30 September 2008
Mess, pt I
I am going to be wading into the financial morass slowly but certainly and here is the beginning.
First, I can't recommend strongly enough to call your federal representatives and tell them not to support the $700,000,000,000 bail-out. My wuss representative's office "didn't know" how he was going to vote on the matter as the roll was being taken. After I saw that he voted for the bill I called his office to let them know how he did vote and to tell them that I will now do whatever I can to make sure he doesn't get re-elected.
The Democratic promulgation and further enhancement of the Community Reinvestment Act did play a significant role in the current mess, but it is not, as some of the bigger conservative morons would have it, solely resposible. If it were, the failing mortgages would be concentrated in poor, urban areas. The current mess is spread evenly through geography and income levels (not quite so much in higher incomes because a person with more means can bite the bullet and refinance into a better loan even if there is loss in equity in the real property). Do not let my calling out of "conservative" morons mean that Barney Frank and his friends are absolved of guilt and are not idiots themselves. Fannie Mae and Freddie Mac were bad ideas to begin with and got worse with time. Their function also is not the concern of the federal government.
But it happened. It all happened and here we are.
We have a Republican president and his Treasury secretary putting forth one of the worst ideas in modern history and he (proudly) gets the support of the Democrats in congress. Because, you know, we have to do something.
One of the catalysts of our current problems is that homes were over-valued and that value was borrowed against. If the home isn't worth $100,000 and you have a mortgage for $120,000 you're in trouble. If one million people have the same problem, then--the logic is--we all have a problem. Nonsense. On stilts.
The government's "fix" is to buy only the bad mortgages, giving lenders breathing room, and holding onto the notes until the market "stabilizes," and the homes are worth the paper. This is such a self-evidently bad idea it just stuns me that it's not only being taken seriously, it's constantly being framed as "necessary" and the better option.
If the houses are over-valued as a result of bad investing, why in hell would it make sense to put the onus on the taxpayer? Since the property is over-valued, why would I want to back it? Would you buy a piece of stock for $100 if the broker told you, "by the way, it's really only worth about $70, but it might very well be $100 at some point in the future. Trust me, I'm the guy who over-valued it in the first place." If you would, please call me. I might have some shit to sell you.
Would the credit market tighten up? Yep. As it should.
It doesn't make sense to offer no-doc loans to people with credit scores of 620, or sell people negative amortization loans with "pick-a-payments" that can ruin you if your home doesn't appreciate in five years, or have lots of first-time homebuyers getting 80/20 loans. I work in title insurance and can tell many stories of people signing stuff that they don't understand with a loan officer over their shoulder saying, "trust me" or "don't worry, your house will always appreciate." And these weren't fools or rubes. Were they taken advantage of? Probably. But while they weren't fools many were foolish. Making the lowest payment required on a loan is rational in the short term, it leaves you with more money. But on a negative amortization loan, it leaves you with increased principal. Most loan officers I know who sold these loans don't understand this concept.
But eventually banks would realize that the only way they can make money, other than the government giving it to them, is to lend to people. At first, they would only lend to people with great credit. Then, barring any government intervention, lending would relax to more people who are still credit worthy. And hopefully the lender's would remember the lessons from this debacle and keep to standards and practices that will keep them solvent. Some won't and they'll go away. That's business, that's life. QED.
I don't care that Wachovia has been around a long time. They bought World Savings, purveyors of the aforementioned Pick-a-Payment loans. They got what they deserve. So did Lehman by buying securities it didn't srutinize well enough.
The market will recover.
It will recover better and more quickly so long as Captain Fantastic and his Motley Crew keep out of it.
These problems didn't arise out of a lack of regulation. Many of the policies banks had/have in place are solely to conform to regulations. The problem is the cost of the unintended consequences of government trying to "help." No government can interfere in the allocation of resources without things getting corrupted in some way.
And I don't know how McCain would address the markets, but I get a feeling of how Obama would from this, and I can only add this to the reasons I won't vote for him.
Also, I'm glad congress isn't doing anything today--if I had my way I'd rip the air conditioners out of congress to keep them out of there at least 4.5 months a year--but if we are in a financial crisis, does it make sense to adjourn for a religious holiday?
More later.
Some good info: here, here, here, here & here.
Other great articles here and here.
First, I can't recommend strongly enough to call your federal representatives and tell them not to support the $700,000,000,000 bail-out. My wuss representative's office "didn't know" how he was going to vote on the matter as the roll was being taken. After I saw that he voted for the bill I called his office to let them know how he did vote and to tell them that I will now do whatever I can to make sure he doesn't get re-elected.
