Caroline Kennedy tells Daily News: I wouldn't be beholden to anybody
So Caroline Kennedy wants to, you know, be the Senator, you know, from the state of, you know, New York. I don't, you know, know if, you know, she's, you know, qualified. I suppose, you know, that her, you know, heritage and activism, you know, set her apart from, you know, other candidates, but, you know, what else does she, you know, bring to the table. Apparently, you know, the ability to connect, you know, with the non-voting public. You know, teenagers! She, you know, apparently, you know, speaks their, you know, language.
The other day I was in the post office trying to get out a few last-minute items. The lady in front of me had two cute little girls with her. As children often do, they became fidgety and started wandering around the area. I became quickly aware that one of the girls' names is Kennedy. Apparently a first name. "Kennedy, get back in line please. Kennedy, stay next to me please." This went on. I almost, ALMOST, leaned over to the woman and said, "Cheer up, your daughter is qualified to be Senator from the state of New York!" Almost!
Sunday, December 28, 2008
2008 was the year man-made global warming was disproved - Telegraph
2008 was the year man-made global warming was disproved - Telegraph
So my friend at anamericanidiot.wordpress.com posted a great blog about the global warming hoax. Fortunately for us all the Brits seem to be leading the way on the anti-global warming movement. This article is a good time capsule since it catalogs a point in time when the tide started to shift. I feel it will take a few more years for us to come to this realization here in the States. We now have an unadulterated, unabashed, global warming alarmist in the White House (well, not NOW, but soon). This guy is proposing a cap and trade system which he says will drive up energy costs and could bankrupt the coal industry if they try to build new plants.
In case you're not aware of the meaning of "cap and trade," I'll do my best to explain. Apparently, Obama wants to pass regulations limiting the amount of emissions any company can emit safely. That's the cap. If the company exceeds that limit, they will be fined. These fines will go to companies who emit less than their allotment. Essentially, the offending company is "trading" emissions with other companies. Obama's idea is to make the cap so low for some companies and the fines so high that they will either raise prices (which will of course stifle business) or force them into bankruptcy, if not in fact close altogether.
I know, I'm just an Obama-hater. No one would ever get elected with a scheme like this as a cornerstone of their energy policy. If they did have this agenda, they would keep this completely quiet so no one would ever know about it until they were in office and it was too late. Oh yeah. . .?!?
Let's pick up a couple of these points. First, he says that his plan is the most aggressive. This means that the "cap" will be VERY low and the "trade" will be VERY costly. He then brags about being the first one to advocate a 100% auction. This means the cap will be Z E R O!!! That is to say, the number one supplier of electricity to our nation will not be allowed to emit ANY "greenhouse" gasses!! That's when he says they can build new plants if they want to (which we will eventually have to do, or we will have to do with less energy) but it will bankrupt them.
Here's where the plan starts to fall apart. Obama believes that this will raise billions which he will spend on new technologies. The problem is as he has stated: that the heavy fines will stifle business so much that companies will not be able to pay the fines. This will, of course, require heavier fines, which will put more companies out of business. This is what always happens when you start taxing a behavior in order to raise money for some special project. If the goal of the tax is to raise money, it will fail. Sometimes I would advocate a tax if the goal is to curb a certain activity. Taxing an activity always reduces the activity. But if the goal is to raise money for new technologies, taxing the coal industry and others at such a high rate will cause havoc.
Our hope at this point is that he has surrounded himself with clearer heads. As usual, time will tell. I don't think the global warming hysteria has left Washington yet though.
So my friend at anamericanidiot.wordpress.com posted a great blog about the global warming hoax. Fortunately for us all the Brits seem to be leading the way on the anti-global warming movement. This article is a good time capsule since it catalogs a point in time when the tide started to shift. I feel it will take a few more years for us to come to this realization here in the States. We now have an unadulterated, unabashed, global warming alarmist in the White House (well, not NOW, but soon). This guy is proposing a cap and trade system which he says will drive up energy costs and could bankrupt the coal industry if they try to build new plants.
In case you're not aware of the meaning of "cap and trade," I'll do my best to explain. Apparently, Obama wants to pass regulations limiting the amount of emissions any company can emit safely. That's the cap. If the company exceeds that limit, they will be fined. These fines will go to companies who emit less than their allotment. Essentially, the offending company is "trading" emissions with other companies. Obama's idea is to make the cap so low for some companies and the fines so high that they will either raise prices (which will of course stifle business) or force them into bankruptcy, if not in fact close altogether.
I know, I'm just an Obama-hater. No one would ever get elected with a scheme like this as a cornerstone of their energy policy. If they did have this agenda, they would keep this completely quiet so no one would ever know about it until they were in office and it was too late. Oh yeah. . .?!?
Let's pick up a couple of these points. First, he says that his plan is the most aggressive. This means that the "cap" will be VERY low and the "trade" will be VERY costly. He then brags about being the first one to advocate a 100% auction. This means the cap will be Z E R O!!! That is to say, the number one supplier of electricity to our nation will not be allowed to emit ANY "greenhouse" gasses!! That's when he says they can build new plants if they want to (which we will eventually have to do, or we will have to do with less energy) but it will bankrupt them.
Here's where the plan starts to fall apart. Obama believes that this will raise billions which he will spend on new technologies. The problem is as he has stated: that the heavy fines will stifle business so much that companies will not be able to pay the fines. This will, of course, require heavier fines, which will put more companies out of business. This is what always happens when you start taxing a behavior in order to raise money for some special project. If the goal of the tax is to raise money, it will fail. Sometimes I would advocate a tax if the goal is to curb a certain activity. Taxing an activity always reduces the activity. But if the goal is to raise money for new technologies, taxing the coal industry and others at such a high rate will cause havoc.
Our hope at this point is that he has surrounded himself with clearer heads. As usual, time will tell. I don't think the global warming hysteria has left Washington yet though.
