every day, I was prepared to come to this blog and be dazzled by his brilliance. What a huge disappointment this turned out to be that I would be subjected to Right wing revisionist history!

    Because the fact is, it was greed, plain and simple, that got us into this mess – plus a bunch of deregulations by the Republican-controlled Congress.

    There’s a brilliant radio program on NPR called This American Life, hosted by fellow Chicagoan Ira Glass. He brought on a professional financial journalist who gets paid to cover financial markets to explain the roots of the subprime mortgage debacle, and not ONE of them mentioned ANYTHING about Clinton policies or "forcing" Freddie and Fannie to make loans to people on welfare. No offense, Clayton, but you must be smoking rock. I encourage EVERYBODY to listen to this program. It’s actually pretty entertaining and well done: http://www.thislife.org/Radio_Episode.aspx?episode=355

    No, they described the subprime mortgage mess in simple economic terms called supply and demand. As developing countries got richer, the global pool of money got bigger (fixed income securities, valued at about $70 TRILLION and which took the entire history of civilization to amass, doubled in only 6 years). And that global pool of money went looking for a home. According to the college-educated experts who are paid to report on the financial industry, if anyone was to blame for this mess (and there’s plenty to go around – on both sides of the aisle) it was Alan Greenspan. According to the experts, he kept T-bills low – too low. The trillions of international dollars out there wanted a better return, so they started turning to something called mortgage-backed securities. Basically mortgages were bundled into these huge packages that were traded on The Street.

    At first, it was a huge boon. International funds began gobbling up these securities, hungry for more. The problem was, there was a finite amount of qualified mortgages out there (supply). When that pool dried up, mortgage brokers started creating all kinds of creative  loan packages, such as no income, no asset (NINA) loans to satisfy the international clamor for more (demand).

    Hence, the birth of subprime mortgages. Hell, I had one, a stated income loan. Fortunately, I got out before my ARM adjusted up 2%.

    I do not do justice to the NPR story. Please do yourself a favor and listen for yourself: http://www.thislife.org/Radio_Episode.aspx?episode=355

    What I’m REALLY disappointed about is when a copywriting genius like Clayton Makepeace, who has real power to influence the thinking of thousands of people, would behave so irresponsibly by spewing partisan misinformation without a fair analysis. And it’s not just Makepeace. These kinds of misinformation campaigns run rampant on the internet. As a professional journalist, I am dismayed by the number of people out there who blog as "experts" on stuff they really know nothing about.

    Clayton, I strongly urge you to take your own sage advice and "stick with what you know."

  232. Andy Bacon says:

    Thank you for the information Clayton.  I didn’t realize the Republicans (who have been in charge of the congress for the last 14 years) were so scared of the evil Democrats that they couldn’t make any changes to lending laws.  I am a registered Republican and have been for 30 years.  I am absolutely disgusted with what Bush, Cheney and their buddies in the congress have done to this wonderful country.  The goal for the last 8 years has been to dismantle the middle class and fill their rich friends pockets by bankrupting our government.
    But they couldn’t have done it without help from media people like you and Fox news.  I used to watch Fox daily until there outright blatant twisting of the facts became too much for me to stomach.
    Bush and Cheney took a budget surplus and turned it into the biggest deficits in history with help of their friends in congress. 
    Your Red Herrings were good but the only stink is with Bush and the Republicans.  And if anyone thinks McCain is going to be any better for this country I have a nice bridge or two for sale.
    I enjoy your blog because it makes me think.  Thanks for the rant.

  233. Hey PJ – that is cheap….

    Time to wake up and get out of PJs…

    Not sure about your spelling – is that lowest common denominator or denounciater?

  234. Simon says:

    I wonder what Warren Buffet would think of this thread? :-)

  235. Peter Black says:

    Dear Clayton…first apologies for my abysmal, unreadable non-formatting here.  Everyone seems to know how to create paragraphs, but I haven’t learned the trick.  Return-return doesn’t to work.  So please bear with me…as I object to this: "See, when the Democrats are in control, investors are desperate for help protecting and growing their money.  The market for investment newsletters grows and they buy other investment products, too.In fact, the investment newsletter industry saw its greatest growth when Carter and Clinton were in the White House.  By contrast, the ’80s saw slow growth and the 2,000s have seen a dramatic shrinkage of our market." First of all, the 1970s were the beginning of this industry as we know it.  Moreover the 1970s were terrible times for investors, period.  It’s well-known and (and here’s the key point) these terrible times started well BEFORE Carter. Carter was simply the last man to step back and got the butt end of everyone’s fury.  He’s not blameless, but we had Ford (remember Whip Inflation Now? and price controls before that?) and Nixon prior to him and we also had the oil shock.  The market was in a funk throughout. But here’s the other key point, individuals had not yet started investing in huge numbers in the 1970s and they were only beginning in the 1980s.  After all, there were no personal computers throughout these decades, the reality of SS’s inadequacy hadn’t sunken in broadly, and tales of instant stockmarket millionaires "next door" were not yet water cooler talk. This all changed in the 1990s with the explosive growth of the Internet investing and Internet companies, the dot.com boom and highly publicized stocks, e.g., AOL, that made investors and entrepreneurs multi-millionaires overnight.  I myself could have put 50K down on the AOL IPO and am still kicking myself. My point is this: The newsletter business went through the roof in the 1990s because folks WERE making a fortune in stocks.  Any stock.  And they were becoming increasingly sophisticated about the ways individual investors could make EVEN MORE with hardly ANY RISK.  After all, there was no downside.  Everything was going up and big time.  So readers were willing to plunk down a couple thou’ on a newsletter, because they knew they were going to make it back on their first trade. Since 2002, needless to say, this has not been the case and newsletters have seen their readership shrink.  In fact, Clayton, because I’m a long-time reader, I remember YOU saying the very same thing back when no one was looking.  Response rates have gone WAY down, and it’s not because Bush is doing such a great job and investors are making so much money and no one is worried about their retirement or their stocks or their healthcare. No.  It’s because folks no see that stocks go up…but they also go down.  Sometimes very quickly.  And no one REALLY knows when they are going to do either or for how long. 

