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Militant leftists are more an annoyance than a real threat to liberty

Militant leftists are more an annoyance than a real threat to liberty

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antifa protests flag burning

In many articles leading up to the 2016 election I discussed the problem of “escalation.” Namely escalation on the left end of the political spectrum and the people who identify with it (set aside that this spectrum does not exist for the leaders and gatekeepers that exploit it).  In analyzing the consequences of the inevitable Trump win, it was clear that extreme leftists (cultural Marxists) were about to lose considerable social influence and that this would end up driving them to more aggressive measures. This process has happened even faster than I expected. Cultural Marxists are almost universally distrusted or despised in America today. Their only support seems to come from their own inbred activist circles, Hollywood and certain elements of the corporate world.
This does not mean they are going away. Not at all. What it means is that they are going to evolve into something else, perhaps something worse. That said, even if this does occur, I worry that conservatives are putting far too much stock in the threat these people represent. My greatest fear is that conservatives will become so hyper-focused on a militant left that they forget about the international financiers that instigated this mess in the first place. I also worry that we will one day abandon our constitutional principles in the name of stomping such people into the dirt.
I understand the circus mentality surrounding this issue. The lefties want to “punch fascists” and be some kind of folk heroes in a cultural revolution, so they fabricate images of Nazis and imperialists everywhere in order to rationalize their behavior. Conservatives see this behavior and conjure images of communist hordes overrunning the Republic and building a nation-sized gulag around us, so we want to go out and “punch communists.”  It’s a tale over a century old.
I see an undue level of fear, though, over the cultural Marxists. I see guys going out to counter-protest little 96 pound, vegan Antifa kids by strapping on ballistic plates or soft body armor and SAP gloves like they think they are going to war. I have to chuckle a little because it showcases the conservative tendency to meet every threat with a nuclear over-response (metaphorically speaking… in some cases).  Remember, in most situations these college-age weaklings have no clue what they are doing, they can barely move around in those skinny jeans they all wear and half of the men identify as women. This is not a group of well trained, bloodthirsty Cheka; they are incompetent and fumbling in the dark.
Opening a high pressure can of whoop ass on such people might be necessary in some instances, but “victory” against them is not going to earn you a place in Valhalla. Let’s be realistic — this is not a war, it is a game… an opportunity to brawl in the streets.
To illustrate my point further, I would like to repost a video that has been making the rounds in the liberty movement recently. Behold! The next phase of escalation in leftist militancy: Learning which end of a gun goes “Boom!”…

The above video posted by the Phoenix John Brown Gun Club was apparently meant as a message of intimidation, but instead it resulted in a roar laughter. These are the people we are supposed to be afraid of?
Anyone with marginal firearms training will be feeling some cringe right now. There is nothing intimidating about 50 people shooting wildly at a drawing of Pepe The Frog and mostly hitting the dirt hillside instead. It’s hard to become personally proficient with a firearm when you can’t even tell who is hitting what during your “training.”  It is also hard to hit a target when you aren’t shown how to shoulder your weapon correctly or present a proper shooting stance.
I’m a good sport and I’ll give the Antifa kids two tips: Lean forward into the gun instead of backwards, and stop gripping the mag well and put your non-shooting hand on the handguard; that’s what it is there for. Don’t get me wrong, I have seen poorly managed prepper and militia training as well, but nothing quite to the level of pure suck that comes across in the video above. And I don’t hold it against the people who showed up to the event, I hold it against the incompetence of the trainers.
But let’s get back to the main point of this article.
The John Brown Gun Club does not represent real escalation. Not the kind of escalation I have referred to in the past. Most leftists do not grow up in a gun culture and are thus lost when trying to adopt it. When you are barely exposed to the notion of a thing, you are going to be very slow in learning that thing. When I showed a friend of mine this video they said, “It’s like when Asians immigrate and have trouble driving…” (Is that racist?  Oh well, who cares…).
Real escalation when it comes to the Left is almost always funded and supported by governments or by elites seeking to use those leftists as cannon fodder. I highly suggest skeptics of this idea look into Antony Sutton’s evidenced records and studies into the corporate backing of the Bolshevik Revolution in Russia.
I would also suggest research into more famous and violent leftists activist groups like the Weather Underground; a group responsible for dozens of bombings and threats against government facilities. Perhaps the most suspicious circumstance of the Weathermen and their seeming immunity in many cases to prosecution is the strange story of Bill Ayers, a leader within the Weather Underground that planned multiple bombings but remains free to this day and is an influential figure among political elites in Washington.
If you think that the racially charged rhetoric of social justice warriors today is extreme or “new,” just look at the rhetoric of the Weather Underground, which included discussions on “killing all white babies” because they were destined to “grow up to be oppressive racists.”  This propaganda has been going on  long time.

