Tuesday, September 30, 2008

Bailout Politics

This from probably THE most respected economist of the last 30 years, now that Milton Friedman has passed on. He doesn't want this bailout, so why should we? Sure some type of Credit market liquidity act must be passed, but not this one! This is like subsidizing a convicted bank robber, just because he got it wrong the 1st time! The paragraph below tells you all you need to know about how utterly corrupted the drive-by's have become. Socialism Redux is NOT the answer friends!...T

"The roots of this problem go back many years, but since the crisis to which all this led happened on George W. Bush’s watch, that is enough for those who think in terms of talking points, without wanting to be confused by the facts.

In reality, President Bush tried unsuccessfully, years ago, to get Congress to create some regulatory agency to oversee Fannie Mae and Freddie Mac. N. Gregory Mankiw, his Chairman of the Council of Economic Advisers, warned in February 2004 that expecting a government bailout if things go wrong “creates an incentive for a company to take on risk and enjoy the associated increase in return.”

Nothing could more painfully demonstrate what is wrong with Congress than the current financial crisis.

Among the Congressional “leaders” invited to the White House to devise a bailout “solution” are the very people who have for years created the risks that have now come home to roost.

Five years ago, Barney Frank vouched for the “soundness” of Fannie Mae and Freddie Mac, and said “I do not see” any “possibility of serious financial losses to the treasury.”

Moreover, he said that the federal government has “probably done too little rather than too much to push them to meet the goals of affordable housing.”

Earlier this year, Senator Christopher Dodd praised Fannie Mae and Freddie Mac for “riding to the rescue” when other financial institutions were cutting back on mortgage loans.

He too said that they “need to do more” to help subprime borrowers get better loans.In other words, Congressman Frank and Senator Dodd wanted the government to push financial institutions to lend to people they would not lend to otherwise, because of the risk of default.

The idea that politicians can assess risks better than people who have spent their whole careers assessing risks should have been so obviously absurd that no one would take it seriously.

But the magic words “affordable housing” and the ugly word “redlining” led to politicians directing where loans and investments should go, with such things as the Community Reinvestment Act and various other coercions and threats.

The roots of this problem go back many years, but since the crisis to which all this led happened on George W. Bush’s watch, that is enough for those who think in terms of talking points, without wanting to be confused by the facts.

In reality, President Bush tried unsuccessfully, years ago, to get Congress to create some regulatory agency to oversee Fannie Mae and Freddie Mac.

N. Gregory Mankiw, his Chairman of the Council of Economic Advisers, warned in February 2004 that expecting a government bailout if things go wrong “creates an incentive for a company to take on risk and enjoy the associated increase in return.”

Since risky investments usually pay more than safer investments, the incentive is for a government-supported enterprise to take bigger risks, since they get more profit if the risks pay off and the taxpayers get stuck with the losses if not.

The government does not guarantee Fannie Mae or Freddie Mac, but the widespread assumption has been that the government would step in with a bailout to prevent chaos in financial markets.

Alan Greenspan, then head of the Federal Reserve System, made the same point in testifying before Congress in February 2004. He said: “The Federal Reserve is concerned” that Fannie Mae and Freddie Mac were using this implicit reliance on a government bailout in a crisis to take more risks, in order to “multiply the profitability of subsidized debt.”

Chairman Greenspan added his voice to those urging Congress to create a “regulator with authority on a par with that of banking regulators” to reduce the riskiness of Fannie Mae and Freddie Mac, a riskiness ultimately borne by the taxpayers.

Fannie Mae and Freddie Mac do not deserve to be bailed out, but neither do workers, families and businesses deserve to be put through the economic wringer by a collapse of credit markets, such as occurred during the Great Depression of the 1930s.

Neither do the voters deserve to be deceived on the eve of an election by the notion that this is a failure of free markets that should be replaced by political micro-managing.

If Fannie Mae and Freddie Mac were free market institutions they could not have gotten away with their risky financial practices because no one would have bought their securities without the implicit assumption that the politicians would bail them out.

It would be better if no such government-supported enterprises had been created in the first place and mortgages were in fact left to the free market. This bailout creates the expectation of future bailouts.

