Dr. Paul Craig Roberts, the former Assistant Secretary of the Treasury for Economic Policy and associate editor of Wall Street Journal said Obama can supersede Congress and the Constitution and declare a state of emergency to fund the government.
He references an executive order by former President George W. Bush which provides government continuity in the case of “catastrophic emergencies” or “natural disasters.” The directive ensures an “enduring constitutional government”, but it’s up to the President on “what constitutes constitutional government during a catastrophic emergency.”
It is reasonable for a president to regard a government shutdown, which can threaten everything from national security to default and economic collapse, as a catastrophic emergency, and to take such steps as are necessary to prevent it, such as raising the debt ceiling, on his own authority.
The Federal Reserve also has the power to prevent a government shutdown. If banks are too big to fail, so is the federal government. If the Federal Reserve on its own authority can issue more than $16 trillion in loans to US and European banks in order to prevent their failure, the Federal Reserve can issue a loan to the US government.
He seems a little more trusting in the “de Fuhrer” than I am;
I don’t expect either of these two possibilities to come into play. A shutdown and default of US debt obligations would terminate the US as a superpower and dethrone the dollar as world reserve currency. Neither Congress nor President Obama desire such an outcome. Also , Congress would not want a presidential directive to be implemented that subordinates their position and possibly eliminates their meaningful participation in governance. Therefore, I expect a resolution of the current standoff prior to the Treasury running out of money.
I am a bit more pessimistic due to the last three Presidents sidelined the Constitution.
At the end of World War 2 the International Monetary Fund (IMF) was established to be the keeper of the rules and the main instrument of public international management.
In theory, the world reserve currency would be the “Bancor”, a supranational currency that John Maynard Keynes conceptualized in 1940-42, but United States was the only nation with her industry still left intact so the “US dollar” was adopted as the world reserve currency. The US began running huge balances of trade surpluses and our reserves was growing rapidly. From 1947 until 1958, the U.S. deliberately encouraged an outflow of dollars with the intent to providing liquidity for the international economy.
In order for the system to work, Belgian American economist Robert Triffin believed the U.S. would have to keep a running balance of payment deficits to keep the system liquid for economic growth. This created “Triffin dilemma” which conflicted with short-term domestic and long-term international objectives. This caused tension between the US domestic and global monetary policy. The US had to convert gold into U.S. dollars to feed the European union. As more dollars left the country, speculation began to grow that the dollar was overvalued and U.S. had less gold than dollars. People began converting the dollar back into gold and took it out of the country until Nixon announced the dollar will no longer be exchanged for gold.
After the financial crisis in 2008, Keynes proposal for a world reserve currency was revived by China’s governor of the People’s Bank. Zhou Xiaochuan proposed the adoption of the IMF special drawing rights as the next world reserve currency due to the financial crisis. His proposal was echoed by former Cold War enemies and several of the United States allies. Several countries began to abandon the dollar causing it to shrink as a percentage of the world’s currency supply.
“Generally speaking, it is believed by the vast majority that the American dollar will be overthrown,” Dick Bove, vice president of equity research at Rafferty Capital Markets, said in a note. “But it will be, and this defrocking may occur in as short a period as five to 10 years.”
Bove uses several metrics to make his point, focusing on the dollar as a percentage pf total world supply. That total has plunged from nearly 90 percents in 1952 to closer to 15% now. He also notes that the Chinese yuan, the yen and the euro each have greater share of that total.
“To the degree that China succeeds in increasing its market share of the world’s currency market, the United States is the loser,” Bove said. “For years, I have been arguing that the move of the Chinese makes perfect sense their point-of view but no sense for Americans.”
How did we get here?
The Clinton Dynasty….
The 1996 United States campaign finance controversy was an alleged effort by the People’s Republic of China to influence domestic American politics prior to and during the Clinton administration that involved fund raising for the administration.
The Democratic National Committee has returned a $250,000 contribution from a recently established subsidiary of a South Korean electronics company because it violated a ban on donations from foreign nationals in U.S. elections, a party spokesman said Friday.
The incident could be politically embarrassing because party officials invited John H.K. Lee, chairman of both Cheong Am America Inc. and its South Korean parent company, to a Democratic fund-raiser in April, where he met President Clinton after he pledged to make the substantial contribution that turned out to be illegal.
[David] Eichenbaum said that the DNC fund-raiser who was responsible for the contribution was under the impression, erroneously as it turned out, that it fulfilled the legal qualifications.
(Washington Post Feb. 13, 1997) A Justice Department investigation into improper political fund-raising activities has uncovered evidence that representatives of the People’s Republic of China sought to direct contributions from foreign sources to the Democratic National Committee before the 1996 presidential campaign, officials familiar with the inquiry said.
Sensitive intelligence information shows that the Chinese Embassy on Connecticut Avenue NW here was used for planning contributions to the DNC, the sources said. Some information was obtained through electronic eavesdropping conducted by federal agencies.
The information gives the Justice Department inquiry what is known as a foreign counterintelligence component, elevating the seriousness of the fund-raising controversy, according to some officials.
The Clinton’s maintained several relationships with the Chinese when he was a governor of Arkansas. The most significant relationships were with James Riady and John Huang which met Bill Clinton in the early 80′s. Together they raised $3.4 million for the Democrat Party. Huang visited the White House 78 times while working as a DNC fund-raiser and Riady visited 20 times (including 6 personal visits to President Clinton). Riady was ordered to pay a fine and his U.S. Visa cancelled, preventing him from reentering the country. In 2010, The Obama administration gave him a visa waiver to re-enter the U.S.
