Archive for September, 2008

26
Sep

No Bailout, No Way

As many as 80% of Americans are against the Paulson bailout of Morgan Stanley and Goldman Sachs (his former employer.)

The emails and calls to congresscritters’ offices is running at better than 90% against.

The heedless McCain is positioning himself as a ‘maverick’ again allegedly pushing to ‘get things done’,  even though by all accounts he’s just sitting in the meetings, saying nothing.

At least Obama had the sense to put a millimeter or two from Hank Paulson’s plea, on bended knee, to please save him and the rest of the oligarchs from the consequences of their own greed.

A contingent of Republicans in the House, however, is heeding Ron Paul’s sound advice, and is opposing the giveaway. Good for them.

I have no illusions – this monstrous theft is going to pass in some form.  But we should all remember who was with us, and who was against us.

24
Sep

On the Topic of Class Warfare

In case you know someone who is a class warfare advocate or believes that somehow the rich are immune from market forces and simply get richer through osmosis, send them this (from Forbes):

The biggest loser [of the Forbes 400 list] this year was casino mogul Sheldon Adelson, whose fortune has fallen $13 billion in the past 12 months–$1.5 million per hour–as shares of his Las Vegas Sands (nyse: LVS – news – people ) have dropped 75% from their all-time highs last October.

Normally, to “lose” that much money that quickly, one would have to work for Halliburton.

24
Sep

Hurricane Ike, And Federal Help

Road Humps Indeed

Road Humps Indeed

A note from a friend, Houston, TX area resident Phil Schawe (SHAHvee) had this to say about the aftermath of Hurricane Ike;

Fortunately, I am pretty much done with that bastard IKE.

Thanks to everyone who expressed concern. Except for gigantic piles of tree debris lined up and down the street, things are pretty much back to normal today. Much luckier than the folks nearer the coast; keep in mind I  live over FIFTY miles inland.

On the bright side, it is AMAZING how neighbors pulled together to help each other out in times of need; truly a silver lining to IKE’s destruction. I got power yesterday after 8-1/2 days without.  Also got power at my office, but no phone or internet there yet.

I spent last Monday & Tuesday at a FEMA P.O.D. site helping hand out food, water & ice. A gigantic bureaucratic clusterf**k if ever I saw one. TSA and FEMA guys were complete tools and didn’t have a clue what to do; fortunately the volunteers that were there just basically took over and handled distribution.

Too bad we distributed stuff too fast for FEMA. We repeatedly ran out of supplies and they could never tell us when we’d be re-supplied. We sat there after everything ran out on Tuesday, and everyone cheered when a truck pulled up the street.

That is, until we saw it carried two brand new fork lifts to help unload the trucks THAT WEREN’T THERE. Oh, and nobody knew how to OPERATE the fork lifts either. Seems like the ONE guy we already had on a forklift and who was doing a wonderful job wasn’t deemed adequate.

And the ultimate comment;

The day after IKE a guy in a big ol’ van somehow made it down our
street to deliver . . . .

a package with a printer cartridge.

The van?

FEDERAL EXPRESS

(PHOTO: Phil’s amazing Flickr set )

24
Sep

Hank Paulson’s Taxpayer Takedown Strategy

[youtube=http://www.youtube.com/watch?v=50kWy6FaZKA]

(CLIP: Leroy Smith Shows How To Set Up An Opponent For A Takedown.)

My local Ron Paul Meetup (yes, it’s still around) has been loosely organizing a letter-writing and phone campaign against the absolutely unconscionable, immoral, illegal, undemocratic bank-bailout bill  that Treasury Secretary Hank Paulson (R, Goldman-Sachs) dragged up the steps of the Capitol the other day.

One writer suggested this emphasis, I thought it good enough to use, initially;

“I am writing to strongly discourage you from supporting the Treasury Secretary Paulson’s “bank bailout” proposal. This bill will ensure the indentured servitude of Americans for generations to come as it will become increasingly certain that the US will never be able to service is debt obligations. Why should I as an honest and responsible citizen be required to bailout the willfully negligent behavior of executives in the financial industry?

Moreover, I find Section 8 of the proposal particularly disturbing:

Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

This bill in effect makes Secretary Paulson a “Financial Dictator” subject to no Congressional oversight and no judicial oversight. He is immune from any future prosecution with respect to his appropriations of bailout funds.”