Wednesday, December 24, 2008
Obama Interviewed In Blagojevich Probe - December 23, 2008
Obama Interviewed In Blagojevich Probe - December 23, 2008
Well, it doesn't look like I've blogged about this yet. I made a few comments on anamericanidots blog so let me get you up to date. This is what I said back on Dec. 10:
"This presents a whole slew of possibilities. First, will Obama be indicted before the inauguration. If so, does he resign and we end up with Biden? If he’s not indicted, does he offer a Presidential pardon to Blago to keep his mouth shut? Who’s behind this investigation? Whoever it is doesn’t have the Democrats’ best interests at heart so naming names wouldn’t be a big problem for them. We certianly know Barry has no problem with hardball politics. Look how he got Ryan’s divorce papers made public so he could win the US Senate virtually unopposed. But did he do anything illegal? I find it interesting that Obama came right out with the comment, “I’ve had no contact with the governor’s office.” Really? You never spoke to the Governor of your state concerning who you think should take over your seat? Let’s assume that’s not crazy on the face of it, but we have evidence that in fact he did. Axelrod says he did and Drudge has a link with the headline, “Nov.5: ‘Ill. Gov to meet with Obama today.’” The story has apparently been taken down and Axelrod says he “apparently” misspoke. So what are they hiding? Time will tell. (And perhaps Atty. Fitzgerald will too!)
"Did you see the picture of Obama SHAKING HANDS with Blago from Dec. 2?!? As Hannity said, if you’re shaking my hand, I’d call that contact. Are we supposed to believe that Obama and Blago were in the same room and DIDN’T talk about the Senate seat? I know. . . it’s just innuendo. . .there’s no evidence. . .yeah, and you didn’t have sex with that woman. Man, does this feel familiar. At least we don’t have to worry about what the nation will be talking about for the next four years. It won’t be Iraq, the economy, national defense, health care, education, tax cuts, or anything else. It will be the ongoing investigations coming out of Chicago! Keep an eye on my blog for more info."
It's taken me a couple of weeks to get up to speed on this. We now know that YES! in fact someone from Obama's office DID have contact with the Gov. This would presumably explain the very strained comment from Barry that "I -- I had no contact with the governor or his office so we -- uhhh, I was not aware of..." Notice the quick change from "we" to "I." But right now, all we have is the word of Obama's attorney, Greg Craig, that Obama didn't talk to Blago. Funny name - Greg Craig. Sound familiar? It sure did to me! Greg Craig was Clinton's attorney during the Lewinsky debacle. Well, one of them anyway. Craig was in charge of the impeachment defense. Nice job Craig. And congratulations on the new appointment to White House counsel. Oh, you're the President's attorney again? Nice.
Wait a minute, I thought we all voted for change we could believe in! Let's see, we have Clinton's former attorney, Clinton's former Deputy Attorney General, Clinton's former Energy Secretary, and Clinton's former. . .er. . .I mean current wife! Just to name a few. Man change sure looks familiar. But I digress.
So Greg Craig is the guy who's going to be advising Obama on legal matters. I wonder if he was the guy who advised Bill Clinton when he told the American people (with the appropriate finger wag) that "I did not have sexual relations with that woman. . ." or if he was the one who told Clinton to admit that he had had an "improper physical relationship" with Ms. Lewinsky. Whichever, the point is that, as I mentioned before, we will be talking about this for months if not in fact years from now. This will haunt Obama's Presidency throughout. He already had a cloud of controversy over him from his associations with Wright, Ayers, and Phleger et al. Now we can add Blago to the list.
Make no mistake. I'm not so sure that there is anything to this whole Senate seat issue. Maybe Obama's nose is clean as far as this particular issue is concerned. The question is: what does Blago have on Obama that he's willing to give up to save himself?!? Obama was a fast riser in the completely corrupt Chicago political machine. It's almost funny to watch this now as the players are all falling over themselves to get rid of Blago, not just because he's corrupt, but because of how it opens up new positions for others to move up. That is to say that in the middle of this corruption scandal, there are all new ones being dreamed up by those who have their sights set on the Governor's office. Seriously, it's like the old Soviet power struggles. Get rid of the head and everybody fights for the chance to move up.
So out of this pool of corruption comes the lily white (figuratively of course) Obama. He who had no idea that Rev. Wright was saying these offensive things from the pulpit. He who had no idea that he was launching his political career in the living room of an admitted terrorist. He who can't produce a valid birth certificate. And he isn't even in office yet. If the transition is any indication of what the next four years are going to be like, this should be a lot of fun and I'm probably going to run out of cyberspace to blog about all of this. Let's just hope it keeps him too preoccupied to raise our taxes!
Well, it doesn't look like I've blogged about this yet. I made a few comments on anamericanidots blog so let me get you up to date. This is what I said back on Dec. 10:
"This presents a whole slew of possibilities. First, will Obama be indicted before the inauguration. If so, does he resign and we end up with Biden? If he’s not indicted, does he offer a Presidential pardon to Blago to keep his mouth shut? Who’s behind this investigation? Whoever it is doesn’t have the Democrats’ best interests at heart so naming names wouldn’t be a big problem for them. We certianly know Barry has no problem with hardball politics. Look how he got Ryan’s divorce papers made public so he could win the US Senate virtually unopposed. But did he do anything illegal? I find it interesting that Obama came right out with the comment, “I’ve had no contact with the governor’s office.” Really? You never spoke to the Governor of your state concerning who you think should take over your seat? Let’s assume that’s not crazy on the face of it, but we have evidence that in fact he did. Axelrod says he did and Drudge has a link with the headline, “Nov.5: ‘Ill. Gov to meet with Obama today.’” The story has apparently been taken down and Axelrod says he “apparently” misspoke. So what are they hiding? Time will tell. (And perhaps Atty. Fitzgerald will too!)
"Did you see the picture of Obama SHAKING HANDS with Blago from Dec. 2?!? As Hannity said, if you’re shaking my hand, I’d call that contact. Are we supposed to believe that Obama and Blago were in the same room and DIDN’T talk about the Senate seat? I know. . . it’s just innuendo. . .there’s no evidence. . .yeah, and you didn’t have sex with that woman. Man, does this feel familiar. At least we don’t have to worry about what the nation will be talking about for the next four years. It won’t be Iraq, the economy, national defense, health care, education, tax cuts, or anything else. It will be the ongoing investigations coming out of Chicago! Keep an eye on my blog for more info."