These are the kinds of groups we should be truly worried about, and not because they are capable of ever accomplishing their goals. Leftists rely on two things when imposing their will on others — they rely on the power of the mob, the power of government or both. Right now it is clear that the left has lost the power of the mob. They have no momentum. They were losing any momentum they did have long before conservatives faced off with them at places like Berkeley.
Government- and elitist-supported groups, supplied with training and funding, are a greater danger. They tend to operate more like terrorist cells, using bombings, shootings and attrition.
This is not always simply to instill fear or to achieve an actual political aim in support of leftist “values.” Instead, these groups are sometimes injected into the system as a way to inspire conservatives to overreact or to run into the welcoming arms of a waiting dictatorship.
Perhaps the most effective example of the creation and exploitation of violent leftist terror was Operation Gladio, a false flag program running from the 1950s to the 1990s in Europe until it was finally exposed by Italian Prime Minister Giulio Andreotti. Many of the leftist and “communist” cells involved in the numerous attacks on civilians during this period were in fact either handled and manipulated by government agencies like the CIA through Gladio or they were created from scratch by the same agencies.
This is not to say that every Antifa and SJW organization active today is some kind of Frankenstein creation of the government. As I stated earlier, most of these people are ignorant college kids brainwashed by academia. They are, at most, useful idiots and not a true threat.
What I am saying, however, is that a day is likely coming in which Gladio-style leftist groups will be active in the U.S., and they will not be assaulting senior citizens with mere pepper spray.
The goal behind such groups will not be to “win.”  They are not trying to establish a Marxist enclave. What they really want is to frighten conservatives and liberty activists into supporting extreme measures outside of the constitution and our principles. For once we abandon our principles in the name of “winning,” we will have actually lost everything.
At bottom, the pinnacle threat to liberty is not the cultural Marxists, the SJWs, Antifa or whatever else they like to call themselves. The real threat, as always, are the establishment elites funding and influencing that very ideology, that very mob. Countering the leftists on the street in some situations is useful, but not at the expense of abandoning the root cancer eating at the heart of our country. Until the moneymen and political criminals are dealt with, the waves of angry leftist dupes and their more dangerous Marxist cells will never end.
— Brandon Smith