  236. Peter Black says:

    Okay, back to my main point here and a little explanation of why I introduced topics such as slavery when, you’re right, they were NOT the topic of your article.  Here’s the key quote from your piece: CLAYTON: "Now, nobody I know has ever accused Mr. Carter of being the sharpest crayon in the box …  But he did know one thing:  He was by-god incensed — incensed, I tell you — at discrimination of any kind!PB:  This is a nice rhetorical trick, but a trick it is.  Carter was NOT incensed at "discrimination of ANY kind."  And as a successful businessperson (perhaps the ONLY president in recent memory who had been a successful businessperson and was hardly agin’ the free market system), he certainly didn’t want banks giving out bad loans to folks who couldn’t pay them back. He was incensed at the well-documented and indeed centuries-old discrimination against blacks in this country, starting with slavery, moving through the century of lynchings and Jim Crow and persisting to his day in the form of "redlining." This practice was WELL-documented and you can find all sorts of information about it in about two minutes using all the tools you used to research your article. CLAYTON: Make no mistake here:  Oprah was NOT having problems getting loans; nor were most of the millions of other hard-working, responsible minority wage-earners in America."PB:  Perhaps not after she became rich–money talks in this country, at least now–but if you listen to her tell the story of her beginnings, you would hear a very different, and well-known story.  But Oprah, as you use her here, is simply a strawman.  OF COURSE, Oprah doesn’t have trouble buying ANYTHING.  Oprah doesn’t need credit for even the biggest items that most people buy.  Oprah needs credit when she wants to buy NBC, a Caribbean archipelago (maybe), Paramount Pictures, or one third of Manhattan.  You’re simply playing to your audience’s most salient symbol of "black America" when you bring up Oprah.  And then you slip in the line about other "hard working, responsible, minority wage-earners."  But you ignore the well-documented history of "redlining."  You don’t even bring up the controversy.  You certainly don’t state any facts that might support this statement. You simply play to your audience’s prejudices by making what seems to THEM an obvious statement requiring no back up.  That’s smart copywriting, but poor truth-telling.CLAYTON: And it’s not like credit was available to low-income white people with no savings, no down payment and lousy credit histories. PB: Here again, you play on your audience’s perception that they are the victims of reverse discrimination (without getting into the issue).  Of course, these white folk were turned away.  But that’s not the point.  Lots of black folk with good credit histories, etc., WERE being turned away, and that’s why CRA came into existence.  White folks, worthy or unworthy, by and large never had to deal with the obstacle of redlining.  (And if, for some reason, they did, they should have been brought within the guidelines as well.) Again, this is a fact-less, purely emotional appeal to your audience’s pre-existing perceptions/prejudices.  No proof. Clayton, I come to your site for copywriting wisdom and help, and I get it in spades.  But copywriting is not really truth-telling.  It is partial truth-telling. If it were about "the truth," a copywriter selling Ford would be obligated to list all the ways in which Chevies were superior to, or just as good as, Fords.  The only time we do that is when those comparisons help us sell Fords better. That’s just the name of the game, and I have no real complaints about it.  You/I get paid to sell our clients’ products, not to tell the customer "the whole truth" unless that will help sell the product.  (Of course, if you can’t feel pretty good about the product, you have no business selling it.)  So, as a piece of copywriting, I give your piece an A.  As a truthful and unbiased analysis of what really happened to our financial system and its root causes, I have to give you a D.  That’s not a slam; it’s just the truth. When you wrote your piece on Gore and global warming, you had to remind us that your real purpose was to give us a copywriting lesson, not to set off a political discussion.  I believe your purpose here is the same.  (I will say this, though.  If you, personally, believe that what you wrote here is the real, unbiased truth, then I think you have, at the very least, some more research to do. And perhaps some soul-searching.)  

  237. Mike says:

    Hey Peter,Are you a MAC user? I can’t get paragraphs to show here either. Think there is a bug in this blog software…

  238. Dave says:

    In support of Clinton’s thesis, here’s an apropos article from London’s Spectator:


  239. Fiscal Conservative says:

    Clayton,What do you consider to be the most libertarian society on earth?  It seems to me that most US libertarians are more concerned with economic issues rather than social ones.  Is the Netherlands not the most libertarian?  Also, perhaps there isn’t as many opportunities to get rich there as there are here, but people can surely do as they wish more than any other Western country.

  240. Fiscal Conservative says:

    What is your opinion of Bush?  What is your opinion of Palin?

  241. Fiscal Conservative says:

    Here is a few facts for you:In the last 75 years GDP has grown more under Democratic presidents than Republican.  Also, in the last 40 years budget deficits have grown under Republicans.  And, Republicans have been much more imperialistic than Democrats – something that libertarians hate.  You say you are a libertarian, what is attractive to you about the Republicans other than low taxes?  They increase deficits, they spread the empire too thin, they spend too much money on defense, and they are for curbing civil liberties.  Socially, democrats are more liberal.

  242. Fiscal Conservative says:

    Why not put up a dumb picture of Bush.  You put up one of Obama.  Clearly you dislike Democrats as a whole.  How could you not be insulted by the likes of Sarah Palin?  Why not put up a dumb picture of her.  If it wasn’t for liberals equal rights and civil liberties would be much worse today.  As a libertarian, you should appreciate that.

  243. Peter Black says:

    Yes, Mike, I am a Mac user.  I had thought of that, but then rejected it.  But given what you say, maybe that’s the problem.

  244. Fiscal Conservative says:

    Your entire argument is predicated on the CRA.  You might as well simply tell readers to go read the CRA listing on Wikipedia.  You have offered nothing substantial in this posting.  Just go to the wikipedia page that you got all this from and you will see arguments against what you are advocating.  Also, if you read Empire of Debt, by libertarian followers of the Austrian School of Economics, you will understand that the major cause of this was Greenspan, who kept interest rates artificially low.And in 2001 we were supposed to go into a recession after 9 bull years but we didn’t.  We pushed that off.  Everybody started spending and spending and a huge housing bubble was created due to low interest rates, people taking out equity lines on their homes, speculators, and lax lending practices.  To blame this solely on the CRA is childish.And if you want to talk about libertarian economic stances and warnings made by the Bush economic advisor, how about the warnings made by Bush’s Treasury Secretary at the same time!  Read this excerpt: O’Neill was appointed Secretary of the Treasury by George W. Bush. O’Neill was a somewhat outspoken member of the administration, often saying things to the press that went against the administration’s party line, and doing unusual things like taking a tour of Africa with singer Bono.A report commissioned in 2002 by O’Neill, while he was Treasury Secretary, suggested the United States faced future federal budget deficits of more than US$ 500 billion. The report also suggested that sharp taxincreases, massive spending cuts, or both would be unavoidable if the United States were to meet benefit promises to its future generations. The study estimated that closing the budget gap would require the equivalent of an immediate and permanent 66 percent across-the-board income tax increase. The Bush administration left the findings out of the 2004 annual budget report published in February 2003.O’Neill’s private feuds with Bush’s tax cut policies and his push to further investigate alleged al-Qaeda funding from some USA-allied countries, as well as his objection to the invasion of Iraq in the name of the war on terror - that he considered as nothing but a simple excuse for a war decided long before by Neoconservative elements of the first Bush Administration (2)- led to his resignation in 2002 and replacement with John W. SnowThe Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neill (ISBN 0-7432-5545-3), a 2004 book, described the Bush administration during O’Neill’s tenure. Written by former Wall Street Journal reporter and Pulitzer Prize-winning journalist Ron Suskind, the book says Bush’s economic policies were irresponsible, Bush was unquestioning and uncurious, and the war in Iraq was planned from the first National Security Council meeting, soon after the administration took office, even though Bush had promised not to engage in nation building during his campaign.[1][2]Also, let’s look at the major problem: the national debt!  How do Republicans stand on that?  When Reagan took office the US was the largest creditor in the world.  When he left office it was the largest debtor in the world.  When he took office the debt was at 930 million, 33% of GDP.  When he left it was hovering over 50% of GDP?  That’s a 50% increase!  During Clinton’s time period it went down as a % of GDP.  And when Bush took over it was at around $6MIL, now it is around $10MIL!  You said that it is ok that Reagan took the debt up because of the Cold War.  Well, I would argue then that if you feel that was OK then we needed to pay for it with taxes!  Not with debt.  The facts just aren’t there for Republican spending.  They do what no business should do.  They decrease revenues and increase spending.  How is that intelligent.  And how is that libertarian?  Furthermore, nation building, imperialism, and such acts are not approved of by libertarians.

  245. Fiscal Conservative says:

    Clayton,Most liberals just find social issues and issues like the environment more important than the small economic differences between Republicans and democrats.  Both parties absolutely suck on economics according to libertarian standards.