Phasing out Fannie Mae and Freddie Mac would make much more sense than letting politicians play politics with them again, with the risk and expense being again loaded onto the taxpayers.

Thomas Sowell is a senior fellow at the Hoover Institution.
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Friday, September 26, 2008

Burning Down the House

A quick history of how this financial crisis hit - and who is responsible. Don't let the Drive-By MSM'ers get away with covering this one up. Even NBC can't Trotsky-up this one...T

Clinton caught with Smoking Gun in Hand

Look at the date in this article – and then, look who pressured Fannie Mae into their bad loaning habits…..hmmmmmmmm...T (Thanks Splugy for this!...)

September 30, 1999

Fannie Mae Eases Credit To Aid Mortgage Lending


In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

Sunday, September 21, 2008

The Old Economic Rule Doesn't Work Anymore

Interesting. This is why McCain and Sarah have such an excellent chance to win this year - economic anxiety does NOT encourage voters to elect a radical leftist who promises massive tax increases...IF they can just state their case! Sarah is making the case, but McCain needs to drive it home. If he does so, we win, in my humble opinion...T

The bankruptcy of Lehman Brothers, the sale of Merrill Lynch to Bank of America, the 500-point plunge of the Dow, the government takeover of AIG -- all these have got the presidential candidates talking about the economy. But both Barack Obama and John McCain have been vague about their solutions. And for good reason.

Our economic problems are concentrated in the finance sector, and that's the part of the economy the average voter knows least about.

Moreover, the political blame is widely dispersed. George W. Bush and Bill Clinton and Democrats and Republicans in Congress have all pushed policies to increase home ownership. The problem is that many marginal home-buyers were unable to pay their mortgages when house prices fell. Another problem: Under a longstanding regulatory regime, the firms that rated packages of securitized mortgages were paid by the sellers rather than the buyers. Some of those mortgage securities turned out to be worth less than buyers thought.

And strong arguments were made that the biggest dealers of securitized mortgages, the government-sponsored enterprises Fannie Mae and Freddie Mac, were overleveraged. The Bush administration and some Republicans in Congress tried to place limits on the GSEs' investments, but this was successfully resisted by most Democrats and some Republicans. Strong lobbying prevailed over strong arguments, and Fan and Fred are now in federal conservatorship.

It's hard to make a 30-second spot about all this. It's easy to call for more regulation, but this is a tricky business, and there's a risk of stifling innovation, which has on balance vastly enriched us over the past 25 years. In any case, voters are not very good at analyzing regulatory changes.

So the economic argument may focus on something voters do understand -- taxes. Here, Barack Obama can argue that he represents change. He wants higher taxes on high earners and promises "tax cuts" to 95 percent of taxpayers. Actually, they're refundable tax credits, which means cash payments to the 40 percent or so of households that don't pay income tax.

But those refundable tax credits are phased out as incomes rise, so his proposal amounts to, as my American Enterprise Institute colleagues Alex Brill and Alan Viard have written, "marginal rate hikes in disguise" on those with incomes as low as $27,000.

The best argument against higher rates on high earners has come from Sarah Palin in her acceptance speech, in a line obviously not written by her speechwriter.
"My sister Heather and her husband have just built a service station that's now opened for business -- like millions of others who run small businesses. How are they going to be any better off if taxes go up?" Note that she doesn't say that Heather and her husband will be paying higher taxes themselves. She's arguing that higher taxes will hurt the economy and will hurt the little gal and guy.

That argument may be gaining some traction. The recent Quinnipiac poll in New Jersey, which showed Barack Obama leading John McCain by only 3 percentage points in a high-income state carried easily by John Kerry and Al Gore, found that 54 percent of likely voters believe their taxes will go up if Obama is elected. When asked whether they believe Obama when he says that he'll cut taxes for 95 percent of working families, or McCain when he says Obama will raise taxes on most families, 44 percent say they believe McCain, and 40 percent say they believe Obama.

Interestingly, post-convention polls show McCain running at least as well as Bush in 2004 in Michigan and Ohio, where recent state tax increases have signally failed to bolster ailing economies. Gallup shows Democrats with only a 3 percentage-point edge in the generic House vote; it used to be double digits. And the Rasmussen poll shows Democrats ahead only 5 percentage points in party identification.