It's taken me a couple of weeks to get up to speed on this. We now know that YES! in fact someone from Obama's office DID have contact with the Gov. This would presumably explain the very strained comment from Barry that "I -- I had no contact with the governor or his office so we -- uhhh, I was not aware of..." Notice the quick change from "we" to "I." But right now, all we have is the word of Obama's attorney, Greg Craig, that Obama didn't talk to Blago. Funny name - Greg Craig. Sound familiar? It sure did to me! Greg Craig was Clinton's attorney during the Lewinsky debacle. Well, one of them anyway. Craig was in charge of the impeachment defense. Nice job Craig. And congratulations on the new appointment to White House counsel. Oh, you're the President's attorney again? Nice.
Wait a minute, I thought we all voted for change we could believe in! Let's see, we have Clinton's former attorney, Clinton's former Deputy Attorney General, Clinton's former Energy Secretary, and Clinton's former. . .er. . .I mean current wife! Just to name a few. Man change sure looks familiar. But I digress.
So Greg Craig is the guy who's going to be advising Obama on legal matters. I wonder if he was the guy who advised Bill Clinton when he told the American people (with the appropriate finger wag) that "I did not have sexual relations with that woman. . ." or if he was the one who told Clinton to admit that he had had an "improper physical relationship" with Ms. Lewinsky. Whichever, the point is that, as I mentioned before, we will be talking about this for months if not in fact years from now. This will haunt Obama's Presidency throughout. He already had a cloud of controversy over him from his associations with Wright, Ayers, and Phleger et al. Now we can add Blago to the list.
Make no mistake. I'm not so sure that there is anything to this whole Senate seat issue. Maybe Obama's nose is clean as far as this particular issue is concerned. The question is: what does Blago have on Obama that he's willing to give up to save himself?!? Obama was a fast riser in the completely corrupt Chicago political machine. It's almost funny to watch this now as the players are all falling over themselves to get rid of Blago, not just because he's corrupt, but because of how it opens up new positions for others to move up. That is to say that in the middle of this corruption scandal, there are all new ones being dreamed up by those who have their sights set on the Governor's office. Seriously, it's like the old Soviet power struggles. Get rid of the head and everybody fights for the chance to move up.
So out of this pool of corruption comes the lily white (figuratively of course) Obama. He who had no idea that Rev. Wright was saying these offensive things from the pulpit. He who had no idea that he was launching his political career in the living room of an admitted terrorist. He who can't produce a valid birth certificate. And he isn't even in office yet. If the transition is any indication of what the next four years are going to be like, this should be a lot of fun and I'm probably going to run out of cyberspace to blog about all of this. Let's just hope it keeps him too preoccupied to raise our taxes!
Saturday, December 13, 2008
Lansing, we have a problem!
Take a moment to view the video I've posted from "Your World" on Fox News. This is the mayor of Lansing, MI, answering questions about the UAW's president implying that people who are against the auto industry bailout are insane. Well, the head of the UAW is an idiot for saying that and I won't waste my time on him. But it was the mayor's comments that got me out of my seat near the end. See if you are as outraged as I am.
Did I hear the Mayor of Lansing correctly? Did he just say that in order to compete with foreign car manufacturers, we need to get rid of capitalist principles?!? Doesn't he realize that it is the removal of capitalist principles that is stifling the car manufacturers here in the States?!? During a conversation about how the auto industry has been losing market share for decades, the Mayor raises the issue of trade. Apparently he feels that the US manufacturers are at a disadvantage to people who have to pay to ship their products half way around the world! At one point, the Mayor asks the rhetorical question, "What happened in textiles, electronics, steel, and furniture?" I'll tell you what happened: THEY WERE UNIONIZED!!! Ever heard of Norma Rae?!? I'm all for humane treatment of workers, but when the unions start holding companies hostage for wages that aren't supported by the market, then who should be surprised by the companies going under?
At the very end of the conversation though is when I blew a gasket. Mayor Virg says that we are unilaterally disarming the American companies because we expect them to follow a capitalist rubric when the rest of the world does not have the same "restriction." With all due respect, your honor, if you think it is our capitalist system that is holding us back, you are clearly unaware of what's been happening to the American auto industry for 30 years or more. Allow me to enlighten you. For years now, we have mandated a variety of safety features, mileage standards, and emission standards, not to mention how the unions have been guaranteeing extensive pensions and higher wages than foreign companies do. These are not the hallmarks of a free-market capitalist business model. The free market would dictate whether or not certain safety features are included or not (thank you Ralph Nader). If people think that a safer car is worth more, then they will pay for it. If a job pays a certain amount of money, then that's what the job is worth. If the job only pays a small wage to hold down costs, then it is up to the workers to decided whether they want to work for that amount of money.
The fact of the matter is this: it was free-market capitalism which got the auto industries to be the great model of American achievement they have become and it will be free-market capitalism which will get them out of it. If the Mayor of Lansing, Michigan thinks that the free market is an albatross around the neck of the auto industry (and he apparently does), we have bigger problems than I thought. He is clearly not alone and it is the basis for much of this bailout talk we have been hearing for many months now. What we are experiencing now is not the FAILURE of the free-market system, it is an example of what happens when the free market is tampered with. Auto, housing, oil, have all had their industry tampered with by massive federal intervention. All for very noble causes I'm sure. But we are reaping now the seeds of intervention we have been sowing for more than 30 years. We can no longer artificially prop up an industry which has lost its way. It's time to let the auto companies go into bankruptcy, renegotiate their union contracts, and pay their people a wage more comparable to those auto workers in the southern states.
Did I hear the Mayor of Lansing correctly? Did he just say that in order to compete with foreign car manufacturers, we need to get rid of capitalist principles?!? Doesn't he realize that it is the removal of capitalist principles that is stifling the car manufacturers here in the States?!? During a conversation about how the auto industry has been losing market share for decades, the Mayor raises the issue of trade. Apparently he feels that the US manufacturers are at a disadvantage to people who have to pay to ship their products half way around the world! At one point, the Mayor asks the rhetorical question, "What happened in textiles, electronics, steel, and furniture?" I'll tell you what happened: THEY WERE UNIONIZED!!! Ever heard of Norma Rae?!? I'm all for humane treatment of workers, but when the unions start holding companies hostage for wages that aren't supported by the market, then who should be surprised by the companies going under?