Democrat wants fiscal responsibility when it comes to killing your privacy

Democrat wants fiscal responsibility when it comes to killing your privacy

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Sen. Dianne Feinstein (D-Calif.) suggested during a recent Judiciary Committee hearing that forcing U.S. technology giants to include backdoors in devices for government surveillance is a matter of fiscal responsibility.
The elderly committee chair’s argument about the need for government to be able to snoop through electronic communications with ease comes from her apparent shock that the FBI paid hundreds of thousands of dollars to a third-party hacker to gain access to an iPhone belonging to one of the San Bernardino shooters.
“I was so struck when San Bernardino happened and you made overtures to allow that device to be opened, and then the FBI had to spend $900,000 to hack it open,” Feinstein said, according to the Associated Press. “And as I subsequently learned of some of the reason for it, there were good reasons to get into that device.”
The government made the decision to bring in the hackers after ending a court battle with Apple.
But as former Congressman Ron Paul noted last year, the government didn’t just begin wanting access to encrypted devices following the San Bernardino shooting.
Paul wrote:  “[T]he truth is they had long sought a way to break Apple’s iPhone encryption and, like 9/11 and the PATRIOT Act, a mass murder provided just the pretext needed. After all, they say, if we are going to be protected from terrorism we have to give up a little of our privacy and liberty. Never mind that government spying on us has not prevented one terrorist attack.”
The liberty advocate also pointed out: “[T]his new, more secure iPhone was developed partly in response to Ed Snowden’s revelations that the federal government was illegally spying on us.”
And with Feinstein complaining that the government had to spend money to hack the shooter’s phone, it’s worth looking at what’s already being spent to violate American privacy.
Over the next two years, according to the Electronic Privacy Information Center, the Trump administration wants to invest nearly $100 million in taxpayer funding to help the FBI and other intelligence agencies defeat encryption.
Since 2011, the NSA has cost U.S. taxpayers around $75 billion.
When the San Bernardino attack occurred in 2015, NSA was operating under a budget of about $10 billion.
What does the agency do with all that money? Well, thanks to Snowden we know that it sweeps up all digital communications data in real time and scours it for signs of budding extremism.
In other words, if the “good reasons to get into that device” Feinstein referenced included text messages and other communications to extremists involved in the San Bernardino attack, the NSA had them.
The information would have made its way to the NSA’s $1.5 billion 1 million square-foot data center in Utah where it stores the data it collects in the surveillance dragnet.
Why does all of this matter? Because Feinstein wants you to believe that the government needs to save $900,000 by making hacking easier—and that we’ll all be safer for it.
That is a load of bullsh*t.
The government missed the San Bernardino shooters, and numerous other real terrorists, because it’s too busy collecting information on millions of people who pose no threat to the nation.
It is information overload— and people like Feinstein are telling us the smart thing to do would be to have more.
I strongly urge you to read Bob Livingston’s 2015 piece, “San Bernardino terror attack lays bare the fraud of government,”  which exposes the massive fraud that the government surveillance state commits against American citizens every day.

Trump News May 10, 2017

WHITE HOUSE MEMO

In order to restore the public confidence in the FBI, President Donald J. Trump accepted the recommendation of both Deputy Attorney General Rod Rosenstein and Attorney General Jeff Sessions and removed FBI Director James Comey from his position yesterday. It was a necessary move to reinstitute faith in America’s crown jewel of law enforcement after a series of high profile and political missteps. The search for new leadership that restores public trust and confidence in the FBI’s vital law enforcement mission will begin immediately.

MORNING:

  • 10:30AM: President Trump meets with the Minister of Foreign Affairs of Russia

WHITE HOUSE UPDATES

Photo of the Day:
Yesterday, the Second Family’s pet rabbit, Marlon Bundo, also known as BOTUS, visited the White House for the first time. Follow Marlon on Instagram@MarlonBundo. (Official White House Photo By Hannah MacInnis).
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Vice President Pence and Mrs. Pence host military families at an event celebrating National Military Appreciation Month and National Military Spouse Appreciation Day.
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Honoring our Veterans this National Military Appreciation Month.
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PRESS ROOM

Watch yesterday’s press briefing with Sean Spicer:

Today, a press briefing will be held at 1:30PM ET in the White House Briefing Room with Principal Deputy Press Secretary Sarah Sanders. Watch it LIVE here.

NEWS REPORTS

  • Washington Times: Trump’s immigration enforcement helps slow illegal border crossings by 76%
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  • CNN: Pence family rabbit hops into spotlight at White House event
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  • National Review: The Bipartisan Case against James Comey
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Illinois Policy Golf Outing June 5th

Join the Illinois Policy Institute for a day on the greens in support of making Illinois a freer and more prosperous state at the fourth annual Links for Liberty golf outing.
WHEN: 11 a.m. – 6 p.m., Monday, June 5
WHERE: Mistwood Golf Club, 1700 W. Renwick Road, Romeoville, IL 60446
TICKETS: Foursome $1,200  Individual golfer $300  Hole sponsor $500
To register, visit linksforliberty.com, or contact Judi Willard at 217-528-8800 or jwillard@illinoispolicy.org by May 31.