Later I remembered what my old wrestling coach taught me about executing a takedown, that the most effective setup is often one where you use your opponent’s own reaction to help you execute the move, so I wrote this;

This bill must be defeated, not modified.

This is a classic setup, a case of action – reaction – action.

If you wrestled in high school or college, you will, upon reflection realize that the Paulson proposal is in part a ‘set-up’ for a financial takedown.

They tie us up with the banking implosion.

Push us (and our representatives) with this unbelievably egregious proposal.

We (and our congresscritters) push back (“we want mortgage forgiveness, salary caps, blah, blah, blah”).

Paulson and Bush then drop down and “Fireman’s Carry” our asses up into the rafters, and down onto the mat – 4 points, and a pin to win.

We never ever see it coming.

Hank’s real goal is to ensure that the bad debt is bailed out at ‘face value‘, instead of at a steep market discount. This will cost further trillions of dollars (money that we do not have) and prevent market prices of the underlying assets from correcting for years, if ever. The bankers will escape completely unscathed, while the taxpayer watches his money rot.

This is why the proposal must not be modified, but defeated utterly.

If the banking system, and our fiat economy, is ready to collapse, then we must Let It Fall.

23
Sep

Things Are Looking Up

I just bought a new iPhone today and like a lot of other owners, one of the first things I did was check out the applications that are available for it. I opened iTunes and checked the list of top 10 freebies and noticed that Constitution for iPhone was on it. I think that the Revolution is starting to stick in the minds of a lot of people.

constitututiin_for_iphone

21
Sep

What I Saw At The Great Inflation

I’m on a mailing list for Guided By Voices, a 4-years-defunct band. What keeps it going, I think, are the people who make up the Postal Blowfish community – largely thoughtful, earnest folks.

I’m feeding an off-off-topic discussion (I didn’t start it, honest) about the current financial calamity, and the discussion turned to government-backed and subsidized mortgages;

David;

> But to scuttle the whole system would also keep people from buying houses
> who can repay the loans.  Put the crooks in jail, but leave the
> baby in the bathtub.

Dennis;

Yes, our first house loan was through fannie may. They put us through the credit check wringer and we had to take out mortgage insurance. We paid our way out of that and were able to refinance at a better rate and get the mortgage ins. dropped. These programs can work but people got too greedy and home buyers were fucked in those hot markets like vegas and arizona. A good friend of mine is sitting on a mortgage that is prob twice what the house will auction for in vegas.

My rejoinder;

One thought on this;

My parents, in 1964, purchased a house. A little run-down, not in the best neighborhood, but good enough. They paid $7000 for it. My dad was a pattern maker in a machine shop, my mom was, well, my mom (NOTE: No disrespect was intended to my mom, after raising 5 of us full-time she has gone on to two degrees and two entirely separate careers.)

My uncle financed the purchase, I think for 5 years at 5% simple interest. It was a duplex, and the upstairs rent paid back the mortgage in that time. I remember the day in first grade when my mom said I was getting my own room, after the renters had vacated (it was the same day I came down with the mumps, silver linings and all that.)

Fast forward 35 years to 1999. We have all moved out, except for my brother. My parents have moved, a couple of steps up the nice-neighborhood ladder (the old neighborhood, now home to numerous subsidized renters, has moved a couple steps down), and my brother, an industrial mechanic, buys the house from them at a heavily-discounted $84,000 or so, 12 times what they paid for it. Even with a healthy discount from market (this was before the boom), he had to get an FHA loan to make the deal.

What happened? There is simply no way that house in real terms was worth 12x what it sold for in 1964. The ‘magic’ of inflation, plus demand artificially stimulated by government-backed and / or subsidized mortgages, helped put a very modest home outside of the budget of a working person without help. It benefitted my parents very modestly. For the first time in 30 years, they had a mortgage. Their new crib consumed much more than the cash from the old home.

I’m not saying I have all the answers. But government interference in any market carries costs. Are they too high?

vini

16
Sep

Add Big Government to the List of the World’s Greatest Inventors

News travels fast since Al Gore invented the Internet so I’m not shocked to hear jokes already sprouting from the inference that John McCain helped invent the Blackberry.

“He didn’t have jurisdiction over financial markets, first and foremost,” Mr. Holtz-Eakin said, before wandering into more politically perilous ground.