At the very end of the conversation though is when I blew a gasket. Mayor Virg says that we are unilaterally disarming the American companies because we expect them to follow a capitalist rubric when the rest of the world does not have the same "restriction." With all due respect, your honor, if you think it is our capitalist system that is holding us back, you are clearly unaware of what's been happening to the American auto industry for 30 years or more. Allow me to enlighten you. For years now, we have mandated a variety of safety features, mileage standards, and emission standards, not to mention how the unions have been guaranteeing extensive pensions and higher wages than foreign companies do. These are not the hallmarks of a free-market capitalist business model. The free market would dictate whether or not certain safety features are included or not (thank you Ralph Nader). If people think that a safer car is worth more, then they will pay for it. If a job pays a certain amount of money, then that's what the job is worth. If the job only pays a small wage to hold down costs, then it is up to the workers to decided whether they want to work for that amount of money.
The fact of the matter is this: it was free-market capitalism which got the auto industries to be the great model of American achievement they have become and it will be free-market capitalism which will get them out of it. If the Mayor of Lansing, Michigan thinks that the free market is an albatross around the neck of the auto industry (and he apparently does), we have bigger problems than I thought. He is clearly not alone and it is the basis for much of this bailout talk we have been hearing for many months now. What we are experiencing now is not the FAILURE of the free-market system, it is an example of what happens when the free market is tampered with. Auto, housing, oil, have all had their industry tampered with by massive federal intervention. All for very noble causes I'm sure. But we are reaping now the seeds of intervention we have been sowing for more than 30 years. We can no longer artificially prop up an industry which has lost its way. It's time to let the auto companies go into bankruptcy, renegotiate their union contracts, and pay their people a wage more comparable to those auto workers in the southern states.
Saturday, November 29, 2008
Get your money for nothin' and your houses for free!
Early on in this year's credit crunch, I started hearing about the Community Reinvestment Act and its effect on America's housing market. I started doing some research into this matter and man is my head spinning. I can't believe we let it go this long and we are now at the brink of the total collapse of the credit markets and NO ONE is asking to repeal the CRA. Let me start at the beginning and see if I can make this understandable. Much of the following information comes from a great paper by Vern McKinley who wrote about the CRA for the CATO Institute. McKinley has worked for The Fed, FDIC, Resolution Trust Corporation, and the Treasury Deparment. He seems like a qualified authority on the subject. I also found a lot of information on Wikipedia's entry titled Community Reinvestment Act.
Back in 1977, Sen. Proxmire (D-Wisc.) thought we needed to do away with the practice of "redlining" in granting loans. "Redlining" is the practice of denying loans or other services due strictly to someone living in a certain area of a city. On the surface, the idea of doing away with "redlining" is a good one. But the cautions we had from the beginning have come to fruition. The idea was to ensure that if a bank took deposits from a certain area of the city that they were giving back in the form of loans to people in that same community. McKinley states that, "Opponents of the bill feared that one day banks would be required to make unsound loans to meet their local credit quotas." Yes, ladies and gentlemen, there were in fact people aware of the dangers of this legislation waaaayyyy back in 1977! I suspect they could not have foreseen the levels to which the government was involved however. Let's move on.
So, ultimately the CRA (along with a battery of other legislation aimed at ending discrimination in home loans) was passed with a variety of government agencies tasked with enforcement. At this point, the banks were simply asked to provide paperwork to the various agencies detailing their level of community involvement. And conversely, the public was allowed to make comment on banks as well. This is similar to the way things are done in broadcasting. TV and radio stations are required to file certain paperwork and hold public hearings to show their community service to the FCC. The agencies would give the various financial institutions a rating based on the information they had as a result of the various filings. Enforcement would come from the agencies in the form of denying approval for mergers, acquisitions, etc. This went on for many years with little or no real enforcement, however.
So Sen. Proxmire wasn't satisfied. In 1989, at a public hearing, Sen. Proxmire said the inner-city neighborhoods were "starving for credit." As a result of these hearings, the agencies overseeing the CRA filed a joint policy statement strengthening enforcement of the CRA. After the requisite round of new legislation, the regulating agencies were now required to write an evaluation of the banks' CRA compliance. It wasn't enough to simply give them a rating, now we have to have a written evaluation. With all this attention on the CRA, the Fed decided it was time to flex their muscle. They denied their first bank acquisition! (Awwww, who's a good little regulatory agency, you're almost all grown up now!) Once the genie's been let out of the bottle, it's going to be hard to get that sucker back in. Now the federal government knows they can dictate the behavior of banks. (Just in case they were unclear on that issue)
In 1992, the Boston Fed undertook a study to find out what was causing the disparity in lending rates, with respect to race. It turns out that there is NO overt discrimination in lending. That, in fact a whopping 97% of minorities with the same credit as whites got the same loans. Despite this, there was still a great disparity in the number of loans. So OBVIOUSLY, the discrimination here is far more subtle than we realized. (It would have nothing to do with the disparity in incomes, would it? Hmmm, maybe we should address that issue.) So under the Clinton administration, they decided that there would be all new standards for complying with the CRA and enforcement would be much stricter. Enter Janet Reno and the Justice Department. Now, banks weren't just worried about satisfying the various regulatory agencies. Now they had to worry about being PROSECUTED!! Apparently, Janet Reno thinks that not giving loans to people who don't qualify is ILLEGAL! Her exact quote is this, "we will tackle lending discrimination wherever and in whatever form it appears. No loan is exempt, no bank is immune. For those who thumb their nose at us, I promise vigorous enforcement.” That my friends is a threat!
She backed up her threats by suing the banks in federal court and forcing them to comply with huge financial packages aimed at revitalising their local neighborhoods. The Clinton administration then started making proposals that were more quota based. So that no matter what conditions existed in the local community, they had to have a certain number of CRA loans to pass the Clinton Administration's strict standards. This was a sort of financial affirmative action. But don't take my words for it. Listen to HUD Secretary Andrew Cuomo talk about this affirmative action in a video discovered by Naked Emperor News. (At the end of the comments by Cuomo, there's a clip from Hannity's show giving a much more succinct history of the CRA.) What I find interesting in this video is Cuomo actually saying that the discrimination is so subtle, it's institutionalized.