Rand Paul demands to know whether Obama spied on him

Rand Paul demands to know whether Obama spied on him

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rand paul

Following a report backing up President Donald Trump’s claims that he and other Americans were the subject of Obama administration spying during the 2016 election, Sen. Rand Paul is demanding any documents the administration may have compiled on him.
The Kentucky Republican announced via Twitter Friday that he has formally requested that the  White House and government Intelligence Committees turn over any information they have on whether the senator was a surveillance subject during Obama’s tenure.
Paul asked in a tweet: “Did the Obama admin go after presidential candidates, members of Congress, journalists, clergy, lawyers, fed judges?”
The lawmaker was referencing a report out this week from Circa which revealed that after loosening rules concerning access to NSA information, surveillance activity within the highest levels of government increased.
From the report:

In all, government officials conducted 30,355 searches in 2016 seeking information about Americans in NSA intercept metadata, which include telephone numbers and email addresses. The activity amounted to a 27.5 percent increase over the prior year and more than triple the 9,500 such searches that occurred in 2013, the first year such data was kept.
The government in 2016 also scoured the actual contents of NSA intercepted calls and emails for 5,288 Americans, an increase of 13 percent over the prior year and a massive spike from the 198 names searched in 2013.

Paul says he wrote the White House asking for answers back in April after “an anonymous source recently alleged to me that my name, as well as the names of other Members of Congress, were unmasked, queried or both, in intelligence reports of intercepts during the prior administration.”
The senator supported President Trump’s claims about the previous administration’s election spying and “unmasking” procedures even as Obama officials categorically denied carrying out any such surveillance activity.
Paul in April said that former Obama national Security adviser Susan Rice is the central figure in the controversy.

“I believe Susan Rice abused the system and she did it for political purposes. She needs to be brought in and questioned under oath,” he said, adding, “This was a witch hunt that began with the Obama administration, sour grapes on the way out the door. They were going to use the intelligence apparatus to attack Trump, and I think they did.”

Deep state openly wars with Trump administration


Deep state openly wars with Trump administration

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title

Reports indicate that government bureaucrats are using the security clearance process to block key members of the Trump administration from accessing sensitive national security information. The politicization of the security process is a signal that unelected government insiders, not the appointees chosen by the elected Trump government, are ultimately in charge of the nation’s military.
Earlier this year in The Washington Times, intelligence expert Angelo Codevilla wrote that the CIA was insulting the president by blocking security credentials for Trump appointees.
From his piece:

The CIA has denied a security clearance to Trump National Security Council (NSC) official Robin Townley without any allegation, much less evidence of disloyalty to the United States. Quite simply, it is because the CIA disapproves of Mr. Townley’s attitude toward the agency, and this is unprecedented. President Trump appointed Mr. Townley to coordinate Africa policy at the NSC. The CIA did not want to deal with him. Hence, it used the power to grant security clearances to tell the president to choose someone acceptable to the agency, though not so much to him. This opens a larger issue: Since no one can take part in the formulation or execution of foreign or defense policy without a high-level security clearance, vetoing the president’s people by denying them clearances trumps the president.
Hence, if Mr. Trump does not fire forthwith the persons who thus took for themselves the prerogative that the American people had entrusted to him at the ballot box, chances are 100 percent that they will use that prerogative ever more frequently with regard to anyone else whom they regard as standing in the way of their preferred policies, as a threat to their reputation, or simply as partisan opponents. If Mr. Trump lets this happen, he will have undermined nothing less than the self-evident heart of the Constitution’s Article II: The president is the executive branch. All of its employees draw their powers from him and answer to him, not the other way around.

Evidently, the president didn’t get rid of those responsible.
The Washington Free Beacon reported Thursday that officials within the intelligence machine have again made a decision about security clearance based not on the nation’s best interest but on bureaucrats’ desire to damage the president’s ability to lead effectively.
From the piece:

Adam S. Lovinger, a 12-year strategic affairs analyst with the Pentagon’s Office of Net Assessment (ONA), has been on loan to the NSC since January when he was picked for the position by then-National Security Adviser Michael T. Flynn.
Lovinger was notified in a letter from the Pentagon on Monday that his Top-Secret, Sensitive Compartmented Information (TS-SCI) clearance had been suspended and that he had to return to the Pentagon.
The letter cited unspecified outside activities by Lovinger. The notice said the suspension was approved by Kevin Sweeney, chief of staff for Defense Secretary James Mattis.
One official said Lovinger was targeted by Trump opponents because of his conservative views and ties to Flynn, specifically his past association with the Flynn Intel Group, Inc., a consulting business.