  246. Peter Black says:

    Just one more point, and then I’ll stop, because this is not a political blog.  When you say…"CLAYTON: Again, true. CRA applies only to depository institutions (banks and S&Ls) and not to other mortgage lenders. Countrywide used CRA guidelines and was praised for it by Fannie. Countrywide sold $600 billion in subprime loans to Fannie – and Fannie bought them because the Clinton administration demanded it."…you are not making a clear argument.  As Brian points out, the GUIDELINES prohibit unsound loans.  What you’re saying here, by induction, is the CRA guidelines REQUIRED Countrywide to make UNSOUND loans to people who clearly couldn’t pay them back.  But this is not true on the face of it.  All one has to do is read the guidelines to know that. And there is no evidence (at least none you’ve produced) they were enforced this way, and even less-than-no-evidence they were enforced this way to an extent capable of bringing down all of Wall Street. I sorry, but you just haven’t made your case. "Obama Supporter" quotes the npr story, which, frankly, makes a lot more sense. (Course an Obama Supporter WOULD be listening to npr and thus has no credibility, yes?  But can’t we say the same thing about a Libertarian bashing Democrats?  No credibility if one is looking for an unbiased analysis.) There was a similar story on Moyers or Now and maybe in The Atlantic on how the lending industry discovered "the gold in them thar hills" known as the poor of this country.  Take used car dealers.  Sure; the poor were bad risks, but they could be charged usurious rates; if they managed to make super-high payments, all the better; and if they defaulted, the lender got to keep the down payment, the fees, and the repo-ed property simply bounced back into inventory.  And the poor, who are stuck spending hours on public transportation to get to jobs paying the minimum wage, are STARVING for the freedom and sense of respect they get from owning a basic symbol of Americanhood:  the car.  So they sign anything and understand nothing of what they sign.  (Do most well off or even middle-class Americans read or understand the fine print on a loan?) They end up paying 2/3 of their income to make car payments–a fact they have trouble calculating beforehand–and when the realization dawns, they have to give up the car, but still lose the down payment and the loan fees they paid.  The car’s been used for, say, seven months, and it’s back on the lot ready to be resold.  Nice scam!  Now, Clayton, if you tell me that your article was about mortgages, not car loans, I will say that many experts believe this rot is spreading throughout the credit industry.  But again, thanks for the great copywriting lesson.

  247. Elleyne Kase says:

    Exerpts from "Creature from Jekyll Island." Page 311… the colonies turned to printing presses when the colonial war started. At the beginning of the war in 1775, the total money supply for the federated colonies stood at $12 million.
    • At June of that year, the Continental Congress issued another $2 million. Before the notes were printed, another $1 million was authorized.
    • By the end of the year, another $3 million.
    • $19 million in 1776
    • $13 million in 1777
    • $64 million in 1778
    • $125 million in 1779
    • A total of $227 million in five years on top of a base of $12 million is an increase of about $2000%
    • On top of this "federal" money, the states were doing the same in an approximately equal amount.
    • And still more: the Continental Army, unable to get enough money from Congress, issued "certificates" for the purchase of supplies totaling $200 million.
    • $650 million created in five years on top of a base of $12 million is an expansion of the money supply of over 5000%
        Although the economy was devastated by this flood of fiat money, most victims were unaware of the cause. In 1777, the sentiment of a large segment of the population was expressed by the words of one patriotic old lady who said: "What a shame it is that Congress should let the poor soldiers suffer when they have the power to make as much money as they choose."
        The immediate result of this money infusion was the appearance of prosperity. After all, everyone had more money and that was perceived as a good thing. But this was quickly followed by inflation as the self- destruct mechanism began to roll. In 1775, the colonial monetary unit called the Continental, was valued at one-dollar in gold. By 1779, just four years from its issue, it was worth less than a penny and ceased to circulate as money at all. It was in that year that George Washington wrote: "A wagon-load of money will scarcely purchase a wagon-load of provisions."
        Then, as now, those who suffered the  most  from fiat money were those who held the most  trust in government. In 1777 these were mostly the Whigs, for it was they who patriotically held paper money and, as a result,  lost their livelihoods and their life savings. The Tories, on the other hand, mistrusting both government and its paper money, passed the bills as quickly as possible in trade for real assets, especially gold. Consequently as a group, they weathered the storm fairly well.
        All of this was painfully fresh in the memories of the delegates to the Constitutional Convention and, as the opening session convened in Philadelphia in 1787, there were angry mobs in the streets threatening the legislators. Looting was rampant. Businesses were bankrupt. Drunkenness  and lawlessness were everywhere to be seen. The fruit of fiat money had ripened and the delegates did not enjoy its taste …
        In 1786 George Washington wrote to James Madison, "No day was ever more clouded than the present. We are fast verging on anarchy."
        In February of 1787, Washington wrote to Henry Knox:"If any person had told me there would have been such a formidable rebellion as exists, I would have thought him fit for a madhouse."
        Just three months prior to the opening of the convention, Washington voiced his reasons of  rejecting the notion of fiat money. In answer to the complaint that there was not enough gold coin (specie) to to satisfy the needs of commerce he replied:
       "The necessity arising from want of specie is represented as greater than it really is. I contend it is by the substance, not the shadow of the thing, we are to be benefited. The wisdom of man, in my humble opinion, cannot devise a plan by which credit of paper money would be long supported; consequently, depreciation keeps pace with quantity of the emission, and articles for which it is exchanged rise in a greater ratio than the sinking value of the money. Where in, then, is the farmer, the planter, the artisan benefited? an evil equally great is the door it immediately opens for speculation, by which the least designing and most valuable part of the community are preyed upon by the more knowing and crafty speculators."
        The Constitutional Convention
        This was the prevailing view held by the great majority of the delegates to the Convention. They were adamant in their resolve to create a constitution which would prevent any state, and especially the federal government itself, from ever again issuing fiat money.
        The Spanish silver dollar was adopted by the Congress in 1785, as the official monetary unit of the United States. It was by unanimous vote. By December 16, 1789 (two years after the Constitutional Convention) edition of the Pennsylvania Gazette declared: "Since the federal constitution has removed all danger of us having a paper tender, or trade has advanced fifty percent. But that was just the beginning. Historian Douglass North says that "the years 1793-1808, were years of unparalleled prosperity." The federal deficit which amounted to 28% of the expenditures in 1792, dropped to 21% in 1795. By 1802 the deficit had disappeared al together and had been replaced by a surplus that was almost as large as the government’s total spending."
        On the specific subject of paper money without backing by gold or silver, George Washington wrote: "We may one day become a great commercial and flourishing nation. But if in the pursuit of the means we should unfortunately stumble again on unfunded paper money or any other similar species of fraud, we shall assuredly give a fatal stab to our national credit in its infancy."

    My suggestion: The US went totally off the gold standard in 1971. Just 6 years later Carter made his "Reinvestment Act." Inflation had put the purchase of a home out of reach of the lower income families. This was a do-good, knee jerk reaction to inflation caused by us going into the free-fall fiat money system. The do-gooders, in concert with speculators, compounded the fiasco by creating mortgage based securities (Misnomer, a security is not "secure" it is an IOU) which were then put in the international casino. Real estate speculators drove the price of property up. The Federal Reserve made getting money less expensive which helped real estate buy/build even more. Our standard of living went down, the cost of maintaining a living wage went up. Businesses forced to survive went elsewhere for cheaper labor and manufacture of goods. Put a few wars in the mix. Add the the Federal Reserve factor in, remember its not just the $700+ billion that the "bailout bill" is putting into the system, the FRB has been printing its own $100s of billions to prop up the system. AND WALAHHH. We are now bankrupt. We have to BORROW FROM FOREIGN COUNTRIES EVERY CENT TO PAY FOR OUR DAY TO DAY ACTIVITIES OF THIS COUNTRY. Now what happens when the dollar is so devalued, as in "A wagon-load of money will scarcely purchase a wagon-load of provisions," that those foreign countries decide not to float us any more loans?

  248. Peter Black says:

    Elleyne writes: "My suggestion: The US went totally off the gold standard in 1971. Just 6 years later Carter made his "Reinvestment Act." Inflation had put the purchase of a home out of reach of the lower income families. This was a do-good, knee jerk reaction to inflation caused by us going into the free-fall fiat money system."  No; I would have to say it was a do-good reaction to the racism inherent the practice of redlining.  Gold and its standard are a loooong discussion, but I think its proposed beneficial effects are, at best, speculative.  I mean the fact that we went completely off the gold standard as LATE as 1971, and North has to point to "the years 1793-1808…years of unparalleled prosperity" as the good old days makes this argument laughable on its face. Beside which, them days weren’t so hot for black folk, Indians, and women.  Nor for folks who didn’t own property. Why not turn the clock back to the days of the Roman Republic …things were pretty good then, too (if you weren’t a slave).