The old rule that economic distress moves voters toward Democrats doesn't seem to be operating.
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Saturday, September 20, 2008


Wow - they really are professional hookers. Just stunning hypocrisy. It remains to be see if McCain has the Cahones to call them on it. This election is his to win - or lose...T

Tuesday, September 16, 2008

Democratic War Room - The Palin Effect

Hidden footage from the bunker...T

What if Obama Loses?

This today from Richard Miniter at Pajama's Media - absolutely dead on accurate...T

...If Obama loses–and it is still a big ‘if’–too many liberals will fail to heed the message that voters have been sending them since 1981. Seventy percent of the country is tired of 1960s liberalism. Indeed many find the hippie vision frightening: A country too ashamed of itself to fight its enemies, too unsure of itself to praise its own history,govern its children or corral its criminals,and too resentful of the rich to allow the economy to make more of them...
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Reaching Critical Mass - The Accelerating Collapse of the Obama Campaign

He's going down, people. I can't agree more with VDH here. It is their arrogance and transparent elitism, combined with their fanatical left wing zealotry that has done in Osama and his socialist, America detesting cabal. Palin has rallied the base, but Osama has none to blame but himself.

Rasmussen, Real Clear Politics, and Michael Barone all now show McCain has surpassed the 270 Electoral votes needed for victory...T

The sudden change in the polls the last 10 days, even though it may be temporary, has prompted a furor in the media that has no parallel in modern election history. Vicious words like "treason", "abasement", "liar", and "lying" are in the air now in an unheralded attack on McCain, often in association with the sex education ad, and the lipstick identification with Palin as a pig. (cf. e.g., Washington Post columnist Richard Cohen today). But as Byron York has shown, that ad alleging that Obama supported detailed information about matters of sex to be disseminated to younger children (for a variety of educational reasons), while tough and unnecessary, was nevertheless not a lie.

And as far as the silly lipstick moment, if one studies the tape carefully as Obama lets go with his similes, it is clear that the hooting audience at least seemed to make the association with Palin, and the further elaboration on a stinky old fish seemed to cement the allusion to McCain.

What otherwise are we to think of this silly controversy?— (a) a candidate is complaining about McCain and Palin; (b) in his exasperation the candidate next uses two metaphors (not 1, not 3) — (c) one to a pig with lipstick (after Palin had famously just used a lipstick/animal metaphor in her speech), and (d) a second one to an old fish — a theme of the Obama campaigning has been to suggest McCain is "losing his bearings", "confused", has "lost track", and "couldn't remember."

But from anger at those two inconsequential ads, and the selection of Palin, Washington Post columnist Richard Cohen, for example, makes a rather large leap to this conclusion:

... the lies of Vietnam and Watergate and Iraq. So many lies. Who believes that in Afghanistan last month only five civilians were killed by the American military, instead of the approximately 90 claimed by the Afghan government? Not me. I first gave up on the military during Vietnam and then again when it covered up the death of Pat Tillman, the Army Ranger and former NFL player who was killed in 2004 by friendly fire.

What does "give up on the military" mean, and what does it have to do with a McCain ad reminding voters of the difference between Obama and himself on the appropriate age to introduce children to sex education learning materials?

What we are seeing is a sort of meltdown in which the selection of Palin is associated with the first real possibility all summer that the messianic Obama may not necessarily ascend; that triggers a certain repulsion toward her in particular, and a general furor at the once likeable McCain (once likeable to present-day Obama's supporters in the past sense that in 2000 he was going to lose, perhaps divide Republicans, and was not George Bush), which, in turn, can conjure up all sorts of no longer latent demons, going back to Vietnam onto to Iraq and the ongoing war in Afghanistan.

The problem (inter alia) with this vicious, loose use of "traitor" and "lie/liar/lying" and blanket condemnations of the US military is that it achieves the opposite of what the authors intend — and repelling most readers to such a degree that they are scared off from anything the writer seems to be advocating.