The report comes on the heels of a Monday revelation from the outlet that politics are increasingly playing a role in the intelligence community’s decision making process.
Free Beacon reported:

The blocking of security clearances under Trump contrasts with the handling of clearances during the Obama administration when a key liberal adviser with a questionable security background was given a high-level clearance.
Ben Rhodes, the White House deputy national security adviser for strategic communications under Obama, was denied an interim TS/SCI clearance by the FBI in October 2008, according to an email obtained from John Podesta last year.
The email stated that Rhodes was the only White House official out of 187 prospective White House aides to be denied the interim TS/SCI clearance.
Yet, despite the denial, Rhodes would later be granted access to some of the most secret U.S. intelligence information and emerge as one Obama’s closest aides who boasted of a “mind-meld” with the president on various issues.
Rhodes became one of the most active originators and shapers of key American foreign and national security policies under Obama.

The push-back Trump is openly getting from intelligence insiders helps to explain his total reversal on many foreign policy promises since the election.

DEEP STATE TOOK DOWN NIXON, PLANS SAME FOR TRUMP

DEEP STATE TOOK DOWN NIXON, PLANS SAME FOR TRUMP

Pat Buchanan: Probably no 2 presidents have faced such hostility, hatred from media

 
For two years, this writer has been consumed by two subjects.
First, the presidency of Richard Nixon, in whose White House I served from its first day to its last, covered in my new book, “Nixon’s White House Wars: The Battles That Made and Broke a President and Divided America Forever.”