In 1992, President Clinton’s devised the “Housing and Community Development Act” which mandated Fannie Mae and Freddie Mac to establish affordable housing loan purchases which will be regulated by HUD. The legislation required 30% or more loan purchases to be related to affordable housing. In order to meet these goals, the underwriting standards would have to be substantially relaxed for low- and moderate-income families. HUD set out to reduce the down payment (eventually to zero) and past credit history requirements became were less important permitting sub prime mortgages to become far more common. In 1995, HUD raised the goal to 40 percent and again to 42% in 1996. The most significant move was when they set a Special Affordable goal for low- and very- low income borrowers to 12 percent, which increased to 14% by 1997. To increase their efforts of eroding the underwriting standards, HUD issued a policy statement entitled “The National Home-ownership Strategy in the American Dream.”
Expanding homeownership will strengthen our nation’s families and communities, strengthen our economy, and expand this country’s great middle class. Rekindling the dream of homeownership for America’s working families can prepare our nation to embrace the rich possibilities of the twenty-first century.
Under the direction of Bill Clinton, Secretary Henry G. Cisneros stated the purpose was to “achieve an all-time high level of home ownership in America within the next 6 years through an unprecedented collaboration of public and private housing industry organizations.”
The inability (either real or perceived) of many younger families to qualify for a mortgage is widely recognized as a serious barrier to homeownership. The National Homeownership strategy commits both government and the mortgage industry to a number of initiatives designed to:
Cut transaction cost through streamlined regulations and technological and procedural efficiencies.
Reduce down payments and interest cost by making terms more flexible, providing subsidies to low- and moderate-income families, and creating incentives to save for homeownership.
Increase the availability of alternative financing products in housing markets throughout the country.(emphasis added)
When you combine low down payments to low FICO scores the risks of default are seven times greater. For example, when you combine a down payment of 5%(high LTVs) to a FICO score below 620, the risk of default is 4.2 times greater than if combined with a down payment of 25%. HUD eventually driven the down payment to zero and still maintain a standard of supplying mortgages to low FICO scores.
In 1989, 1 and 230 homebuyers bought a home with less than 3% down payment, by 2007 that number decreased to 1 and 3.
We were set up for the housing bubble collapse that caused the global financial crisis, giving China the opportunity to push for abandoning of the U.S. dollar as the world reserve currency. Coincidentally, the Obama administration has adopted Clinton’s policy and the subprime Mortgage market started heating up again.
President Bill Clinton began laying the foundation with “Housing and Community Development Act” but another layer was needed before Obama could use it to his advantage.
In 1995, Bill Clinton was struggling to pass the Omnibus terrorism bill which many believe was the predecessor to President George W. Bush Patriot Act. Several civil liberty advocacy groups opposed the bill on the grounds it violated our rights to confront our accuser.
This is deeply troubling news for the loosely organized coalition of civil liberty advocacy groups that had mobilized to block its passage. Among their arguments was that the bill was not needed because there was little potential for terrorism in this country.
The part of the bill that has attracted the greatest opposition is its provision to allow the Government to use evidence from secret sources in deportation proceedings for aliens suspected of terrorist involvement. Under the measure, the Government would not have to disclose the source of the damaging information to the person whom it is seeking to deport.
It wasn’t until after the Oklahoma City bombing did Bill Clinton get the opening he was seeking to push his bill through.
President Clinton prodded Congress on Friday to move swiftly on his anti-terrorism legislation and avoid political ”endless quibbling” over details. ”We must not dawdle or delay,” Clinton said at the White House. ”Congress must act, and act promptly.” His $1.25 billion anti-terrorism package would expand law enforcement’s investigative and enforcement powers and toughen penalties for certain crimes. Republicans have reacted favorably to the proposals Clinton put forward on Wednesday, one week after the Oklahoma City bombing. But they want to add a provision that would curb appeals by death row inmates, a matter the administration would rather see dealt with separately.
President Clinton’s Presidency is riddled with the deaths of 24 children in a roaring oven, a dead 14 year old boy and a 25 year old intern left with a bitter taste and a stain that will haunt her for the rest of her life. Leaders have facilitated or taken advantages of crisis to push unpopular policies since the beginning of civilization. The methods have been refined throughout the ages as they are passed down through philosophers like George Hegel, Straus, Bauer and Karl Marx. Just like the former White House Chief of Staff Rahm Emmanuel while he address the economic crisis; “You never want a serious crisis to go to waste.”
The Patriot Act gave Obama the ability to spy on us, the National Defense Authorization Act to detain us and the Omnibus terrorism prevents us from questioning it. What makes you sure the other “possibilities will never” come into play? After all… China seemed to have a big influence on Obama also.
Breitbart News obtained an advance copy of the bombshell report which reveals that the Obama.com website is not owned by the president’s campaign but rather by Obama bundler Robert Roche, a U.S. citizen living in Shanghai, China. Roche is the chairman of a Chinese infomercial company, Acorn International, with ties to state-controlled banks that allow it to “gain revenue through credit card transactions with Chinese banks.”
“Guard against the impostures of pretended patriotism”.
George Washington, Farewell Address, September 19, 1796