The Democratic promulgation and further enhancement of the Community Reinvestment Act did play a significant role in the current mess, but it is not, as some of the bigger conservative morons would have it, solely resposible. If it were, the failing mortgages would be concentrated in poor, urban areas. The current mess is spread evenly through geography and income levels (not quite so much in higher incomes because a person with more means can bite the bullet and refinance into a better loan even if there is loss in equity in the real property). Do not let my calling out of "conservative" morons mean that Barney Frank and his friends are absolved of guilt and are not idiots themselves. Fannie Mae and Freddie Mac were bad ideas to begin with and got worse with time. Their function also is not the concern of the federal government.
But it happened. It all happened and here we are.
We have a Republican president and his Treasury secretary putting forth one of the worst ideas in modern history and he (proudly) gets the support of the Democrats in congress. Because, you know, we have to do something.
One of the catalysts of our current problems is that homes were over-valued and that value was borrowed against. If the home isn't worth $100,000 and you have a mortgage for $120,000 you're in trouble. If one million people have the same problem, then--the logic is--we all have a problem. Nonsense. On stilts.
The government's "fix" is to buy only the bad mortgages, giving lenders breathing room, and holding onto the notes until the market "stabilizes," and the homes are worth the paper. This is such a self-evidently bad idea it just stuns me that it's not only being taken seriously, it's constantly being framed as "necessary" and the better option.
If the houses are over-valued as a result of bad investing, why in hell would it make sense to put the onus on the taxpayer? Since the property is over-valued, why would I want to back it? Would you buy a piece of stock for $100 if the broker told you, "by the way, it's really only worth about $70, but it might very well be $100 at some point in the future. Trust me, I'm the guy who over-valued it in the first place." If you would, please call me. I might have some shit to sell you.
Would the credit market tighten up? Yep. As it should.
It doesn't make sense to offer no-doc loans to people with credit scores of 620, or sell people negative amortization loans with "pick-a-payments" that can ruin you if your home doesn't appreciate in five years, or have lots of first-time homebuyers getting 80/20 loans. I work in title insurance and can tell many stories of people signing stuff that they don't understand with a loan officer over their shoulder saying, "trust me" or "don't worry, your house will always appreciate." And these weren't fools or rubes. Were they taken advantage of? Probably. But while they weren't fools many were foolish. Making the lowest payment required on a loan is rational in the short term, it leaves you with more money. But on a negative amortization loan, it leaves you with increased principal. Most loan officers I know who sold these loans don't understand this concept.
But eventually banks would realize that the only way they can make money, other than the government giving it to them, is to lend to people. At first, they would only lend to people with great credit. Then, barring any government intervention, lending would relax to more people who are still credit worthy. And hopefully the lender's would remember the lessons from this debacle and keep to standards and practices that will keep them solvent. Some won't and they'll go away. That's business, that's life. QED.
I don't care that Wachovia has been around a long time. They bought World Savings, purveyors of the aforementioned Pick-a-Payment loans. They got what they deserve. So did Lehman by buying securities it didn't srutinize well enough.
The market will recover.
It will recover better and more quickly so long as Captain Fantastic and his Motley Crew keep out of it.
These problems didn't arise out of a lack of regulation. Many of the policies banks had/have in place are solely to conform to regulations. The problem is the cost of the unintended consequences of government trying to "help." No government can interfere in the allocation of resources without things getting corrupted in some way.
And I don't know how McCain would address the markets, but I get a feeling of how Obama would from this, and I can only add this to the reasons I won't vote for him.
Also, I'm glad congress isn't doing anything today--if I had my way I'd rip the air conditioners out of congress to keep them out of there at least 4.5 months a year--but if we are in a financial crisis, does it make sense to adjourn for a religious holiday?
More later.
Some good info: here, here, here, here & here.
Other great articles here and here.
24 September 2008
What's $25,000,000,000 between friends
In the glow of our government giving away $700,000,000,000 of money that doesn't belong to it to fix things that it doesn't have the knowledge, ability or authority to "fix" one could be excused if he missed this little doozy.
$25,000,000,000 in "loans" to the US auto industry to help them deal with the fact that they're pretty bad at making cars efficiently that people want to drive.