So now you have the Clinton administration demonizing the banking industry and threatening them if they don't make all these bad loans. Not to mention the various community organizations (can you say ACORN?) that have started to sue the banks under the CRA (remember the part about the public being able to comment on the banks?). What are the banks supposed to do? So they start making all these bad loans but still have to find a way to make money. That's where Freddie Mac and Fannie Mae come in.
Freddie and Fannie are designed to buy mortgages, insure them, and pay the banks the value of the mortgage. They would then bundle these mortgages into morgage-backed securities and investors would invest in them. Freddie and Fannie would keep a fee for insuring them and everyone was happy. The problem was that they soon realized they were being saddled with too much bad debt. They couldn't keep up with the flow of these CRA loans because of the restrictions on them. So the restrictions were lifted and in 2000 Fannie Mae expected that 50% of their business was going to be CRA loans! 50%!! (I think we've found the source of the problem!) Now, mind you, not all of these loans end up in default. Just a larger percentage.
With home loans going out the door at a record pace, housing becomes in shorter supply, which artificially drives up the price. As these CRA loans started to default, the prices of the houses started to come down, and that reduced the incentive for people to try and work out a repayment schedule. The house they bought wasn't worth what they paid so how could they refinance? And the rest is history.
The best part is now that the banks have done what they were threatened to do, the phrase of the day is "predatory lending." Congress is trying to blame the banks for making all these bad loans. Well, during the Bush years (2000-present), Republicans in Congress have tried to reform the rules and put the power of lending back into the hands of the banks. But when the Republicans tried to INCREASE regulations on Fannie and Freddie, they were lambasted by House Democrats. Take a listen from this video posted by Naked Emporer News.
I briefly mentioned ACORN earlier. Their contribution to this mess shouldn't be overlooked. ACORN was suing the banks and lobbying Congress to get more of these loans in the hands of people who really couldn't afford them. One of the catch phrases you might hear in the videos is "affordable housing." Not sure if anyone is aware of this, but housing is only affordable if you can pay for it. Just being able to get a loan and move in is not the end of the story. Well one of ACORN's lawyers has become very famous recently. He's been on all the network news shows and made several appearances on talk shows and has been traveling around the country talking about his plans for the economy. YUP, you got it! Barack Obama is one of the lawyers who helped ACORN sue the banks. And now he's in charge of fixing this mess. Would I be too cynical to say that I don't think repealing the CRA is high on his list of "to do's?"
Back in 1977, Sen. Proxmire (D-Wisc.) thought we needed to do away with the practice of "redlining" in granting loans. "Redlining" is the practice of denying loans or other services due strictly to someone living in a certain area of a city. On the surface, the idea of doing away with "redlining" is a good one. But the cautions we had from the beginning have come to fruition. The idea was to ensure that if a bank took deposits from a certain area of the city that they were giving back in the form of loans to people in that same community. McKinley states that, "Opponents of the bill feared that one day banks would be required to make unsound loans to meet their local credit quotas." Yes, ladies and gentlemen, there were in fact people aware of the dangers of this legislation waaaayyyy back in 1977! I suspect they could not have foreseen the levels to which the government was involved however. Let's move on.
So, ultimately the CRA (along with a battery of other legislation aimed at ending discrimination in home loans) was passed with a variety of government agencies tasked with enforcement. At this point, the banks were simply asked to provide paperwork to the various agencies detailing their level of community involvement. And conversely, the public was allowed to make comment on banks as well. This is similar to the way things are done in broadcasting. TV and radio stations are required to file certain paperwork and hold public hearings to show their community service to the FCC. The agencies would give the various financial institutions a rating based on the information they had as a result of the various filings. Enforcement would come from the agencies in the form of denying approval for mergers, acquisitions, etc. This went on for many years with little or no real enforcement, however.
So Sen. Proxmire wasn't satisfied. In 1989, at a public hearing, Sen. Proxmire said the inner-city neighborhoods were "starving for credit." As a result of these hearings, the agencies overseeing the CRA filed a joint policy statement strengthening enforcement of the CRA. After the requisite round of new legislation, the regulating agencies were now required to write an evaluation of the banks' CRA compliance. It wasn't enough to simply give them a rating, now we have to have a written evaluation. With all this attention on the CRA, the Fed decided it was time to flex their muscle. They denied their first bank acquisition! (Awwww, who's a good little regulatory agency, you're almost all grown up now!) Once the genie's been let out of the bottle, it's going to be hard to get that sucker back in. Now the federal government knows they can dictate the behavior of banks. (Just in case they were unclear on that issue)
In 1992, the Boston Fed undertook a study to find out what was causing the disparity in lending rates, with respect to race. It turns out that there is NO overt discrimination in lending. That, in fact a whopping 97% of minorities with the same credit as whites got the same loans. Despite this, there was still a great disparity in the number of loans. So OBVIOUSLY, the discrimination here is far more subtle than we realized. (It would have nothing to do with the disparity in incomes, would it? Hmmm, maybe we should address that issue.) So under the Clinton administration, they decided that there would be all new standards for complying with the CRA and enforcement would be much stricter. Enter Janet Reno and the Justice Department. Now, banks weren't just worried about satisfying the various regulatory agencies. Now they had to worry about being PROSECUTED!! Apparently, Janet Reno thinks that not giving loans to people who don't qualify is ILLEGAL! Her exact quote is this, "we will tackle lending discrimination wherever and in whatever form it appears. No loan is exempt, no bank is immune. For those who thumb their nose at us, I promise vigorous enforcement.” That my friends is a threat!
She backed up her threats by suing the banks in federal court and forcing them to comply with huge financial packages aimed at revitalising their local neighborhoods. The Clinton administration then started making proposals that were more quota based. So that no matter what conditions existed in the local community, they had to have a certain number of CRA loans to pass the Clinton Administration's strict standards. This was a sort of financial affirmative action. But don't take my words for it. Listen to HUD Secretary Andrew Cuomo talk about this affirmative action in a video discovered by Naked Emperor News. (At the end of the comments by Cuomo, there's a clip from Hannity's show giving a much more succinct history of the CRA.) What I find interesting in this video is Cuomo actually saying that the discrimination is so subtle, it's institutionalized.
