Monday, September 29, 2008

Poor form!

In my own pet theory I think Pelosi intentionally goaded them with that speech, and probably had members of her caucus vote Nay as insurance, to make this bill fail. It's win-win for them: if the bill fails, and the market is ok, they don't have to sully their little patty-paws with an on-the-record vote that was fairly unpopular; however, if the market tanks (check) and continues to do so, come Thursday it is likely they will have enough political capital to do pretty much whatever they dang well please.

That? That would be bad.

Poor form, house Republicans. Poor form indeed.

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Friday, September 26, 2008

Burning Down the House

This shows in 10 minutes what I've posted over the past few days. Enjoy.



Also, check out the Hot Air and Biz Lizards post to see how the democrats are trying to use this crisis to:
1) Pump federal funds into sympathetic groups such as ACORN and The Urban League. This a means for them to federally fund their elections.
2) Continue their subversive campaign against free markets by slowly but surely nationalizing the finance district completely. What started in 1913 may reach fulfillment today.

Read the rest.

Tuesday, September 23, 2008

Isn't it funny?

When Jim Cramer said this everyone laughed. Maybe he isn't as dumb as everyone always says? Seems to me he was dead on the money...almost a year ahead of the curve of the media.

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Sick of it!

I'm sick and tired of hearing people -- on the left and the right -- say stupid things about the financial crisis.

First, let's get this clear. This is a problem caused by aggressive social engineering by the federal government, from Carter to Clinton. However, at this point the funds that have been poisoned by shady lending practices—tranching and re-tranching of MBS and CDOs until nearly everything carried an AAA rating—have been come so prolific that liquidity is essentially gone. We were <--this--> close to having a freeze on commercial paper last week. We almost had a $200Bn run on money market accounts, one of the most stable places for capital in our entire financial system. This is not a “small thing”. This is not the S&L crisis; this is potentially much, much worse.

Credit: Casey Research for graphs.

The bad thing about this situation, this crisis, is that it is complex—so complex that it is not easily condensed into modern news story sound bites, so that most of the people in this nation have no clue whats going on, other than a vague notion of “financial crisis". Most don't "get" what those graphs above imply.

Namely, this -- commercial paper is the grease that makes our economic wheels spin. It's what allows you to use credit cards, what enables companies to expand, to buy new assets, and to enter new income streams. It is to a major corporation what a home loan is to an individual -- a way to reach financial goals that would otherwise be completely impossible to attain. And it was getting so expensive, and so scarce, that it nearly collapsed. That would be, as they say, "bad".

Secondly, please people -- don’t bash the Paulson-Bernanke plan yet. For one, the outline proposed pre-Democratic meddling is not a bailout. It is an extension of capital in exchange for marked-to-market poisoned assets, most of which worthless and legally nonviable under current accounting rules. This allows banks to get the junk off of their balance sheets. It’s like a get-out-of-jail-for-billions-card. This is not a free pass. Banks with a lot of residential mortgage backed securities (RMBSs) and collateralized debt obligations (CDOs) are going to lose a ton of money—on top of what they’ve already swallowed. This plan will pay them pennies on the dollar for assets that aren't really worthless...they're just not viable under the present financial situation and accounting rules.

For two, it stands to make the government quite a bit of money as the currently near-worthless BBB or lower rated assets will be sorted out, re-rated and sold back to the private sector, once federal intervention increases the transparencies of these securities. This is not a permanent Finance Czar, nor is it a $700Bn bailout—yet (we’ll see what Reid et al in the senate tack on to the bill). Please note that the $700 billion is a proposed spending cap, not a mandate. Additionally, the program is currently timelined at a two year horizon.

And, to answer the populists, of course people on Wall Street were complicit. These securities didn’t trade themselves, and everyone was glad to play along with the bogus rating system as long as it made them money. But make no mistake—this crisis is government caused and government reared. The Bush Administration tried no less than seventeen times in 2008 alone to fix this by, namely by increasing transparency and regulatory oversight, but Chris Dodd and others busily shoving taxpayer money into their pockets (or campaign coffers) blocked them at every turn. Aside from massive corruption, they did so because this plays right into the “capitalism is a failed system” playbook of liberals. If they can spin this as a situation that capitalism is inherently prone to suffer from, you can kiss a lot of our free-market principles good-bye. Prepare for nationalized everything, as clearly "irrational exuberance" must yield to "older and wiser heads".

Which brings up another thing that really irritates me -- on September 17, Harry Reid said this:

No one knows what to do...We are in new territory, this is a different game. [Neither Federal Reserve Chairman Ben Bernanke nor Treasury Secretary Henry Paulson] know what to do but they are trying to come up with ideas."
Well, someone must have got to him (and quick!) because he's definitely singing a different tune today:
"The Bush Administration has called on Congress to rubber stamp its bailout legislation without serious debate or efforts to improve it. That will not happen," said Reid.
Who the heck are you to criticize if just six days ago you were wringing your hands, meekly admitting that you hadn't the foggiest what to do in a situation like this?