  249. Wayne says:

    Just a note to add to the flurry:

    First of all I worked for a firm  called TRW. 
    You might have heard of them if you are old enough.

    (I was born in 45 and am 39 years old–If they can do it so can I)

    I worked for that corp for 23 years.

    I went through 5 name changes wage cuts and made it through several lay-offs.

    My boss was a friend and called me on Friday at 3:30 PM.  He said Wayne you are terminated.  Since he was my friend and I was used to these things from him.  I stated that I was proud of him for using a 3 syllable word and I would get back with him after washing the car.  He immediated responded Wayne, we are all terminated.

    5000 folks nation-wide were terminated at 3:30 pm.  They gave us an 800 number to call which was a recorded message saying we were immediately terminated.  I called it 1 800 U R FIRED.

    By the way, this was 2 years before the Enron fiasco.

    Fast forward to the end of this my 401K plan was worth $1700.00 before tax and penalties.

    I got another job that lasted 2 years before they (and I) suffered from Enron.  

    I was unemployed for a year after that.  Yes, age discrimination is alive and well.

    I finally took an out of state job for much less than I should have and have had that job for over 5 years.


    I agree I was dumb for not working for myself.  We are where we are today by the actions we took yesterday.  I do not have any retirement or health insurance.

    Two points here:

    The situation we are in now is not new or just caused by the recent "loan crises".  It has been advancing ever so slowly over a long time.

    Here I think is the most important point and I am sure I also will get resistance from this.

    Although you say to collect as many dollars as we can please understand that I respectfully disagree.

    Collect the dollars as you suggest and convert ASAP to something more liquid.  Although our "economic experts" (who never seem to agree on anything) have stated in no uncertain terms that we are absolutely NOT going to repeat the environment of the 1930 era, I think we are. 

    Be an expert at barter.

    By the way you alluded to this in your warning:  Useless paper (you called it counterfeit) is what we got.  It is no longer backed by anything.  It used to be a silver certificate but now it is useless.
    Point 2 (I bet you are glad):

    Find a way to play the system.  Millionaires were made in the 30′s and they weill be made again by folks with a great wealth in these hard times to come.


  250. Wayne says:

    To David,  msg 221.

    In my opinion it is much worse than you have pictured.  Americans have been losing (relinquishing) our rights for a long time.

    We have been thrown –gently in the slowly heated pot of water.

    We want the government to do what we should do.

    In Houston TX some wanted to throw the  book at someone who shot some robbers (proven) who were robbing his neighbors house. They had been thrown out of the country and made it back in.  His mistake was running his mouth on 911.  They could have cooked him.

    The real issue here is that an off duty was already on site and took no action.  I have seen many a case when the police was called and they responded longer than 30 minutes out.  They were in city limits.  Police these days are forced to be over glorified report takers.  Even worse is that it is not even their choice.

    Still we want the government to fix it.  Lets put up more cameras.  That’ll fix things.

    In the early days of America there were carpenters, blacksmiths, and the like.  Today we want to work for another company and then demand that they supply us with health care, lots of holiday and vacation days and the like.

    Even though it isn’t 100% correct in my view I feel that along with the meager food stamp and welfare payments that are given out there should also be a book given.  Rich Dad Poor Dad.  If 1 out of a hundred would take the wealth of information in there and build personal wealth the government would actually get richer. 

    A broader tax base. 

    Just to let you know I have absolutely no affilliation with Robert or the company in any way.  (although I wouldn’t mind a reward) :>)

    Again we would rather let the government fix it.

    We the lobsters will be cooked unless we start floundering around in defense of ourselves.

    Unfortunately the folks who should be observing this sort of information aren’t reading these comments.  They are watching some garbage on TV and complaining about the lack of government subsistance.  The sad part is that many of them won’t even be able to watch TV after the first quarter of next year when the signal goes from analog to digital.  Even though the stations have repeatedly informed them that the TV won’t work there will be no action taken by those folks. 

    Now if only the government had taken the action to GIVE all who might watch TV an analog to digital converter……..


  251. Saige says:

    Wow PJ… that was pretty classless statement to make about Clayton. 

    Considering you chose to come to this site, read an entire article about something you are obviously dead against… AND… got worked up enough to post a comment, Clayton once again accomplished what he’s a master at doing: getting a RESPONSE. 

    How do you think it makes you look to suggest to someone who is solely responsible for pulling in multi-millions of dollars in profits (in numerous industries) over the past almost 40 years… that he should learn ‘better persuasive techniques’???

    I sure wouldn’t want to be an employee of yours… or your employer, for that matter.

    I don’t know what you do for a living, but someone gave me great advice once in the workplace that I think you could benefit from: don’t play with the pit-bulls when you’re a Chihuahua.


  252. Eldo Barkhuizen says:


    Have you seen this shocking video? Fills in more of the background to the current crisis.




  253. Brian says:

    According to the college-educated experts who are paid to report on the financial industry, if anyone was to blame for this mess (and there’s plenty to go around – on both sides of the aisle) it was Alan Greenspan. According to the experts, he kept T-bills low – too low. The trillions of international dollars out there wanted a better return, so they started turning to something called mortgage-backed securities.

    The alternative to keeping T-bills low is to raise their rates to make them more attractive to buyers.  If the Treasury Bill rate was more like 5% (like it was ten years ago), and (say) twenty trillion of that global pool of money had been sunk into T-bills, that puts the federal government on the hook to pay out a trillion a year in interest payments (2008 federal budget is on the order of three trillion).

    So while it’s true that a higher T-bill rate would have driven more of that investment money into T-bills, and there would have been less pressure to create these exotic and rickety mortgage-backed securities, the net effect probably would have been a different problem rather than no problem.

  254. richard says:

    wow this is great stuff I have read every last comment and the entire article to boil it all down  We are all in alot of trouble unless we are wise and prudent now is the time for action I read Claytons recomendations, would be interested in more specific things of what we should do

  255. Fiscal Conservative says:

    Thanks for the lesson on spin city.  This is clearly partisan and not to be taken as any sort of inpartial examination of the truth.  People can tell when it is.  Also, it looks as if you got all your information straight from Wikipedia by just looking up the CRA.  You mention the criticisms from one side but fail to mention the criticisms from the other.  And you have absolutely no proof of what you say.  You make deductions offering facts.  Others can make deductions offering other facts.  This is called selective reasoning.  The truth is out there somewhere, but is definitely much deeper than the one you offer.  Furthermore, the greatest investor in American history is for Obama.  How do you argue with that?

  256. Andy Iskandar says:

    Hi Clayton,

    Do not stop your political rantings… errrr, analyses. :D

    I am not from the US and neither am I a citizen. However, I am an ardent student of history and economics and I have always been a huge fan of the ideals & principles on which the US was founded.

    I have read, with great interest (and amusement), your article and the ensuing comments. First of all, I do not claim to be an expert on US history, especially its political and economic history, but let me just say this… my whole-hearted sympathies go out to you.

    I’m surprised you have been able to survive some of the scathing comments on this post.

    Maybe it’s because I am able to view your article with a neutral & unbiased eye, but honestly, I do not get the impression (from reading the article) that you are a hard-core Republican, or even trying to defend the Republicans, as many of the comment-posters have so vehemently expressed.

    I sincerely thought that it was quite a well-balanced, well-considered and well-researched piece. I guess it is a great universal truth that human beings (you and me included I guess) are rarely able to see almost anything without our rose-colored (or any other color for that matter) glasses on.

    And that is why one of the most important rules in copywriting is to always express our services or products in terms of the prospect/customer/end-user. We are all too entrenched in our own lives to bother taking the trouble to see the world from others’ trenches.

    Anyway, my point here is to really express my continued support for you (or at the very least, your writings :D ). I have been a subscriber of yours for quite a while now and I must say that I appreciate ALL your articles… really.