So now you have the Clinton administration demonizing the banking industry and threatening them if they don't make all these bad loans. Not to mention the various community organizations (can you say ACORN?) that have started to sue the banks under the CRA (remember the part about the public being able to comment on the banks?). What are the banks supposed to do? So they start making all these bad loans but still have to find a way to make money. That's where Freddie Mac and Fannie Mae come in.
Freddie and Fannie are designed to buy mortgages, insure them, and pay the banks the value of the mortgage. They would then bundle these mortgages into morgage-backed securities and investors would invest in them. Freddie and Fannie would keep a fee for insuring them and everyone was happy. The problem was that they soon realized they were being saddled with too much bad debt. They couldn't keep up with the flow of these CRA loans because of the restrictions on them. So the restrictions were lifted and in 2000 Fannie Mae expected that 50% of their business was going to be CRA loans! 50%!! (I think we've found the source of the problem!) Now, mind you, not all of these loans end up in default. Just a larger percentage.
With home loans going out the door at a record pace, housing becomes in shorter supply, which artificially drives up the price. As these CRA loans started to default, the prices of the houses started to come down, and that reduced the incentive for people to try and work out a repayment schedule. The house they bought wasn't worth what they paid so how could they refinance? And the rest is history.
The best part is now that the banks have done what they were threatened to do, the phrase of the day is "predatory lending." Congress is trying to blame the banks for making all these bad loans. Well, during the Bush years (2000-present), Republicans in Congress have tried to reform the rules and put the power of lending back into the hands of the banks. But when the Republicans tried to INCREASE regulations on Fannie and Freddie, they were lambasted by House Democrats. Take a listen from this video posted by Naked Emporer News.
I briefly mentioned ACORN earlier. Their contribution to this mess shouldn't be overlooked. ACORN was suing the banks and lobbying Congress to get more of these loans in the hands of people who really couldn't afford them. One of the catch phrases you might hear in the videos is "affordable housing." Not sure if anyone is aware of this, but housing is only affordable if you can pay for it. Just being able to get a loan and move in is not the end of the story. Well one of ACORN's lawyers has become very famous recently. He's been on all the network news shows and made several appearances on talk shows and has been traveling around the country talking about his plans for the economy. YUP, you got it! Barack Obama is one of the lawyers who helped ACORN sue the banks. And now he's in charge of fixing this mess. Would I be too cynical to say that I don't think repealing the CRA is high on his list of "to do's?"
Wednesday, November 26, 2008
They just can't wait
Op-Ed Columnist - We Found the W.M.D. - NYTimes.com
Time For Him To Go
Well, I guess we know what the talk around the water cooler is at the New York Times. There seems to be a theme running through the op-ed page at this once proud journal. Unfortunately, their hatred for all things Republican/Conservative has overwhelmed them. Here you have two columnists dreaming about the new Obama posse. . .er I mean administration. Apparently, it's not enough for them to win, now they want to change the Constitution so they can get their guy in NOW, DAMN IT!!!
As you will see, they are very concerned about the looming financial crisis and what a horrible job Bush is doing handling it. They need Obama and they need him NOW, DAMN IT!!! Never mind that Bush has kept Obama totally in the loop, or that Obama's pick for Treasury Secretary has been intimately involved in the ongoing bailout strategy, even before he was nominated. No, they are completely blinded by their hatred for Republicans in general and Bush in particular.
Too me, they sound like a bunch of spoiled brats. They want their new toy for Christmas and they want Christmas to come in October. Friedman even goes so far as to suggest they suspend the big parties and the fancy coronation. . .er I mean inauguration and go straight to the swearing in. "Just get me a Supreme Court justice and a Bible," says Friedman. Well, in the immortal words of Kevin Spacey in that great movie "Midnight in the Garden of Good and Evil," "that is not going to happen - definitely NOT!" There is NO WAY the Dems are going to miss a bash like this. Think of all the great funk and R&B music we're going to get to hear this year!
To me, this hints at something far more ominous than the looming financial problems. These people are willing to set aside the Constitutional provision for the peaceful transition of power just to get their guy in a couple of weeks early. This is the problem with setting the government/President up as the be all/end all of their lives. Without the right person in office the economy will continue to flounder, they speculate. That is why it is so dangerous to have the government involved in the economy. It has failed everywhere it has been tried. The only fix for this economy is the painful process the free market will inevitably exact on these failing industries. No one is looking ahead to the brave new world we will have when the pain is over. Someone or something will have to take the place of these companies to provide the services or products that they do. We need to let these processes take their time and work their way through. Besides, I STILL don't think it's as bad as their telling us.
Time For Him To Go
Well, I guess we know what the talk around the water cooler is at the New York Times. There seems to be a theme running through the op-ed page at this once proud journal. Unfortunately, their hatred for all things Republican/Conservative has overwhelmed them. Here you have two columnists dreaming about the new Obama posse. . .er I mean administration. Apparently, it's not enough for them to win, now they want to change the Constitution so they can get their guy in NOW, DAMN IT!!!
As you will see, they are very concerned about the looming financial crisis and what a horrible job Bush is doing handling it. They need Obama and they need him NOW, DAMN IT!!! Never mind that Bush has kept Obama totally in the loop, or that Obama's pick for Treasury Secretary has been intimately involved in the ongoing bailout strategy, even before he was nominated. No, they are completely blinded by their hatred for Republicans in general and Bush in particular.
Too me, they sound like a bunch of spoiled brats. They want their new toy for Christmas and they want Christmas to come in October. Friedman even goes so far as to suggest they suspend the big parties and the fancy coronation. . .er I mean inauguration and go straight to the swearing in. "Just get me a Supreme Court justice and a Bible," says Friedman. Well, in the immortal words of Kevin Spacey in that great movie "Midnight in the Garden of Good and Evil," "that is not going to happen - definitely NOT!" There is NO WAY the Dems are going to miss a bash like this. Think of all the great funk and R&B music we're going to get to hear this year!