We've seen that with the Atlantic Monthly pictures and blog rumors about Palin's recent Down Syndrome pregnancy, the unhinged hatred columns of the sort of a Salon's Cintra Wilson or those suggesting riots or global hatred of the U.S. if Obama loses, the Matthews/Olbermann rants, the daily salvos from the NY Times columnists,and the hourly Palin rage from spoiled Hollywood prima donnas.

Do they have any idea of how they sound or where this leads? Despite an unpopular incumbent, economic upheaval, unpopular wars, and a charismatic Democratic candidate, the media, hand in glove with Obama's messianic sense of self, are doing all they can to lose a once sure election by the sheer repugnance of the way in which their anger is expressed and expressed and expressed . . .

And again, it seems uncontrollable. Didn't anyone learn from the General Betray-Us ads?
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Thursday, September 11, 2008

Lipstick on a Buffoon

The more apt usage...T
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Monday, September 08, 2008

No Blood for Oil?

No need for Osama...T
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Saturday, September 06, 2008

Target Palin

VDH at his best - they are scared to death of Sarah, and they are rank hypocrites...but then, we always knew that! The democrats were the party of Slavery, of Jim Crow, of racism...yet today they say we are. Democrats claim they are for equal opportunity for women...but they are still sexist. Racist, Sexist...that's today's democratic party...T


If the post-Speech reaction of the talking heads at CNN, PBS and MSBNC, or the op-ed ravings of Gloria Steinem, Maureen Dowd, Eleanor Clift or Sally Quinn are any indication, the Secret Service better enlist the Alaskan National Guard for help ensuring the Alaskan Governor’s safety.

A beautiful, confident, articulate, independent, accomplished—and conservative—woman apparently has enraged Team Obama, the mainstream media, and the entire American intelligentsia, as if they were collectively hit by a cruise missile aimed from Middle America.

When Palin talks about her present life it sounds as authentic as Biden’s showy populism came off as false. Enraged feminists are apparently the gatekeepers for less well-educated American women, who are supposed to have 0-1.5 children not 5! Their husbands must be professors, lawyers, CEOs, editors—not snowmobile champions, union members, oil workers, and fishermen—or, worse, all in one! And unlike a Pelosi, Quinn, or Clinton, Palin, God forbid, did not rely on a powerful, wealthy husband or father to energize her career. Worse still, she took no women’s studies class, never attended the Ivy League, and shoots moose. The danger is not just that Sarah Palin could win McCain the election, but she could expose the entire flimsy structure of doctrinaire liberalism as the hypocrisy—and chauvinism—it has become.

Dumb and dumber

At about the time that the Republicans were making the case that liberals were hyperpartisan, a little unhinged, and out of touch, hundreds of nutty demonstrators were outside the convention screaming in the usual street theater mode about war crimes et al.—even as Joe Biden announced that when elected, he and Obama may well seek out Bush administration officials to try them for crimes!

Two nations….

- The Geraldine Ferraro Democratic Vice Presidential nominee appointment was an inspired stroke of genius that advanced the cause of feminism; Palin’s was tawdry tokenism.

- Edwards was a social reformer brought down by the tabloids; Palin’s 17-year-old daughter is white trash and fair game.

- Insulting “small town mayors” and “good looking” women is funny; suggesting that “community organizing” is often a farce is a felony.

- Obama’s violation of drug laws with a “little blow” was youthful exuberance; Palin’s husband’s DUI was more proof of a working-class messy family.

- Joe Biden bravely continued as Senator after the tragic death of his wife and daughter left his injured young sons with a single parent; Sarah Palin selfishly shorted her children by running for VP and endangered her infants by flying while pregnant.

- Criticizing Clinton’s engaging in sex in the oval office and lying about it to the American people were once “the politics of personal destruction”; lying that Sarah Palin might not have been the mother of her 5th child is the mere overreach of the blogs caused by the improper vetting of the McCain campaign.

This all reminds me of the 2000 campaign when the media beat the dead-horse of Bush (Yale BA, Harvard MBA) as the lousy, lazy C-student, when, in fact, Al Gore’s undergraduate record at Harvard was full of C’s, F’s at Vanderbilt Divinity School (dropped out), and C’s at Vanderbilt Law School (dropped out). The point is not that quitting professional schools is necessarily a sign of anything, but rather once again that the media is shown to be bending and inventing facts for their higher purposes of liberal utopianism— a continuation of some half a century when we remember the “dumb” Ike floundering before the “brilliant” and “witty” Adlai Stevenson (who flunked out of Harvard Law School, a fact hidden from the public for decades.)