President Dipshit said tonight (or at least he stammered the words someone else put on the teleprompter for him):
Then why is he about to sign this bill doing the exact opposite of what he just said? Is he a liar, a bad businessman, a bad president, a bad economist? Or does he fail to grasp that "lending" companies federal funds rewards bad business decisions and encourages corporate ineptitude (or malfeasance, depending on your viewpoint--the net result is the same). The biggest conundrum of history regarding this administration will be figuring out what it sucked at least. There won't be many candidates.
I will be adding my much anticipated two cents regarding the $700,000,000,000 clusterfuck anon.
First, I must participate in the 2008 MS City to Shore ride this weekend.
UPDATE: What evidence is there that Bush is a free-market guy? He imposed steel tariffs as an election year sop that hurt the majority of Americans and got the US hit with sanctions from the WTO; he also just signed the frickin' farm bill, which is about as anti-free market as you can get. He has supported sugar tariffs on imports and subsidies for domestic producers. Even in the area where he is supposed to be strongest, this guy is a disaster.
$25,000,000,000 in "loans" to the US auto industry to help them deal with the fact that they're pretty bad at making cars efficiently that people want to drive.
President Dipshit said tonight (or at least he stammered the words someone else put on the teleprompter for him):
"I’m a strong believer in free enterprise. So my natural instinct is to
oppose government intervention. I believe companies that make bad
decisions should be allowed to go out of business."
Then why is he about to sign this bill doing the exact opposite of what he just said? Is he a liar, a bad businessman, a bad president, a bad economist? Or does he fail to grasp that "lending" companies federal funds rewards bad business decisions and encourages corporate ineptitude (or malfeasance, depending on your viewpoint--the net result is the same). The biggest conundrum of history regarding this administration will be figuring out what it sucked at least. There won't be many candidates.
I will be adding my much anticipated two cents regarding the $700,000,000,000 clusterfuck anon.
First, I must participate in the 2008 MS City to Shore ride this weekend.
UPDATE: What evidence is there that Bush is a free-market guy? He imposed steel tariffs as an election year sop that hurt the majority of Americans and got the US hit with sanctions from the WTO; he also just signed the frickin' farm bill, which is about as anti-free market as you can get. He has supported sugar tariffs on imports and subsidies for domestic producers. Even in the area where he is supposed to be strongest, this guy is a disaster.
22 September 2008
Uh Oh
From our fearless leader:
Wherefrom he gets his confidence he doesn't say. Maybe the same source that provided such keen insight into Putin's soul. One can only hope this turns out better.
I'm betting it won't.
Working together, I am confident we can enact the legislation necessary to
prevent lasting damage to our economy and meet the unique challenge facing us
today.
Wherefrom he gets his confidence he doesn't say. Maybe the same source that provided such keen insight into Putin's soul. One can only hope this turns out better.
I'm betting it won't.
18 September 2008
Words to Live By
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays thetreasury. There is not even a patriotic duty to increase one's taxes.Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
--Judge Learned Hand
This was first presented to me by an attorney who was explaining the difference between tax avoidance (legal) and tax evasion (not).
This is, of course, contra to Joe Biden saying the it is the patriotic duty of wealthy people to pay more in taxes. Feh.
--Judge Learned Hand
This was first presented to me by an attorney who was explaining the difference between tax avoidance (legal) and tax evasion (not).
This is, of course, contra to Joe Biden saying the it is the patriotic duty of wealthy people to pay more in taxes. Feh.
12 September 2008
143 Days
I've heard the charge that Barack Obama is unfit to be President of the United States because he served only 143 days in the Senate prior to announcing his candidacy. For some this should preclude him from consideration.
Never mind that the Founders saw fit only to set citizenship and attaining 35 years of age as their only requirements (or that there hasn't been a move to modify the requirements in 219 years). Would these critics feel any differently about Obama had he, say, 500 days of Senate experience? 250? Or is 300 more like it? I'm thinking no.
He was a community organizer (which I still don't know exactly what that is, or if society even needs them, but whatever); he did attend one of the finest law schools in the world, graduating magna cum laude; he did edit the Harvard Law Review (sadly, he hasn't published any law review articles, which is a shame for those who would like to know the substance to his stances and odd considering that he:); taught Constitutional Law at one of the other finest Law Schools in the world; he did have a private practice as an attorney and was a state legislator. He did not emerge from the womb and alight straight to the Senate for his 143 days.
The most "experienced" President we had was James Buchanan (House of Representatives, 1814-1831; Senate, 1834-1845; minister to Russia; minister to Great Britain; nominated for and refused a seat on the Supreme Court, 1844; Secretary of State in Polk Administration, 1845-1849; President (15), 1857-1861). He was also, arguably, the worst (ranked DFL in Presidential Leadership among other rankings).