To me, this hints at something far more ominous than the looming financial problems. These people are willing to set aside the Constitutional provision for the peaceful transition of power just to get their guy in a couple of weeks early. This is the problem with setting the government/President up as the be all/end all of their lives. Without the right person in office the economy will continue to flounder, they speculate. That is why it is so dangerous to have the government involved in the economy. It has failed everywhere it has been tried. The only fix for this economy is the painful process the free market will inevitably exact on these failing industries. No one is looking ahead to the brave new world we will have when the pain is over. Someone or something will have to take the place of these companies to provide the services or products that they do. We need to let these processes take their time and work their way through. Besides, I STILL don't think it's as bad as their telling us.
Saturday, November 15, 2008
Dear President-elect Obama: Here's How to Get the Economy out of the Ditch - Knowledge@Wharton
Dear President-elect Obama: Here's How to Get the Economy out of the Ditch - Knowledge@Wharton
This article was sent to me by my dear wife. I think I agree with her that there are some good ideas that should be followed. They are advocating tax cuts on both the marginal tax rates and corporate tax rates. There is one caveat though. The Wharton economists hit on the problem themselves when they say, "Government could do a lot of harm if it gets involved in ways that aren't perfect." Since there's no way to know if government is doing the right thing until the damage is done, throwing a lot against the wall and seeing what sticks is not a very good idea.
Let's look at recent history. This year we had rebates sent out to a selection of American taxpayers, and a $700 billion bailout package passed by Congress. Last time I checked, no one is dancing in the streets claiming, "Hooray! The bailout worked!" Quite the opposite. The banks who got the money sat on it. The people who got rebate checks spent it mostly on gasoline. Meanwhile, the stock market is at an all-time low (not really, but I thought a little hyperbole was appropriate here) and the only sector of the economy that is still flourishing is the oil companies, despite oil prices going down by more than 50%! If anyone is a believer in the saying "Past is prologue" need only look at recent history to see how we should address the current situation.
The Wharton economists suggest some form of tax cut or rebate for middle-income taxpayers, "without driving the federal deficit to unmanageable depths." I hope they aren't suggesting that tax cuts cause deficits. EVERY time we have cut taxes in this country over the last 50 years, revenue has increased. The problem has always been a Congress who can't spend the money fast enough. Of course, that is an oversimplification of why deficits have gone up. There have been some good reasons for allowing the deficits to rise due to issues of national security and the like. For example, in the 80's, Reagan was trying to rebuild the military and started the arms race believing the Soviets wouldn't be able to keep up with our spending due to the limitations of their economic system. He was right and we won the Cold War. Their economy collapsed while ours flourished. Many economists refer to the time from the middle to late 80's as the longest period of peacetime recovery in history. In this case, these deficits would fall under what the Wharton economists refer to as, "perfectly rational to run a deficit to get through hard times." Reagan inherited a flagging economy and used his economic training (yes, Reagan was an economist) to do the right thing and unleashed the power of the American economy: capitalism! He reduced the marginal taxes from a high of 70% down to 28%. This is the easiest way to "Do No Harm" as the Wharton economists warn. You put the power in the hands of the American people.
Just within the last few years, Bush lowered taxes for everyone and lowered the capital gains tax. This encouraged investments and as a result, the value of the stock market DOUBLED! between 2001 and 2007. Obviously, most of those gains are gone as a result of the current crisis but there is no mistaking the dramatic effect tax cuts have on the economy. In fact, this chart shows the dramatic rise in revenues after the 2003 tax cuts.
Tax cuts encourage growth. To me, that's an axiom. Right now, Ireland is experiencing tremendous success with their national experiment of lowering corporate taxes to 12.5%. Compare that to 35% here in the US. If we as a nation accepted the notion that tax cuts generate revenue and encourage growth, we could put to bed the notion that taxing those who create wealth will help us out of our economic slowdown. Then we could concentrate on solving our other economic issues.
This article was sent to me by my dear wife. I think I agree with her that there are some good ideas that should be followed. They are advocating tax cuts on both the marginal tax rates and corporate tax rates. There is one caveat though. The Wharton economists hit on the problem themselves when they say, "Government could do a lot of harm if it gets involved in ways that aren't perfect." Since there's no way to know if government is doing the right thing until the damage is done, throwing a lot against the wall and seeing what sticks is not a very good idea.
Let's look at recent history. This year we had rebates sent out to a selection of American taxpayers, and a $700 billion bailout package passed by Congress. Last time I checked, no one is dancing in the streets claiming, "Hooray! The bailout worked!" Quite the opposite. The banks who got the money sat on it. The people who got rebate checks spent it mostly on gasoline. Meanwhile, the stock market is at an all-time low (not really, but I thought a little hyperbole was appropriate here) and the only sector of the economy that is still flourishing is the oil companies, despite oil prices going down by more than 50%! If anyone is a believer in the saying "Past is prologue" need only look at recent history to see how we should address the current situation.
The Wharton economists suggest some form of tax cut or rebate for middle-income taxpayers, "without driving the federal deficit to unmanageable depths." I hope they aren't suggesting that tax cuts cause deficits. EVERY time we have cut taxes in this country over the last 50 years, revenue has increased. The problem has always been a Congress who can't spend the money fast enough. Of course, that is an oversimplification of why deficits have gone up. There have been some good reasons for allowing the deficits to rise due to issues of national security and the like. For example, in the 80's, Reagan was trying to rebuild the military and started the arms race believing the Soviets wouldn't be able to keep up with our spending due to the limitations of their economic system. He was right and we won the Cold War. Their economy collapsed while ours flourished. Many economists refer to the time from the middle to late 80's as the longest period of peacetime recovery in history. In this case, these deficits would fall under what the Wharton economists refer to as, "perfectly rational to run a deficit to get through hard times." Reagan inherited a flagging economy and used his economic training (yes, Reagan was an economist) to do the right thing and unleashed the power of the American economy: capitalism! He reduced the marginal taxes from a high of 70% down to 28%. This is the easiest way to "Do No Harm" as the Wharton economists warn. You put the power in the hands of the American people.