The Poverty of the Legal Culture

Every Democratic Presidential and VP nominee of the last thirty years, with the exception of Al Gore (law school drop out), has been a lawyer—Obama (s) and Biden, Kerry and Edwards, Gore and Lieberman, Clinton (s) and Gore, Dukakis and Bentsen, and Mondale and Ferraro. And while Carter was a failure, he at least brought a different perspective from someone whose professional training was argumentation.

The Republicans, at least, understood that legal training is not a prerequisite for the Presidency (one in law doesn’t build things, grow, defend, or create anything). The Democrats need to branch out, and find a Reagan, Palin, or McCain. Had the Bushes and Cheney been lawyers, I doubt they would have been elected. I am not suggesting that the products of modern law schools are not articulate, clever, used to arguing both sides of an issue, often rhetorically adept, and attentive to detail; but all that is part of the problem: they simply rarely wade out and solve problems rather than postfacto examining and litigating those who do.

All About Race, All the Time

Two truths have emerged: after promising to be the postracial candidate, Obama evokes race constantly; after suggesting McCain will, he hasn’t yet.

Remember this from Obama: “So what they are going to do is make you scared of me. You know he’s not patriotic enough. He’s got a funny name. You know, he doesn’t look like those other presidents (sic) on the dollar bills.”

Or this Obamism: “They’re going to try to make you afraid. They’re going to try to make you afraid of me. He’s young and inexperienced and he’s got a funny name. And did I mention he’s black?”

Or this in Berlin: “I know that I don’t look like the other Americans who’ve previously spoken in this great city.”

Or his slur of his grandmother as a “typical white person” or the Pennsylvania “clingers” nonsense. No need to go into the rest of the Obama racial stable: Rev. Wright’s racist outbursts; Father Pfleger’s creepy rants; Michelle’s more subtle “they” “raised the bar” complaints, or Barack Obama’s own promises to fund more “oppression studies” as a result of the “tragic history” of the United States that requires “reparations” in deed, not just word.

And then, of course, there are the self-appointed spokesmen from the nut-fringe, racists like Ludacris or Diddy who have weighed in with creepy attacks on McCain and Palin. Here I include the ever crazy Howard Dean. Remember this from the Chairman of the Democratic Party: “If you look at folks of color, even women, they’re more successful in the Democratic Party than they are in the white, uh, excuse me, in the (chuckles) Republican Party, because we just give more opportunity to folks who are hard-working people who are immigrants and come from members of minority groups.”

Then there are the op-ed writers weighing in on cue, like Philadelphia Daily News columnist Fatima Ali: “If McCain wins, look for a full-fledged race and class war, fueled by a deflated and depressed country, soaring crime, homelessness — and hopelessness!”

Or this from Harold Meyerson (who earlier accused Hillary and Bill Clinton of playing the race card) in the Washington Post: “In a year when the Democrats have an African American presidential nominee, the Republicans now more than ever are the white folks’ party, the party that delays the advent of our multicultural future, the party of the American past. Republican conventions have long been bastions of de facto Caucasian exclusivity, but coming right after the diversity of Denver, this year’s GOP convention is almost shockingly — un-Americanly — white. Long term, this whiteness is a huge problem.”

Or Bob Herbert’s fantastic claim that a McCain ad showing Obama speaking in front of the Berlin Victory Column was really a racist attack juxtaposing the Washington Monument and the Leaning Tower of Pisa as phallic symbols to scare the public about black male/white women coupling. About all Herbert revealed was that the New York Times columnist can’t distinguish America’s best known obelisk from a European monument to Prussian militarism.

Bottom line: expect more of the race card, especially if Palin gives the Republicans a bounce after the convention—and anyone who objects to it will be preemptively charged—of course—with racism.
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Osama's New Slogan

Thank you, Cartoon Nazi!...T
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