    I may not agree with some of your views sometimes but hey, that’s why we are on the Internet in the first place right? To learn and be exposed to other ways of thinking, no matter how warped.

    Besides, I love the way you write and how you structure your articles.

    So, keep it up Mr. Clayton Makepeace and may you never stop ranting…. I mean writing (I have got to stop my freudian slips…  :D ). As things stand now, you will always have a reader (and a fan) in me.

    Andy Iskandar

  257. Gene says:

    Clayton Makepeace-what an eloquent name!
    For your truth and honesty, I applaud you.  It’s great to know that there are a few of us that have more than ‘ two miniature-marshmallows and one Lil’ Smokie’  between our legs.   [ No offense Wendy! ]  AT ANY RATE… the most important action we can do, as all children of a bad inheritance must do, is to awake from the bad dream – learn what created that bad dream – and through enlightened awareness put that Bogeyman back into the dark pit from which he came!  Thank you Clayton for the sharp knife in a very dense fog.. also thanks to mises.org  and to our Founding Fathers.  It took many decades of corruption by those who had our trust -under oath – to adhere to the Constitution  yet they did not… and I suspect many more decades will come to pass before things are set right.   ’Time  is  the  Fire  in  which  we burn….   ‘     Now is the time to burn the bastages that created the fire!!      Respectfully.

  258. Peter Black says:

    Andy Iskandar writes: "I sincerely thought that it was quite a well-balanced, well-considered and well-researched piece." Hmmm.  I guess only if you don’t know anything about the topic under discussion.  But I agree:  Clayton is a great writer and copywriter in particular.

  259. Edward says:

    What you are saying is the Foxes are in charge of the hen house?????????

  260. HowDyd says:

    Bravo, Prefessor Makepeace! 
    We can only hope Sen McCain finds a talking point or two here for tonight’s festivities in Nashville. 

  261. HowDyd says:

    Bravo, Professor Makepeace!  We can only hope Sen McCain finds a talking point or two here for tonight’s festivities in Nashville. 

  262. Ryan Healy says:

    Here’s an interesting turn of events. Looks like martial law may already be in place as of Oct 1, 2008.

    Are the markets being manipulated intentionally to cause fear? Will there even be an election?


  263. Thanks everyone — sorry I haven’t weighed in for a while — I was out of town over the weekend for a wedding.  (Yeah.  I hadda wear a suit.)

    Great to see you all still engaging each other on this.  I really want to write about "those zany Republicans" next week (replete with unflattering pics), but I think I’ll wait a week or so and return to a marketing theme first.

    Here’s a thought, though … with Obama enjoying a six- to eight- point lead in the polls, he doesn’t need more votes … and barring an unforseen event, our votes won’t do McCain much good either.

    So I’m thinking … will there EVER be a better time to vote your conscience?

    Instead of holding your nose and voting for either major candidate, why not cast a protest vote for a third party candidate whose convictions are more in line with your own?

    Better believe that if enough of us do it, it’ll send a resounding message to these bozos in both parties.

    What do you all think?

  264. BTW:  Anybody notice that the Dow has plunged about 15% since this article was first published?  DESPITE the passage of the $1 trillion-plus bailout package?

    Hope you heeded my warning!

  265. Peter Black says:

    Clayton writes: "Here’s a thought, though … with Obama enjoying a six- to eight- point lead in the polls, he doesn’t need more votes…"  Oh, but he does IF you support him. A bigger victory means the perception of a true mandate to do something.  A narrow victory means no mandate. That would please the non-Obama supporters, but shouldn’t please the Obama supporters.  So Clayton is asking us to support a candidate who has a 100% chance of NOT winning (and therefore of not having the opportunity to effectuate change) and depriving a candidate who could win from getting the show of support he needs to govern effectively.  Nice rhetorical trick, though.

  266. To Peter Black & Fiscal Conservative:  I’ve said my piece and presented my evidence and you’ve done the same.  The folks here are entirely capable of drawing their own conclusions.

    As far as a "mandate" for Obama is concerned, that — and the fact that he’d have a Democratic Congress — wake me in a cold sweat.  But only every other day.  The other half the time, I’m equally worried about what McCain would do to us.

    Historically, the cry of "Crisis!" is the last thing we hear before Washington smashes our liberties, invades our privacy, tramples our constitutional rights, sends our sons and daughters off to die in foreign wars and steals our money. 

    And thanks to Bush and the U.S. Congress, we are up to our collective arse in crises — including but NOT limited to … 

    ** Nuclear Russia and Pakistan spinning out of control and soon-to-be nuclear North Korea and Iran likely to hand city-busters to terrorists.  

    ** Sky-high energy and food prices, crashing home equity and more than $3 trillion in retirement plans wiped out since the subprime mess began and 750,000 U.S. jobs lost this year alone. 

    ** The average NYSE stock down 38% since last October and U.S. bankruptcy rates surging nearly 30% in the 12 months ending in June 2008 (and they’re barely getting warmed up!).

    ** The collapse of the credit markets and the slowing economy endangering the very survival of GM, Ford, Chrysler and many other huge employers and the specter of a nationalized airline industry just over the horizon.

    ** The projected federal budget deficit for 2008 up 66% — from $246 billion to $407 billion — BEFORE adding the cost of bailing out Fannie, Freddie, AIG … or the $1 trillion “rescue” bill … or the additional $1 trillion or so spent by Congress, the Fed and the Treasury to fight this crisis so far. 

    ** Off-budget obligations for Social Security and Medicare that will have to be paid already between $30 and $50 trillion (depending on whom you believe) — and both candidates proposing massive new spending plans including (unbelievably!) a national health insurance plan that will ultimately make the tens of trillions we owe to Medicare recipients seem like a drop in the ocean.

    And now, the same idiots who created this unmitigated disaster — Washington politicians in BOTH parties — are busy USING IT to justify new legislation that, if history is any indication, will inevitably make matters worse.

    All I can hope is that enough Blue Dog Democrats and fiscally conservative Republicans will remain in Congress to block every economic measure the new president tries to ram down our throats.

    Or better yet:  That since it looks for all the world as though Obama will be our next president, we can pray he’ll do no better fulfilling his promises as president than he did as an Illinois state senator.

    While I dread an Obama administration with Barak’s scum-of-the-Earth buddies like slumlord Tony Rezko as Housing Secretary, terrorist Bill Ayers as chief of Homeland Security and Jeremiah "Goddamn America!" Wright as White House Chaplain and our new “spiritual leader” …

    McCain, while seemingly an honorable human being, clearly has no idealogical compass — no understaning of economic issues or core beliefs other than, of course, the belief that he should be president.

    So once again, I repeat my conclusion at the end of this article:  "If you’re trusting Washington to save you, you’re screwed."

  267. Len says:

    Nicely put, Clayton. Thanks for summarizing the events leading up to this mess — and another outstanding copywriting lesson, of course. Looking forward to seeing the other side of the coin!

  268. Irene says:

    I just wanted to say I have found this whole series of posts fascinating & very educational. And we should thank our lucky stars we live in 2 countries (Canada & the US) where this whole dialogue is possible.
    Now I have a couple of questions for the Americans on board. Recently CNN.com taked about the "magic 60" & the "Lieberman effect". Having a multi-party system here in Canada, anyone of whom potentially could become Prime Minister, & Senators (not referring to the Ottawa Senators ) who are appointed rather than elected, could some one please explain "magic 60" & " the Leiberman effect" & what impact it could have on the whole financial situation. Thanks.

  269. Peter Black says:

    Clayton writes: "While I dread an Obama administration with Barak’s scum-of-the-Earth buddies like slumlord Tony Rezko as Housing Secretary, terrorist Bill Ayers as chief of Homeland Security and Jeremiah "Goddamn America!" Wright as White House Chaplain and our new “spiritual leader” … Hehe!  You’ve GOT to be kidding, Clayton.  Are you REALLY going to traffick in this nonsense?  