The second has been the astonishing campaign of Donald Trump and his first 100-plus days as president.
In many ways, the two men could not have been more different.
Trump is a showman, a performer, a real estate deal-maker, born to wealth, who revels in the material blessings his success has brought. Nixon, born to poverty, was studious, reserved, steeped in history, consumed with politics and policy, and among the most prepared men ever to assume the presidency.
Yet the “mess” Trump inherited bears striking similarities to Nixon’s world in 1969.
Both took office in a nation deeply divided.
Nixon was elected in a year marked by the assassinations of Martin Luther King Jr. and Robert Kennedy, race riots in 100 cities, and street battles between cops and radicals at the Democratic National Convention in Chicago.
By the fall of 1969, Nixon had buses surrounding his White House and U.S. Airborne troops in the basement of his Executive Office Building.
Trump’s campaign and presidency have also been marked by huge and hostile demonstrations.
Both men had their elections challenged by the toxic charge that they colluded with foreign powers to influence the outcome.
Nixon’s aides were accused of conspiring with Saigon to torpedo Lyndon Johnson’s Paris peace talks. Trump aides were charged with collusion with Vladimir Putin’s Russia to disseminate stolen emails of the Democratic National Committee. The U.S. establishment, no stranger to the big lie, could not and cannot accept that the nation preferred these outsiders.
Nixon took office with 525,000 troops tied down in Vietnam. Trump inherited Afghanistan, the longest war in U.S. history, and wars in Iraq, Syria, Libya and Yemen.
Nixon pledged to end the Vietnam War with honor and begin an era of negotiations – and did. Trump promised to keep us out of new Mideast wars and to reach an accommodation with Russia.
Nixon and Trump both committed to remake the Supreme Court. Having pledged to select a Southerner, Nixon saw two of them, Judges Clement Haynsworth and Harrold Carswell, savaged by the Senate.
While Nixon was the first president since Zachary Taylor to take office without his party’s having won either house of Congress, Trump took office with his party in control of both. Thus, Trump’s nominee, Judge Neil Gorsuch, made it.
Probably no two presidents have ever faced such hostility and hatred from the media. After his 1969 “Silent Majority” speech on Vietnam was trashed, Nixon declared war, authorizing an attack on the three networks by Vice President Spiro Agnew.
Trump has not stopped bashing the media since he came down the escalator at Trump Tower to declare his candidacy.
In Trump’s first major victory on Capitol Hill, the House voted narrowly to “repeal and replace” Obamacare. Only with a tie-breaking vote by Agnew in August 1969 did Nixon win his first big victory – Senate approval of a strategic missile defense.
Though Nixon had backed every civil rights law of the 1950s and ’60s, he was charged with pursuing a racist “Southern strategy” to capture the South from Dixiecrats, whose ilk had ruled it for a century.
Trump was also slandered for running a “racist” campaign.
Trump and Nixon were supported by the same loyalists – “forgotten Americans,” “Middle Americans,” “blue-collar Democrats” – and opposed and detested by the same enemy, a political-media-intellectual-cultural establishment. And this establishment is as determined to break and bring down Trump as it was to break and bring down Nixon.
Yet though Trump and Nixon ran up similar Electoral College victories, Nixon at the end of 1969 was at 68 percent approval and only 19 percent disapproval. Trump, a third of the way through his first year, is underwater in Gallup.
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Nixon’s achievements in his first term were extraordinary.
He went to Beijing and opened up Mao Zedong’s China to the world, negotiated with Moscow the greatest arms limitation agreement since the Washington Naval Treaty of 1922 and withdrew all U.S. forces from South Vietnam.
He desegregated the South, ended the draft, gave the vote to all 18-year-olds, indexed Social Security against inflation, created the Environmental Protection Agency and the Occupational Safety and Health Administration, named four justices to the Supreme Court, presided over six moon landings, declared a “war on cancer,” proposed a guaranteed annual income, created revenue sharing with the states, took America off the gold standard and let the dollar float.
He then won a 49-state landslide in 1972, creating a “New Majority,” and setting the stage for Republican control of the presidency for 16 of the next 20 years.
But in June 1972, a bungled bugging at the DNC, which Nixon briefly sought to contain and then discussed as the White House tapes were rolling, gave his enemies the sword they needed to run him through.
The same deep state enemies await a similar opening to do to Trump what they did to Nixon. Rely upon it.



http://www.wnd.com/2017/05/deep-state-took-down-nixon-plans-same-for-trump/#0oqIu5dP7FBKqQ8d.99

Homer 33C Sixth-graders learn about weather, navigation from United Express pilot

0
News Release
Homer CCSD 33C
Goodings Grove Luther J. Schilling William E. Young William J. Butler
Hadley Middle Homer Jr. High
Contact:
Charla Brautigam, Communications/Public Relations Manager
cbrautigam@homerschools.org
| 708-226-7628
For Immediate Release:
May 9, 2017
Sixth-graders learn about weather, navigation from United Express
pilot
File_003.jpeg
See how math and science are used to fly
Hadley Middle School sixth-graders now see a connection between learning
and real life.
Captain Ken Hellem, a pilot with United Express, stopped by the school
recently and talked to students about his 20-year career and how he uses
math and science daily. File_001.jpeg
“It was a nice tie in with Next Generation Science Standards and preparing
future ready students,” said sixth-grade math teacher Heather Martello who
arranged the visit.
It wasn’t difficult to convince the pilot to stop by. Hellem is Martello’s
brother.
File_002.jpeg
He’s also a resident of Homer Glen with a preschooler at Young School.
During his visit to Hadley Middle School, Hellem discussed weather,
navigation, weight and balance, and aerodynamics. He also answered
questions from students.
“All in all, it was a great learning experience,” said Martello.
Like us on Facebook at
https://www.facebook.com/homer33c?
fref=ts&ref=br_tf

Trump News May 9, 2017

WHITE HOUSE MEMO

With yesterday’s nominations, President Donald J. Trump continues delivering on his promises to the American people by filling judicial vacancies with jurists who are committed to upholding the Constitution and defending the rule of law, not advancing their personal political agenda.