The reason for his change of heart? Undoubtedly he got some nasty phone calls from corporate interests and lobbyists...which I imagine went something like this:
Listen you dolt, you're blowing it, blowing it! This is a chance for us to do something...[the perennial liberal mantra, of course] and get some power besides! Get back out there and do your job -- representing those who pay you best.
Sadly, it's apparent to me that people in Washington (on both sides of the aisle) are more interested in playing partisan and catering to their own interests than buckling down and getting things done.

I think the plan, as outlined thus far, is a good one. Here's to hoping they get it passed before Reid and his cronies can stick so much socialism into it (up for grabs thus far, partial nationalization of all affected banks, government mandated CEO salaries, and federal judges waiving mortgage payments) that it no longer does anything worthwhile -- or before they drop a half trillion of their own in an attempt to throw debased dollars at the problem.

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Friday, September 19, 2008

Answers -- The Case Against BO

As Ronald Reagan once said, "...it isn't that our liberal friends are wrong...it's just that there's so much they know that isn't so."

There's so much you know that isn't so! I'll take it point by point, because there's a lot to work with here.

First of all, the premise of my former post was that Obama has run on himself. He didn't really run on ideology because in the later stages of the primary, he was the same or left of Clinton. He ran on the idea he's created that he is the embodiment of change, that he will drastically cut military spending and move to reduce nuclear arsenals, on populist platforms (a nice word for socialism) that would increase drastically the amount of government spending, on blame-game politics that, clearly, everything that goes on in this world that is bad is the direct result of the Bush administration, and that, most of all, he isn't the same kind of politician. He's going to heal the divide (and the planet) and change Washington because he isn't really a politician...he's a community organizer.

And then we've got some liberal hack running interference for him when he reneges on all of those promises (Get Out of Iraq Now, the Post Racial Candidate, I Will Take Federal Campaign Funding, I Will Not Resort to Negative Ads, to name a few) and begins playing politics as usual saying that, somehow, that that too is reformative and changing! What a magnificent feat Obama has accomplished! He has come full circle! He has changed so much that he is now the same. How's that for a moment of zen?

But then the commenter Matt races in to denounce my idealism, my ideas of how this is to claim, somehow, that we're all the same and that the only differences between parties is who is in charge. I profoundly disagree.

To start with: bipartisan reform. There is one word for two definitions. When McCain says bipartisan, he means, in my opinion, "I don't care what letter comes after your name, if you're willing to work with me let's go...if not, get the hell out of the way". This is the attitude of a man who is above party politics in that he doesn't identify with either party; you can see this theme running through some of our founding fathers, such as Adams or Washington. Like McCain, both of these men did things that made them profoundly unpopular within their own parties. Do I agree with everything McCain has done? Good gracious no. Is he my ideal candidate? By far, no! But he has some things in common with GWB that I respect. The aspect of their character that allows them to go against the flow even when it is vastly unpopular that I respect most of all is their conviction. They believe what they believe and they don't need polls or focus groups to determine that for them -- a stark contrast to The One, who has bent and flopped and flailed with the prevailing political winds.

The second working definition of bipartisan reform is that of the left, which largely means "we're going to do this; if you don't like it, you're a partisan hack, and if you do then welcome aboard". This is the theme of Barack Obama, the Clintons, and founding fathers such as Thomas Jefferson. They don't view political parties as an annoying but necessary evil to get things done. They use political parties as a bludgeon to muscle their way into getting their way. For better or worse, Democrats toe the party line far better than Republicans do. There are way more RINOs than DINOs -- because, by and large, Republicans do more cross-aisle work than Democrats. Similar to the fairness doctrine, for some, bipartisanship...isn't.

Secondly, the idea that Barack Obama isn't an idealogue is ridiculous! Look at his political connections (those he has -- his sidelines are conspicuously empty of friends, allies, or longtime supporters). His list includes folks from as far left as can be, including William Ayers and his pastor of twenty years, who is "like an uncle" to him, Jeremiah Wright. Where are his friends? His vouchers for his character? Everyone who knows him, so far, has been shushed up or totally abandoned.

There are no similarities to John McCain on this. McCain has a history of praise from both sides of the aisle over the past two decades because he does what he thinks is right -- whether it upsets his party or not. Did he vote with his party 90% of the time? Sure -- but he also stuck it to them with the Gang of Whatever the Number Currently Is when it came to judicial nominees. McCain's party voting record varies from 67% (2001) to 95% (2007). By contrast, Obama has voted with his caucus 97% of the time. Who is really the embodiment of independent, bipartisan change here?

You want me to cite examples of change? How about McCain's longtime stance against earmarks and pork-barrel spending? Or the funneling of money to candidate's campaigns and districts? Or sketchy deals with lobbyists? It's easy to contrast: Obama has requested over 740 Million dollars in earmarks in his extremely short career (including money funneled to the Hospital that employs his wife and amplifying pork to his campaign bundlers), and has become the Pork Barrel Champion. He picked a long-time porker and Washington insider for his running mate. And in his time in the senate he has managed to become the number two recipient of money from Fannie Mae and Freddie Mac when the list is sorted on donations from 1989 to the present with $126,000 in two short years. The only person that outranks him on this list of dubious honor is Chris Dodd, the chairman of the Senate Banking committee -- another case study in corruption.