  270. It was a joke, Peter.  Get a grip.

  271. Peter Black says:

    I figured it was a joke, Clayton.  But your audience doesn’t think it’s a joke.  That’s why the McCain-Palin ticket is pushing this stuff non-stop.  Just be aware, guy.

  272. David says:

    Clayton’s CRA argument:  "Nailed!"

    Clayton, with a little help from the WSJ and last Sunday’s 60 Minutes reporting; I believe that I can put the final fork in your argument that "those dirty dems and their CRA caused this crisis.

    When getting at the root cause of all this, even the Wall Street Journal has the CRA as the last to blame.  Their primary villains are Banking Regulators and the FED’s actions of flooding the world with cheap money that found it’s way back into our housing markets.

    But the real question that addresses your argument is:  "What % of the toxic loans were CRA?"  If that number has no weight, you are going up against an irrefutable argument.  You were presented with those #’s from Michigan law professor Michael Barr.  "Under the penalty of perjury" he testified before the House Committee on Financial Services – that 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations.

    Your response was:

    "Not exactly what you’d call an "objective source," so any data presented by him should be double-checked." 

    So even someone presenting data "under the penalty of perjury" can’t be trusted because he worked for Robert Rubin!  Clearly, all your research is coming from right-wing publications with a hell-bent mission to hang this on the CRA and Dems.

    But as you say, let’s double check or look at Michael Barr’s research from another angle.

    60 Minutes – last Sunday:

    The real reason why the banks lost all the money was selling " Credit Default Swaps!"  Essentially, they were insuring the mortgage investments "without the capital to back it up."  The investments were sold like "if you bet black on a roulette wheel, you win when it shows – but if red came up, you got a push!"  Bear Stearns, Lehman Brothers, Merrill Lynch , Morgan Stanley, Goldman Sachs and AIG were all making $Billions just selling the Credit Default Swaps – let alone the bogus rated investments that they insured.

    These scum bags also had their own sub-prime lending farms that cranked out $Trillions in toxic loans – including commercial properties.

    BUT, the Credit Default Swap market is estimated at $60 TRILLION DOLLARS of bad mortgages. You argued that $600 BILLION in CPA paper went to Fannie & Freddie.  What weight does that have in a $60 TRILLION DOLLAR market – even if ALL those loans were bad?  NaDa! 

    So there you have it Clayton, the CRA was just a little pea in a huge pod.


  273. Peter Black says:

    David…good work.  Of course, it should be obvious to anyone just eye-balling this that the CRA could NOT be responsible for bringing down the stock markets and arguably all the economies in the world.  With all due respect to butterfly wings, this just ain’t gonna happen.  It’s just that the CRA-type of argument appeals to the preconceptions of Libertarians and right wing Republicans because it places the blame on "government" and "the party that likes government"–the Democrats.  We will see if Clayton can write an anti-Republican piece with the same emotional oomph that he gave to this one.  If he does, then he’s a true master.  But I predict he cannot.  One telltale sign?  He’s up in arms about a trillion here and a trillion there for this and that bailout, but not a mention of the $1-3 trillion we will be spending on the war in Iraq to kill people.

  274. Peter, David, you guys are from Central Casting — right? 

    Someone from our list called CC and asked to send over a couple of the most partisan "don’t confuse me with the facts" guys they could find.  Right?

    At any rate, I’m bored with making the same points over and over again.  I’ve said all I’m going to on the subject.  Enjoy President Obama, guys.  I just know you’ll be happier than a couple of pigs in slop.


  275. Peter Black says:

    No, Clayton, we’re from the "we’re still waiting for you to provide us with some actual facts and a plausible explanation" crowd!

  276. David says:

    Thanks Peter, you’ve made some great points as well.  I’m still a big fan of Clayton’s but I think he’s wrong about the CRA’s impact on this crisis.  But he’s made a lot of other points throughout that are right on the money.  All considered, you can’t beat the quality of marketing and insight he comes up with – just look at the TP issue he came up with today.

    I’m neither a righty or lefty – to me, both parties are opposite wings of the same K-Street bird.  When you apply the standards of what our gov is supposed to be:  "A gov of, by and for the people,"  We have a gov that has become a total fraud – be it the political, legislative or monetary system – the people are being scammed and robbed from birth to grave while our freedoms are being stripped away.  And most don’t even know it.

    Just went to post this and noticed that Clayton bailed out.  I guess we are left with:

    "How did $600 Billion in CPA loans (most of which are good) bring a $60 Trillion market down?"

    I’ll bet Clayton will double down on the Grey Goose before starting another political post.  LOL!  All said, he’s a great guy!


  277. Peter Black says:

    I totally agree with you about Clayton.  That’s why, as a copywriter myself, I come here.  I said that in one of my earlier posts.  He’s the tops.  I may have bigger political disagreements with him than you do–for example, I’m in no ways a Libertarian–and I did read Bastiat, Clayton–but politics isn’t why I come here.  BTW, Clayton bailed because the facts and solid argument turned against him -:)  Fortunately, he has readers willing to go to the trouble of keeping him honest -:)-:)

  278. Eldo Barkhuizen says:

    Hi Clayton,

    Came across this streaming audio yesterday — gives even more startling facts and shocking behind-the-scenes details about WHO’s responsible for the money crash and WHY they’ve engineered it.

    It will be on the website for just a few more days, so please listen to it asap. (Any fellow Christians reading these posts MUST hear what Mr. Marrs says.)

    It’s on this website, on the right-hand side under "Streaming Audio 24/7," and is entitled "Dollars for Moloch":



  279. Reminds me of the saying "If it’s to be, it’s up to me." You can’t rely on these nitwits build your business for you. At best they might just leave us alone so we can keep some of our money.

  280. Angela DeVera says:

    Wow! And I thought you were just a marketing/copywriting guru.
    Go Clayton….you’ve got it. Unfortunately, the people don’t want to hear the truth.

    God Bless.

  281. paul says:

    well you ve just lost me. maybe you should have kept your mouth shut. if you want to inform people the least you can do is have some respect, and avoid to be partisan in any shape or form. I know waynesville, nc. I used to go to western carolina university so I know how that region is higly pro republican. In my opinion and i will probably shoke a lot of people Clayton your attitude right now is what drove this country to its bad situation. Politic of pointing fingers, leaving in complete state of virtual reality , refusal of taking its own responsability. and EGO I don’t know if I can still follow your blog. As they say in the bible don’t follow a tainted preacher. this article just tainted you. How many of your stuff will be bias instead of oure truth?

  282. Rabbi of Response says:


    Thanks fo the education. You filled in a lot of the blanks and answered a lot of the question marks I had on this subject.

    Fractional banking, and a privately owned banking system, are certainly cogs in the overall problem that has brought this country to its knees.

    But your insights regarding the credit crisis, really pin pointed the problem and hammered the nail right on the head.

    I especially appreciated your ability to write about a very complex subject matter and explain it with such simplicity!

    Great article!

    The Rabbi of Response

  283. Jay Peters says:

    The only thing I’ve found GREATER than this article is – all the COMMENTS!

    Thank you Clayton for having the GUTS to start this (by writing and posting) and thank you to EVERYONE who is posting their comments.


    Jay Peters

  284. Morgan says:

    I have not had time to read all the posts here, but it seems we’re missing the core issue:  our monetary system.  Forget all the other stuff.  Yes, there are people building their empires, but we have to get to the core of this all and not get caught up in all the distractions we might think are more important, which are just symptoms.  Our monetary system is screwed.  It’s the same old model and it only leads to one thing:  debt and inflation.  We need a better model.  Any ideas?

  285. Yo Momma says:

    Well,  What can I say…Some of the most interesting reading I have dug into in a long long time.

    It is unfortunate that we are this far up &*%# creek, but I think its been more than one party paddling in the wrong direction.  