MORNING:

  • 10:00AM: President Trump meets with National Security Advisor H. R. McMaster

OVAL OFFICE HIGHLIGHTS

President Trump Announces Judicial Candidate Nominations.
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President Trump calls President-Elect Emmanuel Macron of France.
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WHITE HOUSE UPDATES

Photo of the Day:

Vice President Mike Pence participates in an honor flight reception in the Indian Treaty Room. (Official White House Photo by D. Myles Cullen).
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Republicans just took a major step toward rescuing Americans from Obamacare.
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Vice President Pence honors Public Service Recognition Week and National Military Appreciation Month.
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PRESS ROOM

Watch yesterday’s press briefing with Sean Spicer:

Today, a press briefing will be held at 1:30PM ET in the White House Briefing Room with Press Secretary Sean Spicer. Watch it LIVE here.

NEWS REPORTS

  • The Hill: Business coalition: Trump tax plan ‘will spark an economic boom’
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  • Washington Examiner: Manufacturing openings, hires rise to highest levels of the recovery
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  • Daily Signal: Younger Judicial Nominees Give Trump Chance for Legacy in Courts
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What’s is Glass-Steagall

Is This Glass-Steagall Half Empty?
Jason Williams Photo By Jason Williams
Written Friday, May 5, 2017
Since the financial collapse of 2008, we’ve heard lots of talk about depression-era legislation referred to as Glass-Steagall.
We’ve been told it would have prevented the crisis. We’ve also been told it had nothing to do with the things that caused the crisis.
Depending on whom you listen to, it was either the greatest legislation ever or a complete waste of time.
And since Donald Trump started campaigning for the U.S. presidency, we’ve heard even more talk about it. He says he’s for it. A lot of the people who put him in office are for it.
Maybe he’s really a proponent of breaking up big banks. I doubt that.
Maybe he just wants to garner support from voters who are still clamoring for a reinstatement of the legislation. I think that’s more likely.
Maybe he’s just blowing wind. Probably the most likely explanation.
I’m not here to talk about that or try to guess what’s going on behind the bluster. I’ll leave that to the talking heads on the 24-hour news networks.
I’d rather get into what Glass-Steagall really was and talk about how it worked (or failed) to prevent another banking collapse.
What’s is Glass-Steagall?
The Glass-Steagall Act is actually the Banking Act of 1933 in its entirety. But when people refer to Glass-Steagall these days, they’re only talking about four provisions.
And when people talk about a reinstatement of Glass-Steagall, they’re only referring to one of those four provisions.
When you really get down to it, most people are only talking about two sections of that one provision.
You see, two of the four provisions are still intact. And everyone seems to be happy about one of them being gone…
The legislation created the Federal Deposit Insurance Corporation (FDIC). This was to prevent another run on the banks like what happened in 1929.
It’s why customers don’t have to be worried about their accounts — at least not any that are under $250,000. Those are insured by the FDIC, and pretty much every bank offers that kind of protection.
That was never repealed. And it was a big part of the legislation.
Interestingly enough, Glass-Steagall also laid the foundation for the Federal Open Markets Committee (FOMC). That’s the group that meets eight times a year and sets interest rates.
I say “interestingly enough” because a lot of the people out there talking about how great Glass-Steagall was also think the FOMC has too much power. Those are the same people who complain about the easy money policy of the Federal Reserve. And they’ve forgotten it was Glass-Steagall that gave the FOMC that kind of authority.
Then there’s the one part that nobody cares was repealed. It forbade banks from paying interest on “demand accounts.” Those are accounts that can be accessed by savers at any time. So, your checking or savings account couldn’t accrue any interest.
The only way to get interest was by having a term deposit like a certificate of deposit. If you couldn’t easily get to the money, banks could pay interest on it.
That was repealed in 2011 — long after the recession. And nobody seems to be hankering for a return to the days of old there.
What Does Everyone Want?
There’s only one part of Glass-Steagall anyone cares about these days, and it’s the one that separated commercial banking from investment banking. Well, sort of separated it.
You’re probably wondering why I said “sort of.” Worry not. I’ll get to that a little later. First let’s talk about those sections of the regulation.