Just within the last few years, Bush lowered taxes for everyone and lowered the capital gains tax. This encouraged investments and as a result, the value of the stock market DOUBLED! between 2001 and 2007. Obviously, most of those gains are gone as a result of the current crisis but there is no mistaking the dramatic effect tax cuts have on the economy. In fact, this chart shows the dramatic rise in revenues after the 2003 tax cuts.
Tax cuts encourage growth. To me, that's an axiom. Right now, Ireland is experiencing tremendous success with their national experiment of lowering corporate taxes to 12.5%. Compare that to 35% here in the US. If we as a nation accepted the notion that tax cuts generate revenue and encourage growth, we could put to bed the notion that taxing those who create wealth will help us out of our economic slowdown. Then we could concentrate on solving our other economic issues.
Thursday, November 13, 2008
Time for a change?
Well the election is over and it's time for evaluation and anticipation. First, obviously, my election prediction didn't come true. Sen. McCain had every chance to grab this election by the throat and he simply didn't have the killer instinct. He is definitely a gentleman, but he is just as certainly not the President. However, I don't want to dwell in the past. I believe that things happen for a reason and time will only tell what the reasons are. Frankly, I believe that on election day, over 125 million Americans went to the polls and nearly 53% of them said, "Ahh , what the hell. Let's let this guy try. He can't be any worse, can he?!?"
Let's put this in perspective though. While 66.5 million people voted FOR Obama, over 55 millions voted AGAINST him. When the last two elections were close, we heard the mantra of "minority rights" when it came time to make policy. We will see if that is of great concern now that the Dems are no longer the minority.
It is time though to reflect on the historic nature of this election. All elections are historic for one reason or another, but in this election, clearly the history is in the race of the candidate. (Warning: the following may be deemed politically incorrect and may cause uncontrollable accusations of racism against your humble blogger. Read at your own risk.) First, this is a tremendous achievement and we should all be proud that a man of African heritage has just as much opportunity to reach the highest office in the land as anyone else (with the possible exception of women. Oops, did I say that out loud?!?). A couple of thoughts on this point: does this mean that racism is dead in America now? Simple answer: No. What it means is that racism has been relegated to the underclass. While for years it was mainstream policy, it has now taken its rightful place in the "ash heap of history." (a Reagan quote) Can this kind of success be extrapolated to other Americans of African descent in less notable positions in our society? The simple answer to that is an emphatic: YES! For years I have believed that we had overcome the polarization of past mistakes and that anyone could be rewarded in this society if they were only willing to work hard and get a good education. (Sometimes, working hard is enough) Signs of this kind of success are all around us. Now we have ultimate proof. Will blacks still face racism? Yes. Just as women face sexism, older folks face ageism, fat people face fatism, etc. We all have our crosses to bear, but they can be overcome! (Except for ugly people, there's no hope for them! LOL) My lingering question though is this: why do we celebrate the blacknes of people like Barack Obama, Tiger Woods, and Halle Berry and ignore their other influences. How is saying that Barack Obama is the first black President any different than saying he's just another white guy! After all, he is half black AND half white. Why ignore his whiteness? Why is Tiger Woods considered the most successful black golfer when he's also the most successful white golfer, and the most successful Indian golfer, AND the most successful asian golfer. Aren't those other influences important? Halle Berry wasn't necessarily the first black woman to win the Oscar for Best Actress if you ignore her blackness the way you're ignoring her whiteness. Then she's just another in a long line of white women who have won the award. How 'bout we just do what Martin Luther King said and just judge people on the content of their character and not the color of their skin. Let's see if Obama will set policy with this criteria over the next four years.
Now it's time for a little game, sort of like Where's Waldo? See if you can find the black guy among Barack Obama's economic advisors. Is he here? How 'bout here? No? Ok, how 'bout here? Ok, that was too easy! Amazing how much "change" looks just so familiar.
Let's put this in perspective though. While 66.5 million people voted FOR Obama, over 55 millions voted AGAINST him. When the last two elections were close, we heard the mantra of "minority rights" when it came time to make policy. We will see if that is of great concern now that the Dems are no longer the minority.
It is time though to reflect on the historic nature of this election. All elections are historic for one reason or another, but in this election, clearly the history is in the race of the candidate. (Warning: the following may be deemed politically incorrect and may cause uncontrollable accusations of racism against your humble blogger. Read at your own risk.) First, this is a tremendous achievement and we should all be proud that a man of African heritage has just as much opportunity to reach the highest office in the land as anyone else (with the possible exception of women. Oops, did I say that out loud?!?). A couple of thoughts on this point: does this mean that racism is dead in America now? Simple answer: No. What it means is that racism has been relegated to the underclass. While for years it was mainstream policy, it has now taken its rightful place in the "ash heap of history." (a Reagan quote) Can this kind of success be extrapolated to other Americans of African descent in less notable positions in our society? The simple answer to that is an emphatic: YES! For years I have believed that we had overcome the polarization of past mistakes and that anyone could be rewarded in this society if they were only willing to work hard and get a good education. (Sometimes, working hard is enough) Signs of this kind of success are all around us. Now we have ultimate proof. Will blacks still face racism? Yes. Just as women face sexism, older folks face ageism, fat people face fatism, etc. We all have our crosses to bear, but they can be overcome! (Except for ugly people, there's no hope for them! LOL) My lingering question though is this: why do we celebrate the blacknes of people like Barack Obama, Tiger Woods, and Halle Berry and ignore their other influences. How is saying that Barack Obama is the first black President any different than saying he's just another white guy! After all, he is half black AND half white. Why ignore his whiteness? Why is Tiger Woods considered the most successful black golfer when he's also the most successful white golfer, and the most successful Indian golfer, AND the most successful asian golfer. Aren't those other influences important? Halle Berry wasn't necessarily the first black woman to win the Oscar for Best Actress if you ignore her blackness the way you're ignoring her whiteness. Then she's just another in a long line of white women who have won the award. How 'bout we just do what Martin Luther King said and just judge people on the content of their character and not the color of their skin. Let's see if Obama will set policy with this criteria over the next four years.
Now it's time for a little game, sort of like Where's Waldo? See if you can find the black guy among Barack Obama's economic advisors. Is he here? How 'bout here? No? Ok, how 'bout here? Ok, that was too easy! Amazing how much "change" looks just so familiar.
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