    Obama is clearly NOT the answer however.  I mourn McCains loss, and although he clearly "manned" up and said the blame was his own, I personally know people who voted for Obama, so I can blame them as well.  Unfortunately I know them well, I work with them, I care about them…and they are dead wrong.

    What I am going to enjoy watching is these hopeful Obama supporters that are expecting the economy to do a quick U turn in January.  They are HONESTLY expecting this!  I watched them this morning!  So the reporter asked them respectfully, "what do you think will happen if things do not turn around as quickly as people are hoping?"  Their responses?…"Well, people just need to be patient" ….Oh I see…now we have to be patient…why is that, because he is a newbie?  Because he has no experience?  Because his ideas SUCK? 

    Maybe you should have thought about that PRIOR to voting for him….


    ANYWHO….I love the USA…where we can all just let it all hang out and say what we think.  Let ‘er rip!

  286. Han Poelstra says:

    (270 Irene) "And we should thank our lucky stars we live in 2 countries (Canada & the US) where this whole dialogue is possible." 
    What planet are you from? At a time like
    this discussions like these are going on all over the world!

  287. Tia Dobi says:

    I’ve always wondered why direct response copywriters haven’t created campaigns to sway on political/reform/socio-economic issues…for many years I’ve thought of them banding together and causing change. (nice spoof NY Times to come out recently…great effort of thinking + words + distribution.)

    Could they help create world peace? What could they do?

    How would the world’s top dr writers make this happen?

    We need a new Constitution for the 21st Century.
    My dream Constitution would be one that affirms the principles of personal liberty and property ownership (including the money you earn) and privacy and that makes it a crime for any politician or bureaucrat to propose a law that would abrogate those rights.One that bars Congress from enacting any law regarding anything you say, believe, own or do – and restricts the government to enacting laws that prescribe penalties ONLY for actions a citizen or company takes that overtly harm others.
    One that institutionalizes personal responsibility – and makes it illegal for Congress to pass any law that protects any person, organization or company from the natural consequences of their ill-advised or destructive actions … and that that also allows the citizens to benefit fully from their prudent actions.
    One that requires Congress to balance the budget every year and that prohibits the mindless federal borrowing and counterfeiting that are destroying the value of our money, our buying power, our quality of life and our children’s futures.
    One that states clearly that the government derives its powers from the people and therefore may not engage in any activity that is illegal for the people to engage in.
    And certainly, one that institutionalizes patronage of all types – robbing the taxpayers to reward constituents – as a crime punishable by tarring and feathering.

    Oh wait  a minute, mistakes never call for punishment–merely correction.

  288. Taylor says:

    Clayton’s website, Clayton’s rules. I am so thankful we live in a country where we can express our views openly and engage in conversations like these.

    Little ole me? My New Year’s resolution is to quit my high paying job and work for myself so I can keep more of my hard earned money. Regardless of political leanings I don’t want to ante-up for other people’s mistakes…I don’t care who or what is behind them.

  289. Kenneth Rearden says:

    A brilliant article. Wonderful.

    The only thing I can say is that Atlas Shrugged has never been more true or relevant than it is today.

    Who is John Galt? I wish he was here.


  290. james abugah says:

    Brilliant research.

    You know what?

    People are lazy and want free stuff.

    Politicians know this too well and will promise anything just to remain in power.

    If unqualified people want loans they will get.

    If they want the education system changed they will get.

    I think the best thing is to stop any form of bailout.

    Let every company or institution that can not stand on its own go under.

    Bailouts are not anyway addressing the real issues and reasons why.


    Will Washington allow this?

    James Abugah

  291. Glenn Sargent says:

    Agree with everything said accept!!!! The problem is much deeper, its the democracy itself, after all these people were voted to their positions.

    Can this be fixed? The issue is not as bad in my country but getting that way as media appeal is becoming more influential on voters, spin not substance is determining results, but ir’s still appears to better in AUS than the US.

    Could it be because Australia has compulsory voting?
    Could it be that people who were happy with their lot are forced to vote?

    Would it be good law to enforce a law bans political donations in any form, and instead allocate public funds evenly, who knows?

    Is better economic education needed? Should all political information only be allowed to be published in print (web news papers, and print only on television)?

    I don’t know what the answer is, but it seems US democracy has been busted for thirty years. And because of this the politicians have been able to bust the free enterprise system.

    The problems are deeper than they appear.


  292. james says:

    Hi Clayton,
    Brilliant research, wonderful writing and exceptional unbiasness.

    I just wonder why wouldn’t the Bank CEO refuse to lend to unqualified borrowers despite laws prohibiting the same?

    What better to lend to please Washington or face penalties and save you bank?

    James Abugah

  293. dterth says:

    dsfsdfs67877 test test

  294. greg says:

    It’s too bad you are an idiot.

  295. Joe says:


    The root cause for all this may be just a little different.
    It may be a plan…

    History repeats itself. True saying, proven throughout history.

    Those who do not heed the lessons of history are bound to repeat them. Also true. We just don’t study history, most of it is seen as a series of happenings, like a TV series.

    Remember and realize that our human nature and all it good and bad has not changed since Adam. The Bible, all relegious and historical writings confirm it. This is key.

    When Socrates (500 BC)and Cicero (50 AD) lament about the
    bad state and corruption of government, they were just as serious as we are today.

    Remember also Solomon who said: “There is no news under the sun” It means that whatever WE think today is news
    (for us), in reality it has happened many times over throughout history.

    Study history to understand today, such as:

    The depression of 1929 was a set-up in the markets and
    was carefully plannned by some very big people, in the USA
    and overseas. Greed, greed and more greed. I-WE want it all.

    The purpose was to create the biggest bargain opportunity
    of a lifetime, so those with money – the planners – could
    get even richer… Greed has no end, no limit, no brakes.
    See movie Wall Street fo example: “Greed is good”

    Study who owned what before and after the depression in stocks, property, farms, factories, land, real estate etc.

    The Fed is NOT part of the (US) government. They are a private corporation. Don’t believe it?

    Check any telephone directory. They are NOT in the blue
    government section. NOT listed with the Dept. of the Treasury, or Interior or FBI or CIA. Never have been. Why not?

    They are not listed because they areservice providers to the US government, not part of the government.

    The Fed is a private group of international bankers, not only US bankers.

    The Fed was licensed by congressional vote on December 23, 1913 with just four members of congress presenT; day before Christmas, everyine out of town.

    Wonder why? One of the sponsors was a US banker with a big nose, who in turn was the US agent for one of the real big names in money – from Europe! They arranged this. They wanted control of the US money supply and got it.

    This family’s motto is: “He who has the license to print-issue money has real power” That is what ALL Feds around the wold have. They are commonly called Central Banks.

    They create money out of thin air, without real value backing the new money supply.(such as the gold standard long abandoned in this country)

    Better still, for the Fed, they release this money supply on behalf of the government with an interest rate attached, so that each dollar “created” is under debt from its creation.

    One dollar plus the going interest rate Libor-govt, whatever
    now cost us, the people, the country, say $1.05.
    This is autmatic debt creation for us and automatic income for the Fed.

    Ever wonder why a US dollar bill shows “Federal Reserve Note” and not U.S. Currency Note? That’s why, that is the automatic way how the Fed makes its money.

    JFK released a US Dollar, which by defenition is the legal tender of a souvereign country and therefore released without interest or debt. It did not last long.

    This is by design, no accident or the work of a few crooks.

    As pointed out above, no sane person, let alone government official would pass the insane laws and regulations that
    could – and did – break our economy. Unless it was planned.

    There are several other schemes in operation today.
    The public does not know and the congress does not know or care. QED

  296. J.S says:

    We live as mice trapped in mousetraps. controlled by figures in dark suites and unkowns to us as voters, I do have documents that provides certain evidence that WW11 was in works in the early beginning of the 21st century.

    To Makepeace; To research back further, and not in history of politics, but the signs we see of the underline motives of why and how certain things takes place at certain dates.