He was succeeded, of course, by one of the least experienced men to take the helm and one of the greatest ever to do so, Abraham Lincoln. Buchanan said to Lincoln on the latter's inauguration, "My dear sir, if you are as happy on entering the White House as I am on leaving, you are a very happy man indeed."
Now, I don't think Obama is the next Lincoln (and certainly not the next Jesus, as some would have it). But before making a big deal about something, it might help to know what you're talking about. If some other quanta were necessary to being president the Founders would have included them. If anyone feels strongly enough about it now, propose an amendment to the Constitution adding them. Otherwise, it's a non-issue.
I'm not going to vote for him and I don't like many of the policies he's espoused, but this is nonsense and deserves to be called such.
So from the top: natural citizen and >35 years old=qualified. More electoral votes than competition=win.
N.B.--Nor do I think it is wise to denigrate Sarah Palin (as noted here) on her experience. Regardless of the size, she has been elected to serve two separate executive posts. It an't nothin'.
Never mind that the Founders saw fit only to set citizenship and attaining 35 years of age as their only requirements (or that there hasn't been a move to modify the requirements in 219 years). Would these critics feel any differently about Obama had he, say, 500 days of Senate experience? 250? Or is 300 more like it? I'm thinking no.
He was a community organizer (which I still don't know exactly what that is, or if society even needs them, but whatever); he did attend one of the finest law schools in the world, graduating magna cum laude; he did edit the Harvard Law Review (sadly, he hasn't published any law review articles, which is a shame for those who would like to know the substance to his stances and odd considering that he:); taught Constitutional Law at one of the other finest Law Schools in the world; he did have a private practice as an attorney and was a state legislator. He did not emerge from the womb and alight straight to the Senate for his 143 days.
The most "experienced" President we had was James Buchanan (House of Representatives, 1814-1831; Senate, 1834-1845; minister to Russia; minister to Great Britain; nominated for and refused a seat on the Supreme Court, 1844; Secretary of State in Polk Administration, 1845-1849; President (15), 1857-1861). He was also, arguably, the worst (ranked DFL in Presidential Leadership among other rankings).
He was succeeded, of course, by one of the least experienced men to take the helm and one of the greatest ever to do so, Abraham Lincoln. Buchanan said to Lincoln on the latter's inauguration, "My dear sir, if you are as happy on entering the White House as I am on leaving, you are a very happy man indeed."
Now, I don't think Obama is the next Lincoln (and certainly not the next Jesus, as some would have it). But before making a big deal about something, it might help to know what you're talking about. If some other quanta were necessary to being president the Founders would have included them. If anyone feels strongly enough about it now, propose an amendment to the Constitution adding them. Otherwise, it's a non-issue.
I'm not going to vote for him and I don't like many of the policies he's espoused, but this is nonsense and deserves to be called such.
So from the top: natural citizen and >35 years old=qualified. More electoral votes than competition=win.
N.B.--Nor do I think it is wise to denigrate Sarah Palin (as noted here) on her experience. Regardless of the size, she has been elected to serve two separate executive posts. It an't nothin'.
04 September 2008
Bias
My letter to NPR in response to this article by David Folkenflik regarding Sarah Palin:
I am not one to complain of media bias. It certainly exists, but usually it is inconsequential and doesn't quite spell the doom that some conservatives would have it. It is also not omnipresent. This piece is beyond bias. It is half-baked trash showing a complete dearth of logic, insight or coherence.
Mr. Folkenflik posits that Mrs. Palin's speech doesn't "prove whether the 44-year-old former small-town mayor deserved the job of vice president after just 21 months as governor of Alaska." He does not, however, share what would show someone "deserves" the job. The language used is condescending. It is as condescending as, "[t]he straw men? Members of the Fourth Estate and devotees of the First Amendment," is grandiloquent. I am rather tired of reporters seeing themselves as a collective vanguard for constitutional liberty when most probably couldn't name anything else mentioned in the First Amendment.
He further states, "[s]ince few journalists outside her state knew much about her, and since her record there is, shall we say, still evolving, reporters have picked through the archives to find both true accomplishments and plenty of seeming blemishes." What would, say, five of these "plenty" of seeming blemishes be? And where does he mention her true accomplishments.
Her comment about being judged as unqualified by the Washington elite is seeming pretty reasonable.