“But he did this,” he said, holding up what looked like a BlackBerry. “The telecommunications of the United States, the premier innovation of the past 15 years, comes right through the commerce committee. So you’re looking at the miracle that John McCain helped create. And that’s what he did.”

Better living through Big Government. Maybe a Ron Paul presidency would have killed innovation altogether, huh?

15
Sep

If We Could See The Crisis Coming, Why Couldn’t Anybody Else?

We thought that the collapse of Lehman Brothers and Merrill Lynch over the weekend, the two latest “victims” in the financial calamity unfolding in our newspapers and on our TV screens, was an excellent opportunity for us to point out how right we were about the mortgage mess even before it started;

Every Homeowner…(6/9/2004);

…especially those who are mortgaged to the hilt, should read this article;

An excerpt;

Signs of a “”new era”" in housing are everywhere. Housing construction is taking place at record rates. New records for real estate prices are being set across the country, especially on the east and west coasts…As one loan officer explained to me: “”It’s almost too good to be true.”"In fact, it is too good to be true. What the prophets of the new housing paradigm don’t discuss is that real estate markets have experienced similar cycles in the past and that periods described as new paradigms are often followed by periods of distress in real estate markets, including foreclosure sales, bankruptcy and bank failures.

OOOH, This Is BAD (7/2/2004);

From today’s WSJ;

The Johnsons thought they had it all figured out. After changing jobs, Paul had planned to rollover the $36,000 balance from his former employer’s 401(k) plan into an IRA. But a desire to live closer to their parents and worries that mortgage rates would head higher spurred them to cash out the 401(k) account last year and use some of the money to buy a home…”We’re making more money, but a lot of that is going into improvements on the home.”"The couple also still owes state and federal taxes on the retirement-account withdrawal, and they haven’t started to rebuild their nest egg.

No real-estate bubble you say?;

A President’s Job Is Never Done (8/24/2004);

I just spotted this on the Mises Institute blog. James Bovard (always a must-read) wrote in Barron’s about George Bush’s initiative to close the gap between rich and poor. I can’t even start to comment on it. Here are some clips:

* A White House Fact Sheet issued June 17, 2002, declared that Bush’s agenda “”will help tear down the barriers to homeownership that stand in the way of our nation’s African-American, Hispanic and other minority families. … The single biggest barrier to homeownership is accumulating funds for a down payment.”"

* Federal Housing Commissioner John Weicher said in January 2004 that “”the White House doesn’t think those who can afford the monthly payment but have been unable to save for a down payment should be deprived from owning a home,”" National Mortgage News reported.

* While zero-downpayment mortgages have long been considered profoundly unsafe (especially for borrowers with dubious credit history), Weicher confidently asserted: “”We do not anticipate any costs to taxpayers.”"

Although Barron’s is a pay site, the full text of the article is on the blog if you scroll down a little. I just have one question that Bovard leave’s unanswered: Did we indeed elect Al Gore in 2000?

Some Eagles Fans Have Really, Really Lost Their Minds (2/3/2005);

…and could lose their houses.

From “”The Rude Awakening”", published by Bill Bonner and Addison Wiggin, authors of Financial Reckoning Day comes the following;

“”Mr. Dave Brekher, president and co-owner of North American Federal Mortgage Co. in blue-collar Northeast Philadelphia, realizes that enthusiasm is not the same as good credit.

His company has been asked to lend money to local football fans wishing to mortgage their houses so they can afford to go to the Super Bowl. “”No,”" he said.

“”If someone is that desperate, there’s always repercussions,”" he explained.

I Hope the Voters Remember This When He’s Up for Reelection (2/4/2005);

This is from the Philadelphia Daily News:

Kevin P. O’Donoghue, 36, of Glen Mills, sank $4,000 into a Super Bowl package that includes round-trip airfare, a four-night hotel stay, and one ticket.

He said that he told his wife after the Eagles defeated the Atlanta Falcons for the NFC championship: “”I don’t care if we have to mortgage our house, I’m going.”"

He applied for a home-equity line of credit that required him to put up his home as collateral. He’s getting the money in a few days.

“”Sometimes the cards are maxed out, and you got to do what you got to do,”" he said.

For those of you who don’t know him, O’Donoghue is the township supervisor where I live so he wields fiduciary responsibility over my money. I will surely not forget this next time it comes time to elect a township supervisor. .