    Coincidences are rather less mysterious.

    I can print, if anybody want to open pandoras box. And bear with me, every good, ugly and bad are in every field. I am not into aliens, UFO’s, witchcraft and bigfooties.

    I team up with anybody that has two cents to spare and a message along with a will to fight, to be that leader and speaker the world is in search and need of.

    We has to do things,too.

    As 500 letters, would do it, mysteriously to dissapear on their way up to correct instances. And if not, then went caught in “spam filters”.

    Be the change you hope for Clayton Makepeace. You has it in your later name written in stone.

  297. The Swdish Meatballer(J.S) says:


    ^^^I Hope my language passed somebodies copywriting prejudgement, somehow I get teased for my lack in this wonderful language, on copywriting forums~.~~

  298. John says:


    You have — once again — exposed yourself as little more than a republican party shill. Stick to copywriting.


  299. Tony Longo says:

    Why not revisit this and see where we are now…

    You say Washington did this, but they are owned by the same banks and businesses that failed… so I suggest you look into who made money and see if they were involved… Like The Skulls from Yale… we will never know what is really happening behind closed doors.


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  301. Clayton,

    Like you, I hate Democrats. But as a conservative unaffiliated voter who votes Constitution party, I have to tell you HOW UTTERLY WRONG YOU ARE ABOUT BUSH.

    You did a great job researching the Democrats, but YOU MUST WATCH THIS VIDEO OF BUSH’S ROLE.

    Again, I’m more conservative that you, trust me. You will have to rewrite this post after you see this video:


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  303. robert says:

    Joe is right.

    We don’t learn from history and there are bigger powers at play than repubs vs dems (That is a mugs game and mr makepeace or whatever … is a mug).

  304. Jim J says:

    What a masterfully crafted plan! One year into Obama’s presidency and his 1st State of the Union speech. As a country, I did not think it possible that those we meager citizens elect to office could do such a horrific “job”, that being to represent their constituency.

    Yet another part of the Master Plan is to feed the masses so much information that A) they will never be able to keep anything straight, and B) it will have a numbing effect on the general populous. This once great country used to have a national pastime, that being baseball. Today this is hugely overshadowed by the almighty computer (chip), the internet (created by Al Gore), video games and television. Much of what is available is absolute garbage. Joe Public just sits back and eats this stuff up. I equate this to the movie “Idiocracy”, a comedy about a couple of average intelligence who land in the future (United States of America) where everyone is dumber than a box of hammers. This is, in today’s reality, not very funny.

    I have no statistics to support this claim, but I would wager that IQ’s overall have dropped sharply from generation to generation. This must also be a part of the Master Plan- to provide education through public schools, and to make absolutely sure that the education given consistently erodes year over year. This has turned out to be nothing more than a babysitting service for most working couples with children. A decent education is still available in this country, but at a price (that has gone up every year for many years). Most young adults (I affectionately call them the “what’s-in-it-for-me now?” generation) are not capable of doing simple math in their heads- I recently gave a $100 bill, 2 one-dollar bills and 2 quarters to a kid for a $12.50 bill. He could not do the math, and went into meltdown mode. He refused any logical help from me, of course, and instead had to physically go and get his manager. She was confused also, but did manage to sort it out. This took roughly 5 minutes, and the people that were standing in line behind me? They appeared to be very dissatisfied WITH ME for causing this delay. I guess that’s why Stupid America just uses the VISA card- nobody has to do any math. And something else about this that bothers me- 9 out of 10 people who use “the card” say they do not need a receipt when asked. I guess they can do this type of math in their heads with no problem…

    Regarding the housing and banking mess we find ourselves in, my feeling is that we are nowhere near the end of this debacle. ARM’s are still out there for some more hurt down the road. I think the banks are paying out those ridiculous bonuses now while they still can. The next freight train to more financial ruin lies in the commercial real estate market. One in every four square feet of rental space in America is currently vacant! You think the housing crisis was bad? This ought to be a really fun ride in the coming months and years for everybody.

    Here’s a simple test for what side of the fence you happen to be on-

    If a conservative doesn’t like guns, he doesn’t buy one.
    If a liberal doesn’t like guns, he wants all guns outlawed.

    If a conservative is a vegetarian, he doesn’t eat meat.
    If a liberal is a vegetarian, he wants all meat products banned for everyone.

    If a conservative is homosexual, he quietly leads his life.
    If a liberal is homosexual, he demands legislated respect.

    If a conservative is down-and-out, he thinks about how to better his situation.
    A liberal wonders who is going to take care of him.

    If a conservative doesn’t like a talk show host, he simply switches channels.
    Liberals demand that those they don’t like be shut down. (Pelosi/Reid banning CSPAN from televising the healthcare debate on the floor of the house? C’mon!)

    If a conservative is a non-believer, he doesn’t go to church.
    A liberal non-believer wants any mention of God and religion silenced. (Unless it’s a foreign religion, of course!)

    Recently, I invited over 100 of my friends who are online to join Numbers USA to at least let those in Washington know how they feel about important issues. I am completely mortified that NOT ONE of these people that I invited has joined. It’s free, and I believe, a good cause run by real people who really do care about the shenanigans and Tom Foolery that is going on in our capital, and state Governments as well. I am further disturbed that NOT ONE of these people who I invited through my own email has responded AT ALL. This clearly shows one the indifference that mainstream America has when it comes to politics (the numbing effect).

    I wish this country well, but I do not have a good feeling for what is coming down the pipe.

    For what it’s worth…

    Jim J.
    Tempe, AZ

  305. Chris says:

    “If a conservative is homosexual, he quietly leads his life.
    If a liberal is homosexual, he demands legislated respect.”

    Just one example of all the idiocy exemplified by Americans who believe that they have enough knowledge to form an opinion about politics and policy. The scourge of this country is the tendency toward thinking with emotion and not after analysis and education. Only an authortarian “conservative” (the modern republican) would think along the lines of the above statement. A true conservative (libertarian) realizes that limited rights for one group of people endangers the rights of all. Lack of thought, and too much emotion, is why we are so easily coached on how and what to think by the media. Most middle calss conservatives only support the modern republican party because they are too uneducated to know the difference, or are just happy to belong to a club. Idiots.

    If you are thinking in terms of democrats vs republicans, then you’ve already lost. You are playing the game as it was designed for you to play it, and your power is completely removed in the process. Do you think the super wealthy care about democrats vs republicans? They win no matter who is in office. They only care that the majority of people in this country have no real democratic power. Without a powerful third party to compete with the dems and the republicans, we don’t. The two parties are more similar than different, talking points and propaganda aside.

  306. Eddie says:

    I beg to differ Mr Clayton.We are the imbeciles here for electing those lunatics to power-or letting them remain there.

    They are way more smart and crafty than we will ever know,hence they are up and we are down in the gutter.

    We are stupid asses for silently agreeing to carry their ever increasing burdens while whinging like little girls.

    Thank you

  307. Darren says:


    I am glad you responded to Jim in his denial of partisan politics having anything to do with our current situation. My world has been turned upside-down from the time the ink dried on Mr. Clinton’s FREE TRADE AGREEMENT. I worked for 22 years for a company that I planned on retiring from. My father worked for that company for 45 years. As son as these acts were implemented all of the West Coast plants I worked for were CLOSED. They relocated in places like Mexico and Vietnam (yes Vietnam?). Millions of jobs disappeared overnight, never to return. I retrained and have not been able to keep a job more than 2 years because of economic failure. At age 51 I need to be working my hardest. I have been unemployed for more than 6 months now. My father managed to squeeze in one of the last decent retirements to be had. My Mother did not fair so well. Her 800k retirement, all invested in stocks; is now worth virtually nothing. That is exactly why I am on Clayton’s site, trying to create a formidable business plan to try to salvage my future and retirement….if that is possible.

    Thank you


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