He then digresses on the McCain campaign's hostility to the press, about which no one who isn't a member of the press cares.
Farther along he then knocks Mrs. Palin's allusion to Harry Truman, "tough she didn't mention that he had been a senator for a decade before becoming vice president." Cute little point, but if he was trying to use this as a nod to Barack Obama, please note that Senator Obama has served less than two years as a US Senator and President Truman was a military officer, businessman and judge before turning to politics.
He ends with a grossly malformed understanding of the Geneva Conventions, POW status and whether POWs or enemy combatants are entitled to the full scope of US Constitutional protections. Would Mr. Folkenflik turn Osama bin Laden or Khalid Sheikh Mohammed loose if it were found out that soldiers had not informed them of their right to remain silent and to counsel before questioning them? Does Mr. Folkenflik equate the current actions of the US military with the Viet Cong? What proof could he offer that any US soldier or group of soldiers has behaved for one day the way the Viet Cong behaved regularly in Hanoi?
This piece was disgusting and unworthy of NPR. I am ashamed for you corporately for having put it on your site.
Sean M.
--Back to me, he mentions in his piece some blather regarding Peggy Noonan and some remarks she had made regarding Palin. The link included is here and Noonan's full whatever is here. I am just putting this as an excuse to inlude my two-cents that it seems when reporters are truly desperate to make a point they look to other journalists. How edifying this must be. Completely lost is that the title "journalist" doesn't imply or impart any necessary knowledge or insight. Or maybe to other journalists it does imply something. I also don't know why anyone would cite Peggy Noonan. She writes like Larry King used to, but without the charm.
More on Palin, McCain, Obama, Biden and the whole rest of the mush later.
I am not one to complain of media bias. It certainly exists, but usually it is inconsequential and doesn't quite spell the doom that some conservatives would have it. It is also not omnipresent. This piece is beyond bias. It is half-baked trash showing a complete dearth of logic, insight or coherence.
Mr. Folkenflik posits that Mrs. Palin's speech doesn't "prove whether the 44-year-old former small-town mayor deserved the job of vice president after just 21 months as governor of Alaska." He does not, however, share what would show someone "deserves" the job. The language used is condescending. It is as condescending as, "[t]he straw men? Members of the Fourth Estate and devotees of the First Amendment," is grandiloquent. I am rather tired of reporters seeing themselves as a collective vanguard for constitutional liberty when most probably couldn't name anything else mentioned in the First Amendment.
He further states, "[s]ince few journalists outside her state knew much about her, and since her record there is, shall we say, still evolving, reporters have picked through the archives to find both true accomplishments and plenty of seeming blemishes." What would, say, five of these "plenty" of seeming blemishes be? And where does he mention her true accomplishments.
Her comment about being judged as unqualified by the Washington elite is seeming pretty reasonable.
He then digresses on the McCain campaign's hostility to the press, about which no one who isn't a member of the press cares.
Farther along he then knocks Mrs. Palin's allusion to Harry Truman, "tough she didn't mention that he had been a senator for a decade before becoming vice president." Cute little point, but if he was trying to use this as a nod to Barack Obama, please note that Senator Obama has served less than two years as a US Senator and President Truman was a military officer, businessman and judge before turning to politics.
He ends with a grossly malformed understanding of the Geneva Conventions, POW status and whether POWs or enemy combatants are entitled to the full scope of US Constitutional protections. Would Mr. Folkenflik turn Osama bin Laden or Khalid Sheikh Mohammed loose if it were found out that soldiers had not informed them of their right to remain silent and to counsel before questioning them? Does Mr. Folkenflik equate the current actions of the US military with the Viet Cong? What proof could he offer that any US soldier or group of soldiers has behaved for one day the way the Viet Cong behaved regularly in Hanoi?
This piece was disgusting and unworthy of NPR. I am ashamed for you corporately for having put it on your site.
Sean M.
--Back to me, he mentions in his piece some blather regarding Peggy Noonan and some remarks she had made regarding Palin. The link included is here and Noonan's full whatever is here. I am just putting this as an excuse to inlude my two-cents that it seems when reporters are truly desperate to make a point they look to other journalists. How edifying this must be. Completely lost is that the title "journalist" doesn't imply or impart any necessary knowledge or insight. Or maybe to other journalists it does imply something. I also don't know why anyone would cite Peggy Noonan. She writes like Larry King used to, but without the charm.
More on Palin, McCain, Obama, Biden and the whole rest of the mush later.
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