We Hate To Say We Told You So… (10/17/2005);

…but the “”crack-up boom”" is about to bite us all in the ass. Just this week;

When you get right down to it, people vote their pocketbooks.

And they are all about to be given a HARD kick.

Taking Advantage Of FHA, Buyers, Beazer Destroys Lives, Neighborhoods (3/28/2007);

When we last left this sorry tale, builder Beazer Homes had sold crappy 2-bedroom starter houses to low-income buyers in Charlotte, NC, an average of 20% of whom, it turns out, have since had those homes foreclosed.

Now the FBI, and the US Attorney in Charlotte are involved, and Beazer’s stock price is tanking, down 17% from an already low point.

As great as it is to see such a corporate pig get skewered, Beazer was only doing what the Bush Administration was urging them to do, which is to sell houses to people who have no realistic way to ever pay for them.

(link from Breitbart.com)

The Fed’s Fatal Overreach (4/1/2008);

Just when you think you have seen it all, a proposal has arisen from the Bush White House to empower the Federal Reserve to take over the entire US financial system.

Now right about now, anyone like us who has followed the Fed-inflated real-estate bubble, followed by the collapse of the housing marketthe Fed origins of the mortgage crisis, and the Fed-caused recession can be forgiven for making a gurgling noise as their head explodes from the unbelievable hubris, the BALLS behind such a move.

The prescient words of the great Ron Paul chill the spine at this moment;

We had missed the 5:30 Ferry, but the good people at Shepler’s quickly boarded us on another boat and made a special run to take us and Ron Paul over to the Island..

… I asked him how much longer he thought those guys in Washington could keep going before everything started to collapse, and he said “”Not much longer, things are starting to fall apart and this time they will not be able to stop it.”"

To singlehandedly destroy an economy, quickly steal away from the scene, then return with a flourish annoncing that salvation is at hand is exactly what compulsive arsonists do.

And the people should rise up and put them in exactly the same place as arsonists – in prison, every last one of them.

13
Sep

America Still Needs A Doctor

Another Successful Cure

Another Successful Cure

I think it is a shame that everyone seems to be fixated on the dust-up between the Barr camp and Ron Paul. It threatens to overshadow the significance of the meeting Ron held (and Barr bagged out on) where he introduced, again, the case for the principles of Liberty over the politics of expediency.

The list of points of agreement that Ron, Ms. McKinney, Mr. Baldwin, and Mr. Nader endorsed is a call to effect a cure rather than treating (or, not treating) the symptoms.  (a side note, it is roughly analogous to my SSS plan for energy and environment)

John Walsh had a great post on LRC today where he sums up the four points;

  • Foreign Policy: The Iraq War must end as quickly as possible with removal of all our soldiers from the region. We must initiate the return of our soldiers from around the world, including Korea, Japan, Europe and the entire Middle East. We must cease the war propaganda, threats of a blockade and plans for attacks on Iran, nor should we re-ignite the cold war with Russia over Georgia. We must be willing to talk to all countries and offer friendship and trade and travel to all who are willing. We must take off the table the threat of a nuclear first strike against all nations.
  • Privacy: We must protect the privacy and civil liberties of all persons under US jurisdiction. We must repeal or radically change the Patriot Act, the Military Commissions Act, and the FISA legislation. We must reject the notion and practice of torture, eliminations of habeas corpus, secret tribunals, and secret prisons. We must deny immunity for corporations that spy willingly on the people for the benefit of the government. We must reject the unitary presidency, the illegal use of signing statements and excessive use of executive orders.
  • The National Debt: We believe that there should be no increase in the national debt. The burden of debt placed on the next generation is unjust and already threatening our economy and the value of our dollar. We must pay our bills as we go along and not unfairly place this burden on a future generation.
  • The Federal Reserve: We seek a thorough investigation, evaluation and audit of the Federal Reserve System and its cozy relationships with the banking, corporate, and other financial institutions. The arbitrary power to create money and credit out of thin air behind closed doors for the benefit of commercial interests must be ended. There should be no taxpayer bailouts of corporations and no corporate subsidies. Corporations should be aggressively prosecuted for their crimes and frauds.

Often the most effective cures are negative, epitomized by the old joke where the patient describes a pain that occurs when he does a certain action, to which the physician makes a commonsense reply. Let’s apply this to the four points;

Patient – “Doctor, when I garrison the globe with 800 bases in 150 countries, and meddle in the internal affairs of other countries, terrorists keep trying to blow me up! What do I do?”