By contrast, McCain has $20,000 in donations over twenty years from Fannie and Freddie, a figure which is irrelevant by comparison. Incidentally, McCain tried to reform Fannie and Freddie as a consponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, saying:

If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
Unfortunately, the bill never made it out of the committee headed by Chris Dodd.

McCain has never used an earmark and is known on both sides of the aisle as an enemy of pork. He has promised to veto any bill that comes across his desk with earmarks on it. Is this possible? I don't know, but at least it's a start.

Oh, and that bridge to nowhere that Obama is saying that Palin was for before she was against? He and Biden both voted for the earmark -- twice, the second time coming when Sen. Tom Coburn motioned to transfer the funds from Alaska to Katrina relief efforts, which they both voted down.

Moving right along:
It goes without saying (to anyone with a brain) that the current economic crisis we're in is the direct result of excessive deregulation.
I really wish you had the time, inclination, or lack of ignorance (and I mean that genuinely) to realize that the current financial situation of the US is far more complex than anyone can sum up in an short statement like that. This isn't the place to go into it, because it involves complex ideas like commercial paper, leveraging, the paradox of deleveraging, liquidity, inflation and deflation, rates, federal mandates, meddling and lawsuits -- but the short answer is you're flat out wrong. This financial situation comes from one place and one place alone: The Community Reinvestment act of 1977, pushed by Jimmy Carter and overwhelmingly voted for by Democrats. This act was later "put on steroids" by the Clinton administration in their efforts for social engineering. The essence is that the government demanded that banks find a way to lend money to poor people -- whether they could rate it or not. The quick method of how they did this was federal subsidies in the forms of low rates and loans to Fannie and Freddie, who then leveraged out the market. Was Wall Street complicit in this? Sure, takes two to tango. But the Bush Administration saw this coming and tried to fix it, 'way back in 2005, as reported by none other than the New York Times:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios....

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Which party caused this crisis again? If anything, it was government meddling in the free market, and then a lack of regulation to prevent corruption that caused this crisis. It wouldn't sting so badly if you didn't frame your opinion as if it were an obvious, absolute truth.

Next...
The only real tangible differences as far as I can tell between these two candidates are their plans for taxes and healthcare.
If you genuinely believe this then either you have no political ideology or you're completely ignorant of the ideology of the two parties. This goes as far back as 1964 when Reagan told us that Social Security, supposedly a government backed insurance program, was actually being funded as a welfare program, and was of course bankrupt -- $220 billion in the hole, 44 years ago. It comes down to who's side your on; the government's, or the people's.

Liberals believe that everything can be solved by government intervention. And when that intervention fails, by creating new and better government programs to right the mistakes of the previous intervention, and so on. Socialism in this country will never come the way you seem to expect it to, in one glorious Proletariat revolution. It comes stealthily, through foot-in-the-door tactics such as social security and medicare, nationalized healthcare, FEMA and Federal intervention to state matters in which they have no constitutional mandate, farm programs and subsidies, or the building of baseball fields, museums, parks or housing, or demanding that Wall Street loan money when and where the Fed decides.

These aren't new questions or problems. The answers offered by either campaign are recycled, too. But the point is that these changes to government are largely irreversible. We haven't seen, ever, a retraction in the size of the Federal government -- or a retraction of its sucking up of personal liberties, either. The campaign comes down to which side your on. As Reagan said, and as is true for every election year, it is "a time for choosing". Socialism or capitalism? Personal freedom or personal security?

Almost done -- stick with me. To deride McCain as a flipper is ridiculous. McCain is who he is. He's a Maverick. He isn't a strong conservative -- and that showed in the lackluster response of the base in the primaries. He's wooing conservatives through Palin, who (apparently) is a conservative. But he's more conservative than Obama, or rather, he's less conservative than Obama is socialist. As for the list of "flipper" subjects:
"pro-choice, anti-torture, pro-gay rights"
McCain has never been "pro-torture". He hasn't changed on that issue even when it meant voting against his caucus. He has a 0% rating with NARAL when it comes to being pro-life -- it doesn't get any better than that -- and exists as a sharp contrast to Obama's record of voting for infanticide, allowing babies born alive during procedures to be intentionally murdered via exposure and neglect, all in the name of supporting abortion. Obama, by the way, has 100% voting record in all three of his years in the senate with NARAL and has earned their endorsement. Who's not to the left of his caucus?

As for gay rights, I'm not sure what your point is -- McCain has a record of leaving gay rights up to the states and despises the idea of judicial legislation, as strong a conservative support of federalism as can be.

Finally...
Ever notice how our side doesn't repeat bottom-feeding, dishonest attacks like that one, even when we have more material to work with?
Are you freaking kidding me? Seriously? I mean really???

Update for 9/20: How long should I keep posting evidence?

Thanks for the laugh.

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