Section 16: This part of the legislation prohibited national banks from buying or selling securities except for a customer’s account. It also prohibited them from underwriting or distributing securities — except U.S. government, state, and local bonds. Section 5 (c) applied these rules to state banks that were members of the Federal Reserve System. Still in effect.
Section 20: This kept any Federal Reserve member bank from being affiliated with a company that “engaged principally” in “the issue, flotation, underwriting, public sale, or distribution” of securities. This was repealed in 1999.
Section 21: This is the part that prohibited any company or person from taking deposits if it was in the business of “issuing, underwriting, selling, or distributing” securities. That means investment companies like Smith Barney or Merrill Lynch can’t also have a savings wing. Also, still in effect.
Section 32: This section made it illegal for a Federal Reserve member bank’s officers and directors to have a role at any of the companies noted in Section 21. But the Federal Reserve Board could grant exemptions on a case-by-case basis. This section was also repealed in 1999.
So, What Do You Mean, “Sort Of?”
Now you’ve got a little background on the parts of Glass-Steagall some people want back. So, let’s talk a bit about how it was already dead long before being repealed.
There were so many loopholes in Glass-Steagall that it never really had a big impact on banks.
You see, except for Section 21, the legislation only applied to Federal Reserve member commercial banks. To put that into perspective, only about 38% of U.S. banks are currently members of the Federal Reserve System.
That means most of these rules never applied to savings and loans, state nonmember banks, and any other firm or individual in the business of taking deposits.
Also, Sections 16 and 21 prohibit banks from selling securities and prevent securities firms from taking deposits. But the legislation’s affiliation provisions didn’t have those absolute prohibitions.
Section 20 merely prohibited a bank from directly affiliating with a firm “engaged principally” in underwriting, distributing, or dealing in securities. It didn’t say anything about the bank’s parent company not doing the same thing.
Section 32 said a bank couldn’t share employees or directors with a securities firm. And that could be circumvented with an exemption from the Federal Reserve Board.
It was those two differences that led to a lot of regulatory actions. And those actions pretty much took the teeth out of Glass-Steagall long before it was ever repealed.
Plus, no part of the legislation but Section 21 applied to all institutions. And that gave plenty of opportunities for banks and their lawyers to exploit the loopholes.
Starting back in the 1960s, regulators’ interpretations of the law let commercial banks engage in more and more securities activities. Banks were able to create financial products that blurred the distinction between banking and security products. That led to even more leniency from courts and eventually the merging of banking and securities companies.
One of largest examples of failure came in 1998. Citigroup (the owner of Citibank) bought Solomon Smith Barney (a securities firm). The interpretation of Glass-Steagall at the time did nothing to stop it. By that point, Glass-Steagall was effectively dead.
That was a year before the Gramm-Leach-Bliley Act repealed Sections 20 and 32 of Glass-Steagall and put the final nails in the coffin.
Don’t Call It a Comeback
Glass-Steagall may make a comeback. I don’t know. There are a bunch of people who think it would be a good idea. There are also a bunch who think it would be a waste of time.
Judging by how effective it was the first time, I’m probably a member of the latter group.
Any reenactment of Sections 20 and 32 of Glass-Steagall would likely be no more than a symbolic gesture to garner voter support. If it wasn’t enforced last time, what makes people think it’ll be enforced this time?
I’m all for protecting the American taxpayer from funding another bailout. I just don’t think this kind of legislation will do it.
I’m sure there are a lot of folks out there with a different opinion. But, hey, that’s mine.
Plus, I’m inclined to agree with my colleague, Briton Ryle, when he says big banks are a good thing.
They can back huge lines of credit for corporations. They can offer cost savings to their customers. They can diversify their risk better than small ones. They’re something we need.
I’ll be keeping an eye on the news for what’s going to happen with all this talk. I’m sure you will, too. But I’m convinced nothing will come to fruition.
And if it does, I certainly don’t think it’s going to break up the banks the way we’re being told. Honestly, I hope it doesn’t.
To investing with integrity (and a grain of salt),
Jason Williams
Wealth Daily

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