Doctor – “Stop doing that.”

Patient – “I keep trading liberty for security, yet while I am less free, I am no more secure, what do I do?”

Doctor – “Stop doing that.”

Patient – “I am so in debt I have to borrow money from my business adversaries just to stay afloat. In addition, I am saddling my estate with debt so that my children will be sent to the workhouse to work off my debts for the rest of their lives, and their children, and their children. What do I do?”

Doctor – “Stop doing that.”

Patient – “I have been passing bad checks and counterfeiting bills to paper over my debt and fund my extravagant lifestyle. So far I haven’t been caught yet, but I have noticed that my counterfeits don’t buy nearly as much as they used to, and my neighbors are all dressed in rags and their home is being foreclosed, what do I do?”

Dr. Paul – “Are you dense? Haven’t you been listening to my advice for the past 30 years? STOP DOING THAT!”

10
Sep

The Real Way To Stop Anthropogenic Global Warming

Ah, Close, But Not Exactly

Ah, Close, But Not Exactly

We have been listening for years now the the claims that science has ‘proved’ that man’s activities on the planet are causing a malignant accelerating warming of the atmosphere, which portends disaster and possibly the end of life on earth. Having some background in the sciences, we are nonetheless loath to point out that while the evidence for some warming is pretty convincing, and the fact that man contributes some measurable CO2 to the atmosphere is plausible, the mechanism is far from proved.

Moreover, the proposals (cap and trade, 2, carbon tax, technology subsidies) that have been seriously floated to try to slow or halt “Global Climate Change” (renamed that because the warming isn’t happening everywhere, and in some places cooling is being recorded) require an even heavier hand of government, have unknown efficacy, are vulnerable to cheating, and will have detrimental effects here and especially in developing countries. These proposals will disrupt the fundamental social and economic patterns of our civilization, and cost trillions of dollars, potentially for little to negative effect on the buildup of greenhouse gases.

So what do we do then? We have come up with a plan that;

1) Will measurably reduce emissions of greenhouse gases in the US

2) Is guaranteed to work, if conscientiously and carefully implemented

3) While not costless, will require no forced transfer of funds from taxpayers to polluters

4) Will actually free up trillions of dollars for productive investment

5) Will massively incentivize innovators in clean energy-production technologies.

Our plan to reduce greenhouse gases, and clean up the environment?

The SSS Plan.

What does that stand for?

Stop Subsidizing Sh*t.

Stop subsidizing ethanol.

Stop subsidizing coal (by “permitting” pollution and destroying property rights in our lands and bodies).

Stop subsidizing oil (see coal above, also military intervention in the middle east, South America, and coming soon, Russia)

Stop subsidizing nuclear (state PUCs, the NRC, the DOE, and Price-Anderson have fundamentally retarded this very important energy source).

Stop subsidizing hybrid and electric vehicle development (it rewards the biggest culprits (GM, etc) while disadvantaging innovators).

Stop subsidizing highways (causing massive pollution, energy wastage, corruption, and economic malinvestment / dislocation)

Stop subsidizing airports and airlines (airports and skies jammed with planes jammed with people, absolute violations of 2nd, 4th, 7th , 9th, 10th, and 14th amendments).

And while we are at it, stop subsidizing solar, wind, geothermal, tidal, waste-to-energy, all of it.

When you get right down to it, pollution is a property-rights problem, but more importantly, it is an ECONOMIC problem, and a GOVERNMENT problem. Government disadvantages sustainable methods when it subsidizes unsustainable methods. Moreover, government investment in new technologies, meant to correct the previous mistake, serve to misdirect investment down particular avenues favored by particular interests, the very opposite of allowing the market, correctly incentivized, to determine the pace and direction of innovation.

It is said that if government could have seen the automobile coming, it would have outlawed it. It is, by its policies, outlawing sustainable energy policy economically. Before our leaders commit us to a path of dubious efficacy and certain harm, let us insist that they go through the books and strike every law, order, and policy that has the net effect of destroying property rights against polluters.

In just the coal-fired power generation sector alone, the costs of pollution, if fairly assessed, would make the industry as currently constituted extinct almost overnight. The resulting increase in the cost of electricity would both force conservation and incentivize innovation and production. all without a single cent of tax or seziure of property.

SSS.

(Image from Paul Goscicki’s blog)